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American Journal of  Applied 
Statistics and Economics (AJASE)

Navigating Employee Retention: The Importance of  Compensation in Phnom Penh’s 
Private Companies, Cambodia

Meng Kheang Sorn1*, Guanghui Fu1, Sreang Leangheng2

Volume 3 Issue 1, Year 2024
ISSN: 2992-927X (Online)

DOI: https://doi.org/10.54536/ajase.v3i1.2893
https://journals.e-palli.com/home/index.php/ajase

Article Information ABSTRACT

Received: April 18, 2024

Accepted: May 21, 2024

Published: May 25, 2024

This research addresses the critical issue of  employee retention in private companies in 
Phnom Penh, Cambodia, specifically focusing on compensation practices. The study 
employs quantitative and qualitative methods, utilizing a cross-sectional approach to collect 
data from a sample of  335 employees. The findings reveal that many employees view their 
compensation package as a key factor influencing their decision to remain with their current 
company. However, a substantial proportion of  employees expressed dissatisfaction or 
neutrality towards their compensation packages, signaling potential areas for improvement. 
The research contributes to a deeper understanding of  employee preferences regarding 
compensation packages, thereby aiding businesses in enhancing job satisfaction and loyalty. 
Furthermore, the study offers practical recommendations for improving compensation 
practices, including enhancing transparency, conducting regular market analyses, addressing 
employee concerns, reassessing compensation strategies, investing in employee satisfaction, 
and considering employee feedback. In essence, this research comprehensively analyzes 
compensation practices and their impact on employee retention, offering valuable insights 
and actionable recommendations for private companies in Phnom Penh, Cambodia.

Keywords

Cambodia, Compensation, 
Employee Retention, Phnom 
Penh, Private Companies

1 School of  Economics and Management, Nanjing Tech University, Nanjing City, Jiangsu Province, China
2 Faculty of  Finance and Accounting, National University of  Management, Phnom Penh Capital City, Cambodia
* Corresponding author’s e-mail: mengkheangsorn@gmail.com

INTRODUCTION 
Compensation is widely regarded as one of  the most 
essential aspects determining employee retention in an 
organization. It is a well-established fact that employees 
are the backbone of  any organization. Hence, retaining 
talented and efficient employees is crucial for the 
organization’s success. The Cambodian job market has 
undergone significant changes in the past decade, with 
an increasing number of  organizations offering higher 
compensation packages to attract and retain top talent. 
Despite these changes, many organizations still struggle 
to retain their employees due to various factors. In 
Cambodia, retaining skilled employees has become a 
significant challenge for organizations due to the intense 
competition in the market. It has become increasingly 
challenging to keep talented and skilled employees who 
can be easily enticed by better job opportunities or 
higher salaries. The importance of  employee retention is 
widely recognized by businesses operating in Cambodia. 
Consequently, employee retention is a key component in 
the success of  private companies, especially in Cambodia, 
where there is a high demand for skilled labor. Thus, this 
study investigates the importance of  compensation in 
employee retention within private companies in Phnom 
Penh, Cambodia. Specifically, it will examine employees’ 
current compensation packages, assess their satisfaction 
levels, and explore their experiences and perspectives 
regarding their compensation.

Research Question and Objective
Research Question
To what extent do compensation practices contribute to 

employee retention in private companies in Phnom Penh, 
Cambodia?

Research Objective
To analyze the importance of  compensation practices 
in influencing employee retention in private companies 
in Phnom Penh, Cambodia, based on employees’ 
perceptions and experiences.

Significance of  Research
This research is of  significant value as it addresses a 
critical issue faced by private companies in Phnom 
Penh, Cambodia - employee retention. By focusing on 
compensation practices, the study provides valuable 
insights that can assist companies in enhancing 
their retention strategies. It contributes to a deeper 
understanding of  employee preferences regarding 
compensation packages, enabling businesses to tailor 
their compensation strategies to better align with the 
needs and expectations of  their employees, thereby 
enhancing job satisfaction and loyalty.
 
LITERATURE REVIEW
Compensation
Compensation refers to all forms of  financial benefits that 
employees receive from an employer in exchange for their 
work. It includes base pay, bonuses, benefits, and other 
incentives (Kishore, P., Das, K., & Mohapatra, P., 2014). 
Salary and earnings, benefits, bonuses, and other extras 
are all considered forms of  employee compensation. Pay 
that employee regularly earn for their labor is referred 
to as their salary or wages. Retirement plans, insurance, 



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and different kinds of  leave are indicators of  benefits. 
Bonuses are extra money given out when objectives are 
met or surpassed. Other benefits may include professional 
development opportunities, flexible work hours, on-site 
parking, lunches provided by the firm, and more (Sorn 
et al., 2023). 

