Journal of Management and Social Sciences Volume.
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DOI: https://doi.
org/10.
55606/jimas.
Tersedia: https://journal-stiayappimakassar.
id/index.
php/Jimas Remote Work Has to Be Engaging: Why Compensation and Career Development Alone Are Not Enough to Drive Performance Heni Kesumayani1*.
Rita2 Sekolah Tinggi Ilmu Ekonomi Ganesha.
Indonesia Email: heni@stieganesha.
id 1*, rita@stieganesha.
*Corresponding author: heni@stieganesha.
Abstract.
Remote work has expanded rapidly in Indonesia and created new challenges for sustaining employee performance in digitally mediated work settings.
This study examines the role of employee engagement in mediating the effects of compensation and career development on the performance of remote workers.
quantitative approach was employed using survey data from 200 Indonesian remote workers, and the relationships among variables were analyzed through Partial Least Squares Structural Equation Modeling.
The results show that compensation and career development both have significant positive effects on employee engagement, while employee engagement has a strong positive effect on employee performance.
The direct effect of compensation on performance is not significant, indicating that its influence operates mainly through In contrast, career development affects performance both directly and indirectly through These findings indicate that employee engagement is a key mechanism linking organizational support to remote employee performance.
The study implies that organizations should not rely solely on financial rewards, but also provide clear career pathways, continuous learning opportunities, regular feedback, and meaningful recognition to strengthen engagement and improve performance in remote work environments.
Keywords: Career Development.
Compensation.
Employee Engagement.
Employee Performance.
Remote Work.
INTRODUCTION
The rapid expansion of remote work in Indonesia has transformed the countryAos labor market, particularly after the COVID-19 pandemic forced widespread adoption of work-fromhome arrangements.
What started as a temporary measure has become a structural feature of employment, with millions of Indonesian professionals now operating fully remotely across sectors such as technology, finance, education, and creative industries (Adindatarisa & Hendarman, 2025.
Hongdiyanto et al.
, 2.
IndonesiaAos unique contextAimarked by geographic dispersion across thousands of islands, uneven digital infrastructure, and a youthful workforceAiamplifies both the opportunities and challenges of remote arrangements.
While remote work promises greater flexibility and access to global opportunities, it also introduces persistent issues such as social isolation, blurred work-life boundaries, technostress, and difficulties in sustaining performance without physical oversight (Suhariadi et al.
, 2023.
Abiddin et al.
, 2.
Compensation and career development remain cornerstone human resource practices that organizations use to attract and motivate talent.
In the Indonesian remote-work setting, competitive salaries, benefits, and clear career progression pathways signal organizational commitment and reciprocity, addressing both financial needs and the desire for long-term growth amid limited face-to-face interaction (Adindatarisa & Hendarman, 2025.
Hongdiyanto Received: 20 Desember, 2025.
Revised: 25 Januari, 2026.
Accepted: 26 Februari, 2026.
Terbit: 28 Februari, 2026 Remote Work Has to Be Engaging: Why Compensation and Career Development Alone Are Not Enough to Drive Performance et al.
, 2.
Employee engagement, defined as the degree of vigor, dedication, and absorption employees feel toward their roles, has emerged as a critical psychological mechanism that translates these organizational investments into tangible performance outcomes.
Recent studies confirm that engaged remote workers in Indonesia demonstrate higher productivity, resilience, and innovation, yet the precise mediating pathways remain insufficiently examined in fully remote cohorts (Suhariadi et al.
, 2023.
Abiddin et al.
, 2.
Despite increasing scholarly attention to remote work globally, a notable gap exists in the Indonesian context.
Most prior research has focused on hybrid or general work-from-home models, often overlooking the specific mediation role of employee engagement among purely remote Indonesian workers (Adindatarisa & Hendarman, 2025.
Hongdiyanto et al.
, 2.
This omission is particularly urgent given IndonesiaAos position as one of Southeast AsiaAos largest digital economies, where remote talent retention directly influences national competitiveness and organizational sustainability in the post-pandemic era (Suhariadi et al.
, 2023.
Abiddin et , 2.
The present study addresses this void by investigating the mediating effect of employee engagement on the relationships between compensation, career development, and employee performance among 200 Indonesian remote workers.
Drawing on social exchange theory and the job demands-resources framework, it employs Partial Least Squares Structural Equation Modeling (PLS-SEM) to provide robust empirical evidence.
By clarifying these mechanisms, the research offers both theoretical advancement for emerging-market remote-work literature and practical strategies for Indonesian organizations striving to maintain high performance in distributed environments.
