The Effect of Compensation on Employee Motivation

Oct 13, 2025 by ludoplayers7.com 58 views

The Effect of Financial and Non-Financial Compensation on Employee Work Performance at PT Perkebunan Nusantara (PTPN) II Tanjung Morawa Medan

Introduction

In today's competitive business landscape, companies are constantly seeking ways to improve employee work performance and productivity. One of the key factors that can significantly impact employee performance is compensation. Compensation can be broadly categorized into two types: financial and non-financial. Financial compensation includes salaries, benefits, bonuses, and other incentives that directly provide economic benefits to employees. On the other hand, non-financial compensation includes recognition, career development, and supporting work environment. In this study, we aim to investigate and analyze the effect of financial and non-financial compensation on employee work performance at PT Perkebunan Nusantara (PTPN) II Tanjung Morawa-Medan.

Methodology

This study employed a descriptive analysis method and multiple linear regression analysis to investigate the effect of financial and non-financial compensation on employee work performance. The data obtained was processed using SPSS software version 16.0. The population in this study consisted of all employees of PT Perkebunan Nusantara (PTPN) II Tanjung Morawa-Medan, with a sample of 84 permanent employees.

Results

The results of this study showed that both financial and non-financial compensation had a significant influence on employee work performance at PT Perkebunan Nusantara (PTPN) II Tanjung Morawa-Medan. This can be seen from the multiple regression analysis and the coefficient of determination, which shows the R value of 0.466. This means that the relationship between financial and non-financial compensation and employee work performance is 46.6%. This shows a close relationship between the two variables.

Furthermore, the Adjusted R Square value of 0.178 indicates that 17.8% of work performance can be explained by the financial and non-financial compensation variables. This implies that there are still 82.2% of other factors that can affect employee performance that are not discussed in this study. This is an important finding, as it suggests that besides compensation, there are other factors that also contribute to employee performance.

Financial and Non-Financial Compensation

Financial compensation is a crucial aspect of employee compensation, as it directly provides economic benefits to employees. It includes salaries, benefits, bonuses, and other incentives that can motivate employees to perform better. On the other hand, non-financial compensation includes recognition, career development, and supporting work environment. Both types of compensation have an important role in increasing employee motivation and job satisfaction, which ultimately has a positive impact on their performance.

The Effect of Compensation on Employee Motivation

Employees who feel valued through adequate compensation tend to have higher motivation. When employees feel that the compensation they receive is proportional to the contributions given, they will be more committed to achieving company goals. In addition, career development and opportunities for learning given by the company also contribute to the sense of ownership and loyalty of employees.

The Importance of a Supporting Work Environment

A good work environment is also very important in supporting employee work performance. Comfortable workspaces, support from superiors, and harmonious relationships between coworkers can increase productivity. Therefore, companies need to not only focus on financial aspects but also pay attention to non-financial factors so that employees feel more involved and motivated.

Conclusion

From the results of this study, it can be concluded that financial and non-financial compensation has a significant influence on employee work performance at PT Perkebunan Nusantara (PTPN) II Tanjung Morawa-Medan. Therefore, companies should pay attention to these two aspects to improve employee performance. In addition, it is also necessary to consider other factors that can affect performance, so that the policies taken are more comprehensive and effective. Thus, the company can achieve the desired goals and create a positive work environment for all employees.

Recommendations

Based on the findings of this study, the following recommendations are made:

Improve Financial Compensation: Companies should review their financial compensation packages to ensure that they are competitive and fair. This can include increasing salaries, benefits, and bonuses to motivate employees.
Develop Non-Financial Compensation: Companies should develop non-financial compensation packages that include recognition, career development, and supporting work environment. This can include training and development programs, mentorship, and employee recognition schemes.
Create a Positive Work Environment: Companies should create a positive work environment that is comfortable, supportive, and inclusive. This can include providing comfortable workspaces, supporting employees' well-being, and promoting teamwork and collaboration.
Consider Other Factors: Companies should consider other factors that can affect employee performance, such as employee engagement, job satisfaction, and organizational culture. This can include conducting regular employee surveys, providing feedback and coaching, and promoting a positive organizational culture.

By implementing these recommendations, companies can improve employee work performance, increase productivity, and achieve their desired goals.
Frequently Asked Questions (FAQs) about the Effect of Financial and Non-Financial Compensation on Employee Work Performance

Q: What is the main finding of this study?

A: The main finding of this study is that both financial and non-financial compensation have a significant influence on employee work performance at PT Perkebunan Nusantara (PTPN) II Tanjung Morawa-Medan.

Q: What are the types of compensation discussed in this study?

A: The study discusses two types of compensation: financial and non-financial. Financial compensation includes salaries, benefits, bonuses, and other incentives that directly provide economic benefits to employees. Non-financial compensation includes recognition, career development, and supporting work environment.

Q: How does financial compensation affect employee motivation?

A: Financial compensation can motivate employees to perform better when they feel that the compensation they receive is proportional to the contributions given. This can lead to increased commitment to achieving company goals.

Q: What is the importance of a supporting work environment?

A: A good work environment is essential in supporting employee work performance. Comfortable workspaces, support from superiors, and harmonious relationships between coworkers can increase productivity.

Q: What are the limitations of this study?

A: The study has several limitations, including the sample size and the fact that it only focuses on two types of compensation. Future studies can explore other factors that can affect employee performance.

Q: What are the implications of this study for companies?

A: The study has several implications for companies, including the need to improve financial compensation packages, develop non-financial compensation packages, and create a positive work environment. Companies should also consider other factors that can affect employee performance.

Q: How can companies improve employee work performance?

A: Companies can improve employee work performance by implementing the recommendations outlined in this study, including improving financial compensation, developing non-financial compensation, creating a positive work environment, and considering other factors that can affect employee performance.

Q: What are the benefits of improving employee work performance?

A: Improving employee work performance can lead to increased productivity, better job satisfaction, and improved organizational performance. It can also lead to increased employee engagement and retention.

Q: How can companies measure the effectiveness of their compensation packages?

A: Companies can measure the effectiveness of their compensation packages by conducting regular employee surveys, analyzing employee performance data, and assessing the impact of compensation on employee motivation and job satisfaction.

Q: What are the future research directions for this study?

A: Future research directions for this study can include exploring other factors that can affect employee performance, such as employee engagement, job satisfaction, and organizational culture. It can also include conducting longitudinal studies to examine the long-term effects of compensation on employee performance.

Q: How can companies create a positive work environment?

A: Companies can create a positive work environment by providing comfortable workspaces, supporting employees' well-being, and promoting teamwork and collaboration. They can also provide opportunities for employee development and recognition.

Q: What are the key takeaways from this study?

A: The key takeaways from this study are that both financial and non-financial compensation have a significant influence on employee work performance, and that companies should consider other factors that can affect employee performance. Companies should also create a positive work environment and provide opportunities for employee development and recognition.