Employee Retention
Employee retention pertains to the proportion of  
employees that an organization manages to keep. The 
term “retention” is commonly used when discussing 
employee turnover; however, they are not entirely 
interchangeable. Retention concentrates on enhancing 
the contentment of  current employees by offering growth 
possibilities, challenges, and incentives, such as bonuses 
and compensation that inspire the most skilled workers to 
remain with the company. Turnover, on the other hand, 
is an inevitable aspect of  any business, brought about 
by various factors, including involuntary and voluntary 
ones (Ruth Mayhew, 2017). Employee retention refers to 
an employer’s potential to keep best personnel (Jennifer 
Herrify, 2023).

Overview of  Cambodia
Cambodia’s Economy
Cambodia’s economy grew at an average annual rate of  
7.7 percent between 1998 and 2019, making it one of  the 
fastest-growing economies in the world. The economic 
growth for 2023 is projected to reach 5.2 percent after 
recovering from Covid-19 pandemic (World bank, 2023). 

Cambodian’s Population
According to the World Factbook by the Central 
Intelligence Agency, Cambodia’s population is estimated 
to be 16,891,245 in 2023 (1.04% growth rate). Most of  
the population is concentrated in Southeast Asia, notably 
in and around the capital city of  Phnom Penh. The 
United Nations Population Fund also provided data on 
Cambodia’s population: The total Cambodian population 
in 2023 was 16.9 million. Most, 65% were in the age 
group of  15 to 64 (CIA, 2023). 

Labor Market in Cambodia
The Cambodia Labour Force Survey (CLFS) report 
summarized the employment and unemployment status 
of  the working age population. The report provided 
decent work indicators related to employment and 
unemployment, working conditions, social protection, 
and recruitment cost of  migration. The working age 
population (aged 15 years and over) was about 11.5 million 
(73.2% of  the total population), of  whom 6.1 million 
(53.1%) were females and 5.4 million (46.9%) were males.  
The report further added that the total working-age 
population, 68.5% (or 7.9 million people) were classified 
as employed, 0.8% (or 97,687) were unemployed, and 
30.7% (or 3.5 million) were not in the labour force at the 
time the survey was conducted (ILO, 2019). 

Understanding Compensation and Employee 
Retention in Cambodia
Cambodians do not typically work more than 48 hours 
per week. For any employees who work more than eight 
hours per day or 48 hours per week, they are eligible for 
overtime payments. Standard overtime rates are 1.5x 
(150%) an employee’s regular hourly wage. If  an employee 
works overtime at night, on a Sunday, or a designated 
holiday, they are entitled to overtime rates that 2x (200%) 
their regular hourly wage. Employers may not request 
employees to work more than two hours of  overtime per 
day (Horizons, n.d). The standard workweek in Cambodia 
is 6 days per week, with 8 hours per day, or 48 hours per 
week. Employees must get at least one full day (24 hours) 
off  per week, typically on Sunday. Enterprises have the 
right to limit the work hours, as long as they adhere to the 
stipulated law. The lunch break can last from 30 minutes 
to 1 hour, depending on the business requirements. The 
maximum number of  overtime hours per day is 2 hours. 
Therefore, the maximum number of  hours a person 
should be employed per day is 10 hours. Public holidays 
in Cambodia are paid leave, and employees receive 1.5 
days of  annual leave for each month of  company service. 
Women who have worked for a firm for at least a year are 
eligible for maternity leave. Full-time employees get 1.5 
days of  annual leave per month, but many organizations 
allow employees to take their leaves in the first year. 
Employees who work fewer than 48 hours per week are 
considered part-timers and are entitled to yearly leave 
in proportion to their employment. So, an employee 
working 24 hours per week must be given at least nine 
days of  paid leave annually. Official paid holidays and 
sick leave are not counted as paid annual leave. Expectant 
mothers are entitled to 90 days of  maternity leave with 
pay after one year of  continuous service. After returning 
from maternity leave, they are only expected to perform 
light work. Mothers who breastfeed their children during 
working hours are entitled to one hour per day. This 
time can be divided into two periods of  thirty minutes 
each. Sick leave with pay: According to the Arbitration 
Council and several Prakas, every company must establish 
internal policies for giving employees paid sick time when 
they present certification from authorized and legally 
recognized doctors confirming their illness. The pay 
scale for sick leave depends on the during of  sick leave: 
Employees who take one-month sick leave will be paid 
100% of  the salary, 60% of  the salary for taking sick leave 
from 2 to 3 months and employees who take sick leave 
more than 4 months have no wages. Sick leave without 
pays: Each employee has a right to sick leave. The Labor 
Law is generally silent on sick leave, other than requiring 
a company to suspend a contract for up to six months 
in case of  illness. In other words, the company must 
keep a sick employee’s job open for at least six months 
without compensation. Social insurance, work injury, 
survivors’ pension, temporary disability benefit, constant-
attendance allowance, permanent disability pension is paid 