LITERATURE REVIEW
The rise of remote work in Indonesia has significantly reshaped the labor market, with 5 million professionals now working remotely across sectors like technology, finance, and education, making Indonesia the largest remote work economy in Southeast Asia (Putra & Sari, 2024.
Wijaya et al.
, 2.
While remote work offers flexibility, it also brings challenges such as digital fatigue, isolation, and reduced supervision, which can negatively impact employee performance (Suhariadi et al.
, 2023.
Abiddin et al.
, 2.
Compensation remains a crucial factor influencing employee attitudes in remote settings.
In Indonesia, competitive salaries, bonuses, and benefits serve as key indicators of organizational commitment, especially when physical presence is limited (Adindatarisa & Hendarman, 2025.
Hongdiyanto et al.
, 2.
Research shows that compensation satisfaction JIMAS - VOLUME.
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correlates with higher work motivation and lower turnover intention among remote workers (Wijaya et al.
, 2023.
Rahman et al.
, 2.
Similarly, career development opportunities, such as training programs and mentorship, are vital for remote employees' growth and autonomy, addressing the challenges of limited organizational visibility (Oktaviani et al.
, 2024.
Pramudito et al.
, 2.
Employee engagement, defined as vigor, dedication, and absorption (Schaufeli et al.
, is particularly crucial in remote work, where traditional oversight is limited (Ghani et , 2023.
Takahashi, 2.
In Indonesia, engaged remote workers demonstrate higher performance, creativity, and citizenship behaviors (Suhariadi et al.
, 2023.
Putra & Sari, 2.
Engagement is theorized to mediate the effects of compensation and career development on performance through social exchange processes, where employees reciprocate with greater effort when they perceive fair compensation and support (Hongdiyanto et al.
, 2025.
Rahman et al.
, 2.
Theoretically, this study draws on Social Exchange Theory (Blau, 1.
and the Job Demands-Resources (JD-R) model (Bakker & Demerouti, 2.
, where compensation and career development are key resources that foster engagement, ultimately driving performance in remote environments (Oktaviani et al.
, 2024.
Pramudito et al.
, 2.
Despite growing research, a gap remains in studies focusing specifically on remote workers in Indonesia.
Previous studies have primarily addressed hybrid work models, with limited exploration of engagement's mediating role in remote contexts (Adindatarisa & Hendarman, 2025.
Wijaya et al.
, 2.
This study fills that gap by providing empirical evidence from 200 Indonesian remote workers, contributing both to theory and practice in optimizing performance in remote work environments.
RESEARCH METHOD
This study employed a quantitative, cross-sectional survey design to examine the mediating role of employee engagement in the relationships between compensation, career development, and employee performance among Indonesian remote workers.
The research was conducted in accordance with ethical guidelines and received approval from the institutional review board of the authorsAo affiliated university prior to data collection.
Participants and Sampling Procedure The target population consisted of full-time remote workers in Indonesia.
A total of 200 valid responses were collected using a non-probability convenience sampling technique combined with snowball sampling.
The survey was created using Google Forms and distributed Remote Work Has to Be Engaging: Why Compensation and Career Development Alone Are Not Enough to Drive Performance through professional networks on LinkedIn between January and March 2025.
Inclusion criteria required participants to .
be currently employed full-time in a remote capacity .
o office attendanc.
, .
have at least one year of remote work experience, and .
reside in Indonesia.
The final sample comprised 58% male and 42% female participants, with an average age of 34.
2 years (SD = 6.
and an average organizational tenure of 3.
8 years (SD = 2.
Participants represented diverse industries including technology .
%), finance .
%), education .
%), and creative services .
%).
Instruments All variables were measured using multi-item, 5-point Likert scales .
= Strongly Disagree to 5 = Strongly Agre.
Compensation (X.
was assessed with 10 items adapted from established scales focusing on salary satisfaction, benefits, bonuses, and fairness perceptions .
AuI am satisfied with my current salary and benefits packageA.
Career Development (X.
was measured with 10 items covering training opportunities, promotion prospects, and professional growth .
AuMy organization provides adequate opportunities for career advancementA.
Employee Engagement (M) was measured with 10 items based on the Utrecht Work Engagement Scale (Schaufeli et al.
, 2.
, capturing vigor, dedication, and .
Employee Performance (Y) was assessed with 10 items evaluating task performance, goal achievement, and quality of work .
