The Role of Organizational Trust in Mediating the Effect of Non-Financial Compensation and Organizational Justice on Employee Loyalty
Abstract
This study explores how non-financial compensation, organizational justice, and organizational trust influence employee loyalty. Employing a quantitative approach with an explanatory research design, the study involved a population of 93 employees, from which 89 valid responses were obtained and analyzed using Structural Equation Modeling–Partial Least Squares (SEM-PLS) via SmartPLS software. To enrich the analytical context, open-ended questions were also incorporated to capture respondents’ qualitative perceptions. The findings indicate that non-financial compensation and organizational justice significantly enhance organizational trust. Furthermore, all three key variables—non-financial compensation, organizational justice, and organizational trust—exert a direct and significant influence on employee loyalty. Organizational trust is also demonstrated to be a significant mediating variable in the relationship between both non-financial compensation and organizational justice with employee loyalty. The implications of this study underscore the importance of managerial strategies that balance non-financial compensation with the cultivation of trust and perceptions of fairness in the organization. Such an approach supports the development of long-term employee loyalty grounded in psychological and relational values.
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