FORUM EKONOMI, 23 (1) 2021, 145-154

http://journal.feb.unmul.ac.id/index.php/FORUMEKONOMI

Effect of compensation, work environment and communication on employee

performance in ud. djaya listrik and material
Raniasari Bimanti Esthi
Management Study Program, Pelita Bangsa University.
Email: raniasari@pelitabangsa.ac.id

Abstract
Demand for building materials and electrical appliance products in Bekasi, West Java continues to
increase due to the growth of the property sector and various consumers preferences. This has
contributed to the growth of this supports business. The objective of this study is to determine the effect
of compensation, work environment and communication on employee performance with a case study at
UD. Djaya Electricity and Materials (UD. DEM). The sampling method was purposive sampling
technique because UD. DEM selected as a company that sells and distribute building materials and
electrical appliance products for wholesale and retail, already has 10 branches in Bekasi and 50
employees. Data collection was conducted through observation, distributing questionnaires and
literature study. The analysis method used in this research is validity, reliability, classical assumption,
multiple linear analysis and hypothesis test. The results showed that compensation and work
environment partially had a positive effect on employee performance, while communication partially
had no effect on employee performance.
Keywords: Compensation; work environment; communication; employee; performance

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INTRODUCTION
Demand for building materials and electrical appliance products in the Bekasi area, West Java
continues to increase due to the growth of the property sector, such as the construction buildings of
office, shops, business areas, housing, tourist attractions and entertainment. Not only for new buildings
but also for renovation purposes. In addition, continuous of architectural innovations are carried out to
create modern, classic, decorative, futuristic buildings and so on to meet the demands of consumers who
crave buildings according to modern, comfortable, environmentally friendly, and other living standards
according to their preferences which also encourage the growth of service businesses. provider of
building materials and electrical appliance products.
UD. DEM activities that are oriented towards fulfilling wholesale and retail demand must be able
to empower all existing resources including employees to achieve business targets optimally. The
company's human resources, 88 percent of whom have a maximum education level of junior high school,
cause the salary they receive is not high. Compensation is an inseparable part of improving employee
performance because it is impossible to only depend only on salaries. Zulkarnaen et. al. (2017) in their
research stated that direct and inderect compensation have a positive and significant effect, on the other
hands it’s plays an important role in improving employee performance because one of the main reasons
someone works is to make ends meet from the rewards they receive while working.
UD. DEM employees in a work environment will pay close attention to physical and non-physical
factors to support the performance of each employee and the work team as a whole. Physically,
employees carry out work activities by utilizing all the tools and materials owned by the company to
support performance. Non-physically, employees need methods and organizational arrangements also
work relationships between employees and with company leaders that give the impression of being
comfortable, safe, pleasant, providing challenges and motivation to work harder, calm and focus in doing
every assigned task, it will also affect performance.
Communication in the UD. DEM can be seen in three ways: a) between leaders and employees,
b) between employees and each other, and c) between employees and leaders. Communication within
the company have a purpose to forming a sense of mutual understanding, controlling corporate behavior,
generating motivation, expressing emotions and considering decision-making both by individuals and
by teams. When the pre-survey found communication problems in UD. DEM appears because of the
different of employees : a) backgrounds and experiences, b) perceptions and interpretations of
instructions or data, and c) misunderstandings in the delivery of messages and not evenly distributed.
Lirature review
Employee performance
Performance comes from the word job performance and is also called actual performance or work
performance or actual achievement that has been achieved by an employee. There are many definitions
of employee performance that are said by experts, one of the definitions of performance is the work that
can be achieved by a person or group of people in an organization, in accordance with their respective
authorities and responsibilities, in order to legally achieve the organizational goals concerned, does not
violate the law and is in accordance with morals and ethics (Ulfa and Ridwan, 2015).
Human resource management in the company is intended so that the performance of employees
can achieve and realize all the plans, policies, goals, objectives, vision, mission and work programs of
the company that have been previously determined. Performance is work performance or work results
(output) both in quality and quantity, and also utilization of workload completion time achieved by the
human resources of the unity period of time to carrying out their work duties in accordance with the
responsibilities assigned to them (Sudarmanto, 2014).
Mangkunegara (2005) in Prabu and Wijayanti (2016) states that in general performance can be
divided into two, that is individual and organizational performance. Individual performance is the result
of employee work both in terms of quality and quantity based on determined work standards, while
organizational performance is a combination of individual performance with group performance.
The individual performance of each person is influenced by many factors, according to Kasmir
(2016), that is:

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Abilities and Skills: is the ability a person doing a job. The more capable and skilled they will be able
to complete their work correctly, according to what has been determined;
Knowledge: someone who has good work knowledge will get good job results, and vice versa;
Job Design: that will make it easier for employees to achieve their goals;
Personality: everyone has a different personality from one another. Someone who has a good personality
will be able to do the job seriously with full responsibility so that the results of his job will also be good;
Work Motivation: the encouragement for someone to do jobs, if the employee has a strong impulse from
within or from outside himself, the employee will be motivated to do something well, so that the drive
is able for someone to produce employee performance; and
Leadership: the behavior of a leader in organize, managing and ordering his employee to carry out the
tasks and responsibilities.
The performance measurement is a systematic attempt to compare what someone achieves in
comparison with existing standards. The purpose is to encourage one's performance to be above average.
The success of strategy achievement is a key aspect of performance for management to improve it
(Pasalong, 2013). Therefore, the strategic objectives that become the basis of measurement can be
determined, and strategic initiatives are determined to realize these targets. Strategic targets and their
measurements are then used to determine targets that will be used as the basis for performance
measurements, to determine the awards to be given to employee, teams or organizational units (Dharma,
2012).
Compensation and employee performance
According to Handoko (2014), compensation is everything that employees receive in return for
their work. According to Hasibuan (2014), compensation is all income in the form of money, direct
goods or indirectly received by employees as compensation for services provided to the company. In
order to improve employee performance, the company can choose several ways according to the
company's situation and capabilities, including providing compensation.
Highlighting the problem of compensation, Sunyoto (2013) in Fauzi (2017) states that
compensation is an important component in relationships with employees. Compensation includes direct
cash payments, indirect payments in the form of employee benefits. In addition, there is also an intensive
to motivate employees to work hard to achieve higher levels of productivity. According to Suwanto and
Priansa (2011) in Suharyanto et. al. (2014) stated that compensation provides the main incentive or
motivation for an employee to work. Compensation has a broader scope than wages and salaries.
Compensation includes all expenses incurred by the company for workers and received or enjoyed by
workers, either directly, routinely or indirectly, one day. In a broad sense, compensation besides
consisting of salaries and wages, can also take the form of housing facilities, vehicle facilities, uniforms,
family allowances, medical benefits, food allowances and many others that can be valued in money and
tend to be received by employees on a regular basis.
Compensation will provide encouragement for employees to work optimally, to excel and achieve
predetermined work targets. When an employee is satisfied with the compensation he has received,
whether in financial form such as salary, bonus or allowance or non-financial in the form of prizes,
awards or promotions, the employee will try to improve his performance. Compensation will affect
employee performance when employees are satisfied or dissatisfied with the compensation provided.
Employee performance will be maximized and will continue to increase if employees are satisfied with
the compensation provided by the company, and vice versa, employee performance will decrease if
employees are disappointed with the compensation from the company. Compensation that is given fairly
will make employees satisfied and will ultimately affect the employee's performance. So thus, employee
performance will increase or decrease in accordance with the level of employee job satisfaction with the
compensation provided by the company (Jufrizen, 2017).
According to Werther and Davis in Astuti and Suhendri (2017) state that compensation aims are
: a) Obtaining quality personnel. Compensation needs to be set high enough to be able to attract the
number of applicants, b) Retaining existing employees. Workers can leave if the level of compensation
is not competitive with other organizations which results in high labor turnover, c) Ensuring Justice.
Compensation management strives to maintain internal and external fairness and d) Appreciate the

