The Importance of Compensation in Improving Employee Performance

Oct 13, 2025 by pynkocean.com 19 views

The Effect of Compensation on Employee Performance at PT PLN (Persero) Padang Sidempuan Area, North Sumatra

Introduction

Employee performance at PT PLN (Persero) Padang Sidempuan Area, North Sumatra, has been a topic of concern for the company. Customer complaints related to the slow response of electrical installation disruption officers and demands for more alert customer service have highlighted the need for an in-depth evaluation of the factors that affect employee performance. This study aims to examine the effect of compensation on employee performance at PT PLN (Persero) Padang Sidempuan Area, to understand how the applicable compensation system can encourage improvement in performance.

The Importance of Compensation in Improving Employee Performance

Compensation is one of the main factors that encourage employees to work hard and achieve performance targets. When employees feel valued and paid according to their contributions, they tend to be more motivated, dedicated, and loyal to the company. Adequate compensation helps employees meet their and family needs, such as food, clothing, education, and health. This reduces worry and uncertainty, so that employees can focus on their work.

Good compensation, including incentives and bonuses, provide motivation and incentives for employees to achieve targets and exceed expectations. Employees who feel valued and paid according to their performance tend to be more satisfied with their work. This job satisfaction in turn has a positive impact on performance and productivity. Furthermore, employees who feel valued and get compensation that is appropriate tends to be more loyal to the company. This loyalty will encourage employees to last longer in the company and make a maximum contribution.

The Effect of Compensation on Employee Performance at PT PLN (Persero) Padang Sidempuan Area

This study uses a quantitative approach, with data collected through questionnaires and field observations. As many as 40 respondents were chosen as samples and data were analyzed by instrument tests, simple linear regression, significance tests, and coefficient of determination. The results showed that compensation had a significant influence on employee performance at PT PLN (Persero) Padang Sidempuan Area. Compensation which includes salary, benefits, and incentives, together has a positive and significant impact on employee performance, reaching 93.2%. This shows that compensation is an important factor in encouraging employees to improve their performance.

Why is Compensation so Important?

Compensation is a crucial factor in motivating employees to work hard and achieve performance targets. When employees feel valued and paid according to their contributions, they tend to be more motivated, dedicated, and loyal to the company. The following are some reasons why compensation has a significant influence on employee performance:

Meet the needs: Adequate compensation helps employees meet their and family needs, such as food, clothing, education, and health. This reduces worry and uncertainty, so that employees can focus on their work.
Motivation and incentives: Good compensation, including incentives and bonuses, provide motivation and incentives for employees to achieve targets and exceed expectations.
Increasing job satisfaction: Employees who feel valued and paid according to their performance tend to be more satisfied with their work. This job satisfaction in turn has a positive impact on performance and productivity.
Increasing loyalty: Employees who feel valued and get compensation that is appropriate tends to be more loyal to the company. This loyalty will encourage employees to last longer in the company and make a maximum contribution.

Recommendations for PT PLN (Persero) Padang Sidempuan Area

Based on the results of the study, here are some recommendations that can be applied by PT PLN (Persero) Padang Sidempuan Area to improve employee performance through the compensation system:

Evaluation and adjustment of the compensation system: Periodic compensation system evaluation to ensure compliance with employee needs and industrial development. Consider adjusting the amount of salary, benefits, and incentives to remain competitive and attractive to employees.
Application of appreciation and recognition systems: In addition to financial compensation, implementing the appreciation system and recognition for outstanding employees. This can be in the form of non-financial awards such as certificates, promotions, or training opportunities.
Increasing transparency and justice: Make sure the compensation system is applied transparently and fairly to all employees. Transparency and justice in the compensation system can build a sense of trust and motivation among employees.

