Ilomata International Journal of Management
P-ISSN: 2714-8971; E-ISSN: 2714-8963
Volume 5, Issue 1, January 2024
Page No: 294-307
The Influence of Compensation, Motivation, and Work Discipline on
Employee Performance
Giri Nurpribadi1, Erina Rulianti2, Fachrur Rozy Al Banteni3
123
Universitas Pelita Bangsa, Indonesia
Correspondent:
[email protected] Received : November 15, 2023 ABSTRACT: This study aims to analyze the effect of
Accepted : January 21, 2024 compensation, motivation, and work discipline on employee
performance. The population of this study were all employees
Published : January 31, 2024 of PT Diamond Cold Storage which amounted to 80 people.
The sampling technique in this study is a saturated sample or
census because the entire population is used as a research
Citation: Nurpribadi, G., Rulianti, E., Al sample. Research data collected through questionnaires that
Banteni, F, R. (2024). The Influence of have been tested for validity and reliability. The results
Compensation, Motivation, and Work showed that compensation has a positive and significant
Discipline on Employee Performance. Ilomata effect on employee performance, meaning that the better the
International Journal of Management, 5(1), compensation provided, the more it will improve employee
294-307. performance, motivation has a positive and significant effect
https://doi.org/10.52728/ijjm.v5i1.1057
on employee performance, meaning that the higher the
motivation provided, the more it will improve employee
performance, work discipline has a positive and significant
effect on employee performance, meaning that the better the
application of work discipline in the company, the more it will
improve employee performance; and Compensation,
motivation, and work discipline simultaneously have a
significant effect on employee performance. The better the
compensation, motivation, and implementation of work
discipline together, the more it will improve overall employee
performance. Policy Implications The company needs to
formulate human resource policies related to the
compensation system, motivation, and enforcement of work
discipline so that employee performance can be optimized
and company goals achieved.
Keywords: Compensation, Motivation, Work Discipline,
Employee Performance
This is an open access article under the
CC-BY 4.0 license
INTRODUCTION
Employee performance is a key factor that determines the success and competitiveness of the
company (Ogbonnaya & Valizade, 2018). Therefore, every company needs to identify and manage
various factors that affect employee performance. Several previous studies have found that
compensation (Riley, 2021); (Koch et al., 2019), motivation (Lazaroiu, 2015); (Kanfer et al., 2017),
and work discipline (Nguyen et al., 2017); (Elshout et al., 2013) have a positive effect on improving
employee performance.
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The Influence of Compensation, Motivation, and Work Discipline on Employee Performance
Nurpribadi, Rulianti, and Al Banteni
Fair and reasonable compensation is important to increase employee satisfaction and retention
(Riley, 2021). Compensation also encourages employees to work more productively to maximize
the rewards they receive (Koch et al., 2019). Meanwhile, both intrinsic and extrinsic work
motivation is needed so that employees remain passionate about their work (Lazaroiu, 2015). In
addition, the implementation of a reward and punishment system is also effective for creating a
disciplined work environment (Nguyen et al., 2017). These three factors are simultaneously and
partially proven to have an effect on employee performance (Elshout et al., 2013).
Compensation has been found to have a significant effect on employee performance across various
studies. (Wahyuddin, 2021) showed that compensation positively and significantly impacts
employee performance, as fair and attractive compensation packages motivate employees and
make them feel valued. This drives them to reciprocate with higher performance and productivity.
Similarly, (Tanjung, 2021) concluded that compensation has the strongest influence on employee
performance compared to other factors like career development and work discipline. However,
(Herusetya, 2020) notes that while financial compensation is important, non-financial
compensation in terms of recognition and appreciation can also greatly boost morale and
performance. Ultimately, (Rachmawati, 2019) states that organizations must develop
compensation systems aligned with their objectives and strategy to incentivize goal-congruent
behaviors from employees. An effective compensation plan along with fair administration of
rewards can elicit employee commitment and high quality performance (Atatsi et al., 2019; Miao
et al., 2022; Putra, 2021).
An issue that often develops in a company is the role of human resources which has a very
important and strategic position in the company to achieve goals. Human Resources are very
important for companies in managing, organizing, and utilizing employees, so that they can
function productively to achieve company goals. Human Resources as the driving force of the
company in achieving its goals, so the company's efforts in encouraging employees to work better
must continue to be done with the employees who work well, it is hoped that good work results
will also be achieved by employees in carrying out their duties in accordance with the
responsibilities given to them (Abualoush et al., 2018; Kim et al., 2015; Lee & Raschke, 2016).