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depending on the severity of  the disability and the length 
of  hospitalization. Medical and rehabilitation services 
are also provided (Usama, 2022). Seniority Payment: All 
employees with an unlimited duration contract (UDC) 
are entitled to receive ongoing seniority payments. The 
amount of  the seniority payment is equal to 15 days of  
the employee’s wages and other benefits per year. 
Employers must pay the seniority payment to employees 
in two installments: 

• An additional 7.5 days’ worth of  their wage in June 
of  each year.

• An additional 7.5 days’ worth of  their wage in 
December of  each year.
A new employee is entitled to a full installment of  the 
seniority payment (being equal to 7.5 days of  wages and 
benefits) if  the employee worked for at least one month 
in the applicable period (being from January to June, or 
July to December) (Remote, n.d). 
According to the ‘HRINC Consulting Annual 
Compensation Surveys’, the average turnover rate among 
large companies in Cambodia is around 19 percent. This 
indicated that high rates of  employee turnover can lead 
to low employee retention rates.  Retaining employees 
and managing HR in Cambodia is a significant challenge 
for private companies. The most common reasons for 
an employee initiating separation with the company in 
Cambodia are better salary and compensation offered, 
move to another company in the same industry, and 
employee offered a higher position which the company 
could not provide (Ses Socheata & Nil Keorachana, n.d). 

Elements Influencing Employee Retention
A study on factors affecting employee retention of  
private companies in Cambodia using Delphi Method 
exhibited that the experts agreed that there are five 
factors greatly affecting employee retention of  private 
companies in Cambodia: compensation; promotion-
opportunity and growth; work environment; training and 
development; and work-life balance. Furthermore, the 
findings suggested that private companies in Cambodia 
could improve employee retention by focusing on these 
five factors. For example, they could offer competitive 
compensation packages, provide opportunities for growth 
and promotion within the company, create a positive 
work environment, invest in training and development for 
their employees, and support work-life balance (Ramon 
Macaraig Jr et al., 2023). The factors affecting employee 
retention in the banking sector, specifically focusing on 
curriculum development, employee capacity building, 
lifelong learning, career development, and career success. 
The results indicated that curriculum development, 
employee capacity building, lifelong learning, career 
development, and career success are critical factors 
influencing employee retention in the banking sector 
in Cambodia. Lifelong learning of  employees has a 
positive influence on both employee career success and 
employee retention. The research findings contributed 
to understanding the importance of  employee training 

and development in enhancing employee retention in 
the banking sector. Organizations should consider these 
factors to retain talented employees and reduce turnover 
rates (Sovannara et al., 2023).

The Role of  Compensation in Employee Retention
Compensation has a significant influence on employee 
retention in banking institutions in Dar es Salaam, 
Tanzania. Specifically, the attribute of  fair salary was 
found to be the most valued compensation attribute 
contributing significantly towards employee retention. 
The study recommended that bank managers develop 
and implement retention policies that contemplate fair 
salaries and pay great attention to right retention policies 
in order to improve retention of  employees (Hanai, A. E., 
& Pallangyo, W. A., 2020). Bonuses for the Lunar New 
Year holiday have a positive effect on employee retention. 
Employees perceive bonuses as a form of  recognition 
and appreciation, leading to increased job satisfaction and 
organizational commitment. Hence, the role of  bonuses 
as a form of  compensation is crucial when considering 
strategies to boost employee retention. This research 
provides valuable insights for companies seeking to 
improve employee retention through the implementation 
of  strategic bonus schemes that are sensitive to cultural 
and seasonal contexts (Do et al., 2023). 

