International Journal of Human Resource Studies ISSN 2162-3058 2012, Vol. 2, No. 4 www.macrothink.org/ijhrs 118 Empirical Investigation into Compensation Preferences for Diversified Employees Ahmed Al-Asfour Oglala Lakota College Accepted: August 05, 2012 Published: September 22, 2012 Doi:10.5296/ijhrs.v2i4.2587 URL: http://dx.doi.org/10.5296/ijhrs.v2i4.2587 ABSTRACT Motivational factors play an essential role with increasing employee job satisfaction. Satisfied employees in return can help improve organizational performance. Hence, it is the purpose of this paper to examine intrinsic and extrinsic motivation preferences between domestic and foreign employees working at a factory in the Kingdom of Saudi Arabia. Three hypotheses were developed and examined by the researcher. The first and second tests showed that foreign and domestic employees view both intrinsic and extrinsic motivation alike. The third hypothesis stated that the employees would prefer one motivation method, and indeed the t-test showed that employees rated extrinsic motivation more highly than intrinsic Keywords: Domestic & Foreign Employees Motivation, Intrinsic & Extrinsic Employees Motivation, Reward Systems INTRODUCTION The effectiveness of any organization is greatly influenced by human behavior. Effective administrative help creates a work environment that encourages productivity and innovation in employee work motivation. Because of this, organizations use reward systems to channel motivation in desired ways. In different terms, reward systems attempt to attract skillful employees to join or continue working for an organization. Reward systems influence all employees of an organization regardless of its size and place. Although the methods of motivation and compensation may differ between occupations, organizations none the less, attempt to motivate all employees. The level of motivation may vary based on the type of organization and its needs. Every organization and business wants to be successful and has a desire to get a constant level of employee performance. The current era of conducting a business is highly competitive. Organizations utilize all means available to compete with the best technology, products, and most importantly workforce obtainable in the market. Hongping (2006) stated that the performance quality of the employees correlates with motivation. Because employees