Optimizing Employee Performance through Compensation and Work Motivation: The Mediating Role of Job Satisfaction
Keywords:
compensation, job satisfaction, motivation, MSMEs, performance
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.
References
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Ondeng, M., & Rahman, A. (2025). Likert scale application in research. Journal of Social Science Methods, 7(2), 55–64.
Pramesti, D., & Yuswono, T. (2025). Mediation models in HR research. Journal of Behavioral Science, 12(1), 88–99.
Rahman, F., Hidayat, T., & Putra, D. (2025). SEM-PLS in business research. Journal of Data Analysis, 9(1), 22–34.
Rosalia, D., Santoso, B., & Wijaya, H. (2020). Differences between SMEs and large firms. Journal of Business Comparison, 4(1), 15–25.
Saaidin, M. (2024). Employee performance in beverage MSMEs. Journal of Service Industry, 6(2), 78–85.
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Seku, R., & Andriyani, D. (2023). Measuring employee performance. Journal of Performance Management, 8(2), 65–74.
Silitonga, H., & Faddila, N. (2023). Employees as research units. Journal of HR Research, 7(1), 44–52.
Sofyani, H., & Survei, M. (2025). PLS-SEM analysis techniques. Journal of Quantitative Research, 11(1), 90–102.
Srivastava, R., & Agarwal, P. (2024). Application of Herzberg theory in SMEs. International Journal of HR Studies, 14(2), 120–135.
Sugiarto, D., & Suryani, T. (2022). Motivation and organizational commitment. Journal of Business Psychology, 6(3), 101–110.
Susanto, E., Wibisono, A., & Lestari, D. (2024). Causal research design in management studies. Journal of Research Design, 5(2), 33–42.
Urban, B. (2022). MSME competitiveness and sustainability. Journal of Entrepreneurship, 31(1), 1–14.
Wahyuni, S., Dewi, L., & Rahmawati, A. (2022). HRM research in MSMEs. Journal of Small Business Research, 10(2), 55–66.
Waruwu, M., Simanjuntak, R., & Sitorus, H. (2025). Quantitative causal research approach. Journal of Scientific Research, 12(1), 77–88.
Wiyoga, H., Santoso, B., & Rahmawati, L. (2025). Compensation and job satisfaction in MSMEs. International Journal of Economics and Business Research, 12(2), 89–101.
Yuiandini, P., Lestari, M., & Putra, R. (2023). HR practices in small enterprises. Journal of SME Studies, 6(1), 23–34.
Zehao, L. (2024). Job satisfaction and employee perception. Journal of Organizational Psychology, 19(1), 55–67.
Alfawaire, F., & Atan, T. (2021). Human capital and sustainable competitive advantage. International Journal of Innovation Management, 25(4), 1–15.
Alejandro, P., Gomez, R., & Luis, M. (2025). Revisiting Herzberg’s theory in modern organizations. Journal of Organizational Psychology, 12(1), 33–45.
Alie, M. (2025). The role of MSMEs in economic development and employment. Journal of Economic Development Studies, 14(1), 55–66.
Amindrawati, N., Karman, A., & Putri, R. (2025). Strategic HR practices in MSMEs. Journal of Small Business Management, 11(2), 120–134.
Amrullah, F., Pramesti, D., & Yuswono, T. (2025). Mediation role of job satisfaction in HRM research. Journal of Management Research, 13(1), 77–89.
Andriani, D., Putra, A., & Wijaya, H. (2025). Mediation analysis in SEM-PLS models. Journal of Applied Statistics, 10(2), 101–110.
Annur, C., Setiawan, B., & Hidayat, R. (2025). Growth of beverage MSMEs in urban areas. Journal of Urban Economics, 7(1), 45–58.
Arafat, Y., & Darmawati, S. (2021). Observation as a data collection method in organizational research. Journal of Qualitative Methods, 5(2), 66–74.
Astuti, R. (2023). Service quality and customer satisfaction in beverage MSMEs. Journal of Marketing Practice, 8(1), 34–42.
Balbino, J. (2023). Motivation and job satisfaction: Revisiting Herzberg. International Journal of Psychology, 18(2), 99–108.
Bikefe, G., & Daniel, K. (2022). MSMEs competition and performance challenges. Journal of Business Economics, 6(3), 73–84.
Choiri, M. (2025). Census sampling in small population research. Journal of Research Methods, 9(1), 21–30.
Dahman, A., & Kunci, R. (2023). Work motivation and its impact on employee performance in SMEs sector. International Journal of Management Research, 8(1), 45–53.
Dharmajaya, I., Nugroho, T., & Saputra, A. (2023). MSME regulation and economic policy. Journal of Public Policy, 10(3), 112–124.
Febrianto, D., & Siroj, A. (2024). Secondary data in academic research. Journal of Research Development, 6(2), 55–63.
Ferlia, R., Hasan, M., & Dewi, S. (2022). Sampling techniques in management research. Journal of Social Research, 7(1), 40–52.
Francis, L. (2023). Two-Factor Theory in contemporary organizations. Journal of Management Theory, 15(2), 88–99.
