How to increase intrinsically motivated employees work engagement through compensation?

Our aim is to explore how employees’ perceptions about their compensation are connected to the two “core” dimensions of work engagement, i.e. vigor and dedication. Especial attention is given to the role of pay satisfaction in work engagement. We hypothesize that pay administration satisfaction mediates the relationship between other elements of pay satisfaction and work engagement. Regression results indicated that pay administration satisfaction fully mediated the relationship between other pay satisfaction elements and vigor and dedication. Our findings contribute to the understudied area of compensation systems and employee engagement. The results indicate that the influence of pay level, pay raise, and benefits satisfaction on vigor and dedication are mediated by pay administration satisfaction.