In increasing employee productivity, motivation in the form of material or awards needs to be
given, one of which is by providing compensation. Compensation given to employees as a reward
for the work and responsibilities given to the company. compensation is a form of appreciation
given by the company to employees who have helped the process of running a company. The
compensation provided is expected to be a motivation in producing the best output and working
productively so that the company makes a profit. According to (Suprihatin & Gunarda, 2019)
compensation is a reward given by the company to employees, which can be physical or non-
physical, in a fixed period. A good compensation system will provide satisfaction for employees
because they feel that the work they do is good.
Motivation has been widely shown to positively impact employee performance in organizations.
According to (Hanaysha, 2016), employee motivation serves as a crucial driver that stimulates
passion, direction and persistence in aligning employee goals with organizational objectives.
Intrinsically motivated employees tend to show greater commitment, creativity and performance
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The Influence of Compensation, Motivation, and Work Discipline on Employee Performance
Nurpribadi, Rulianti, and Al Banteni
in their tasks (Rutherford, 2022). Furthermore, motivated employees exhibit lower turnover
intention, absenteeism and higher productivity (Sundi, 2013). However, (Amran, 2021) caution
that the type of motivation also matters - intrinsic motivation elicits greater engagement and
performance compared to just extrinsic rewards. Ultimately, organizations must develop holistic
motivational frameworks that incorporate elements like empowerment, recognition, autonomy
and growth opportunities to sustain employee performance (Mangi, 2015). Continually evaluating
and enhancing motivational determinants can thus help drive an organization’s success and
competitiveness.
Paying attention to employee work discipline is one form of company effort in improving
employee performance. A company not only wants employees who have a great willingness to
work but also wants employees who have a great awareness of work discipline. Work discipline is
an attitude, behavior, and actions that are in accordance with the rules of a company in written
form or not.
Good management of work discipline can result in employee compliance with the rules made by
the company which aims to improve the performance of its employees. For this reason, company
leaders need to observe the behavior and actions taken by employees while working, discipline is
an awareness based on self-will to obey all regulations made by the company, agency or
organization and applicable social norms (Jufrizen, 2018). The progress of a company depends on
the quality of human resource performance in the company. Performance is the result of an
employee's work in doing work. Human resource performance is the work that has been achieved
by an employee for the work they do according to their responsibilities in a company.
Work discipline has a pronounced impact on employee performance outcomes. According to
(Simamora, 2021), work discipline directly affects employee performance as it cultivates productive
work behaviors like punctuality, responsibility and conformity to rules. Employees with higher
work discipline demonstrate greater competence, meet formal performance standards and
contribute more to organizational goals (Raharjo, 2022). However, (Arif, 2021) found that while
stricter disciplinary measures can minimize undesirable behaviors, excessive control mechanisms
can restrict employee autonomy and diminish intrinsic motivation. As such, organizations must
strike a balance between structure and flexibility while designing disciplinary frameworks aligned
with performance objectives (Turab, 2020). An optimal level of work discipline can elicit employee
commitment, compliance and high quality performance outcomes (Annisa, 2021). Ultimately,
supervisory enforcement and just disciplinary procedures are key to ensuring employee adherence
to standards while preventing attrition.
The facts that occur at PT Diamond Cold Storage (Diamond), a company that stands in the
MM2100 area which is engaged in manufacturing which of course has employees as company
assets that must be considered. Many employees who excel in the company, but the problems
faced by the company are related to compensation where employees feel there is injustice. The
injustice is because the salaries of old employees and new employees are not seen from the results
of their work but based on the assessment of the leadership. Because the leadership in the company
has its own assessment of all employees, which makes employees less motivated to work and less
disciplined in their work. Another problem is related to overtime pay, where the overtime pay
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The Influence of Compensation, Motivation, and Work Discipline on Employee Performance
Nurpribadi, Rulianti, and Al Banteni
given is not in accordance with the number of overtime hours set by the company. As a result of
the injustice felt by employees, it will have an impact on the lack of maximum employee
performance. So that the work done by employees does not meet company expectations.
Based on this description, this study aims to analyze the effect of compensation, motivation, and
work discipline on employee performance in a company. Similar research has been conducted on
bank employees (Utami & Nerdy, 2020), nurses (Djati & Khusaini, 2003), and civil servants
(Kurniawan & Yuniarsih, 2019). However, research on different subjects and locations is still
needed to strengthen the generalizability of the study results.
