The Mediating Effects of Procedural Justice on the Relationship between Performance-based Remuneration Management and Job Satisfaction

Mohd Ridwan Abd Razak, Azman Ismail

Abstract


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.

Keywords: Management of performance-based remuneration; procedural justice; job satisfaction; intrinsic job satisfaction; extrinsic job satisfaction

ABSTRAK

Dalam era revolusi perindustrian keempat, pengurusan saraan telah menjadi strategi penting organisasi untuk mencapai objektif organisasi. Tujuan kajian ini adalah untuk meneroka pengaruh pengurusan saraan berdasarkan prestasi ke atas kepuasan kerja pekerja melalui perantaraan peranan keadilan prosedur. Teknik keratan rentas telah digunakan untuk mengumpul data utama daripada 232 pekerja di institusi pendidikan tinggi swasta di semenanjung Malaysia yang telah mengalami pelaksanaan saraan berdasarkan prestasi. Partial Least Square Structural Equation Modelling (PLS-SEM) telah digunakan dalam menganalisa data. Dapatan kajian menunjukkan tiga penemuan penting: pertama, hubungan antara pengurusan saraan berdasarkan prestasi dan keadilan prosedur adalah signifikan. Kedua, hubungan antara pengurusan saraan berdasarkan prestasi, keadilan prosedur dan kepuasan kerja intrinsik adalah signifikan. Ketiga, hubungan antara pengurusan saraan berdasarkan prestasi, keadilan prosedur dan kepuasan kerja ekstrinsik adalah signifikan. Secara statistik, keputusan ini mengesahkan bahawa pengaruh pengurusan saraan berdasarkan prestasi terhadap kepuasan kerja secara tidak langsung dipengaruhi oleh keadilan prosedur dalam organisasi kajian. Kajian ini memberikan bukti empirikal mengenai kepentingan keadilan prosedur dalam mengurus saraan berdasarkan prestasi. Ini merupakan input penting untuk meningkatkan kepuasan kerja pekerja dalam organisasi. Selanjutnya, kajian ini diakhiri dengan perbincangan mengenai sumbangan, batasan dan cadangan untuk penyelidikan di masa depan.

Kata kunci: Pengurusan saraan berdasarkan prestasi; keadilan prosedur; kepuasan kerja; kepuasan kerja intrinsik; kepuasan kerja ekstrinsik


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