Compensation and Career Development as Drivers of Employee Performance: The Mediating Role of Job Satisfaction

This study examines how compensation and career development influence employee performance through job satisfaction within a highly regulated professional service context. Drawing on human resource management and motivational perspectives, the research investigates the direct effects of compensation and career development on employee performance, as well as their indirect effects through job satisfaction. Extending prior studies that largely assume compensation as a direct performance driver, this study emphasizes job satisfaction as a central explanatory mechanism, particularly in state-owned professional service organizations. Data were collected from 134 active employees of PT Sucofindo (Persero) Banjarmasin Branch using a census approach and analyzed through variance-based structural equation modeling. The results indicate that compensation does not have a significant direct effect on employee performance, despite showing a positive relationship. Career development demonstrates a positive and significant effect on employee performance. Both compensation and career development significantly enhance job satisfaction, which in turn positively affects employee performance. Further analysis confirms that job satisfaction fully mediates the compensation–performance relationship and partially mediates the career development–performance relationship. The model explains a substantial proportion of variance in employee performance. These findings contribute theoretically by clarifying the conditional role of compensation and highlighting job satisfaction as a key mechanism linking human resource practices to performance in regulated public service settings. Practical implications are offered for state-owned organizations seeking to improve performance through integrated compensation, career development, and job satisfaction strategies.