The effect of organizational culture and compensation on employee engagement

Abstract

The purpose of this research is to study the effect of organizational culture and compensation on employee engagement. Organizational culture, compensation and employee engagement were assessed in an empirical study based on a sample of 138 permanent staff employees working at PT Lim Siang Huat as a beverage distributor company in Indonesia. The data gathered using a printed questionnaire was analyzed through path analysis methods. The finding research shows there are positive direct effect among organizational culture to employee engagement, compensation to employee engagement, organizational culture to compensation and positive indirect effect of organizational culture to employee engagement through the mediating role of compensation. The implications of the research is of utmost importance for PT Lim Siang Huat facing high voluntary turn over and high absenteeism rate in recent times. Organizational culture contribute to compensation and employee engagement. Imparting organizational culture improvement can help to strengthen the employee engagament through compensation. This study explores the effect of organizational culture on employee engagement through the mediating role of compensation which has not been explored theoretically and tested empirically at a beverage distributor company in Indonesia.

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