Abstract The traditional industry of Taiwan boiler manufacturers¡¦ compensation system design is now facing the challenge of gradually improving working conditions and decreasing employees work hours to 84 hours (two week); in accordance with government regulations. These changes deeply affect organizations¡¦ development and cause a sense of uncertainty among employees. In addition, enterprises are becoming more concerned with improving employees¡¦ performance in order to enhance the performance of the organization as a whole. That is the reason to choose compensation system and performance as researching objective for this study. How does the compensation system affect performance? Which variables of compensation system may affect performance? This research refers to a cause and effect model of the organizational commitment to show the relationship between the compensation system, organizational commitment, performance, and how they influence each other. This study assumes that the compensation system affects performance via organizational commitment, which acts as the medium actor. Boiler manufacture industry employees are the object of this study; and there are 232 effective questionnaires in this survey. After statistic analysis, the study finds that: 1. The higher organizational commitment employees undertake, the higher performance they show; these two variables show positive correlation and influence. 2. The higher perceptions employees have toward the compensation system, the higher they expect to perform; these two variables show positive correlation and influence. 3. The higher perceptions employees have toward the compensation system, the higher commitment they undertake; these two variables show positive correlation and influence. 4. The compensation system either directly or indirectly affects performance via organizational commitment. 5. Using Structural Equation Modeling (SEM) to set up the integral pattern , and run on LISREL 8.2 to analyze data. The variable structure¡¦s appropriateness of this study is appropriate, and also able to prove that, organizational commitment is the medium factor between the compensation system and employee performance.