JRSSEM 2021, Vol. 01, No.5 , 443 – 454
E-ISSN: 2807 - 6311, P-ISSN: 2807 - 6494
DOI: 10.36418/jrssem.v1i5.44
THE EFFECT OF COMPENSATION ON EMPLOYEE
PERFORMANCE THROUGH WORK DISCIPLINE AS AN
INTERVENING VARIABLE AT PANAHMAS DWITAMA
DISTRINDO LTD. JEMBER
Vika Dhelia Pristiawati 1*
Rahmat Agus Santoso 2
1, 2 Universitas Muhammadiyah Gresik, Indonesia
*e-mail: vikadhelia122@gmail.com 1, ra_santoso@umg.ac.id 2
Correspondence: vikadhelia122@gmail.com1
Submitted: 19 November 2021, Revised: 11 December 2021, Accepted: 14 December 2021
Abstract. Panahmas Dwitama Distrindo Jember is a product distributor company of Unilever
Indonesia Ltd. has low employee discipline and decreased productivity of employee performance
is one of the problems this company faces. This study aims to see the effect of compensation on
employee performance through work discipline as an intervening variable at Panahmas Dwitama
Distrindo Ltd. Jember. This research method uses quantitative research methods by taking 60
respondents. Answer the problem formulation with the help of Smart Partial Least Square (PLS) 3
and analyze the data using the Partial Least Square (PLS) analysis technique. The study results show
that compensation has a negative and insignificant effect on employee performance,
compensation has a positive and significant effect on work discipline. Work discipline has a positive
and significant effect on employee performance, and compensation has a positive and significant
effect on performance. Employees through work discipline as an intervening variable.
Keywords: compensation; work discipline; employee performance.
Vika Dhelia Pristiawati, Rahmat Agus Santoso| 443
DOI: 10.36418/jrssem.v1i5.44
INTRODUCTION
The establishment of a company and
factors business capital, human resources
are also included in one of the most critical
factors. Therefore good management and
development of human resources aim to
achieve company goals (Hyväri, 2016). To
achieve a company's success, there needs
to be an encouragement that allows
employees to develop and improve their
abilities and skills optimally. One way that
the company can provide is with
compensation. Achieving good company
performance and company progress
Contribute to employee performance in
their respective jobs (Ardiansyah & Bachri,
2021). According to (Priyono & Darma,
2016), compensation is income received by
employees in the form of goods directly or
indirectly by the company in return for
services that have been provided to the
company.
Person obedience in actual behavior at
the time of achieving the goals set and
supported by high work discipline, then the
success of a job carried out by employees
of a company to obtain the maximum
result. Mediation can be interpreted as a
process of third party participation (third
element) in solving a problem (Armengol,
2013), and here work discipline is an
intermediary to determine the effect of
compensation on employee performance.
An employee's performance or an
employee is an evaluation of the
employee's work in performing their duties
and responsibilities and following the
procedures determined by the
organization within a certain period:
profitable or non-profitable (Rachmawati
et al., 2021). This is also following previous
research conducted by (Patmarina & Erisna,
2012) that work discipline affects the
performance of employees' CV. Laut
Selatan Jaya Bandar Lampung.
Panahmas Dwitama Distrindo Ltd. is a
distributor company Unilever with the
status of a private company, where
employees are required to have a good
performance for the company to survive
and compete with other companies.
Therefore, companies must consider
factors - factor labor that determines the
company's success in achieving its goals by
increasing employee performance.
Based on observations made by the
author, the fact that employees of
Panahmas Dwitama Distrindo Ltd. have
different performances is influenced by
compensation and productivity. In
providing compensation to employees
following the level of education, period,
and career period at the company
Panahmas Dwitama Distrindo Ltd. The
provision of compensation based on Law
No. 13 of 2003 concerning Manpower
Article 1 paragraph 30 requires companies
to provide salaries and wages in which
there are also allowances. The contents of
Law No. 13 of 2003 (Undang-Undang,
2003) concerning Manpower Article 1
Paragraph 30 is that.
