THE EFFECT OF COMPENSATION AND WORK MOTIVATION ON EMPLOYEE PERFORMANCE: THE MEDIATING ROLE OF JOB SATISFACTION (A CASE STUDY AT PERUMDA DELTA TIRTA SIDOARJO)

Abstract

This study analyses the effect of compensation and work motivation on employees’ performance with work satisfaction as a mediating variable. Furthermore, the study applies quantitatively. The instrument in the data collection technique used was a questionnaire. The questionnaires were distributed to 180 respondents as samples. Moreover, the data analysis technique used was Partial Least Square, Structural Equation Modelling (PLS-SEM).

The result shows that both compensation and work motivation have a positive and significant effect on employees’ performance, either directly or through work satisfaction as a mediating variable. Likewise, compensation as well as work motivation have a significant effect on work satisfaction. Therefore, these findings strengthen organizational behavior theory that states external and internal factors such as internal and external factors have an important role in increasing employees’ satisfaction and performance.