The Role of Financial and Non-Financial Compensation in Improving Employee Job Satisfaction and Performance
A Literature Review
DOI:
https://doi.org/10.52103/jms.v7i1.2316Keywords:
Employee Job Satisfaction, Employee Performance, Financial, Compensation, Non-Financial CompensationAbstract
This literature review examines how financial and non-financial compensation improve employee job satisfaction and performance. The findings show that financial compensation strengthens satisfaction when employees perceive pay as fair, transparent, competitive, and linked to contribution. Non-financial compensation improves satisfaction by fulfilling psychological needs for appreciation, competence, autonomy, and belonging. Job satisfaction often mediates the relationship between compensation and performance, but this effect depends on organizational justice, leadership, resources, sectoral context, and performance measurement The review concludes that organizations should design integrated total reward systems instead of separating monetary and non-monetary rewards. Balanced compensation systems can strengthen satisfaction, motivation, commitment, and performance when they combine fair pay with meaningful work experiences.
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