"Wages are the workers' rights or
workers received and expressed in the
form of money as a rewarding
entrepreneur or employer to the
worker or laborer who is determined
and paid according to an employment
agreement, agreements, or statutory
regulations, including allowances for
Vika Dhelia Pristiawati, Rahmat Agus Santoso| 444
workers or laborers and their families
for a job and for services that have
been or, will ‘be performed.”(Undang-
Undang, 2003).
In addition to compensation,
companies can also improve employee
performance by creating work discipline.
Work discipline can affect employee
performance, and this statement is
reinforced by the opinion of (Hasibuan et
al., 2017) that The better one's work
discipline, the higher the performance will
be achieved. The work discipline of
Panahmas Dwitama Distrindo Ltd. can be
seen from the attendance and punctuality
when employees enter the office. This can
be seen from the number of attendance
achieved. The employee attendance
method of Panahmas Dwitama Distrindo
Ltd. Jember uses fingerprints to be precise
and accurate in evaluating employee
discipline.
In solving performance problems, poor
work discipline is also a factor that reduces
productivity, affecting performance
because many employees are subject to
disciplinary action. From the description
above, the formulation of the problem
proposed is whether compensation affects
employee performance through work
discipline as an intervening variable. This
study aimed to determine the effect of
compensation on employee performance
through work discipline as an intervening
variable.
Compensation
According to Priyono & Darma (2016),
compensation is all income received by
employees in the form of goods directly or
indirectly by the company in return for
services rendered to the company.
Compensation is divided into him that
compensation direct and indirectly. Direct
compensation is in salary, wages, intensive
while compensation is indirect to inform
welfare employees. In his book, Priyono &
Darma (2016) explains in detail the
objectives of compensation include:
a. Cooperation Bonds, by providing
compensation, a formal cooperative
bond is established between employers
and workers, where employees
(laborers) must do their jobs well while
employers are obliged to pay agreed
compensation.
b. Job Satisfaction, with remuneration
employees, will be able to meet their life
needs so that job satisfaction will be
obtained from the position they hold.
c. Motivation, If the remuneration
provided is adequate, then managers
will find it easier to motivate employees,
which will have an impact on increasing
productivity.
d. Employee Stability, with a compensation
program based on fair and proper
principles, guarantees employee
stability because turnover is relatively
small.
e. Discipline Improvement, Compensation.
Following procedures will have an
impact on increasing employee
discipline.
Work Discipline
According to Parwita (2015), work
discipline is the willingness of an employee
to comply with and carry out various
provisions that must be obeyed. (Supomo
445 | The Effect of Compensation on Employee Performance Through Work Discipline as an
Intervening Variable at LTD. Panahmas Dwitama Distrindo Jember
& Nurhayati, 2018) also argue that work
discipline is an attitude or behavior of
employees in an organization or institution
always to obey, respect, and respect all
rules and norms that have been
determined by the institution so that
organizational goals are achieved. From the
description above, it can be concluded that
Work Discipline is an act of one's awareness
to carry out all the regulations determined
by the company so that organizational
goals are achieved. According to (Farid et
al., 2019), some factors that influence
employee discipline, namely:
1. The amount of compensation may affect
discipline. Employees will comply with
all applicable rules.
2. Whether the company has exemplary
leadership or not, an example of
leadership is significant. Because in a
corporate environment, all employees
will always be vigilant about how they
can control themselves with words,
actions, and attitudes that they have
control over, which may violate
disciplinary rules.
3. Whether or not there are specific rules
used as a guideline, a company cannot
develop discipline without specific
document rules that can be used as
general guidelines.
4. The courage of leadership to act. If
employees have committed misconduct,
management needs the courage to act
according to their misconduct level.
5. All activities conducted by the company,
whether or not supervised by
management, must be supervised to
guide employees to perform their duties
correctly following decisions made.
6. Whether you care about them or not,
employees have different personalities.
7. Development habits that promote
discipline.
