Equitable and Sustainable HRM in the AI Era: The Mediating Impact of Financial Compensation on Employee Performance under Fair and Standardized HR Practices.

Abstract

This study examines the influence of Employer Fair Dealing and Employee Uniform Policy on Employee Performance, with Financial Compensation as a mediating mechanism, in the context of Green Human Resource Management (GHRM). Using PLS-SEM structural equation modeling, the findings reveal that fair dealing significantly enhances both remuneration and performance, while uniform policies indirectly impact performance through compensation. The results confirm that financial compensation serves as a critical mediator, translating fair and standardized HR practices into tangible productivity gains. The model demonstrates strong explanatory power, with R² = 0.769 for remuneration and R² = 0.676 for performance. Theoretically, the study extends Social Exchange Theory and Equity Theory, highlighting how AI governance within GHRM can operationalize fairness, transparency, and sustainability in HR processes. Practically, organizations can leverage AI-driven HR systems to ensure fairness and equitable compensation, reinforce policy compliance, and enhance employee outcomes, aligning workforce performance with organizational and environmental sustainability goals.