Effect of pay-for-performance on performance: mediating role organisational justice
by Asim Talukdar; Pragya Mishra
J. for Global Business Advancement (JGBA), Vol. 15, No. 5, 2022

Abstract: Pay-for-performance (PFP) despite being a powerful and ubiquitous strategic compensation initiative, its effectiveness in enhancing individual and organisational performance is often not obvious. The interplay of several underlying factors affects PFP effectiveness. This study examined the role and effect of organisational justice focusing on the two continents namely, perceived distributive and procedural justice as intervening factors, on the PFP effectiveness in enhancing individual performance. The data of a sample size of 231 were analysed using partial least squares structural equation modelling (PLS-SEM). The findings showed that the relationship between PFP effectiveness and superior-rated performance is partially mediated by these two core constituents of organisational justice-perceived distributive and procedural justice. Further, procedural justice was found to mediate the relationship between PFP effectiveness and self-rated performance, though it was a partial mediation, distributive justice did not. These findings have significant theoretical and practical implications which have been discussed.

Online publication date: Tue, 13-Jun-2023

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