Performance
According to (Mangkunegara, 2005)
Performance is the result of work in quality
and quantity achieved by an employee in
carrying out his duties following the
responsibilities given to him. According to
(Simamora, 2004) there are several
characteristics of employees who have high
performance, including:
a. Achievement-oriented employees who
have high performance have a strong
desire to build the dreams they dream
of.
b. Confidence, employees with high
performance have a positive attitude
that leads to acting with a high level of
confidence.
c. Self-control, employees with high
performance have high self-discipline.
d. Competition, employees with high
performance, can develop specific
abilities.
The Hypothesis of Research
Effect of Compensation on Employee
Performance
Argue by (Purnama Dewi & Harjoyo,
2019) that the purpose of compensation, in
general, is to help the company achieve the
goals of the company's strategy success
and ensure the creation of internal and
external justice. In addition, compensation
is intended for the benefit of employees,
Vika Dhelia Pristiawati, Rahmat Agus Santoso| 446
the government, and the community. On
the other hand, the compensation program
must also be determined based on fair and
reasonable principles to provide
satisfaction for all parties, and the purpose
of compensation is achieved. A previous
study researched by (Junaedi & Lestari,
2017) stated that partial compensation
significantly affects employee performance
at the Brilliant Education Center
Probolinggo Educational Institution. At the
same time, the results of research
(Asmayana, 2018) Compensation has a
positive effect on employee performance at
the City Trade Office Makassar. Based on
the statement above, the following
hypothesis can be formulated:
H1: Compensation has a positive effect on
the performance of employees of
Panahmas Dwitama Distrindo Ltd.
Jember.
The Effect of Compensation on Work
Discipline
Compensation is one factor that
influences the enforcement of employee
discipline in a company. According to (Reni
Yesi, 2017), discipline is an attitude of
respect for the company's rules and
regulations that exist in employees, which
causes employees to conform to the rules
and regulations company voluntarily. The
results of (Husain 2020) state a positive and
significant influence between
Compensation on Work Discipline of Ltd.
Strategic Pest control Tebet, South Jakarta.
A similar study was also conducted by
(Suwarna & Juliansyah, 2018), which stated
a significant influence between
Compensation on Employee Work
Discipline at Ltd. Son of the Hutama Board.
From the description above, the
following hypothesis can be drawn:
H2: Compensation positively affects
Employee Work Discipline at
Panahmas Dwitama Distrindo Ltd.
Jember.
The Influence of Work Discipline on
Employee Performance
The company must create productivity
in improving employee performance,
starting with the first step, namely Work
Discipline. By creating work discipline,
employees will have high performance.
(Liyas & Primadi, 2017) in their research,
work discipline has a significant effect on
Employee Performance at Rural Banks.
H3: Work Discipline Affects Employee
Performance.
The Effect of Compensation on Employee
Performance through Work Discipline as an
Intervening Variable.
The company always expects
employees to have high performance.
Employees with high performance improve
the company's overall performance to
survive and compete in global competition.
The high and low level of employee
performance can be seen from the
compensation they get from the company.
Therefore the company must provide
compensation following the
responsibilities given. In addition to
compensation, work discipline is also a
factor causing employee performance that
is less than optimal in completing work on
time. (Isvandiari & Fuadah, 2017) in his
research shows that compensation and
work discipline variables significantly affect
the performance of Ltd. Meritjan Kediri.
447 | The Effect of Compensation on Employee Performance Through Work Discipline as an
Intervening Variable at LTD. Panahmas Dwitama Distrindo Jember
H4: Compensation positively affects
employee performance through work
discipline as an Intervening variable.
The research shows that updates and
differences lie in the variables and
population and how to process the data.
The author's interest in taking the title "the
effect of compensation on employee
performance through work discipline as an
intervening variable at panahmas dwitama
distrindo Ltd. Jember” because the author
wants to know and learn about
compensation work discipline and
employee performance. In addition, the
author will also test whether there is an
influence between these variables.
