Research shows that well-compensated employees are satisfied with their jobs and thus perform much better at work compared to those that are poorly paid. Compensation can be financial or non-financial. Where employed effectively, the two forms of compensation positively affect employee motivation, job satisfaction, and overall performance in the workplace.
The following are empirical studies carried out in different parts of the globe about the effect of compensation on employee job satisfaction.
The impact of compensation on job satisfaction: the work experience and education relationship
The study investigated the impact of compensation on job satisfaction among workers in the Bekasi City food and beverage industry, Indonesia. The specific objectives of the study included the following: to determine the effect of work experience on compensation; to establish the effect of education on compensation; to find out the effect of work experience on job satisfaction; to assess the effect of education on job satisfaction; to evaluate the effect of compensation on job satisfaction; to establish the effect of compensation on the relationship between work experience and job satisfaction; and to determine the effect of compensation on the relationship between education and job satisfaction (Novialumi & Winata, 2025).
The target population included employees of the Bekasi City food and beverage industry, Indonesia. A sample size of 180 respondents was selected to participate in the study. Data collection was done using a questionnaire. The collected data was analyzed using descriptive variables such as frequency and standard deviation. Regression analysis (PLS-SEM) was used to establish the effect of independent variables on the dependent variable. The results were presented in tables as required (Novialumi & Winata, 2025).
The results of regression analysis were as follows: compensation had a positive and significant impact on job satisfaction; education had a positive and significant impact on compensation; education had a positive and significant impact on job satisfaction; work experience had a positive and significant impact on compensation; work experience had a positive and significant impact on job satisfaction; compensation had a positive and significant mediating effect on the relationship between education and job satisfaction; also, compensation had a positive and significant mediating effect on the relationship between work experience and job satisfaction (Novialumi & Winata, 2025).
Impact of compensation and benefits on the job satisfaction of employees: case of iron industry in Real Group
The study focused on the impact of compensation and benefits on job satisfaction of employees of Real Group in Raipur, Chhattisgarh. Specifically, the objectives of the study included the following: to assess the effect of compensation on job satisfaction and to examine the effect of employee benefits on job satisfaction. Therefore, the study assessed the effect of average pay, average recognition, average promotion opportunity, and average meaningful work on average satisfaction in the target company (Gupta & Pathak, 2024).
The target population included all the 568 permanent employees of Real Group Company located in Raipur, Chhattisgarh. A sample size of 235 respondents was selected to participate in the study. Data collection was done using a questionnaire. Descriptive statistics, including frequency and percentage, were used to analyze descriptive variables of the study. Regression analysis was used to assess the effect of the predictor variables on the outcome variable. The results were presented in charts, graphs, and tables as required (Gupta & Pathak, 2024).
The findings of regression analysis indicated that the predictor variables contributed 98% variance in average job satisfaction. Specifically, the results of regression analysis’s standardized coefficients indicated that when all factors are kept constant, average pay contributed 66.8% variance in average job satisfaction; average recognition contributed 12.8% variance in average job satisfaction; average promotion opportunity contributed 16.4% variance in average job satisfaction; and average meaningful work contributed 6.8% variance in average job satisfaction (Gupta & Pathak, 2024).
Impact of direct and indirect compensation on employee job satisfaction: an empirical study on commercial banks of Bangladesh
The study explored the impact of direct and indirect compensation on employee job satisfaction in commercial banks in Bangladesh. Specifically, the study explored the following objectives: to determine the effect of direct compensation on employee job satisfaction and to establish the effect of indirect compensation on employee job satisfaction (Akter, 2024).
The target population included employees of commercial banks in Bangladesh. A sample size of 360 respondents was selected to participate in the study. Data collection was done using a questionnaire. Descriptive statistics such as frequency and percentage were used to analyze descriptive variables of the study. Regression analysis was used to assess the effect of predictor variables on the outcome variable. The results were presented in tables as required (Akter, 2024).