Conclusion

By understanding the effect of compensation on employee performance and applying appropriate recommendations, PT PLN (Persero) Padang Sidempuan area can create a positive and supportive work environment, and motivate employees to achieve optimal performance. Compensation is a crucial factor in motivating employees to work hard and achieve performance targets. Adequate compensation helps employees meet their and family needs, provides motivation and incentives, increases job satisfaction, and increases loyalty. Therefore, PT PLN (Persero) Padang Sidempuan Area should evaluate and adjust the compensation system, apply appreciation and recognition systems, and increase transparency and justice in the compensation system to improve employee performance.

Limitations of the Study

This study has some limitations. The study only focuses on the effect of compensation on employee performance at PT PLN (Persero) Padang Sidempuan Area, and does not consider other factors that may affect employee performance. Furthermore, the study only uses a quantitative approach, and does not consider the qualitative aspect of employee performance.

Future Research Directions

Future research can build on this study by considering other factors that may affect employee performance, such as job satisfaction, motivation, and loyalty. Furthermore, future research can use a mixed-methods approach to consider both quantitative and qualitative aspects of employee performance.

References

[List of references]

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Frequently Asked Questions (FAQs) about the Effect of Compensation on Employee Performance at PT PLN (Persero) Padang Sidempuan Area

Q: What is the main objective of this study?

A: The main objective of this study is to examine the effect of compensation on employee performance at PT PLN (Persero) Padang Sidempuan Area, to understand how the applicable compensation system can encourage improvement in performance.

Q: What is the significance of compensation in improving employee performance?

A: Compensation is a crucial factor in motivating employees to work hard and achieve performance targets. When employees feel valued and paid according to their contributions, they tend to be more motivated, dedicated, and loyal to the company.

Q: What are the benefits of adequate compensation for employees?

A: Adequate compensation helps employees meet their and family needs, such as food, clothing, education, and health. This reduces worry and uncertainty, so that employees can focus on their work.

Q: What are the types of compensation that can motivate employees?

A: Good compensation, including incentives and bonuses, provide motivation and incentives for employees to achieve targets and exceed expectations. Employees who feel valued and paid according to their performance tend to be more satisfied with their work.

Q: What are the recommendations for PT PLN (Persero) Padang Sidempuan Area to improve employee performance through the compensation system?

A: Based on the results of the study, here are some recommendations that can be applied by PT PLN (Persero) Padang Sidempuan Area to improve employee performance through the compensation system:

Evaluation and adjustment of the compensation system: Periodic compensation system evaluation to ensure compliance with employee needs and industrial development. Consider adjusting the amount of salary, benefits, and incentives to remain competitive and attractive to employees.
Application of appreciation and recognition systems: In addition to financial compensation, implementing the appreciation system and recognition for outstanding employees. This can be in the form of non-financial awards such as certificates, promotions, or training opportunities.
Increasing transparency and justice: Make sure the compensation system is applied transparently and fairly to all employees. Transparency and justice in the compensation system can build a sense of trust and motivation among employees.

Q: What are the limitations of this study?

A: This study has some limitations. The study only focuses on the effect of compensation on employee performance at PT PLN (Persero) Padang Sidempuan Area, and does not consider other factors that may affect employee performance. Furthermore, the study only uses a quantitative approach, and does not consider the qualitative aspect of employee performance.

Q: What are the future research directions?

A: Future research can build on this study by considering other factors that may affect employee performance, such as job satisfaction, motivation, and loyalty. Furthermore, future research can use a mixed-methods approach to consider both quantitative and qualitative aspects of employee performance.

Q: What are the implications of this study for PT PLN (Persero) Padang Sidempuan Area?

A: By understanding the effect of compensation on employee performance and applying appropriate recommendations, PT PLN (Persero) Padang Sidempuan area can create a positive and supportive work environment, and motivate employees to achieve optimal performance.

Q: What are the implications of this study for other organizations?

A: This study has implications for other organizations that want to improve employee performance through the compensation system. By understanding the effect of compensation on employee performance, organizations can create a positive and supportive work environment, and motivate employees to achieve optimal performance.

Q: What are the future implications of this study?

A: This study has future implications for the development of human resource management practices in organizations. By understanding the effect of compensation on employee performance, organizations can develop more effective human resource management practices that can improve employee performance and organizational success.