International Review of Management and Marketing ISSN: 2146-4405 available at http: www.econjournals.com International Review of Management and Marketing, 2023, 13(4), 9-13. International Review of Management and Marketing | Vol 13 • Issue 4 • 2023 9 Relationship Model of Compensation, Motivation, Job Satisfaction and Employee Performance Dorothea Wahyu Ariani* Universitas Mercu Buana Yogyakarta, Indonesia. *Email: ariani1338@gmail.com Received: 14 March 2023 Accepted: 24 June 2023 DOI: https://doi.org/10.32479/irmm.14464 ABSTRACT Employee performance (EP) is an important variable that can improve company performance. Many studies have examined various factors that infuence EP. Compensation, motivation, and job satisfaction (JS) are three important variables that have been shown to have an efect EP. This study aimed to examine the model of the relationship between the four variables. By using 520 government company employees in Yogyakarta, Indonesia, the results of model testing proved that compensation, motivation, and JS were related to EP. The results of the mediation model testing using structural equation modeling (SEM) found that motivation also played a role as a mediating variable for the relationship between fnancial rewards and EP. In this relationship model, motivation was able to increase JS, but employees who feel satisfed cannot guarantee that they will perform better. Keywords: Compensation, Motivation, Job Satisfaction, Performance JEL Classifcations: M120, J30 1. INTRODUCTION EP is always sought to be achieved because high EP can support the achievement of high organizational performance. There are many factors that afect EP, which can be grouped into internal or dispositional and external or situational factors (Robbins and Judge, 2007). Motivation and JS are internal or dispositional factors that infuence EP. Meanwhile, awarding or compensation is an external factor that infuences EP. Motivation is an individual’s desire to do a particular task or job. High motivation can improve performance (Kori et al., 2016). Motivation is referred to as the mover of organizational behavior because it infuences EP and employee productivity (Cerasoli et al., 2014; Fischer et al., 2019). Motivation has indeed been widely researched and proven an efect on EP. Motivation can be caused by external factors such as giving awards or compensation (Ryan and Deci, 2020). According to Self-Determination Theory (SDT), giving awards will strengthen extrinsic motivation (Kuvaas et al., 2017). Giving awards can also improve EP (Naidu and Satyanarayana, 2018). Kuvaas et al. (2016) found that motivation is related to performance. In addition, giving awards can also improve performance (Cerasoli et al., 2016). Motivation has indeed been shown to improve EP (see for example Cerasoli et al., 2014; Ekundayo, 2018; Girdwichai and Sriviboon, 2020; Lencho, 2020). Meanwhile, employee JS is an attitude or how satisfed employees are with their work (Parvin and Kabir, 2011). JS has also been shown to improve EP (see for example, Chao et al., 2015; Wolomasi et al., 2019). However, the efect of JS on EP is inconsistent. This is because JS is a variable that has several dimensions (Pang and Lu, 2018). Each dimension has a diferent efect on performance (Bakan et al., 2014). Bowling et al. (2015) found that in testing the relationship between JS and EP, moderating situational variables This Journal is licensed under a Creative Commons Attribution 4.0 International License