AuI consistently meet or exceed my work targetsA.
Composite scores for engagement and performance were pre-computed and provided in the dataset.
All scales demonstrated acceptable internal consistency in the pilot test (CronbachAos > 0.
Data Collection and Analysis Data were collected anonymously to reduce social desirability bias, with participants informed about the studyAos purpose, voluntary nature, and their right to withdraw.
The final dataset was cleaned for missing values and outliers before analysis.
Partial Least Squares Structural Equation Modeling (PLS-SEM) was selected due to its appropriateness for predictive research and its robustness with smaller samples and non-normal data (Hair et al.
The analysis followed a two-stage approach: .
evaluating the measurement model .
ndicator loadings.
CronbachAos , composite reliability.
AVE.
HTMT for discriminant validit.
, and .
evaluating the structural model .
ath coefficients.
RA, fA, and bootstrapping with 5,000 resamples using BCa 95% confidence interval.
SmartPLS 4 software was used for all analyses, and common method bias was assessed, showing no significant concerns.
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FINDINGS AND DUSCUSSION
This section presents the results of the PLS-SEM analysis conducted on data from 200 Indonesian remote workers.
The analysis followed the two-stage approach recommended by Hair et al.
: first, the measurement model was evaluated, followed by the structural model and mediation analysis.
Bootstrapping with 5,000 resamples and bias-corrected accelerated (BC.
95% confidence intervals was used to test significance.
Measurement Model Assessment The measurement model was evaluated prior to the structural model following Hair et al.
All constructs were modeled as reflective.
Indicator loadings, internal consistency, convergent validity, and discriminant validity were assessed.
All outer loadings exceeded the recommended threshold of 0.
708, except for two items in Compensation and one in Career Development that were marginally below but retained after content validity review .
ee Table .
CronbachAos , composite reliability (CR), and average variance extracted (AVE) for all constructs met or exceeded the established cut-offs ( Ou 0.
CR 0.
70Ae0.
AVE Ou For Employee Engagement and Employee Performance, the pre-computed composite scores resulted in perfect reliability ( = 1.
CR = 1.
AVE = 1.
Discriminant validity was confirmed using both the HeterotraitAeMonotrait (HTMT) ratio .
ll values < 0.
and the FornellAeLarcker criterion .
quare root of AVE exceeded all inter-construct Table 1.
Indicator Loadings.
Reliability, and Validity.
Construct Compensation (X.
Career Development (X.
Employee Engagement (M) Employee Performance (Y) Item
X1_Q1
X1_Q2
X1_Q3
X1_Q4
X1_Q5
X1_Q6
X1_Q7
X1_Q8
X1_Q9
X1_Q10
X2_Q1
X2_Q2
X2_Q3
X2_Q4
X2_Q5
X2_Q6
X2_Q7
X2_Q8
X2_Q9
X2_Q10
M_Q1AeM_Q10 Y_Q1AeY_Q10 Outer Loading CronbachAos AVE Remote Work Has to Be Engaging: Why Compensation and Career Development Alone Are Not Enough to Drive Performance Note.
Loadings Ou 0.
708 are retained.
All HTMT ratios < 0.
85 and OoAVE > inter-construct correlations (Fornell-Larcker criterion satisfie.
The measurement model is therefore valid and reliable, allowing progression to the structural model evaluation.
Structural Model Assessment Following the confirmation of a valid and reliable measurement model, the structural model was evaluated using the criteria outlined by Hair et al.
The assessment included collinearity, explanatory power (RA), effect size .
A), and predictive relevance.
No collinearity issues were detected, with all inner variance inflation factor (VIF) values 1 .
ell under the conservative threshold of 3.
The model demonstrated substantial explanatory power: employee engagement (M) had an RA value of 0.
512, while employee performance (Y) had an RA value of 0.
These values indicate that the model explains 51.
of the variance in engagement and 57.
8% of the variance in performance among Indonesian remote workers.
Effect sizes .
A) further supported the practical significance of the relationships.
The path from Compensation to Engagement showed a medium effect .
A = 0.
Career Development to Engagement showed a medium-to-large effect .
A = 0.
, and Engagement to Performance showed a large effect .
A = 0.
The direct paths from the independent variables to performance had small effect sizes (Compensation Ie Performance: fA = 0.
Career Development Ie Performance: fA = 0.
Predictive relevance was assessed using the blindfolding procedure .
mission distance = The QA values were positive and above zero for both endogenous constructs (QA_M = 0.
QA_Y = 0.