METHODOLOGY
Research Design
This study used a mix of  quantitative and qualitative 
methods to gather and examine data from private 
company employees in Phnom Penh, Cambodia. It 
employed a cross-sectional approach, collecting data 
from a sample of  employees at a single point in time.

Sample Collection
The sample size for this research was initially targeted 
at 350, based on the availability and willingness of  
employees to participate in the survey. However, a total 
of  335 respondents successfully submitted and returned 
their responses for this research. Participants were 
selected using a convenience sampling method, which 
is a non-probability sampling method used in research. 
In this research, the convenience sampling consisted of  
employees currently working in private companies in 
Phnom Penh Capital City, Cambodia. These employees 
were invited to voluntarily take part in the survey.

Data Sources
Primary data was collected by conducting a survey 
targeting employees at private companies in Phnom Penh, 
Cambodia. An online questionnaire was utilized for this 
survey, and it was disseminated through various channels 
including social media and individual as well as group 
messaging platforms, inviting employees to participate. 
The secondary data sources for this research included 
journal articles, reports, other scholarly sources, official 
websites, and other relevant online sources.



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Data Collection
The data collection process for this research involved 
an online survey questionnaire. The questionnaire was 
designed using Google Forms and was available in both 
Khmer and English. Khmer is the official language 
of  Cambodia, and English is a widely spoken foreign 
language in Cambodia. Participants received a link to the 
survey through social media and individual and group 
messaging platforms. The survey questionnaire consisted 
of  a mix of  open-ended and closed-ended questions to 
collect both qualitative and quantitative data.

Data Analysis
The collected data was analyzed using statistical software 
IBM Statistical Package for Social Sciences 27.0.1 (SPSS). 
The study focused on using descriptive statistics to 
summarize and describe the main features of  the data. In 
addition to using descriptive statistics, multiple response 
analysis was also conducted for questions that allowed 
respondents to choose more than one answer. This analysis 
was used to understand the patterns and trends within the 
various responses. Narrative summaries were also written 
to provide an overview of  the main patterns and trends in 
the data and highlight any interesting or important results. 
Overall, these approaches ensured that the results were 
easy to understand for both academic and non-academic 
audiences, allowing for easier interpretation and practical 
insights that could be easily applied in the workplace.

Research Limitations and Delimitations 
This study’s focus on Phnom Penh’s private sector may 
not reflect Cambodia’s entire business environment. The 
online survey method and convenience sampling could 
introduce bias and limit the findings’ applicability. The 
sample size and representativeness might be affected by 
the employees’ availability and willingness to participate.
 
RESULTS AND DISCUSSION
The provided data represented a frequency distribution 
of  various types of  employee compensation. With a total 
of  2590 responses from a sample size of  335, the data 
revealed that each individual could select more than one 
type of  compensation, resulting in multiple responses per 
individual. This accounted for the discrepancy between 
the total responses and the sample size. It was also the 
reason why the percentages exceeded 100%, a common 
occurrence in surveys allowing multiple selections.
The data revealed that 321 employees, accounting 
for 12.39% of  the total responses and 95.82% of  the 
sample, chose salary as their form of  compensation. This 
suggested that the majority of  employees received their 
compensation in the form of  a salary. However, it was 
also worth noting that some employees might not have 
received a salary but instead received alternative benefits. 
Following salary, paid time off  such as sick leave, holiday 
leave, and annual leave were the next most common forms 
of  compensation. Sick leave was chosen by 286 employees, 

Table 1: Current compensation types received by employees
Multiple Response Analysis
Employee Compensation Responses Percent of  Cases

Sample (N) Percent
Salary 321 12.39 % 95.82 %
Overtime Pay 165 6.37 % 49.25 %
Performance-based incentives 124 4.79 % 37.01 %
Seniority Pay 166 6.41 % 49.55 %
Bonus 140 5.41 % 41.79 %
Annual Leave 265 10.23 % 79.10 %
Holiday Leave 270 10.42 % 80.60 %
Sick Leave 286 11.04 % 85.37 %
Paternity Leave 64 2.47 % 19.10 %
Maternity Leave 84 3.24 % 25.07 %
Casual Leave 94 3.63 % 28.06 %
Bereavement Leave 90 3.47 % 26.87 %
National Social Security Fund (NSSF) 193 7.45 % 57.61 %
Life Insurance 114 4.40% 34.03 %
Dental Health 18 0.69 % 5.37 %
Eyes Care 20 0.77 % 5.97 %
Retirement Benefits 148 5.71 % 44.18 %
Other: Mental support 13 0.50 % 3.88 %
Other: Certificate Reward 15 0.58 % 4.48%
Total 2590 100.00 % 773.13 %



