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Ruhmawati
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Decision Sciences, Operations Research & Management Economics, Econometrics & Finance Social Sciences

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EFFECT OF COMPENSATION ON EMPLOYEE MENTAL HEALTH THROUGH WORK STRESS IN MICROFINANCE INSTITUTIONS Ruhmawati; Rahayu Puji Suci; Hanif Rani Iswari
Bulletin of Management and Business Vol. 7 No. 1 (2026): March 2026
Publisher : Program Studi Manajemen, Fakultas Ekonomi dan Bisnis, Universitas Widya Gama

Show Abstract | Download Original | Original Source | Check in Google Scholar | DOI: 10.31328/bmb.v7i1.457

Abstract

This study examines how compensation influences employee mental health through work stress in microfinance institutions. The research was conducted at PNM Mekaar Arjasa Unit, Kangean Island, involving 43 employees using a census approach. Data were collected through structured questionnaires and analyzed using Partial Least Squares–Structural Equation Modeling (PLS-SEM). The results show that compensation does not directly affect mental health but indirectly influences it through work stress. Fair and adequate compensation reduces work stress, which improves employees’ psychological well-being. Conversely, imbalanced compensation increases emotional pressure and weakens mental health. These findings confirm that work stress acts as a mediating mechanism linking compensation and mental health. The study contributes to the Job Demand–Resources framework by emphasizing the psychological role of compensation in high-pressure microfinance environments. Practically, the findings suggest that compensation policies should be integrated with stress management strategies to maintain employee well-being and organizational stability
Co-Authors Hanif Rani Iswari Rahayu Puji Suci