The results of regression analysis indicated that the predictor variables explained 49.2% variance in employee job satisfaction in commercial banks in Bangladesh. The findings of regression analysis’s standardized coefficients indicated that when all factors are maintained constant, direct compensation contributed 13.9% variance in employee job satisfaction in commercial banks in Bangladesh, while indirect compensation contributed 28.7% variance in employee job satisfaction among the target staff. This implies that indirect compensation had more impact on employee job satisfaction compared to the direct compensation approaches (Akter, 2024).
The relationship between compensation and job satisfaction
The study explored the effect of compensation on job satisfaction among employees working in manufacturing companies in Johor Bahru, Johor, Malaysia. Specific objectives of the study included the following: to determine the effect of financial rewards on employee job satisfaction in manufacturing companies in Johor Bahru and to establish the effect of non-financial rewards on employee job satisfaction in manufacturing companies in Johor Bahru (Amiruddin & Rodzalan, 2024).
The target population included employees working in manufacturing companies in Johor Bahru, Johor, Malaysia. A sample size of 375 respondents was selected to participate in the study. Data collection was done using a questionnaire. Descriptive statistics were used to analyze descriptive variables of the study. Pearson correlation analysis was used to assess the relationship between the study variables. The results were presented in tables as required (Amiruddin & Rodzalan, 2024).
The results of correlation analysis indicated that financial rewards had a positive (0.57) and significant relationship with employee job satisfaction in the target manufacturing companies. In addition, the results revealed that non-financial rewards had a much stronger positive (0.61) and significant relationship with employee job satisfaction in the target manufacturing companies. This means that non-financial rewards had a greater impact on employee job satisfaction than the financial rewards in the target companies (Amiruddin & Rodzalan, 2024).
Employee monetary compensation and employee job satisfaction
The study investigated the relationship between employee monetary compensation and employee job satisfaction in Fortune 500 companies in the United States of America. The specific objectives of the study included the following: to determine the relationship between employee monetary compensation and job satisfaction, to assess the relationship between employee monetary compensation and extrinsic satisfaction, and to evaluate the relationship between employee monetary compensation and intrinsic satisfaction (Watkins & Fusch, 2022).
The target population included employees of Fortune 500 companies located in the United States of America. A sample size of 129 respondents was selected to participate in the study. Data collection was done using a questionnaire. Descriptive statistics were used to analyze descriptive variables of the study. Spearman’s correlation analysis was used to assess the relationship between study variables. The results were presented in tables as required (Watkins & Fusch, 2022).
The results of Spearman’s correlational analysis indicated the following: there was a moderate positive and significant relationship between employee monetary compensation and general job satisfaction in the target companies; there was a moderate positive and significant relationship between employee monetary compensation and extrinsic satisfaction in the target companies; there was a moderate positive and significant relationship between employee monetary compensation and intrinsic satisfaction in the target companies (Watkins & Fusch, 2022).
The effect of compensation and work environment on employee satisfaction at PT Veneta Indonesia
The study explored the effect of compensation and work environment on employee satisfaction at PT Veneta, Indonesia. Specifically, the objectives of the study included the following: to determine the effect of compensation on employee job satisfaction in the target organization and to find out the effect of compensation on the work environment on employee job satisfaction in the target organization (Nuraini et al., 2022).
The target population included all the employees of PT Veneta in Indonesia. A sample size of 63 respondents was selected to participate in the study. Data collection was done using a questionnaire. Descriptive statistics were used to analyze descriptive variables of the study. Pearson correlation was used to assess the relationship between study variables. Regression analysis was employed to establish the effect of predictor variables on the outcome variables. The results were presented in tables as deemed fit (Nuraini et al., 2022).
The results of correlation analysis indicated that there was a positive and significant relationship between compensation and job satisfaction and between work environment and job satisfaction. The results of regression analysis indicated that the predictor variables, work environment and compensation, explained 68% of the variance in job satisfaction (outcome variable) in the target organization. The results of regression analysis’s standardized coefficients indicated that with all factors constant, compensation explained 48.3% of the variance in job satisfaction in the PT Veneta organization, while the work environment explained 44.3% of the variance in job satisfaction in the organization. This means that compensation had a greater impact on employee job satisfaction than work environment in the target organization (Nuraini et al., 2022).