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making up 11.04% of  the total responses and 85.37% of  
the sample. Holiday leave was selected by 270 employees, 
representing 10.42% of  the total responses and 80.60% 
of  the sample. Annual leave was chosen by 265 employees, 
accounting for 10.23% of  the total responses and 79.10% 
of  the sample. These figures indicated that paid time off  
was a significant component of  employee compensation, 
playing a significant role in promoting work-life balance 
among employees. Overtime pay and seniority pay were 
also common, with 165 and 166 responses respectively, 
each accounting for around 6.37% and 6.41% of  the total 
responses and 49.25% and 49.55% of  the sample. The 
National Social Security Fund (NSSF) was chosen by 193 
employees, representing 7.45% of  the total responses and 
57.61% of  the sample. These forms of  compensation 
are what the employees reported receiving from their 
companies that are additional pay for extra work and 
recognition of  their tenure at the company. Retirement 
benefits were received by 148 employees, making up 
5.71% of  the total responses and 44.18% of  the sample. 
Bonuses were chosen by 140 employees, accounting for 
5.41% of  the total responses and 41.79% of  the sample. 
Performance-based incentives were received by 124 
employees, accounting for 4.79% of  the total responses 
and 37.01% of  the sample. Life insurance was part of  
the compensation for 114 employees, making up 4.40% 
of  the total responses and 34.03% of  the sample. These 
benefits indicated that employees received both immediate 
rewards, such as bonuses, and long-term security, such as 
retirement benefits and life insurance. Casual leave was 
selected by 94 employees, making up 3.63% of  the total 
responses and 28.06% of  the sample. Bereavement leave 
was chosen by 90 employees, accounting for 3.47% of  

the total responses and 26.87% of  the sample. Maternity 
leave was chosen by 84 employees, representing 3.24% of  
the total responses and 25.07% of  the sample. Paternity 
leave was received by 64 employees, accounting for 2.47% 
of  the total responses and 19.10% of  the sample. These 
forms of  compensation are flexible leave options, allowing 
employees to balance their professional responsibilities 
with personal obligations. The least common forms of  
compensation were eyes care, chosen by 20 employees 
(0.77% of  responses, 5.97% of  cases) and dental health, 
chosen by 18 employees (0.69% of  responses, 5.37% 
of  cases). Moreover, In the questionnaire, there was an 
option labeled “Other: (Please Specify)” for employees 
to provide their own responses. A significant portion 
of  these responses were related to “Mental Support” 
and “Certificate Reward”. These responses were then 
categorized into two separate variables in SPSS for 
analysis. Specifically, the category “Other: Certificate 
Reward” was derived from responses related to certificate 
rewards. This category was selected by 15 employees, 
accounting for 0.58% of  responses and 4.48% of  cases. 
Similarly, the category “Other: Mental Support” was 
created from responses related to mental support. This 
category was chosen by 13 employees, accounting for 
0.50% of  responses and 3.88% of  cases. This method of  
categorizing open-ended responses into specific variables 
is a common practice in data analysis, allowing for a more 
structured and simplified analysis of  the data. While these 
forms of  compensation were less common, they still 
represented important aspects of  employee well-being 
and recognition.
Total Respondents (N)=335
Total percentage (%)=100%

Figure 1: Employee Satisfaction with Current Compensation Package

The majority of  the respondents, comprising 156 
individuals (46.57%), expressed satisfaction with their 
compensation package. Additionally, 131 respondents 
(39.10%) reported a neutral stance. It’s noteworthy 
that some employees expressed dissatisfaction, with 
a few even indicating that they were very dissatisfied. 
Although these numbers were smaller, they still represent 

significant concerns for the company. Specifically, 
28 respondents, accounting for 8.36% of  the total, 
expressed dissatisfaction. Furthermore, 4 respondents, 
representing 1.19% of  the total, were very dissatisfied. 
On the other hand, a mere 16 respondents, representing 
4.78% of  the total, expressed being very satisfied with 
their compensation package. These findings suggest 