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desired behavior. Payments should reinforce desired behavior and act as incentives for future behavior.
Effective compensation plans reward performance, loyalty, expertise and responsibility.
Work environment and employee performance
According to Sutanto and Suwondo (2015), the work environment consists of two types. First,
the work environment which is related to the physical aspect is everything related to the physical aspect
of the work environment. Second, the work environment which has a psychological aspect is a work
environment that cannot be grasped by the five senses. Physical work environment is all physical
conditions that exist around the workplace that can effected employees either directly or indirectly. The
physical work environment is divided into two categories, that is environments that are directly related
to and near employees (chairs, tables and so on) and intermediate environments (temperature, humidity,
air circulation, lighting, mechanical vibrations, unpleasant odors, colors and so on). A non-physical
work environment is all situations that occur in relation to work relationships, both relationships with
leaders and relationships with fellow colleagues as well as relationships with employee.
According to Moulana, et al. (2017), a work environment condition is said to be good or
appropriate if the people inside can carry out their activities optimally, healthy, safe and comfortable. A
safe and healthy work environment has been shown to have an effect on productivity. In addition, it is
also argued that pleasant working conditions can include a workplace, and supporting facilities that
speed up work completion. The suitability of the work environment can have an impact for a long time,
as well as a bad work environment which will make it difficult to obtain an effective and efficient work
system.
Employees always demand a comfortable work environment, so that the optimization of
employee work can be achieved properly. The comfort of the work environment both physically and
non-physically is the hope for every employee. By paying attention to the physical work environment
or creating working conditions that are able to provide motivation to work, it will have an influence on
employee enthusiasm or spirit for work (Simamora et al., 2016).
Communication and employee performance
According to Daryanto (2011) the benefits of communication include: a) to inform, b) to educate,
c) to persuade and d) to entertain. The main purpose of communication is to build or create mutual
understanding or comprehension. According to As'ad (2018), in carrying out work, employees cannot
be separated from communicating with fellow workers, with leaders and with subordinates. Good
communication can be the right means to improving employee performance. Through communication,
employees can ask their leaders for instructions regarding work implementation. Through
communication, employees can also cooperate with each other. The expected communication in the
world of work is effective communication.
According to Suprapto (2011) there are four kinds of communication objectives that is : a)
Functional goals that are primarily useful for achieving the goals of the organization or institution, b)
Manipulative goals that are meant to move people who are willing to accept the ideas presented, whether
or not they are in accordance with their values and attitudes, c) Aesthetics goals to achieve goals are
creative, and communication is used to enable someone to be able to express these feelings in reality
and d) Confidence goals that intend to convince or develop people's confidence in the environment.
According to Rialmi and Morsen (2020), the effectiveness of communication can be assessed
from the performance of human resources in the organization. An important element in improving
performance in an organization is the availability of quality human resources, productivity, has a high
work ethic, and is able to provide optimal contributions to the company. To get the elements needed,
organizations need proper coordination of every human resource in the company through effective
communication.
According to Munthe and Tiorida (2017), a company is required to maximize its performance in
collaborating with other people for various purposes such as business, professional, social and various
other needs. They work together to determine goals to be achieved, compile a work plan, manage and
run the organization's business operations. To realize all of this, a unity of its members is needed, that
is the internal parties in the company, if the internal parties in the company have good, compact
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cooperation and prioritize the interests of the company, then this creates a conducive working climate
in the company and of course the company's performance will be better too.
METHOD
The type of research used is a quantitative method, a method that emphasizes the objective
measurement aspects of social phenomena (Sugiyono, 2014). Population in this study is the employees
of UD. DEM as many as 50 employees. Data collection methods used in this research are observation,
questionnaire data, interviews and literature study.
The data analysis method used in this study was a research instrument test consisting of validity
and reliability tests, classical assumption tests and hypothesis testing using multiple linear analysis, that
is to determine the effect between one independent variable and one dependent variable which is shown
in the form of the regression equation as follows :
Multiple regression analysis model
The equation model of Multiple Regression Analysis use in this research can be formulated as
shown below:
Y = α + β1X1 + β2X2 + β3X3 + e
Where:
Y : Employee Performance
α : Intercept
β1 : The slope of compensation variable
β2 : The slope of work environment variable
β3 : The slope of communication variable
X1 : Value of compensation variable
X2 : Value of work environment variable
X3 : Value of communication variable
e : Error standart
RESULT AND DISCUSSION
Validity and reliability test
Table 1. Validity and reliability test results
Question Validity test Reliability test
Number t count t table Cronbach alpha
X1 X2 X3 Y X1 X2 X3 Y
1 0,582 0,642 0,879 0,622 0,285 0,832 0,940 0,947 0,797
2 0,645 0,779 0,800 0,496 0,285 0,823 0,937 0,949 0,806
3 0,584 0,746 0,828 0,413 0,285 0,830 0,938 0,948 0,811
4 0,616 0,796 0,724 0,502 0,285 0,826 0,936 0,951 0,806
5 0,763 0,677 0,795 0,522 0,285 0,807 0,939 0,949 0,805
6 0,695 0,818 0,783 0,597 0,285 0,816 0,936 0,950 0,799
7 0,730 0,798 0,758 0,385 0,285 0,812 0,936 0,950 0,816
8 0,568 0,855 0,791 0,371 0,285 0,831 0,935 0,949 0,819
9 0,738 0,804 0,858 0,711 0,285 0,810 0,936 0,948 0,789
10 0,673 0,830 0,546 0,285 0,940 0,948 0,803
11 0,683 0,643 0,422 0,285 0,940 0,953 0,815
12 0,754 0,664 0,625 0,285 0,937 0,952 0,797
13 0,737 0,793 0,723 0,285 0,938 0,949 0,789
14 0,667 0,673 0,636 0,285 0,940 0,953 0,796
15 0,700 0,845 0,389 0,285 0,939 0,948 0,814
Based on the data above, it can be seen that all instruments in the variables can be declared valid,
because t count > t table so that the data statement can be used on further research. The value of Cronbach's
Alpha of all items in this research is more than 0.6, this result means that the data is considered good
and reliable.

