This study investigated the mediating role of Salary Satisfaction in the relationship between the Compensation System and Job Satisfaction among Palestinian public sector employees, refining the objective to underline the mechanism relating compensation perceptions and attitudes toward work. Partial Least Squares Structural Equation Modeling (PLS-SEM) was used as part of a mixed-methods strategy. A comprehensive literature review guided the conceptual framework, compensation dimensions, and survey instrument, alongside survey data from 136 public sector personnel. The results show that all six compensation dimensions—equity, justice, payment consistency, work perks, structure, and wage increases—are strong positive predictors of salary satisfaction. Salary Satisfaction was shown to be a significant driver of Job Satisfaction (β = 0.515, p < 0.001) and entirely mediated the association between the six pay components and Job Satisfaction. The structural model, using Salary Satisfaction and six pay characteristics as predictors, explains 68.3% of the variation in Job Satisfaction (R 2 = 0.683). These findings provide strong empirical evidence that employee perceptions of pay are the fundamental psychological mechanism by which compensation policies lead to favorable workplace attitudes. The paper closes with strategic suggestions for HRM reform in developing public sector environments, highlighting the need to implement equal and transparent compensation systems to boost morale and organizational performance.
KeywordsHuman Resource ManagementJob SatisfactionSalary SatisfactionCompensation SystemPublic SectorMediation Model
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