The Effects of Compensation and Organizational Justice on Job Satisfaction: The Mediating Role of Employee Engagement

Abstract

This study examines the effects of compensation and organizational justice on job satisfaction and investigates the mediating role of employee engagement among Grab driver-partners in Sleman Regency, Indonesia. A quantitative explanatory design was employed using a survey of 120 respondents selected through purposive sampling. Data were analyzed using Partial Least Squares–Structural Equation Modeling (PLS-SEM). The measurement model demonstrated satisfactory convergent and discriminant validity and high construct reliability. The structural results indicate that compensation positively affects job satisfaction (β = 0.303, p < 0.001) and employee engagement (β = 0.410, p < 0.001), while organizational justice positively affects job satisfaction (β = 0.161, p < 0.001) and employee engagement (β = 0.348, p < 0.001). Employee engagement has the strongest direct effect on job satisfaction (β = 0.441, p < 0.001). Furthermore, employee engagement significantly mediates the effects of compensation (β = 0.181, p = 0.002) and organizational justice (β = 0.153, p = 0.001) on job satisfaction. The findings extend Equity Theory, Social Exchange Theory, and the Job Demands–Resources Model to the Indonesian gig-economy context and highlight employee engagement as a key mechanism linking economic and organizational resources to positive work outcomes.