The mediating effects of procedural justice on the relationship between performance-based remuneration management and job satisfaction

Abstract

In the era of fourth industrial revolution, remuneration management has become an important organizational strategy for achieving organizational objectives. The purpose of this study is to explore the influence of performance-based remuneration management on employee’s job satisfaction through the mediating role of procedural justice. A cross-sectional technique was employed to collect primary data from 232 employees of private higher educational institutions in Peninsular Malaysia who experienced the implementation of performance-based remuneration. The Partial Least Square Structural Equation Modelling (PLS-SEM) was used in the data analysis. The outcomes displayed three important findings: first, the relationship between management of performance-based remuneration and procedural justice was significant. Second, the relationship between management of performance-based remuneration, procedural justice and intrinsic job satisfaction was significant. Third, the relationship between management of performance-based remuneration, procedural justice and extrinsic job satisfaction was significant. Statistically, this result confirms that influence of management of performance-based remuneration on job satisfaction is indirectly affected by procedural justice in the studied organizations. This study provides empirical evidence on the importance of procedural justice in managing performance-based remuneration. It is an important input to enhancing employee’s job satisfaction in the organization. Further, the study concludes with a discussion on the contributions, limitations and suggestions for future research.