, confirming the modelAos predictive capability.
Overall, the structural model meets all recommended quality criteria for PLS-SEM and is suitable for hypothesis testing and mediation analysis.
Hypothesis Testing and Mediation Analysis The results of the hypothesis testing and mediation analysis are summarized in Table 2.
All direct hypotheses, except for the direct effect of Compensation on Performance, were In particular, the relationship between Employee Engagement and Performance was significant, as expected, with a strong positive effect ( = 0.
623, p < 0.
, confirming Hypothesis 3.
For Compensation and Career Development, both had significant positive effects on Employee Engagement, supporting Hypotheses 1 and 2.
The effect of Compensation on Employee Engagement was moderate ( = 0.
412, p < 0.
, while Career Development had a JIMAS - VOLUME.
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slightly stronger effect ( = 0.
488, p < 0.
These findings underscore the importance of both compensation and career development in engaging remote workers.
However, the direct effect of Compensation on Employee Performance was not significant ( = 0.
089, p = 0.
, indicating that Compensation does not directly impact Performance without the mediation of Employee Engagement.
This suggests that Employee Engagement plays a crucial role in translating compensation into improved performance, supporting the idea that compensation influences performance indirectly through engagement.
In contrast.
Career Development showed a significant direct effect on Employee Performance ( = 0.
125, p = 0.
, supporting Hypothesis 4.
This finding suggests that career development efforts directly contribute to improved employee performance, in addition to its effect on engagement.
Mediation Analysis Both Compensation and Career Development exhibited significant indirect effects on Employee Performance through Employee Engagement, confirming Hypotheses 4 and 5.
Specifically.
Compensation had a partial indirect effect on performance ( = 0.
257, p < 0.
and Career Development had a slightly larger indirect effect ( = 0.
304, p < 0.
These indirect effects were further tested using Variance Accounted For (VAF) to assess the strength of mediation.
The VAF for the Compensation path was 74.
3%, and for the Career Development path, it was 71.
According to the classification suggested by Zhao et al.
, these results indicate partial mediation in both cases.
The mediation analysis also revealed that Employee Engagement acts as a partial mediator in both paths.
For Compensation, the mediation is classified as partial-only mediation because the indirect effect was significant, while the direct effect was not.
For Career Development, the mediation is complementary partial mediation, as both the direct and indirect effects were significant, but the indirect effect accounted for a larger proportion of the total Table 2.
Structural Model and Mediation Results.
Path Compensation Ie Employee Engagement (H.
Career Development Ie Employee Engagement (H.
Employee Engagement Ie Performance (H.
Direct: Compensation Ie Performance Direct: Career Development Ie Performance Indirect: Compensation Ie Engagement Ie Performance (H.
Indirect: Career Development Ie Engagement Ie Performance (H.
p-value <0.
<0.
fA Result 204 Supported 285 Supported <0.
<0.
Ae Supported Not significant Supported Indirect-only mediation <0.
Ae Complementary partial Remote Work Has to Be Engaging: Why Compensation and Career Development Alone Are Not Enough to Drive Performance Note.
Bootstrapping with 5,000 resamples (BCa 95% CI).
Mediation classification follows Zhao et al.
VAF values were 74.
3% for the Compensation path and 71.
0% for the Career Development path.
Figure 1.
Bootstrapped PLS-SEM Structural Model of Compensation.
Career Development.
Employee Engagement, and Employee Performance.
= 200, 5,000 resamples.
BCa 95% CI).
Note.
Solid arrows represent significant paths.
The nonsignificant path from Compensation Ie Performance is shown with a dotted arrow.
**p < 0.
001, p < 0.
05, ns = not Discussion This study aimed to examine how Employee Engagement mediates the relationship between Compensation.
Career Development, and Employee Performance among remote workers in Indonesia.
The results from the PLS-SEM analysis provided significant insights into the complex dynamics between these variables.
The findings offer several contributions to the literature on employee engagement, compensation, and career development in the context of remote work.
The Impact of Compensation on Employee Engagement The positive and significant effect of Compensation on Employee Engagement ( = 412, p < 0.
aligns with prior research emphasizing that financial rewards, benefits, and fair compensation systems can foster employee engagement, especially in remote work settings where traditional forms of motivation and recognition may be less prevalent (Jiang et al.
, 2020.
Alfes et al.
, 2.
In the context of remote work, compensation has been shown to be a key factor in maintaining employee satisfaction and motivation, as it provides employees with tangible recognition for their work.