Effect of compensation packages on job satisfaction and employee retention: a case of Jalalabad-based private universities of Afghanistan
The study investigated the effect of compensation packages on job satisfaction and employee retention among university staff in Afghanistan. The specific objectives of the study included the following: To determine the effect of compensation packages (salary, rewards, incentives, bonus, and allowances) on employee job satisfaction and to assess the effect of compensation packages (salary, rewards, incentives, bonus, and allowances) on employee retention (Adil et al., 2020).
The target population included 512 employees of six private universities in Jalalabad, Afghanistan. A sample size of 275 respondents was selected to participate in the study. Data collection was done using a questionnaire. Descriptive statistics, including frequency and percentage, were used to analyze descriptive variables of the study. Correlation analysis was used to assess the association between study variables. Regression analysis was used to examine the effect of independent variables on the dependent variable (Adil et al., 2020).
The results of correlation analysis indicated a positive and significant association between compensation packages and job satisfaction. The results also indicated a positive and significant association between compensation packages and employee retention. The results of regression analysis indicated that compensation packages explained 29% of the variance in job satisfaction and employee retention. Specifically, the results of regression analysis’s standardized coefficients indicated that when all factors are kept constant, compensation packages explained 54.1% variance in job satisfaction, and compensation packages explained 8% variance in employee retention. This means that compensation packages had a greater impact on job satisfaction than on employee retention (Adil et al., 2020).
The effect of compensation on job satisfaction and employee performance at TVRI Station, West Nusa Tenggara
The study explored the effect of compensation on employee job satisfaction at TVRI Station, West Nusa Tenggara, in Indonesia. The specific objectives of the study included the following: to assess the effect of compensation on job satisfaction, to examine the effect of compensation on employee performance, and to determine the effect of job satisfaction on employee performance (Walewangko et al., 2020).
The target population included employees at Television of the Republic of Indonesia in West Nusa Tenggara. A sample size of 90 respondents was selected to participate in the study. Data collection was done using a questionnaire. Descriptive statistics such as frequency and percentage were used to analyze descriptive variables of the study. The Partial Least Square Structural Equation Model (PLS-SEM) was used to assess the effect of the predictor variables on the outcome variables (Walewangko et al., 2020). The results were presented in tables as deemed fit (Walewangko et al., 2020).
The results of regression analysis’ standardized coefficients indicated that when all factors are held constant, compensation contributed 64.1% variance in employee job satisfaction and 43.7% variance in employee performance, while job satisfaction contributed 38.2% variance in employee performance in the target organization (Walewangko et al., 2020).
Effect of compensation on employee satisfaction and employee performance
The study examined the effect of compensation on employee satisfaction and performance in a mining company in Mulawarman. Specifically, the study aimed at achieving the following objectives: to determine the effect of compensation on employee performance in Mulawarman Mining Company and to assess the effect of employee compensation on job satisfaction in Mulawarman Mining Company (Saman, 2020).
The target population included staff working at the Mulawarman mining company. A sample size of 51 respondents was selected to participate in the study. Data collection was done using a questionnaire. The collected data was analyzed using descriptive variables. Regression analysis was used to assess the effect of predictor variables on the outcome variable. The results were presented in tables as required (Saman, 2020).
The findings of regression analysis’s standardized coefficients indicated that compensation contributed 71% variance in employee performance; also, compensation contributed 59.6% variance in job satisfaction. This means that in this study, compensation had a greater effect on employee performance than it had on job satisfaction (Saman, 2020).
The impact of compensation and job motivation on employee performance with job satisfaction as a mediating variable: a study at Bali regional offices of the Directorate General of Taxes.
