A study of the relationship between compensation package, work motivation and job satisfaction

This study applied the theoretical framework based on expectancy and discrepancy theories to examine how the elements of total compensation might influence work motivation and job satisfaction. The principal dimensions of total compensation that give rise to distinct reactions among employees were examined. Two samples of employees, 269 exempt employees and 297 nonexempt employees, were studied separately in order to identify the differences of reaction between these two groups. The relationships between the elements of total compensation, work motivation and job satisfaction were analysed by a structural equations model with LISREL VII. Proposals were developed to predict the conditions of compensation efficiency on work motivation and job satisfaction in the cultural context bf employment in France. The three principal conclusions of the study were: (1) under certain conditions, individualized compensation of exempt employees can be a factor of work motivation; (2) flexible pay of nonexempt employees neither motivates nor increases job satisfaction; (3) benefits of exempt and nonexempt employees neither motivate nor increase job satisfaction. Copyright (C) 1999 John Wiley & Sons, Ltd.