How does Organizational Culture Affect Performance? Employee Satisfaction as a Mediator

Purpose: Organizational culture (OC) does not automatically improve employee performance (EP). One of the mediators is employee satisfaction. This study examined the influence of OC on EP mediated by training satisfaction (TS) and pay satisfaction (PS).Methodology: This study used a survey method with a questionnaire involving 475 SME’s employees in Yogyakarta, Indonesia. After data from the filling out the questionnaire being declared valid and reliable, testing the normality, heteroscedasticity, and multicollinearity tests were carried out as a condition for multiple linear regression tests for examining the effect of OC, TS, and PS on EP. Then, the mediation model was tested using SEM with AMOS.Results: This study reinforces the results of previous research that the effect of OC on EP is mediated by TS and PS. This study proves that companies, especially SMEs, must pay attention to TS and PS for employees. OC does not directly improve performance, but OC can build employee satisfaction which has an impact on their performance. Research limitations: The use of self-assessment for all tested variables causes common method variance, and cross-section data makes it difficult to test the mediation model.Practical implications: OC, TS, and PS must be managed because it can encourage employees to achieve better performance. OC and JS are multidimensional variables that have a positive effect on EP.Originality: This framework demonstrates the importance of organizational culture for improving performance through job satisfaction. Keywords: Organizational Culture, Pay Satisfaction, Performance, SMEs, Training SatisfactionAcknowledgements: Thank you very much to SMEs who have participated in this research.DOI: https://doi.org/10.58869/EJABM10(2)/06