Compensation Role in Improving Employees' Performance

Abstract

The role of compensation is essential for the company and employees because it impacts both parties' performance. This study aims to analyze what factors affect compensation and how compensation affects employee performance, especially in the automotive component industry in West Java. This research is a type of quantitative research where data is collected by sharing questionnaires with 285 employees who work in automotive component companies in the Bekasi, West Java, Indonesia. Data analysis techniques used are descriptive statistics and structural equation modeling (SEM) using Lisrel 8.8 software tools. The results showed that government policies, trade unions, wage levels, and living costs significantly affected compensation while work productivity had no significant effect on compensation but compensation had a significant impact on employee performance.

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