Relationship Between Participation in Pay Systems and Job Commitment: Does Interactional Justice Act as a Mediating Variable?

Abstract

Compensation management literature highlights that employees who actively participate in pay systems may have increased job satisfaction. A careful observation of such relationships shows that employee participation in pay systems indirectly affect job commitment via interactional justice. The nature of this relationship is less emphasized in compensation management models. The evidence is used as a foundation to develop conceptual schema for this study. A survey research method was used to gather 917 usable questionnaires from employees who have worked in Malaysian Institutions of Higher Education (MIHE). Outcomes of testing mediating model using a stepwise regression analysis showed that the inclusion of interactional justice in the analysis had increased the effect of participation in pay system features (i.e., participation in pay allocation and participation in pay procedure) on job commitment. Further, this result confirms that interactional justice does act as a full mediating variable in the compensation system models of the organizational sector sample. In addition, the implications of this study to compensation theory and practice, methodological and conceptual limitations, and directions for future research are discussed.