Studies by Alfes et al.
and Jiang et al.
highlight that remote employees are more likely to feel connected and engaged when they perceive their compensation as fair and competitive within their industry.
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The Role of Career Development in Employee Engagement Similarly.
Career Development was found to have a significant and positive effect on Employee Engagement ( = 0.
488, p < 0.
, supporting the argument that employees who perceive opportunities for growth and development in their roles are more likely to be engaged with their work (Ng & Lucianetti, 2020.
Kular et al.
, 2.
These findings resonate with the work of Ng and Lucianetti .
, who demonstrated that employees who engage in continuous professional development and see clear career progression are more committed to their Furthermore.
Kular et al.
argue that career development is an essential motivator for fostering an engaged workforce, particularly in remote settings where the lack of physical interaction might otherwise decrease engagement levels.
Employee Engagement as a Mediator Between Compensation and Performance One of the most notable findings of this study is the significant indirect effect of Compensation on Employee Performance through Employee Engagement ( = 0.
257, p < This suggests that Employee Engagement plays a crucial role in enhancing employee performance by acting as a mediator between compensation and performance.
Previous studies confirm that employees who feel more engaged with their work are more likely to perform at higher levels (Saks, 2020.
Christian et al.
, 2.
Saks .
found that employee engagement acts as a bridge, translating compensation packages into tangible outcomes in terms of job performance and organizational loyalty.
Similarly.
Christian et al.
emphasize that engagement serves as a driver of performance, especially in environments where intrinsic and extrinsic motivators like compensation are combined to promote a high-performance culture.
Employee Engagement as a Mediator Between Career Development and Performance The mediation of Employee Engagement in the relationship between Career Development and Employee Performance was also found to be significant ( = 0.
304, p < This finding is consistent with existing literature that underscores the importance of engagement in translating career development opportunities into improved performance.
Klein et al.
and Gong et al.
both support the notion that career development initiatives enhance employee performance through increased engagement.
Klein et al.
specifically note that when employees are engaged through career development initiatives, they are more motivated to contribute to organizational success.
Furthermore.
Gong et al.
argue that career growth opportunities foster a sense of purpose, which enhances work performance, particularly in remote work settings where direct supervision is minimal.
Remote Work Has to Be Engaging: Why Compensation and Career Development Alone Are Not Enough to Drive Performance The Non-Significant Direct Effect of Compensation on Performance Despite the significant indirect effect of Compensation on Employee Performance through Employee Engagement, the direct effect of Compensation on Employee Performance was not significant ( = 0.
089, p = 0.
This aligns with studies that suggest Employee Engagement mediates the relationship between compensation and performance, indicating that compensation alone may not be sufficient to drive performance without engagement (Tarique et al.
, 2021.
DeLisi et al.
, 2.
The absence of a direct effect may be due to the complex nature of remote work, where employees' intrinsic motivations, such as engagement, play a larger role in performance outcomes than external rewards alone.
As Tarique et al.
suggest, while compensation is an important motivator, its effects on performance are amplified when employees are highly engaged in their work.
Implications for Practice The findings of this study have several practical implications for organizations, particularly those employing remote workers.
First, the results underscore the importance of offering competitive compensation packages to foster employee engagement.
However, it is clear that compensation alone is not enough to drive performance.
organizations must also provide opportunities for career development and growth.
This highlights the need for a comprehensive approach to employee motivation, combining both financial rewards and career development initiatives to boost engagement and, ultimately, performance.
For remote organizations, where direct supervision and face-to-face interactions are limited, it is especially critical to foster employee engagement through both Compensation and Career Development.
This study suggests that remote organizations should prioritize strategies that enhance employee engagement to maximize the potential benefits of their compensation and career development programs.
CONCLUSION AND RECOMMENDATION
This study highlights the crucial role of Employee Engagement in mediating the effects of Compensation and Career Development on Employee Performance among remote workers in Indonesia.
To foster engagement, organizations can take specific actions such as offering performance-based bonuses, equity-based incentives, and ensuring transparent pay structures to enhance compensation satisfaction.
For career development, implementing personalized development plans, offering mentorship programs, and providing access to online learning platforms .
LinkedIn Learning.
Courser.
can support growth opportunities.
Additionally, organizations should encourage regular one-on-one check-ins between employees and JIMAS - VOLUME.
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managers, create virtual recognition programs, and establish employee wellness initiatives to promote work-life balance and mental well-being.
These actions can significantly enhance engagement and performance in remote work settings.
REFERENCES