Abstract
Purpose- The purpose of this study was to investigate the mediating effect of work performance and organizational commitment on the relation between reward system and employees' work satisfaction. Design/Methodology/Approach- population in this study was all employees/permanent employees (Civil Servants and Non-Civil Servants) at BNI, BRI, Bank of Mandiri and South Sulawesi BPD on leadership level. The analytical method used to test the hypothesis of the research was Structural Equation Modeling (SEM). Findings- Extrinsic Reward System and Intrinsic Reward System had direct significant effect on Work Performance and Organizational Commitment, and Work Performance and Organizational Commitment had direct significant effect on Work Satisfaction. On the other hand, Extrinsic Reward System and Intrinsic Reward System had no direct effect on Work Performance, but Work Performance and Organizational Commitment were mediating variables to bridge the relation of Extrinsic Reward System and Intrinsic Reward System with Work Satisfaction. Originality/Value- The originality of this study shows (1) the mediating effects (using sobel test) of Work Performance and Organizational Commitment on the relation between Reward System and Work Satisfaction, (2) location of study (no previous research on this relationship): Bank in South Sulawesi, Indonesia.
E. Conclusions and Recommendations
The conclusion of this study is that Extrinsic Reward System and Intrinsic Reward System had direct significant effect on Work Performance and Organizational Commitment, and Work Performance and Organizational Commitment had direct significant effect on Work Satisfaction. On the other hand, Extrinsic Reward System and Intrinsic Reward System had no direct effect on Work Performance, but Work Performance and Organizational Commitment were mediating variables to bridge the relation of Extrinsic Reward System and Intrinsic Reward System with Work Satisfaction.
Findings indicated that extrinsic and intrinsic reward system had no direct effect on work satisfaction, leading to the need to evaluate companies' reward systems. Specifically, it concerned intrinsic reward system which seemed to not be perceived as a reward. Reward system was heavily laden with external influences, internal affairs of organizations and the psychology of employees, especially those involving the perception of fairness. Extrinsic rewards were relatively easy measure in a way which could be accepted as fair. But there was no such intrinsic rewards, because the benefits are more abstract, such as autonomy and the completion of the work. Employees at the leadership level, categorized by Vroom as high level employees, which is a relative terms, received extrinsic rewards in the form of financial rewards, interpersonal rewards, promotion, which were seen as the companies' obligations to give to them. But there was no intrinsic reward. This was seen as a company policy to increase motivation, so that the employees could perform optimally. Intrinsic rewards should be developed in accordance with the variations of characteristics associated with work performance.