Giovanni, A., & Ie, M. (2022). Job satisfaction and employee attitudes. Journal of Organizational Behavior, 11(3), 101–112.
Harsono, B., Rahman, A., & Yusuf, M. (2025). MSMEs and local economic resilience. Journal of Regional Development, 13(2), 89–101.
Herzberg, F. (1968). One more time: How do you motivate employees? Harvard Business Review, 46(1), 53–62.
Idrus, M., Hakim, L., & Sari, P. (2024). Globalization and digital transformation in business. Journal of Global Business, 12(1), 1–12.
Jabnabillah, F., & Fahlevi, R. (2023). Questionnaire design in quantitative research. Journal of Research Instruments, 5(1), 22–30.
Junaedi, A., & Wahab, R. (2023). Hypothesis testing using SEM-PLS. Journal of Statistical Analysis, 8(2), 75–84.
Kartikaningrum, D. (2025). HR priorities in MSMEs. Journal of Entrepreneurship Studies, 9(2), 66–77.
Katabalo, P., & Mwita, K. (2024). Compensation fairness and employee satisfaction. Journal of HR Studies, 14(1), 55–64.
Katolik, S., Prasetyo, D., & Lestari, N. (2023). Compensation and job dissatisfaction. Journal of Workplace Studies, 6(2), 88–96.
Kayoe, R. (2023). Job satisfaction challenges in SMEs. Journal of Management Issues, 7(1), 33–41.
Karman, A., Yusuf, R., & Hidayah, N. (2022). HR strategies in small businesses. Journal of Business Management, 10(1), 45–54.
Latif, M., Sari, N., & Pratama, A. (2025). The influence of job satisfaction on employee performance. Journal of Human Resource Studies, 10(1), 67–78.
Ma, Q. (2021). Compensation systems and employee behavior. International Journal of HRM, 32(5), 1021–1035.
Maria, S. (2022). MSME competitiveness strategies. Journal of Business Development, 5(3), 120–130.
Nawangsari, L., Putri, D., & Anwar, H. (2023). Compensation practices in MSMEs. Journal of Applied Management, 11(2), 99–108.
Nurdiansyah, A., Putra, H., & Sari, D. (2020). HRM in large organizations. Journal of Industrial Management, 6(1), 50–60.
Nuriman, H. (2021). Work motivation and productivity. Journal of Organizational Studies, 9(3), 140–150.
Ondeng, M., & Rahman, A. (2025). Likert scale application in research. Journal of Social Science Methods, 7(2), 55–64.
Pramesti, D., & Yuswono, T. (2025). Mediation models in HR research. Journal of Behavioral Science, 12(1), 88–99.
Rahman, F., Hidayat, T., & Putra, D. (2025). SEM-PLS in business research. Journal of Data Analysis, 9(1), 22–34.
Rosalia, D., Santoso, B., & Wijaya, H. (2020). Differences between SMEs and large firms. Journal of Business Comparison, 4(1), 15–25.
Saaidin, M. (2024). Employee performance in beverage MSMEs. Journal of Service Industry, 6(2), 78–85.
Salim, A. (2024). Human resources as strategic assets. Journal of Strategic Management, 10(1), 12–20.
Seku, R., & Andriyani, D. (2023). Measuring employee performance. Journal of Performance Management, 8(2), 65–74.
Silitonga, H., & Faddila, N. (2023). Employees as research units. Journal of HR Research, 7(1), 44–52.
Sofyani, H., & Survei, M. (2025). PLS-SEM analysis techniques. Journal of Quantitative Research, 11(1), 90–102.
Srivastava, R., & Agarwal, P. (2024). Application of Herzberg theory in SMEs. International Journal of HR Studies, 14(2), 120–135.
Sugiarto, D., & Suryani, T. (2022). Motivation and organizational commitment. Journal of Business Psychology, 6(3), 101–110.
Susanto, E., Wibisono, A., & Lestari, D. (2024). Causal research design in management studies. Journal of Research Design, 5(2), 33–42.
Urban, B. (2022). MSME competitiveness and sustainability. Journal of Entrepreneurship, 31(1), 1–14.
Wahyuni, S., Dewi, L., & Rahmawati, A. (2022). HRM research in MSMEs. Journal of Small Business Research, 10(2), 55–66.
Waruwu, M., Simanjuntak, R., & Sitorus, H. (2025). Quantitative causal research approach. Journal of Scientific Research, 12(1), 77–88.
Wiyoga, H., Santoso, B., & Rahmawati, L. (2025). Compensation and job satisfaction in MSMEs. International Journal of Economics and Business Research, 12(2), 89–101.
Yuiandini, P., Lestari, M., & Putra, R. (2023). HR practices in small enterprises. Journal of SME Studies, 6(1), 23–34.
Zehao, L. (2024). Job satisfaction and employee perception. Journal of Organizational Psychology, 19(1), 55–67.
Published
2026-03-31
How to Cite
Saputra, M. I., & Yuswono, I. (2026). Optimizing Employee Performance through Compensation and Work Motivation: The Mediating Role of Job Satisfaction. Journal of Economics and Public Health, 5(1), 21-30. https://doi.org/10.37287/jeph.v5i1.7632
Section
Articles