MATERIALS AND METHODS
The research used is approach
descriptive and quantitative analysis so that
the data are numbers (numeric). According
to (Sugiyono, 2016) the Quantitative
approach is a research method based on
the philosophy of positivism used to
examine populations specific or samples,
data collection using instruments research,
data analysis is quantitative and statistical,
intending to test predefined hypotheses so
that the results can find out what has been
suspected. The purpose of this research
using the descriptive method is to describe
the object of research, or the research
results can be seen clearly. (Sugiyono,
2017) also states that this descriptive
research method is carried out to
determine the existence of independent
variable, either on one or more variables,
without making comparisons of variables
Quantitative research is systematic
scientific research on parts and phenomena
and their relationships. The purpose of
quantitative research is to develop and use
mathematical models, theories, and
hypotheses related to natural phenomena.
The measurement process is a crucial part
of quantitative research. This provides an
overview or answer to the fundamental
relationship of quantitative relationships
(Siyoto & Sodik 2015). Research with a
quantitative approach is usually carried out
with the number of samples determined
based on the existing population.
Calculation of the number of samples is
done using a specific formula. The selection
of the formula to be used is then adjusted
to the type of research and population
homogeneity (Priyono & Darma, 2016).
Data Collection Tools
Quantitative data collection methods
rely heavily on random sampling and
instruments structured data collection
according to predetermined response
categories so that the resulting data is easy
to summarize, compare and generalize.
Quantitative research is closely related to
testing hypotheses made from previous
theories or an occurrence of phenomena.
Population and Sample
The population used in this study
were employees of Panahmas Dwitama
Distrindo Ltd. Jember. The number of
employees of Panahmas Dwitama Distrindo
Ltd. Jember totals 150 employees.
According to (Margono 2005), the
population is the entire object of research
consisting of a human object, animals,
plant, symptoms, test scores of the event as
sources of funds that have characteristics
Vika Dhelia Pristiawati, Rahmat Agus Santoso| 448
specified in a study.
Most members' sample is of the
population taken using the sampling
method. This study uses sampling
developed by Isaac and Michael using a
statistical approach for an error rate of 10%,
which can be done with the formula:
Where :
n: Sample
N : Population
D : Degrees of freedom
Diet :
N : 150 Employees
D : 10%
= 60
So the sample collection of this study
only used 60 of the 150 employees of
Panahmas Dwitama Distrindo Ltd. Jember.
Types of Research
This research uses descriptive research
development with survey descriptive
research methods. The purpose of this
research is to find out the effect of
compensation on employee performance
through work discipline as an intervening
variable at Panahmas Dwitama Distrindo
Ltd. Jember.
Types of Research Data
This study uses primary and secondary
data. According to (Sarwono, 2006),
primary data is data in the form of text from
interviews and obtained through interviews
with informants sampled in his research. In
connection with this research, the primary
data was obtained from a questionnaire
survey on employees of Panahmas
Dwitama Distrindo Ltd. Jember. At the
same time, the secondary data from this
study were obtained from other data
sources related to the research title.
Nature of Research Data
The nature of the data in this study is
quantitative data. According to (Siyoto S. &
Sodik, 2015), quantitative data is data in the
form of numbers or numbers. Following the
form, quantitative data can be processed or
analyzed using mathematical or statistical
calculation techniques.
Data Collection Tool
Data collection was done through
questionnaires or questionnaires as a data
collection tool chosen by researchers to
collect data.
Data Analysis Techniques
The data analysis technique is carried
out chronologically after data collection
and processed and analyzed computerized.
The data analysis technique used validity
test, test reliability, simple linear regression,
correlation coefficient, coefficient of
determination, and significant test (t-test).
The approach in Data Analysis
This study uses a systematic
descriptive approach and inferential
analysis of the relationship between
variables by testing hypotheses.
RESULTS AND DISCUSSION
Data were managed using the partial
least square (PLS) (Ghozali & Latan, 2015).
method using the Smart PLS 3.0 program.
