Under the guidance of the national strategic policy of “Made in China 2025”, aiming at improving the high-quality development of manufacturing industry, this paper selects the data of A-share listed companies in manufacturing industry from 2012 to 2018 as samples and empirically examines the influence of employee compensation incentives and characteristics of knowledge & ability on the quality of internal control from the perspective of employees. The results show that the higher the compensation incentive level of employees, the better the quality of internal control. Compared with the economically developed regions in the east, the effect of the midwest is more obvious. The higher the knowledge and ability of employees, the better the quality of internal control. Furthermore, from the perspective of the five elements of internal control, employees’ compensation incentives and knowledge and ability characteristics play an important role in improving the control environment and information and communication. Compared with labor-intensive manufacturing enterprises, characteristics of knowledge and ability on the part of employees in capital-intensive and technology-intensive manufacturing enterprises play a more significant role in internal control.