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Classical assumption test

Multicollinearity test
This test is conducted to see whether the regression model finds a correlation between the
independent variables. If there is a strong correlation, it can be said that there has been a multicollinearity
problem in the regression model.
Table 2. Multicollinearity test results
No. Variable Collinearity statistics
Tolerance VIF
1. Compensation 0,772 1,295
2. Work Environment 0,570 1,754
3. Communication 0,476 2,102
From the table 2, it can be seen that the VIF value is less than 10 and the tolerance value is more
than 0.2 for the three variables, so it can be concluded that the regression model does not have
multicollinearity problems.
Heteroscedasticity and normality test
Heteroscedaticity test using the Scatterplot Method, by looking at the dots pattern on the
regression scatterplot. If the dots spread out in an unclear pattern above and below the number 0 on the
Y axis then there is no heteroscedasticity problem. The normality test in this research used the graphical
method by looking at the distribution of data on the diagonal source on the normal P-P Plot of Regression
Standardized Residual Graph. If the dots spread around the line and follow the diagonal line, the residual
value is normal.

Scatterplot Normal P-P plot of

dependent variable: employee performance regression standardized residual
dependent variable: employee performance

Figure 2. Heteroscedaticity scatterplot and normality test result

The results of the heteroscedasticity test can be seen that the dots spread with an unclear pattern
above and below the number 0 on the Y axis, so it can be concluded that there is no heteroscedasticity
problem in the regression model. Based on the graphic image of the Normal P-P Plot of Regression
Standardized Residuals above, it shows that the points spread around the line and follow the direction
of the diagonal line, so the residual value can be said to be normal. This proves that regression model of
the effect of compensation (X1), work environment (X2) and Communication (X3) on employee
performance (Y) fulfills the condition and passed the normality test.
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Multiple regression analysis

Multiple regression linear analysis is used to answer the hypothesis whether compensation, work
environment, and communication simultaneously and partially effect on employee performance at UD.
DEM.
Table 3. Multiple Regression Test Result
No Variable Unstandardized Standardized t Sig. Sign
Coefficients Coefficients
B Std.Error Beta
1. (Constant) 31,077 7,084 4,387 0,000
2. Compensation 0,423 0,161 0,371 2,632 0,012 *
3. Work Environment 0,340 0,112 0,496 3,022 0,004 **
4. Communication -0,124 0,154 -0,146 -0,811 0,422 ns
**, * = significance at 1% and 5%
Based on the analysis result, the equation of multiple regression models in this research is shown
as follows:
Y = 31,077 + 0,423X1 + 0,340X2 – 0,124X3
The multiple regression equation has the following interpretation:
Constant value of 31,077 means that if all the independent variables in this research : compensation
(X1), work environment (X2) and Communication (X3) are equal to 0 (zero), then the employee
performance (Y) is predicted to be 31,077 in this case other effecting factors are considered constant;
Coefficient value of 0,423 means that if the independent variable in this research, compensation (X 1)
increases by one point or one scale, it will increase the employee performance (Y) by 0,423, in this case
other effecting factors are considered constant;
Coefficient value of 0,34 means that if the independent variable in this research, work environment (X2)
increases by one point or one scale, it will increase the employee performance (Y) by 0,34, in this case
other effecting factors are considered constant; and
Coefficient value of -0,124 means that if the independent variable in this research, communication (X3)
increases by one point or one scale, it will decrease the employee performance (Y) by 0,124, in this case
other effecting factors are considered constant.
t - Test
The t test is conducted to see whether or not the independent variables (compensation, work
environment and communication) effected the dependent variable (employee performance) partially. To
prove whether there is effected or not, the following steps will be taken:
Table 4. Hypothesis test result
No Hypotesis R square t value t table Conclusion
H1 Compensation has effect on employee 0,335 2,632 2,013 H0 rejected
performance
H2 Work Environment has effect on employee 0,335 3,022 2,013 H0 rejected
performance
H3 Communication has no effect on employee 0,335 -0,811 2,013 H0 accepted
performance
Hypothesis determination
The determination of the hypothesis in this study is as follows :
Ho : Compensation, work environment, and communication partially not effected employee
Performance, and
Ha : Compensation, work environment, and communication partially effected employee performance.
The t test is carried out by comparing the t count value obtained in the table above, with a
significance rate of 0,05 and degrees of freedom (df) = n-k-1 = 50-3-1 = 46. With these determination,
the t table is obtained for 2,013.
The conclusion of the t test

