The Effect of Direct Financial Compensation and Organizational Commitment on Work Performance at PT Perkebunan Nusantara II Kwala Hadu Sugar Factory

Oct 13, 2025 by thesweetdesigns.com 43 views

The Effect of Direct Financial Compensation and Organizational Commitment on Work Performance at PT Perkebunan Nusantara II Kwala Hadu Sugar Factory

In today's fast-paced business world, employees are considered one of the most valuable assets for any company. At PT Perkebunan Nusantara II Kwala Hadu Sugar Factory, understanding the impact of direct financial compensation and organizational commitment on employee work performance is crucial to improving organizational performance. This study aims to analyze the extent to which these two factors contribute to the achievement of employee work results.

Background and Significance of the Study

The success of any organization depends on the performance of its employees. In the context of PT Perkebunan Nusantara II Kwala Hadu Sugar Factory, employee work performance is a critical factor in achieving the company's goals and objectives. Direct financial compensation and organizational commitment are two key factors that can influence employee work performance. Direct financial compensation refers to the monetary rewards and benefits provided to employees, while organizational commitment refers to the emotional attachment and loyalty that employees have towards the organization.

Research Methodology

This study employed an explanatory research design, with a population of 124 employees from PT Perkebunan Nusantara II Kwala Hadu Sugar Factory. A sample of 95 employees from the Administration, Human Resources, and Computerization Section was used for the study. The data collection methods used included questionnaires, interviews, and document studies. Descriptive methods and multiple linear regression analysis were employed to analyze the data. The level of significance used in this study was 0.05.

Results and Discussion

The results of the F test showed that both direct financial compensation and organizational commitment have a positive and significant influence on employee work performance. However, the T-test results indicated that only direct financial compensation has a positive and significant influence. On the other hand, the organizational commitment variable showed an insignificant negative effect on employee work performance. The R² value of the determinant identification test confirmed that the relationship between direct financial compensation and organizational commitment and work performance is quite close, although there are other factors such as indirect financial compensation and unsealed employee commitments.

The Effect of Direct Financial Compensation on Employee Work Performance

The effect of direct financial compensation on employee work performance can be explained through motivational theory. Adequate compensation not only functions as a financial incentive, but can also increase employee motivation to achieve better work results. When employees feel financially valued, they tend to be more committed to doing their duties well. This is because direct financial compensation provides a sense of security and stability, which can motivate employees to perform better.

The Effect of Organizational Commitment on Employee Work Performance

Although organizational commitment is often considered an important factor in influencing performance, the results showed that these commitments are not always directly proportional to work performance. This can be caused by various factors, such as lack of employee involvement in decision making or dissatisfaction with the work environment that may not be affected by the amount of commitment that employees have. In other words, organizational commitment may not always translate to better work performance, especially if employees are not satisfied with their work environment or feel that their contributions are not valued.

Implications of the Study

The findings of this study have several implications for the management of PT Perkebunan Nusantara II Kwala Hadu Sugar Factory. Firstly, the study suggests that direct financial compensation is a critical factor in influencing employee work performance. Therefore, the company should evaluate and formulate a better compensation policy that takes into account the needs and expectations of its employees. Secondly, the study highlights the importance of creating a supportive work environment that values employee contributions and provides opportunities for self-development. By improving internal communication, providing opportunities for self-development, and creating a positive work culture, the company can increase employee commitment, which in turn can contribute to improving overall work performance.

Conclusion

In conclusion, this study provides valuable insights into the effect of direct financial compensation and organizational commitment on employee work performance at PT Perkebunan Nusantara II Kwala Hadu Sugar Factory. The study suggests that direct financial compensation is a critical factor in influencing employee work performance, while organizational commitment may not always translate to better work performance. The findings of this study have several implications for the management of the company, including the need to evaluate and formulate a better compensation policy and create a supportive work environment that values employee contributions and provides opportunities for self-development.

