Remote Work and Employee Attitudes: The Role of Reward Allocation in European SMEs

Digital transformation and remote work continue to reshape the nature of work, yet the implications for salaries and promotions in SMEs continue to be poorly understood. This study investigates how reward allocation mediates the relationship between remote work and employee attitudes, addressing the organizational challenges of aligning human resource practices with digitalization work models in the European context based on the social exchange theory and data collected from n = 615 participants, primarily from SMEs, which were analyzed using PLS-SEM software and WarpPLS 7.0. The findings reveal that remote work not only strengthens workers’ engagement and satisfaction but also channels their efforts toward achieving outcomes and reward allocation, reducing the reliance on physical presence and visibility. Digital transformation enables SMEs to adopt more flexible and fairer HR practices, with remote work also contributing to organizational resilience, employee agility, and competitiveness. This research advances the theoretical understanding of HRM in the context of digital transformation, offering SMEs a guide to building a suitable reward system that promotes both individual well-being and sustainability.