The study investigated the impact of compensation and job motivation on employee performance at Bali regional offices of the Directorate General of Taxes (DGT), Indonesia. The specific objectives of the study included the following: to assess the effect of compensation on job satisfaction at the Bali regional office of DGT Indonesia; to establish the effect of compensation on employee performance at the Bali regional office of DGT Indonesia; to find out the effect of job motivation on job satisfaction at the Bali regional office of DGT Indonesia; to evaluate the effect of job motivation on employee performance at the Bali regional office of DGT Indonesia; to examine the effect of job satisfaction on employee performance at the Bali regional office of DGT Indonesia (Andry, 2018).
The target population included staff working at Bali regional offices of the directorate general of taxes, Indonesia. A sample size of 190 respondents was selected to participate in the study. Data collection was done using a questionnaire. The collected data was analyzed using descriptive statistics such as frequency and percentage. Path analysis was used to assess the effect of independent variables on the dependent variable. The findings were presented in tables as required (Andry, 2018).
The results of path coefficient analysis indicated the following: Compensation explained 43% of the variance in employee job satisfaction at the Bali regional office of DGT Indonesia; compensation explained 38.5% of the variance in employee performance. The Bali regional office of DGT Indonesia: job motivation explained 13.8% of the variance in job satisfaction. The Bali regional office of DGT Indonesia: job motivation explained 42.7% of the variance in employee performance. The Bali regional office of DGT Indonesia: job satisfaction explained 24.4% of the variance in employee performance. Bali regional office of DGT Indonesia (Andry, 2018).
The effect of compensation on satisfaction and employee performance
The study explored the effect of compensation on employee job satisfaction and performance in PT Telekomunikasi, a state-owned company in Indonesia. Specifically, the study objectives included the following: to establish the effect of compensation on employee satisfaction, to determine the effect of compensation on employee performance, and to evaluate the effect of employee satisfaction on employee performance (Darma & Supriyanto, 2017).
The target population included staff at the state-owned PT Telekomunikasi in Indonesia. A sample size of 70 respondents was selected to participate in the study. Data collection was done using a questionnaire. The collected data was analyzed using descriptive statistics such as frequency and percentage. Regression analysis was done to assess the effect of the independent variables on the dependent variable. The results were presented in tables as required (Darma & Supriyanto, 2017).
The results of regression analysis indicated that compensation explained 57.6% variance in employee satisfaction; compensation contributed 54.8% variance in employee performance, while employee satisfaction contributed 56.4% variance in employee performance in the target organization (Darma & Supriyanto, 2017).
Effect of compensation factors on employee satisfaction – a study of doctors’ dissatisfaction in Punjab
The study focused on the effect of compensation factors on employee satisfaction among doctors working in Punjab hospitals in Pakistan. The specific objectives of the study included the following: to assess the effect of pay on job satisfaction among doctors working in Punjab hospitals; to examine the effect of recognition on job satisfaction among doctors working in Punjab hospitals; to establish the effect of promotion on job satisfaction among doctors working in Punjab hospitals; to find out the effect of meaningful work on job satisfaction among doctors working in Punjab hospitals (Ayesha, 2013).
The target population included doctors working in Punjab government hospitals in Pakistan. A sample size of 166 respondents was selected to participate in the study. Data collection was done using a questionnaire. The collected data was analyzed using descriptive statistics such as frequency and percentage. Pearson correlation was used to assess the relationship between study variables. Regression analysis was used to examine the effect of independent variables on the dependent variable. The results were presented in tables as required (Ayesha, 2013).
The results of correlation analysis indicated a positive correlation between job satisfaction and all the predictor variables of the study. The results of regression analysis indicated that the predictor variables explained 76.3% variance in job satisfaction among the target staff. In particular, the findings of regression analysis’s standardized coefficients indicated that when all factors are kept constant, pay contributed 5.6% variance in job satisfaction among target doctors, recognition contributed 1.7% variance in job satisfaction among target doctors, and promotion contributed 14% variance in job satisfaction among target doctors, while meaningful work contributed 72.6% variance in job satisfaction among target doctors. This means that meaningful work had the greatest impact on job satisfaction, followed by promotion. The effect of pay and recognition on doctors’ job satisfaction was apparently too little (Ayesha, 2013).