Recommendations for Future Research

This study highlights the need for further exploration of other factors that can affect work performance, such as non-financial compensation and work environment. By understanding these aspects, companies can create more comprehensive strategies to maximize employee performance, which in turn will support the long-term goals of the organization. Future research should focus on investigating the impact of non-financial compensation and work environment on employee work performance, as well as exploring the relationship between employee work performance and organizational performance.

Limitations of the Study

This study has several limitations that should be acknowledged. Firstly, the study was conducted on a sample of 95 employees from PT Perkebunan Nusantara II Kwala Hadu Sugar Factory, which may not be representative of the entire population. Secondly, the study used a cross-sectional design, which may not capture the dynamic nature of employee work performance. Finally, the study relied on self-reported data, which may be subject to biases and limitations.

Conclusion

In our previous article, we discussed the findings of a study on the effect of direct financial compensation and organizational commitment on work performance at PT Perkebunan Nusantara II Kwala Hadu Sugar Factory. In this article, we will answer some of the most frequently asked questions related to the study.

Q: What is the main finding of the study?

A: The main finding of the study is that direct financial compensation has a positive and significant influence on employee work performance, while organizational commitment does not have a significant influence.

Q: Why is direct financial compensation important for employee work performance?

A: Direct financial compensation is important for employee work performance because it provides a sense of security and stability, which can motivate employees to perform better. When employees feel financially valued, they tend to be more committed to doing their duties well.

Q: What is the relationship between organizational commitment and work performance?

A: The study found that organizational commitment does not have a significant influence on work performance. This can be caused by various factors, such as lack of employee involvement in decision making or dissatisfaction with the work environment that may not be affected by the amount of commitment that employees have.

Q: What are the implications of the study for the management of PT Perkebunan Nusantara II Kwala Hadu Sugar Factory?

A: The study suggests that the company should evaluate and formulate a better compensation policy that takes into account the needs and expectations of its employees. Additionally, the company should create a supportive work environment that values employee contributions and provides opportunities for self-development.

Q: What are the limitations of the study?

A: The study has several limitations, including a small sample size and a cross-sectional design. Additionally, the study relied on self-reported data, which may be subject to biases and limitations.

Q: What are the recommendations for future research?

A: The study recommends that future research should focus on investigating the impact of non-financial compensation and work environment on employee work performance. Additionally, future research should explore the relationship between employee work performance and organizational performance.

Q: How can the findings of the study be applied in a real-world setting?

A: The findings of the study can be applied in a real-world setting by implementing a better compensation policy and creating a supportive work environment that values employee contributions and provides opportunities for self-development. Additionally, the study suggests that companies should focus on providing a sense of security and stability to their employees, which can motivate them to perform better.

Q: What are the benefits of implementing a better compensation policy and creating a supportive work environment?

A: The benefits of implementing a better compensation policy and creating a supportive work environment include increased employee motivation, improved work performance, and reduced turnover rates. Additionally, a supportive work environment can lead to increased employee satisfaction and engagement.

Q: How can companies measure the effectiveness of their compensation policy and work environment?

A: Companies can measure the effectiveness of their compensation policy and work environment by conducting regular surveys and focus groups with employees. Additionally, companies can use metrics such as employee turnover rates, absenteeism rates, and productivity rates to measure the effectiveness of their compensation policy and work environment.

Q: What are the challenges of implementing a better compensation policy and creating a supportive work environment?

A: The challenges of implementing a better compensation policy and creating a supportive work environment include resistance to change from employees and management, limited resources, and competing priorities. Additionally, companies may face challenges in measuring the effectiveness of their compensation policy and work environment.

Q: How can companies overcome the challenges of implementing a better compensation policy and creating a supportive work environment?

A: Companies can overcome the challenges of implementing a better compensation policy and creating a supportive work environment by communicating clearly with employees and management, providing training and development opportunities, and setting clear goals and expectations. Additionally, companies can use metrics such as employee turnover rates, absenteeism rates, and productivity rates to measure the effectiveness of their compensation policy and work environment.