Performance Model of Employees Based on Compensation

Abstract

This study aims to analyze the influence of interpersonal communication and work ethic on employee performance with compensation as an intervening variable at the Regional Development Planning, Research and Innovation Agency of Asahan Regency. The population in this study amounted to 40 employees. The sampling technique used was saturated sampling, so the entire population was used as respondents. The analytical method used is path analysis with the assistance of Partial Least Square (PLS). The results showed that work ethic has a positive and significant effect on employee performance and on compensation. Compensation also has a positive and significant effect on employee performance. Interpersonal communication has a positive and significant effect on compensation, but does not have a significant direct effect on employee performance. Furthermore, compensation is able to mediate the effect of work ethic and interpersonal communication on employee performance. In conclusion, improving work ethic and support from a good compensation system are important factors in encouraging improved employee performance.