METHOD
This research uses a quantitative approach with a survey method. The population of this study
were all employees of PT Diamond Cold Storage which amounted to 80 people. The sampling
technique in this study is a saturated sample or census because the entire population is used as a
research sample. Research data collected through questionnaires that have been tested for validity
and reliability. Data was collected by distributing questionnaires containing statements regarding
compensation, motivation, work discipline and employee performance. The questionnaire was
made using a Likert scale of 1-5 and distributed to respondents via Google Form. Before
hypothesis testing is carried out, the collected data will be tested for validity and reliability first to
ensure that the items on the questionnaire are valid and reliable. Furthermore, the data is analyzed
using SPSS. Selection of SPSS analysis because it is more flexible in terms of sample size and data
distribution. This study aims to determine the effect of compensation, motivation and work
discipline both partially and simultaneously on the performance of employees of PT Diamond
Cold Storage. The results of this study are expected to provide an overview of the company
regarding important factors determining employee performance, so that it can be used as a
consideration in making decisions related to human resources in the company.
RESULT AND DISCUSSION
Validity Test
Table 1. Validity Test Results
Variabel Statement r count r table 5% Description
C1 0,813 0,219 Valid
C2 0,844 0,219 Valid
Compensation C3 0,780 0,219 Valid
C4 0,715 0,219 Valid
C5 0,696 0,219 Valid
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The Influence of Compensation, Motivation, and Work Discipline on Employee Performance
Nurpribadi, Rulianti, and Al Banteni
C6 0,667 0,219 Valid
C7 0,730 0,219 Valid
M1 0,840 0,219 Valid
M2 0,841 0,219 Valid
M3 0,767 0,219 Valid
M4 0,847 0,219 Valid
Motivation
M5 0,790 0,219 Valid
M6 0,734 0,219 Valid
M7 0,736 0,219 Valid
M8 0,747 0,219 Valid
W1 0,846 0,219 Valid
W2 0,844 0,219 Valid
W3 0,831 0,219 Valid
Work Discipline
W4 0,829 0,219 Valid
W5 0,881 0,219 Valid
W6 0,864 0,219 Valid
E1 0,818 0,219 Valid
E2 0,834 0,219 Valid
E3 0,816 0,219 Valid
Employee Performance E4 0,824 0,219 Valid
E5 0,774 0,219 Valid
E6 0,824 0,219 Valid
E7 0,822 0,219 Valid
E8 0,794 0,219 Valid
Source: Data processed (2023)
The validity test can be said to be valid or not if the calculated r value is positive and the calculated
r value is > 0.219 (r table value), then the item is declared valid. If the calculated r value is negative
and the calculated r <0.219 (rtable value), then the statement item is invalid. The calculated R can
be seen in the corrected item column – Total Correlation.
Reability Test
Tabel 2. Hasil Uji Reabilitas (X1)
Cronbach's Alpha N of Items
.871 7
Source: Data processed (2023)
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The Influence of Compensation, Motivation, and Work Discipline on Employee Performance
Nurpribadi, Rulianti, and Al Banteni
Based on table 2, the results of statistical reliability tests, 7 statement items have an alpha
coefficient, r = 0.852, so the measurement of the level of reliability is included in the Cronbach
Alpha value above 0.60, which means reliable.
Table 3. Reliability Test Results (X2)
Cronbach's Alpha N of Items
.912 8
Source: Data processed (2023)
Based on table 3 above, the results of statistical reliability tests, 8 statement items have an alpha
coefficient, r = 0.897, so the measurement of the level of eating reliability is included in the
Cronbach Alpha value above 0.60, which means reliable.
Table 4. Reliability Test Results (X3)
Cronbach's Alpha N of Items
.922 6
Source: Data processed (2023)
Based on table 4 above, the results of statistical reliability tests, the 6 statement items have an alpha
coefficient, r = 0.903, so the measurement of the level of reliability is included in the Cronbach
Alpha value above 0.60, which means reliable.
Table 5. Reliability Test Results (Y)
Cronbach's Alpha N of Items
.926 8
Source: Data processed (2023)
Based on table 5 above, the results of statistical reliability tests, 8 statement items have an alpha
coefficient, r = 0.909, so the measurement of the level of reliability is included in the Cronbach
Alpha value above 0.60, which means reliable.
Classic Assumptions Test
Normality Test
Table 6. Normality Test Results
Unstandardized Residual
N 80
Normal Parametersa,b Mean .0000000
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The Influence of Compensation, Motivation, and Work Discipline on Employee Performance
Nurpribadi, Rulianti, and Al Banteni
Std. Deviation 2.82254444
Most Extreme Differences Absolute .076
Positive .071
Negative -.076
Test Statistic .076
Asymp. Sig. (2-tailed)c .200d
a. Test distribution is Normal.
b. Calculated from data.
c. Lilliefors Significance Correction.
d. This is a lower bound of the true significance.
