The Impact of Compensation Systems on Innovative Work Behavior: The Mediating Role of Work Engagement

Abstract

Employee creativity is crucial for attaining long-term success and adaptability in the fast-paced organizational environment of today. With an emphasis on the mediating function of work engagement, this study investigates how the compensation system affects innovative work behavior (IWB). The study examines how monetary and non-monetary compensation affects workers' intrinsic motivation, engagement, and eventually their creative behaviors. It is based on the Self-Determination Theory. A structured questionnaire was used to gather data from 109 academic and administrative staff members at a few chosen universities in Rawalpindi and Islamabad as part of a quantitative research design. Structural equation analysis was used to examine the data.Modeling (SEM) through Jamovi to evaluate the study variables' direct and indirect relationships. The findings show that a well-designed pay plan greatly raises employee engagement, which in turn encourages creative work practices. Additionally, it was discovered that the relationship between pay and IWB was partially mediated by work engagement. These results offer useful information to HR specialists and university administration who want to create pay plans that encourage creativity and employee engagement.