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All Journal Journal of Economics and Public Health
Saputra, Mohamad Ilham
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Economics, Econometrics & Finance Education Public Health

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Optimizing Employee Performance through Compensation and Work Motivation: The Mediating Role of Job Satisfaction Saputra, Mohamad Ilham; Yuswono, Irawan
Journal of Economics and Public Health Vol 5 No 1 (2026): Journal of Economics and Public Health: March 2026
Publisher : Global Health Science Group

Show Abstract | Download Original | Original Source | Check in Google Scholar | DOI: 10.37287/jeph.v5i1.7632

Abstract

This study examines the effects of compensation and work motivation on employee performance, with job satisfaction as a mediating variable, in Kedai Minumku MSME in Semarang City. A quantitative causal approach was applied using a census sampling technique involving 102 employees. Data were collected through structured questionnaires and analyzed using Structural Equation Modeling Partial Least Squares (SEM-PLS). The results show that compensation and work motivation have positive and significant effects on job satisfaction and employee performance. Work motivation has a stronger influence on job satisfaction, indicating that intrinsic factors play a more dominant role in shaping employee attitudes. In addition, job satisfaction significantly affects employee performance and partially mediates the relationships between compensation and performance, as well as motivation and performance. These findings suggest that improving employee performance in MSMEs requires a balanced approach between financial compensation and motivational strategies. While compensation ensures fairness and stability, motivation and job satisfaction contribute more strongly to employee engagement and productivity. Therefore, MSME owners are encouraged to create a supportive work environment while maintaining fair compensation systems to achieve optimal performance.
Co-Authors Irawan Yuswono