The purpose of this study was to examine the effect of compensation systems on the work performance of employees (junior staff) of the University of Cape Coast (UCC), Ghana. The sample size for the study was 346. Stratified random sampling technique was used to select the junior staff. Also, 24 administrators were selected purposively to help collect data from the respondents. Questionnaire and an annual assessment form were the instruments used in collecting data. Both descriptive and inferential statistics were used in analysing the data. Findings from the study show that the junior staff have positive view on the university’s compensation packages as a whole. However, junior staffs’ view on the university’s compensation packages does not influence employees’ work performance directly. It does so only if it boosts their level of satisfaction which in turn boosts their commitment to the university and in the long run increases their work performance. It was recommended to management of the university to ensure a congenial environment and improved its compensation packages, especially non-financial, to encourage and motivate staff to be committed to the university which will lead to a significant increase in the work performance of the staff.
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