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The Relevance of McClelland’s Motivation Theory in Understanding Compensation and Employee Outcomes

In: Proceedings of the International Conference on Contemporary Risk Studies (ICONIC-RS 2025)

Author

Listed:
  • Rafi Rahadian Izza

    (Pasundan University, Faculty of Economics and Business)

  • Ina Ratnamiasih

    (Pasundan University, Faculty of Economics and Business)

Abstract

This study aims to re-examine McClelland’s motivation theory in the contemporary organizational context by investigating the dominant factors influencing employee performance. While McClelland emphasized the need for achievement as the most critical driver of work motivation, the findings from this research conducted at PT Tomo Food Industri indicate otherwise. The results show that direct, indirect, and non-financial compensation all have a significant positive impact on work motivation, with indirect compensation emerging as the most influential factor. Furthermore, work motivation significantly enhances employee performance and acts as an effective mediator between all forms of compensation and performance outcomes. The research employed a quantitative approach using a saturated sample of 95 employees. Data were collected through Likert-scale questionnaires (1–5) and analyzed using validity and reliability testing, ordinal-to-interval transformation via the Method of Successive Interval (MSI), and coefficient of determination. Statistical data processing applied Structural Equation Modelling (SEM) and path analysis with SmartPLS 4. The findings contribute to the theoretical discourse by challenging McClelland’s proposition and highlighting compensation, particularly indirect benefits, as a pivotal determinant of motivation and performance in today’s organizational setting.

Suggested Citation

  • Rafi Rahadian Izza & Ina Ratnamiasih, 2026. "The Relevance of McClelland’s Motivation Theory in Understanding Compensation and Employee Outcomes," Advances in Economics, Business and Management Research, in: Eka Puspitawati & Dewi Hanggraeni & Indra Kusumawardhana & Parulian Sihotang & Nanda Nurdianto (ed.), Proceedings of the International Conference on Contemporary Risk Studies (ICONIC-RS 2025), pages 176-188, Springer.
    • Handle: RePEc:spr:advbcp:978-2-38476-595-9_14
    DOI: 10.2991/978-2-38476-595-9_14
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