The Effect of Compensation and Work Environment on Employee Performance in the Chicken Business in Sei Sikambing Market Medan

Abstract

This study aims to analyze the influence of compensation and work environment on employee performance in the slaughtered chicken business at Sei Sicaming Market, Medan. The background of this research is based on the importance of the role of human resources in increasing productivity and business success, especially in the traditional trade sector which demands efficiency and precision of work. The main problem faced by chicken business owners is low employee performance which is allegedly caused by an inadequate compensation system and suboptimal working environment conditions. This study uses a quantitative approach, which aims to determine the relationship and influence between variables. The population in this study is all employees in various slaughtered chicken businesses in Sei Sicaming Market, Medan, with a sample of 100 respondents selected using purposive sampling techniques, namely employees who have worked for at least six months. Primary data was collected through questionnaires compiled based on variable indicators of compensation, work environment, and employee performance. Data analysis was carried out using Partial Least Square (PLS) with the help of SmartPLS 3.0 software, which included convergent validity tests, reliability tests, structural model analysis (inner model), and intervariable significance tests. The results of the study show that compensation has a positive and significant effect on employee performance, which means that the higher the compensation received, the higher the performance produced. The work environment also has a positive and significant effect on employee performance, which shows that safe, comfortable, and supportive working conditions can increase employee morale and productivity. In addition, simultaneously these two variables have a significant effect on employee performance in the chicken slaughter business at Sei Sikambing Market in Medan. Improving employee performance can be achieved through the provision of proper and systematic compensation, as well as the creation of a conducive work environment both physically and non-physically. The results of this study are expected to be input for slaughtered chicken business owners in designing effective human resource management strategies to increase business productivity and sustainability.