The mediating role of job satisfaction on compensation, work environment, and employee performance: Evidence from Indonesia

Abstract

Job satisfaction has a pivotal role in improving employee performance. It provides enthusiasm and high motivation to employees to increase productivity. On the other hand, to improve employee performance, the organization provides compensation based on established standards and in an environment that is, sometimes, less conducive. This study purposes to examine the mediating role of job satisfaction on compensation, work environment, and employee performance at State Polytechnic colleges in Indonesia. This study used Partial Least Square (PLS) as data analysis. This study found that compensation has no impact on job satisfaction and employee performance. In addition, job satisfaction cannot mediate the compensation and employee performance. However, the work environment positively and significantly affects job satisfaction and employee performance. Job satisfaction has impact on work environment and employee performance. It also influences employee performance positively and significantly. Thus, job satisfaction directly or indirectly can be a mediator for the relationship between work environment and employee performance.