Performance-based Reward Administration Enhancing Employees’ Feelings of Interactional Justice

Abstract

Abstract:The

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

“…Communication from organization to employees refers to openness and secrecy policies used by an organization to decide on the amount of remuneration and information that will be shared with their employees (e.g., pay ranges, pay raises, pay averages, and/or individual pay levels). Further, communication from employees to the organization refers to the process where pay administrators (e.g., human resource manager) seek information about remuneration packages from employees (e.g., remuneration expectations and preferences) (Azman & Mohd Ridwan 2017a, 2017bRahim et al 2016). The capability of managers to practice open and honest communication in administering organization's remuneration systems will divulge the value of the remuneration package quantitatively and qualitatively; avoid misunderstanding about remuneration and performance relationships; allow a voice in the system, as well as improve the sense of equity and fair treatment within the system.…”

“…Outcomes of this assessment process will be used by managers to determine remuneration based on actual employee's performance or productivity. The ability of manager to fairly implement performance evaluation, connecting the outcomes of performance evaluation with employee's remuneration, adequately determine the type, level and/or amount of remuneration according to employee's actual performance and expectation, will strongly retain and motivate them to continuously support their organizational strategic vision and missions (Akhtar & Khattak 2013;Azman & Mohd Ridwan 2017b;Azman, Ridwan & Zalina 2016;Rabiul et al 2017).…”

“…This situation will strongly attract, retain and motivate employees to support the ultimate objectives of organizational remuneration system: efficiency (i.e., improving performance, quality, customers, and labor costs), equity (i.e., fair pay treatment for employees through recognition of employee contributions and employees' needs), compliance with laws and regulations, and ethics (Milkovich, Newman & Gerhart 2014;Newman et al 2017). Thus, it may lead to maintaining and enhancing organizational performance and competitiveness in a global marketplace (Azman & Mohd Ridwan 2017a, 2017bRozila & Scott 2015).…”

“…According to many scholars, management of performance-based remuneration is usually described as a systematic method used by organization's reward administrators to determine worker's remuneration based on actual worker's performance while performing daily tasks. This strategy is to achieve worker and organizational objectives (Azman, Fuad & Aimi 2015;Azman & Mohd Ridwan 2017b;Xavier 2014). The ability of managers to implement proper guidelines in distributing the type, level and/or amount of remunerations according to performance (e.g., merit, knowledge, competency and/or productivity) will strongly evoke employees' sense of procedural justice.…”

“…Many scholars debate that this condition may be caused by several reasons: first, numerous earlier research have much described the features of performance-based remuneration, such as conceptual definitions, types, purposes and advantages of the remuneration systems in Western and Asian organizational settings (Azman & Mohd Ridwan 2016, 2017bCastro et al 2016). Second, many of previous studies have utilized simple correlation and variance test techniques to assess two types of relationships: 1) connection between employees' attitudes based on different personal and service backgrounds with specific types of management of performance-based 87 The Mediating Effects of Procedural Justice on the Relationship remuneration (e.g., pay increases and bonuses types), 2) association between particular types of management of performance-based remuneration and specific employee attitudes (e.g., satisfaction and fairness), and 3) correlation between performance-based remuneration as a single or multidimensional construct with particular employee behavior (e.g., job satisfaction, organizational commitment and turnover).…”