THE MEDIATING ROLE OF WORK MOTIVATION IN ENHANCING EMPLOYEE PERFORMANCE AT THE DEPARTMENT OF HOUSING AND SETTLEMENT AREAS, SAMARINDA CITY

This study examines the mediating role of Work Motivation in the relationship between Compensation and Employee Performance. The research was conducted on 80 employees working at the Department of Housing and Settlement Areas in Samarinda City, East Kalimantan Province, Indonesia. A quantitative approach using Structural Equation Modeling (SEM) was employed. The results show that Compensation has a positive (β = 0.28) and significant effect on Work Motivation, and a positive (β = 0.30) and significant effect on Employee Performance. Furthermore, Work Motivation also has a positive (β = 0.76) and significant effect on Employee Performance. The findings indicate a full mediating role of Work Motivation in the relationship between Compensation and Employee Performance. Theoretically, this reinforces motivation theories such as Herzberg’s Two-Factor Theory and Vroom’s Expectancy Theory, which emphasize the critical role of motivation as a bridge between organizational factors and individual performance. Practically, the study suggests that improving employee performance requires more than just providing competitive compensation. It also requires strategies that enhance motivation, such as recognition, career development opportunities, and meaningful task assignments. Therefore, a balanced approach that integrates both compensation and motivation strategies will be more effective in driving employee performance in the public sector.