Influence of employee compensation on organisational commitment and job satisfaction: a case study of the educational sector of Pakistan
The study investigated the influence of employee compensation on organizational commitment and job satisfaction in the education sector, Pakistan. The specific objectives of the study included the following: to assess the effect of employee compensation on organizational commitment in the Pakistani education sector and to evaluate the effect of employee compensation on job satisfaction in the Pakistani education sector (Bhatti & Nawab, 2011).
The target population included faculty members of universities in Pakistan. A sample size of 150 respondents was selected to participate in the study. Data collection was done using a questionnaire. Descriptive statistics, including frequency and percentage, were used to analyze descriptive variables of the study. Pearson correlation analysis was used to examine the relationship between study variables. Regression analysis was used to assess the effect of independent variables on dependent variables. The results were presented in tables as deemed fit (Bhatti & Nawab, 2011).
The results of correlation analysis indicated a positive and significant relationship between all compensation variables. There was also a positive and significant relationship between compensation and organizational commitment. In addition, the results also indicated that compensation had a positive and significant association with job satisfaction. The results of regression analysis indicated that employee compensation explained 60.3% of the variance in organizational commitment in Pakistan’s education sector. On the other hand, the results further indicated that employee compensation explained 52.1% of the variance in job satisfaction in Pakistan’s education sector. This means that employee compensation had a greater impact on organizational commitment than on job satisfaction (Bhatti & Nawab, 2011).
Citations
Adil, H., Rao, C.V.K., and Ayaz, M.Q. (2020). Effect of compensation packages on job satisfaction and employee retention: a case of Jalalabad-based private universities of Afghanistan. Asia Pacific Journal of Multidisciplinary Research, 8(2), 26-35.
Akter, S.K. (2024). Impact of direct and indirect compensation on employee job satisfaction: an empirical study on commercial banks of Bangladesh. Asian Journal of Social Science and Management Technology, 6(5).
Amiruddin, N.Z.M. and Rodzalan, S.A. (2024). The relationship between compensation and job satisfaction. Research in Management of Technology and Business, 5(1), 145-154.
Andry, V. (2018). The impact of compensation and job motivation on employee performance with job satisfaction as mediating variables: a study at Bali regional offices of the Directorate General of Taxes. RJOAS, 1(73).
Ayesha, Y. (2013). Effect of compensation factors on employee satisfaction – a study of doctors’ dissatisfaction in Punjab. International Journal of Human Resource Studies, 3(1).
Bhatti, K.K. and Nawab, S. (2011). Influence of employee compensation on organizational commitment and job satisfaction: a case study of the educational sector of Pakistan. International Journal of Business and Social Science, 2(8).
Darma, P.S. and Supriyanto, A.S. (2017). The effect of compensation on satisfaction and employee performance. Management and Economics Journal, 1(1).
Gupta, B.P. and Pathak, N.D. (2024). Impact of compensation and benefits on the job satisfaction of employees: case of iron industry in Real Group. International Scientific Journal of Engineering and Management, 3(5).
Novialumi, A. and Winata, S.D. (2025). The impact of compensation on job satisfaction: the work experience and education relationship. Annals of Human Resource Management Research, 5(3), 627-639.
Nuraini, F., Sutarman, A., Setiawan, E., and Juliandara, L. (2022). The effect of compensation and work environment on employee satisfaction at PT Veneta Indonesia. Business Review and Case Studies, 3(3).
Saman, A. (2020). Effect of compensation on employee satisfaction and employee performance. International Journal of Economics, Business and Accounting Research, 4(1), 2020. Walewangko, C.N.F., Agusdin, and Saufi, A. (2020). The effect of compensation on job satisfaction and employees’ performance at TVRI Station, West Nusa Tenggara. International Journal of Innovative Science, Engineering, & Technology, 8(6).