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a potential risk area for the company. Although a 
majority of  the respondents indicated satisfaction or 
high satisfaction with their compensation package, a 
significant proportion (nearly 50%) expressed neutral, 
dissatisfied, or very dissatisfied sentiments. This raise 
concerns as these employees may be considering leaving 
the organization due to their dissatisfaction with their 
compensation. The substantial percentage of  neutral 
responses might indicate uncertainty or a lack of  strong 
opinions regarding the compensation package. These 
employees have the potential to shift towards either 
satisfaction or dissatisfaction in the future, depending 
on changes in their compensation or their perception of  
it. It is crucial for the organization to take this feedback 
seriously and reassess their compensation strategies. 
To address these concerns, the organization should 
consider conducting further surveys or interviews to 
gain a deeper understanding of  the specific aspects of  
the compensation package that dissatisfied employees 
find problematic. By doing so, they can make targeted 
improvements to enhance overall satisfaction and mitigate 
the risk of  losing valuable employees. It is important to 
recognize that retaining satisfied employees is often more 
cost-effective than recruiting and training new ones. 
Therefore, investing in improving employee satisfaction 

with their compensation can yield significant long-term 
benefits for the organization.
Total Respondents (N)=335
Total percentage (%)=100
The figure reveals that a significant proportion of  
respondents, 196 (58.51%), were uncertain about the 
competitiveness of  their compensation packages. This 
uncertainty may arise from an insufficient understanding 
or lack of  information regarding the market standards for 
compensation, as well as the specifics of  their company’s 
compensation policy. It implies that these employees 
might not perceive their compensation as being 
commensurate with their effort and sacrifice. Once these 
employees become aware of  their compensation relative 
to the market, they might perceive their compensation 
as non-competitive or unfair, potentially leading them to 
consider leaving the organization for companies offering 
more competitive compensation. While 90 respondents 
(26.86%) believe their compensation is competitive, 
the presence of  49 respondents (14.63%) who do not 
share this belief  is a serious concern. These respondents 
represent potential risks for employee turnover. The 
organization should proactively address these concerns. 
Conducting a thorough market analysis to ensure 
their compensation packages are indeed competitive, 
and improving communication about compensation 
packages could help reduce uncertainty and increase the 
perceived value of  the compensation packages among 
employees. For those who perceive their compensation 
as non-competitive, the organization should investigate 
the specific concerns of  these employees and consider 
necessary adjustments to retain these employees and 
prevent potential turnover.
A typical 5-point Likert Scale, respondents were asked 
to rate their level of  agreement with a statement on a 
scale of  1-5, where 1 represent ‘Strongly disagree (SD), 
2 represents ‘disagree (D), 3 represents ‘Neutral (NE)’, 4 
represents ‘Agree (A)’, and 5 represents ‘Strongly Agree 
(SA)’.

Figure 2: Do employees believe their current 
compensation package is competitive compared to other 
private companies in Phnom Penh, Cambodia?

Table 2: A typical 5-point Likert Scale
Questions 1 2 3 4 5

(SD) (D) (NE) (A) (SA)
Do you agree that your compensation package is important 
in your decision to stay with your current company?

1.19% 9.25% 36.72% 48.66% 4.18%

Respondents 4 31 123 163 14
Total (N)=355
Do you agree that your current company has a fair system for 
determining employee compensation?

2.09% 16.72% 41.79% 35.52% 3.88%

Respondents 7 56 140 119 13
Total (N)=355
Do you agree that compensation plays a vital role in retaining 
employees in your current company?

2.69% 9.85% 35.52% 42.09% 9.85%

Respondents 9 33 119 141 33
Total (N)=355



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The data from the table 2 represents the responses of  335 
individuals to three different questions related to their 
compensation packages.

First
“Do you agree that your compensation package is 
important in your decision to stay with your current 
company?” A majority of  the respondents, 163 (48.66%), 
agree that their compensation package is important in 
their decision to stay with their current company. This is 
followed by 123 respondents (36.72%) who are neutral 
about the importance of  their compensation package in 
their decision to stay. A smaller number of  respondents, 
31 (9.25%), disagree, while 4 respondents (1.19%) 
strongly disagree. Lastly, 14 respondents (4.18%) strongly 
agree that their compensation package is important in 
their decision to stay with their current company.

