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TWO-WAY COMMUNICATION IN PAY SYSTEM AND JOB SATISFACTION: MEDIATING EFFECT OF FAIRNESS PERCEPTIONS

This study examines the mediating effect of fairness perceptions in the relationship between two-way communication in pay system and job satisfaction. Although the relationship between such variables has been generally investigated, the mediating effect of two specific types of fairness perceptions, namely procedural fairness and distributive fairness, has not been thoroughly discussed in organizational pay system research literature. Thus, this study was conducted to fulfil this gap. Self-report questionnaires were utilized to gather data from employees in Malaysian public research universities. The study is also novel in that it utilized SmartPLS to assess the psychometric of measurement scale and then test the research hypotheses. Findings from this study prove that the implementation of two-way pay communication between administrators and employees about pay system has strongly invoked employees’ perceptions of procedural fairness and distributive fairness. Consequently, this fairness perception may lead to a higher job satisfaction. Thus, this finding may be used as important guidelines by senior administrators to understand different paradigms of fairness perception concept and formulate fair pay systems for different job levels and structures to maintain and support their strategies and goals in times of global competition and unpredictable economic situation.