The research results can be seen as follows:
Evaluation of the Measurement Model
449 | The Effect of Compensation on Employee Performance Through Work Discipline as an
Intervening Variable at LTD. Panahmas Dwitama Distrindo Jember
or Outer Model
In testing the validity and reliability, the
research model can use latent constructs
with indicators reflective and normative.
a. Convergent validity is determined based
on the principle that the measurement
of a construct should be highly
correlated (Jabbour et al., 2015). The
convergent validity with indicators was
reflectively evaluated by Average
Variance Extracted (AVE).
Table 1. Convergent Validity
Factor Loading
P-Value
X3
0.887
0.000
X4
0.874
0.000
X5
0.700
0.000
Y3
0.884
0.000
Y4
0.831
0.000
Z3
0.823
0.000
Z4
0.837
0.000
Z5
0.846
0.000
Source: Processed data (2021)
Based on table 1. It can be proven if the
data in the study is valid because the value
factor loading is more significant than 0.7.
b. Validity Discriminant aims to ensure
whether an indicator reflective is correct
to measure good.
Table 2. Discriminant Validity
(AVE)
Compensation
0.680
Company Performance
0.737
Work Discipline
0.698
Source: Processed data (2021)
Table 2 shows the AVE value of all
variables > 0.5, and it can be stated that all
variables have good discriminant validity.
Table 3. Composite Validity
Composite Reliability
X
0863
Y
0848
Z
0874
Source: Data processed (2021).
Based on table 3 above, the composite
value reliability of all research variables >
0.7, thus indicating that all variables have
met the composite standard. So that all
variables are considered reliable.
Table 4. Cronbach's Alpha
Cronbach's Alpha
Compensation
0.764
Performance
0.645
Work Discipline
0.785
Source: Processed data (2021)
Table 4. shows The Cronbach's Alpha
value >0.6. Performance has the lowest
value of 0.645.
Evaluation of the Structural Model
(Inner Model)
After measuring (outer model), then
testing the model structural (inner model).
R Square can show the strength and
weakness of the influence caused by
endogenous variables (Maryani et al.,
2020). The following is the R-Square value
on the latent variable:
Table 5. R Square
R Square
Compensation (X)
Performance (Y)
0.571
Work Discipline (Z)
0.212
Source: Processed data (2021)
Based on table 5, the latent variable of
performance has a value of 0.571 which
means that performance can explain the
variance of Work Discipline of 57.1%. The
value of R Square of Work Discipline is also
Vika Dhelia Pristiawati, Rahmat Agus Santoso| 450
influenced by compensation of 0.212,
testing the hypothesis as follows:
1. Effect of compensation (X) on employee
performance (Y).
2. The effect of compensation (X) on work
discipline (Z).
3. The effect of work discipline (Z) on
employee performance (Y).
4. The effect of compensation on
employee performance through work
discipline as an intervening variable.
Figure 1. Path Diagram
Figure 1 is the result of processing data
carried out with the SmartPLS 3.0 program,
then in hypothesis testing, display the
results of data processing relationships
between variables using SmartPLS as
follows:
Table 6. Results of Inter-Variable Influence Test
Original
Sample
(O)
Sample
Mean (M)
Standard
Deviation
(STDEV)
T Statistics
(|O/STDEV|)
P
Values
Compensation (X) ->
Employee Performance (Y)
-0.077
-0.083
0.122
0.631
0.264
Compensation (X) -> Work
Discipline (Z)
0.461
0.493
0.084
5.473
0.000
Work Discipline (Z) ->
Employee Performance (Y)
0.788
0.801
0.075
10.480
0.000
Source: Processed data (2021)
Discussion
Based on table 6, obtained p-value and
t-statistics for each variable are described
as follows:
1. Effect of Compensation on Employee
Performance
451 | The Effect of Compensation on Employee Performance Through Work Discipline as an
Intervening Variable at LTD. Panahmas Dwitama Distrindo Jember
Table 6 shows that the relationship
between compensation and employee
performance is not significant with a P-
Value of 0.264 > 0.05 with a beta value
of -0.007 and a T-statistic value of 0.631
< t-table 1, 96 it can be concluded that
compensation has a negative and
insignificant effect on employee
performance. This explains that
compensation has a negative and
insignificant effect on the performance
of employee Panahmas Dwitama
Distrindo Ltd. Jember. However,
employees work to meet their needs
and improve their lives where
compensation given by large or small
companies does not improve
employees' performance. This is
different from previous research
conducted by (Junaedi & Lestari, 2017),
which states that partial compensation
significantly affects employee
performance at the Brilliant Education
Center Probolinggo.