Second
“Do you agree that your current company has a fair 
system for determining employee compensation?” 
The largest group of  respondents, 140 (41.79%), are 
neutral about the fairness of  their company’s system for 
determining employee compensation. This is followed by 
119 respondents (35.52%) who agree that their company 
has a fair system. A significant number of  respondents, 56 
(16.72%), disagree, while 7 respondents (2.09%) strongly 
disagree. Lastly, 13 respondents (3.88%) strongly agree 
that their company has a fair system for determining 
employee compensation.

Third
“Do you agree that compensation plays a vital role in 
retaining employees in your current company?” The 
largest group of  respondents, 141 (42.09%), agree that 
compensation plays a vital role in retaining employees. 
This is followed by 119 respondents (35.52%) who are 
neutral about the role of  compensation in employee 
retention. A smaller number of  respondents, 33 (9.85%), 
disagree, while 9 respondents (2.69%) strongly disagree. 
Lastly, 33 respondents (9.85%) strongly agree that 
compensation plays a vital role in retaining employees.
In term of  discussion, the first question indicates that 
employees who respond with agree or strongly agree 
view the compensation package as a key factor in their 
decision to remain with their current company. This 
positive response suggests that these employees find 
the compensation package acceptable and satisfying. 
However, those who respond with neutral, disagree, 
or strongly disagree likely feel that their compensation 
packages are inadequate and do not meet their needs. 
The second question shows that employees who 
responded neutrally are uncertain about the fairness 
of  their compensation packages within the company’s 
system. In contrast, those who responded with agree or 
strongly agree feel that their compensation packages are 
distributed fairly. However, those who responded with 
disagree or strongly disagree express a sense of  unfairness 

in their compensation. This could be due to issues in the 
implementation of  employee compensation, corruption 
within the company, labor exploitation, and other related 
problems. The third question indicates that a significant 
number of  employees view compensation as crucial 
in retaining them in their current company, as shown 
by those who responded with agree or strongly agree. 
However, those who responded with disagree or strongly 
disagree feel that their compensation does not play a 
significant role in employee retention. This perception 
may arise from employers not adequately compensating 
for employees’ efforts, leading to an imbalance that leaves 
employees feeling unappreciated. Notably, a significant 
number of  employees responded neutrally, indicating their 
uncertainty about the value of  compensation to them. 
The high number of  neutral responses across all three 
questions is a significant concern. These respondents 
are in an uncertain situation, unsure whether they agree 
or disagree. This uncertainty could lead to feelings of  
discomfort and a lack of  connection with the company, 
which could subsequently increase the possibility of  
them leaving the company. The significant number of  
neutral and disagreeing respondents suggests that the 
company needs to reassess its compensation strategies 
and communication to ensure that employees feel valued 
and fairly compensated, which is essential for retaining 
talented personnel.

CONCLUSION
The study provides valuable insights into the role of  
compensation in employee retention within private 
companies in Phnom Penh Capital City, Cambodia. 
The data reveals that a significant number of  employees 
view their compensation package as a key factor 
influencing their decision to remain with their current 
employer. However, the study also reveals a substantial 
proportion of  employees expressing dissatisfaction 
or neutrality towards their compensation packages, 
signaling potential areas for improvement. The findings 
suggest that while salary and paid time off  are the most 
common forms of  compensation, other benefits such 
as performance-based incentives, retirement benefits, 
and life insurance also play a crucial role in employee 
satisfaction. However, the presence of  a significant 
number of  employees who are uncertain about the 
competitiveness of  their compensation packages and the 
fairness of  the company’s compensation determining 
system indicates a need for improved communication 
and transparency. Moreover, the research emphasizes 
the necessity of  acknowledging and addressing employee 
concerns about compensation. A notable percentage of  
employees expressed dissatisfaction or neutrality towards 
their compensation packages, which could potentially 
escalate turnover rates. Consequently, it is imperative for 
companies to reevaluate their compensation strategies to 
ensure they are competitive, equitable, and transparent. 
In conclusion, this study underscores the importance 
of  a comprehensive and fair compensation package in 



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retaining employees. It calls for companies to continually 
reassess and improve their compensation strategies, 
taking into account the diverse needs and expectations 
of  their employees. By doing so, companies can enhance 
employee satisfaction, foster loyalty, and ultimately, 
achieve better employee retention.

