The Effect of Compensation, Work Discipline, and Work Environment on Employee Performance: Evidence from an Indonesian Company

Agnar Rifky  Iswanto; Nugraha  Saefudin

doi:10.47747/ijmhrr.v7i1.3387

Authors

Agnar Rifky Iswanto Widyatama University
Nugraha Saefudin Widyatama University

DOI:

https://doi.org/10.47747/ijmhrr.v7i1.3387

Keywords:

Compensation, Work Discipline, Work Environment, Employee Performance, Multiple Linear Regression

Abstract

Employee performance is a critical determinant of organizational effectiveness and sustainability, particularly in labor-intensive organizations. This study aims to examine the effect of compensation, work discipline, and work environment on employee performance. A quantitative approach with a descriptive and verificative design was employed. The study included all 77 employees of PT Kriya Nusantara Global and employed a census sampling technique. Data were collected via structured questionnaires and analyzed using multiple linear regression, supported by validity and reliability assessments and classical assumption tests. The results indicate that compensation, work discipline, and work environment each have a positive and significant effect on employee performance. Furthermore, the simultaneous test confirms that these variables collectively explain significant variation in employee performance. The findings demonstrate that employee performance is shaped by an integrated human resource system that combines fair compensation, consistent disciplinary practices, and a supportive work environment. This study contributes to the human resource management literature by reinforcing the importance of integrated HR practices in improving employee performance. In practice, the findings provide managerial insights for organizations to design holistic HR policies that align reward systems, behavioral discipline, and workplace conditions to achieve sustainable performance improvements. However, the findings are based on a single-organization context and should be generalized with caution

References

Adha, F. A., & Kasmari. (2024). Pengaruh kompensasi, disiplin kerja, dan lingkungan kerja terhadap kinerja karyawan. Jurnal E-Bis: Ekonomi Bisnis, 8(2), 846–855. https://doi.org/10.37339/e-bis.v8i2.1895

Al-Shammari, M., Al-Mutairi, A., & Al-Qatami, S. (2021). Work discipline and employee performance: Evidence from organizational settings. Management Science Letters, 11(3), 879–886. https://doi.org/10.5267/j.msl.2020.10.012

Astuti, V., & Damayanti, D. (2023). Pengaruh lingkungan kerja, kompensasi, dan disiplin kerja terhadap kinerja karyawan. Jurnal Riset Akuntansi dan Bisnis Indonesia, 3(3). https://journals.indexcopernicus.com/api/file/viewByFileId/1857216

Fernanda, R., Cik, A., & Digdowiseiso, K. (2024). The effect of physical work environment, work discipline, and financial compensation on employee performance. Journal of Social Science, 5(1).

Janah, S. F., & Bhirawa, S. W. S. (2022). Pengaruh kompensasi, disiplin kerja, dan lingkungan kerja terhadap kinerja karyawan pada CV GTT Kediri. Simposium Manajemen dan Bisnis, 1, 663–670. https://repository.unpkediri.ac.id/5960/

Jiang, K., Hu, J., Liu, S., & Lepak, D. P. (2021). Understanding employees’ perceptions of human resource practices: Effects on performance and well-being. Human Resource Management Journal, 31(2), 455–472. https://doi.org/10.1111/1748-8583.12314

Kwon, K., & Kim, T. (2020). An integrative review of employee engagement and performance. Human Resource Management Review, 30(2), 100704. https://doi.org/10.1016/j.hrmr.2019.100704

Lee, Y., Tao, W., Li, J. Y. Q., & Sun, R. (2021). Enhancing employees’ well-being and performance through supportive work environments. Public Relations Review, 47(1), 101982. https://doi.org/10.1016/j.pubrev.2020.101982

Malik, P., Garg, P., & Jain, R. (2023). Linking HR practices and employee performance: The mediating role of motivation. International Journal of Manpower, 44(4), 742–759. https://doi.org/10.1108/IJM-08-2021-0482

Nguyen, T. T., Pham, L. T., & Le, Q. H. (2022). Human resource management practices and employee performance in emerging economies. Asia Pacific Management Review, 27(3), 151–160. https://doi.org/10.1016/j.apmrv.2021.09.002

Park, S., & Min, S. (2022). Pay fairness and employee performance: The role of perceived organizational justice. Journal of Business Research, 139, 1304–1314. https://doi.org/10.1016/j.jbusres.2021.10.054

Putra, I. G. B., & Setiawan, P. Y. (2021). Work environment and employee performance: Evidence from Indonesian organizations. Journal of Asian Finance, Economics and Business, 8(2), 1045–1053. https://doi.org/10.13106/jafeb.2021.vol8.no2.1045

Nguyen, T. T., Pham, L. T., & Le, Q. H. (2022). Human resource management practices and employee performance in emerging economies. Asia Pacific Management Review, 27(3), 151–160. https://doi.org/10.1016/j.apmrv.2021.09.002

Park, S., & Min, S. (2022). Pay fairness and employee performance: The role of perceived organizational justice. Journal of Business Research, 139, 1304–1314. https://doi.org/10.1016/j.jbusres.2021.10.054

Putra, I. G. B., & Setiawan, P. Y. (2021). Work environment and employee performance: Evidence from Indonesian organizations. Journal of Asian Finance, Economics and Business, 8(2), 1045–1053. https://doi.org/10.13106/jafeb.2021.vol8.no2.1045

Raziq, A., & Maulabakhsh, R. (2022). Impact of working environment on job satisfaction and performance. Management Science Letters, 12(1), 1–8. https://doi.org/10.5267/j.msl.2021.8.001

Sari, D. P., Handayani, R., & Nugroho, Y. (2023). Work discipline, leadership, and employee performance: Empirical evidence from Indonesian firms. Journal of Asian Finance, Economics and Business, 10(2), 345–354. https://doi.org/10.13106/jafeb.2023.vol10.no2.0345

Sharma, A., & Dhar, R. L. (2020). Role of compensation and rewards in shaping employee motivation and performance. Journal of Organizational Effectiveness: People and Performance, 7(2), 197–215. https://doi.org/10.1108/JOEPP-01-2020-0006

Sugiyanta, Y., & Alessandro, M. (2024). Effects of the work environment and compensation on employee performance at PT Cedefindo Bekasi. International Journal of Entrepreneurship and Business Development, 7(2).

Wahyudi, A., Pratama, I. G. S., & Sari, N. P. R. (2022). Human resource practices and employee performance: Evidence from Indonesian service firms. International Journal of Productivity and Performance Management, 71(8), 3145–3163. https://doi.org/10.1108/IJPPM-03-2021-0167