2. Effect of compensation on work
discipline
The p-value of the compensation
variable on work discipline is 0.000 <
significant 0.05 with a positive beta
value of 0.461, and the t statistic has a
value of 5.473 > 1.96. It can be
concluded that compensation has a
positive and significant effect on work
discipline. This explains that
compensation has an effect on
employee discipline at Panahmas
Dwitama Distrindo Ltd. Jember. The
factor that affect the enforcement of
employee discipline is compensation, so
to improve employee work discipline the
company must provide appropriate
compensation. This research is
supported by previous research
conducted by (Husain, 2020) which
states that there is a positive and
significant influent between
compensation on the work discipline of
Ltd. Strategic Pest control Tebet, South
Jakarta. (Suwarna & Juliansyah, 2018)
also argued that there is a significant
influence between compensation on
employee work discipline at Ltd. Putra
Papan Hutama.
3. Testing the effect of work discipline
on employee performance
The p-value of the work discipline
variable on employee performance is
0.000 <significantly 0.05 with a positive
beta value of 0.788 and the t statistic has
a value of 10.480>1.96, it can be
concluded that work discipline has a
positive and significant effect on
performance employee. This explains
that work discipline affects the
performance of employees of Panahmas
Dwitama Distrindo Ltd. Jember.
Employees who have high work
discipline certainly have high
performance as well. (Liyas & Primadi,
2017) in previous research also
produced a statement what work
discipline had a significant effect on
employee performance at Bank Kreditan
Rakyat.
4. Testing the effect of compensation on
performance through work discipline
as an intervening variable
Vika Dhelia Pristiawati, Rahmat Agus Santoso| 452
DOI: 10.36418/jrssem.v1i5.44
Table 7. indirect effect test results
Original
Sample
(O)
Sample
Mean
(M)
Standard
Deviation
(STDEV)
T Statistics
(|O/STDEV|)
P Values
Compensation (X) -> Work
Discipline (Z) -> Employee
Performance (Y)
0.363
0.396
0.083
4.397
0.000
Source: Processed data (2021)
Tables The above shows a P-value of
0.000 <0.05, with a beta value of 0.363 and
a t-statistic value of 4.397 > at-value of
1.96, it can be concluded that
compensation has a positive and significant
effect on employee performance through
work discipline as an intervening variable.
This explains that the effect of
compensation on company performance
through employee discipline at Panahmas
Dwitama, DIstrindo Jember Ltd. The first
step that must be taken by the company to
improve employee performance is to
enforce good work discipline, for that the
company must provide appropriate
compensation so that employee
performance increases. Previous research
conducted by (Andryane & Mukaffi, 2019)
stated that compensation has an indirect
effect on employee performance through
work discipline at PT Telekomunikasi
Indonesia.
CONCLUSIONS
Based on the research results and the
hypotheses that have been formulated, the
results obtained are research that is able to
prove and answer this research problem.
The conclusions are compensation has a
negative and insignificant effect on
employee performance at Panahmas
Dwitama Distrindo Ltd. Jember.
Compensation has a positive effect on
Work Discipline Panahmas Dwitama
Distrindo Ltd. Jember. Work Discipline has
a positive and significant effect on
Employee Performance of Panahmas
Dwitama Distrindo Ltd. Jember.
Compensation has a positive and
significant influence on employee
performance through Work Discipline as an
intervening variable. Work Discipline is able
to mediate the effect of compensation on
the performance of employees of
Panahmas Dwitama Distrindo Ltd. Jember.
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