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Compensation (X1). The value of t count > t table (2,632 > 2,013), Ho is rejected, meaning that
the compensation partially effected employee performance. The value of t count is positive, meaning
that it has a positive effect, so increasingly of the compensation then the effect is the employee's
performance increases.
Work Environment (X2). The value of t count > t table (3,022 > 2,013), Ho is rejected, meaning
that the work environment partially effected employee performance. The value of t count is positive,
meaning that it has a positive effect, so increasingly of the work environment then the effect is the
employee's performance increases.
Communication (X3). The value of t count > t table (-0,811 > 2,013), Ho is accepted, meaning that
the communication has no effect on employee performance.
Determination test (the goodness of fit)
The coefficient of determination (R2) from the results of multiple regressions shows how much
the dependent variable (employee performance) is influenced by the independent variables
(compensation, work environment, and communication).
Table 5. Determination Test Result
of correlation (R) is 0.579 means that the level of relationship between independent and dependent
variable is considered moderately correlated. The value of coefficient of determination is between 0 and
1. The Adjust R Square figure is 0.291 or (29.1%). This shows that 29.1% of employees performance
of the UD. DEM is effected by compensation, work environment, and communication variables, while
70.9% is effected by other variables not discussed in this research.
DISCUSSION
The results showed that compensation has a partial effect on employee performance of UD. DEM,
if the compensation is given properly, the employee's performance will be better. Compensation given
to employees must be proportionally adjusted to the income of UD. DEM. If this is done, employees
will feel that the compensation is wise and fair, because the amount is in accordance with the
performance of each employee. This research is in line with research conducted by Ananta Dwikristianto
Satedjo and Sesilya Kempa (2017) which states that compensation has a positive and significant effect
on employee performance, because with high compensation, employee performance will increase.
The results showed that work environment has a partial effect on employee performance of UD.
DEM, does this mean that the better and more comfortable the work environment, the employee
performance will increase. Employees will feel comfortable with the conditions of the existing work
environment, do not feel disturbed when they work, so they are motivated to work, this has an effect a
lot of work to be completed so that their performance can be said to be good. This research is in line
with research conducted by Pratama (2015) which concluded that the work environment has a positive
and significant effect on employee performance. This implies that a comfortable work environment
causes the level of employee concentration at work to increase.
The results showed that communication has no effect on employee performance. Communication
applied to UD. DEM has no positive effect on employee performance, because employees who work on
average still have relatives, where the ability and experience in serving and doing business is no longer
in doubt and there is no need for more training or direction in carrying out their respective jobs, so
communication is not a priority. This research is in line with previous research conducted by
Tambingon, et. al. (2014) which states that the effectiveness of communication has no partial effect on
employee performance.
CONCLUSION
The conclusion of this research can be concluded as follows :
Compensation has a partial, positive and significant effect on employee performance of UD. DEM, with
high compensation, employee performance will increase;
Work environment has a partial, positive and significant effect on employee performance of UD. DEM,
with the better and more comfortable the work environment, the employee performance will increase;
and
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Communication has no effect on employee performance of UD. DEM, the ability and experience
in serving and doing business is no longer in doubt and there is no need for more training or direction
in carrying out their respective jobs, so communication is not a priority.
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