September 10, 2025Behavioral SciencesOpen Access

The Effect of Leadership Styles and Relational Contracts on Compensation Effectiveness and Employee Performance

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Transformational leadership enhances perceptions of compensation system effectiveness, impacting employee performance.
Relational contracts foster intrinsic motivation and fairness perceptions, leading to more effective compensation systems.
Managerial performance evaluations influence employee productivity, particularly when compensation is viewed as effective.
Research stresses the significant role of leadership in shaping relational contracts and their organizational outcomes.

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Survey analysis reveals transformational leadership boosts perceptions of compensation systems and employee performance.

Rakic et al. (2025) studied this question.

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