Source: Data processed (2023)
From table 6 above, the significance value obtained from Kolmogorov-Smirnov is 0.200. Because
the significance value is greater than 0.05, it can be concluded that the residual value is normally
distributed.
Multicollinearity Test
Table 7. Multicollinearity Test Results
Collinearity Statistics
Model Tolerance VIF
1 X1 .286 3.497
X2 .247 4.056
X3 .229 4.359
a. Dependent Variable: Y
Source: Data processed (2023)
Based on table 7 above, it shows a tolerance number > 0.10 and has a VIF value < 10.00, thus it
can be concluded that there is no multicollinearity between the independent variables
compensation, motivation, and work discipline on the dependent variable performance.
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The Influence of Compensation, Motivation, and Work Discipline on Employee Performance
Nurpribadi, Rulianti, and Al Banteni
Heteroscedasticity Test
Figure 2. Heteroscedasticity Test Results
Source: Data processed (2023)
From Figure 2 you can see the dots are spread randomly. It does not form a clear pattern, and is
spread both above and below the number 0 (Zero) on the Y axis, so heteroscedasticity does not
occur.
Hypothesis Test
T Test
Table 8. T Test Results
Coefficientsa
Standardized
Unstandardized Coefficients
Coefficients
Model B Std. Beta t Sig.
Error
(Constant) ,884 1,410 ,627 ,533
X1 ,303 ,141 ,152 2,153 ,033
1 X2 ,527 ,083 ,514 6,353 ,000
X3 ,538 ,104 ,432 5,155 ,000
a. Dependent Variable: Y
Source: Data processed (2023)
According to the data in table 8 above, the sig value of X1 = 0.033 and t = 2.153. for sig, X2 =
0.000 and t = 6.353. for sig From the partial T test table, the conclusion is that compensation (X1)
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The Influence of Compensation, Motivation, and Work Discipline on Employee Performance
Nurpribadi, Rulianti, and Al Banteni
calculated t value is 2.153 > t table value 1.665 and obtained a sig value of 0.033 < 0.05, so Ho is
rejected and Ha is accepted. It can be concluded that Hypothesis I states that there is a significant
influence of compensation on employee performance at PT. Diamond Cold Storage is acceptable.
Motivation (X2) calculated t value 6.353 > t table value 1.665 and obtained a sig value of 0.000 <
0.05, then Ho is rejected and Ha is accepted. It can be concluded that Hypothesis II states that
there is a significant influence of motivation on employee performance at PT. Diamond Cold
Storage is acceptable. Work Discipline (X3) calculated t value 5.155 > t table value 1.665 and
obtained a sig value of 0.000 < 0.05, then Ho is rejected and Ha is accepted. It can be concluded
that Hypothesis III states that there is a significant influence of Work Discipline on PT Employee
Performance. Diamond Cold Storage is acceptable.
F test
Table 9. F Test Results
ANOVAa
Model Sum of df Mean F Sig.
Squares Square
Regression 4506,090 3 1502,030 181,008 ,001b
1 Residual 630,660 76 8,298
Total 5136,750 79
a. Dependent Variable: Y
b. Predictors: (Constant), X3, X1, X2
Source: Data processed (2023)
Based on table 9, it is known that the Fcount value is 181.008 and the Ftable value is 3.112 or F-
count 181.008 > 3.112 F-table and the significant value is 0.001 < 0.05. So it can be concluded
that the Compensation variable (X1), Motivation variable (X2), and Work Discipline (X3)
simultaneously have a positive and significant effect on Employee Performance (Y) at PT.
Diamond Cold Storage.
Coefficient of Determination Test (R2)
Table 10. Coefficient of Determination Test Results
Model Summary
Std. Error of the
Model R R Square Adjusted R Square Estimate
1 .937a ,877 ,872 2,88065
a. Predictors: (Constant), X3, X1, X2
Source: Data processed (2023)
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Nurpribadi, Rulianti, and Al Banteni
The statement of determination is used to show how much the percentage value of the
independent variables, namely compensation, motivation, and work discipline, together explains
the variance of the dependent variable, namely Employee Performance. The results of the multiple
linear regression analysis test show that the coefficient of determination is 87.7%. This value shows
that 93.7% of employee performance is influenced by compensation, motivation and work
discipline, while the remaining 12.3% is influenced by other variables not examined in this research.