RECOMMENDATIONS
Based on the findings, this research proposes the 
following actionable recommendations.

Improve Transparency
Companies should strive to enhance transparency and 
communication about their compensation packages. This 
could alleviate uncertainty among employees and augment 
their perceived value of  the compensation packages.

Conduct Regular Market Analysis
Companies should undertake regular market analysis 
to ascertain that their compensation packages remain 
competitive. This could aid in retaining employees who 
might otherwise contemplate leaving for companies 
offering more competitive compensation.

Address Employee Concerns
Companies should proactively address employee concerns 
about their compensation. This could entail conducting 
additional surveys or interviews to gain a more profound 
understanding of  the specific aspects of  the compensation 
package that employees find problematic.

Reassess Compensation Strategies
Companies should reevaluate their compensation 
strategies to ensure they are fair and cater to the 
diverse needs of  their employees. This could involve 
contemplating alternative forms of  compensation, such 
as performance-based incentives, retirement benefits, and 
life insurance.

Invest in Employee Satisfaction
Companies should invest in enhancing employee 
satisfaction with their compensation. This could involve 
implementing targeted improvements to boost overall 
satisfaction and mitigate the risk of  losing valuable 
employees.

Consider Employee Feedback
Companies should take employee feedback into 
account when reassessing their compensation strategies. 
Employees who are dissatisfied with their compensation 
could provide valuable insights into how the compensation 
packages could be improved.

Future Research
There are several areas identified for future research

Comparison Across Industries
Future research could also compare compensation 

practices and their impact on employee retention across 
different industries. This could provide valuable insights 
into industry-specific trends and practices.

Longitudinal Study
A longitudinal study tracking the same employees 
over time could provide insights into how changes 
in compensation impact employee retention and job 
satisfaction.

Specific Aspects of  Compensation Packages
Future research could delve deeper into the specific 
aspects of  compensation packages that employees find 
most valuable. This could involve conducting surveys or 
interviews to gain a more profound understanding of  
employee preferences and expectations.

Acknowledgements 
I’m deeply grateful to my supervisor, Prof. Dr. Guanghui 
Fu, for his guidance and support. His expertise 
significantly shaped this study.
I’m thankful to Nanjing Tech University for the research 
opportunity. The university’s supportive environment was 
crucial for my learning, personal growth, and research 
success.
I appreciate the respondents who shared their time and 
insights, making this study possible.
Lastly, my family’s constant support and encouragement 
were my driving force throughout this journey.

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Hanai, A. E., & Pallangyo, W. A. (2020). The Contribution 
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Banking Institutions in Dar es salaam, Tanzania. 
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Hong, S., & Lay, S. (2023). Factors Affecting Employee 
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Jennifer, H. (2023). What Is Employee Retention? 



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Benefits, Causes and Strategies. https://www.indeed.
com/career-advice/career-development/definition-
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Kishore, P., Das, K., & Mohapatra, P. (2014). A Literature 
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Socheata, S. & Keorachana, N. (n.d). Practical Procedures 
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Annexures
Survey Questionnaires
1. What are your current compensations that you receive 
from your current company? 
Please carefully read the description and question. This 
question allows for multiple responses, meaning you 
may select more than one answer that applies to you. 
Additionally, you have the option to provide an open-
ended response in the ‘Other (Please Specify)’ area where 
you can express your opinion or add any information not 
covered by the provided options.
2. How satisfied are you with your current compensation 

package?
Please carefully read the question and select the answer 

that best applies to you. You may only select one answer.
3. Do you believe your current compensation package 

is competitive compared to other private companies in 
Phnom Penh, Cambodia?
Please carefully read each question and select the answer 

that best applies to you. You may only select one answer.
4. In a typical 5-point Likert scale, respondents are asked 

to rate their level of  agreement with a statement on a scale 
of  1-5, where 1 represents ‘Strongly disagree’, 2 represents 
‘disagree’, 3 represents ‘Neutral (Neither agree nor disagree)’, 
4 represents ‘Agree’, and 5 represents ‘Strongly Agree’.

Please carefully read the description and questions. Then 
select the answer that best applies to you. You may only 
choose one answer per question.



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Questions Statement
1 2 3 4 5

Do you agree that your compensation package is important in 
your decision to stay with your current company?
Do you agree that your current company has a fair system for 
determining employee compensation?
Do you agree that compensation plays a vital role in retaining 
employees in your current company?


