This study applied the theoretical framework based on expectancy and discrepancy
theories to examine how the elements of total compensation might in¯uence work
motivation and job satisfaction. The principal dimensions of total compensation that
give rise to distinct reactions among employees were examined. Two samples of
employees, 269 exempt employees and 297 nonexempt employees, were studied separately
in order to identify the dierences of reaction between these two groups. The relation-
ships between the elements of total compensation, work motivation and job satisfaction
were analysed by a structural equations model with LISREL VII. Proposals were
developed to predict the conditions of compensation eciency on work motivation
and job satisfaction in the cultural context of employment in France. The three
principal conclusions of the study were: (1) under certain conditions, individualized
compensation of exempt employees can be a factor of work motivation; (2) ¯exible pay
of nonexempt employees neither motivates nor increases job satisfaction; (3) bene®ts
of exempt and nonexempt employees neither motivate nor increase job satisfaction.
Copyright #1999 John Wiley & Sons, Ltd.