Compensation Affects Performance
The research results explain that compensation is able to contribute to improving employee
performance. Compensation is an important thing that can influence employee performance in a
company. Providing adequate and fair compensation can increase job satisfaction and motivate
employees to improve their performance (Riley, 2022). Results of a longitudinal study of 8,933
workers in Germany by (Koch et al., 2021) found that increasing wages is positively correlated
with increasing worker performance. Direct financial compensation such as salary and bonuses as
well as indirect compensation such as insurance and leave have an effect on employee work results.
Competitive compensation makes employees feel cared for and appreciated for their contributions
by the company. This motivates them to work harder and more productively in order to achieve
maximum performance (Riley, 2022). On the other hand, providing compensation that is not
commensurate with the employee's workload and responsibilities can have a negative impact.
Employees will feel dissatisfied and motivated to look for another job that provides better
compensation (Koch et al., 2021). Therefore, compensation program design must consider internal
and external aspects in order to increase employee retention and performance.
Motivation Affects Performance
The research results explain that motivation can contribute to improving performance. Employee
work motivation is very important to improve performance in the company. Employees who are
intrinsically and extrinsically motivated tend to have better performance (Kanfer et al., 2022). The
results of a study on 163 banking employees in Pakistan show that motivation has a positive and
significant effect on performance (Ali & Farooqi, 2014). Several factors that influence employee
motivation levels include fair salaries, a conducive work environment, good interpersonal
relationships, and career development opportunities. Providing appropriate motivation such as
praise, rewards for performance, and interesting work challenges can increase job satisfaction and
encourage employees to perform better (Kanfer et al., 2022). On the other hand, employees who
are less motivated tend to work minimalistly and are less productive. This is because they feel
dissatisfied with their work or environment (Ali & Farooqi, 2014). Therefore, it is important for
companies to design effective motivation programs to improve employee performance and
productivity.
Work Discipline Affects Performance
The research results explain that work discipline is able to contribute to improving performance.
Work discipline is crucial for improving employee performance in the company. Employees who
have high work discipline are proven to be able to achieve more optimal performance (Basu et al.,
2017). The results of research on 150 bank employees in India revealed that work discipline has a
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positive and significant effect on individual performance (Dixit & Gupta, 2020). Some indicators
of good work discipline include being present on time, doing work according to procedures,
following company rules, and completing tasks effectively and efficiently. By enforcing work
discipline regulations, companies can increase employee productivity (Basu et al., 2017).
Meanwhile, a lack of work discipline has the potential to have a negative impact on the quality and
quantity of work results. Therefore, companies are advised to design work discipline policies that
are fair and wise. Apart from that, implementing rewards and punishment is also needed so that
disciplined behavior is embedded in every employee (Dixit & Gupta, 2020). Thus, increasing work
discipline in aggregate contributes positively to achieving the company's vision and mission.
Compensation, Motivation and Work Discipline Affects Performance
Compensation, motivation and work discipline together have a positive effect on improving
employee performance in the company. Providing adequate compensation and motivation
accompanied by enforcing good disciplinary rules has been proven to be able to increase employee
productivity and quality of work (Utami & Nerdy, 2020). Fair and appropriate financial and non-
financial compensation encourages employees to work optimally in order to provide maximum
contribution to the company. Meanwhile, various forms of intrinsic and extrinsic motivation are
also needed to raise work enthusiasm. Furthermore, strict but wise work discipline rules are the
foundation for the formation of consistent and responsible work behavior among employees
(Umar & Asmawi, 2022). These three factors complement each other. Without any of these
factors, it is likely that companies will have difficulty increasing organizational capabilities and
competitiveness.
CONCLUSION
Based on the results of the research that has been conducted, it can be concluded that
compensation, motivation and work discipline simultaneously have a positive and significant effect
on employee performance. Adequate and fair financial and non-financial compensation is very
important to increase satisfaction and encourage employees to work more optimally. Apart from
that, various forms of motivation, both intrinsic and extrinsic, are also needed so that employees
remain enthusiastic and enthusiastic in carrying out their duties. Meanwhile, the application of
disciplined rules and regulations is the foundation for the formation of employee work ethics and
responsibility in achieving performance targets. These three factors complement and strengthen
each other in determining employee performance in a company. Future research should involve
more samples and other independent variables such as work environment, organizational culture,
leadership, and so on. It is hoped that research with broader dimensions will be able to provide
more comprehensive results regarding the key factors that influence employee performance in
companies. Further research can also use a combination of quantitative and qualitative methods
to obtain a deeper and more complete understanding.
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