The Effect of Compensation
Read this study on the influence of compensation on job satisfaction in Indonesia. One thing that we need to remember is that different cultures may be satisfied by different job factors. Furthermore, we also need to consider that different types of jobs or working conditions may change the factors that affect job satisfaction. For example, a factory or a restaurant setting may give rise to different job satisfiers than a more professional office setting such as a bank.
Test Result and Discussion
Overall Match Tests Model Criteria Goodness of Fit
Based on the SEM Analysis Output using Lisrel software the values obtained are used as references in the overall model test. In the Table 1, The Match Test scores on some of the Goodness of Fit Index Criteria are as follows:
| Table 1 Overall Match Tests Model Criteria Goodness of Fit |
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| Goodness of Fit Index | Criteria | Research Result | Conclusion |
| Chi-Square | Kecil | 403 | Good-Fit |
| P-Value | >0.05 | 0.000 | Marginal-Fit |
| RMSEA | <0.08 | 0.061 | Good-Fit |
| GFI | >0.90 | 0.85 | Marginal-Fit |
| AGFI | >0.90 | 0.82 | Marginal-Fit |
| CMIN/DF | <2.00 | 2,33 | Marginal-Fit |
| TLI | >0.95 | 0.99 | Good-Fit |
| CFI | >0.95 | 0.99 | Good-Fit |
The above Goodness of Fit coefficient indicates a matching model with a good match rate. Goodness of Fit values obtained entirely meets the requirements of the model fit well. Based on the above coefficient values that meet the fit requirements of a model, it can be concluded that in general, the model obtained has a good level of compatibility.
The table above shows that:
1. Chi-Square Statistic Value (χ2) of 403 with a small concentration means the smaller the better.
2. The P-Value value is >0.05, this indicates that the proposed model is good
3. Root Mean Square Error of Approximation (RMSEA) is ≤ 0.08 which means this model is a good fit.
4. Goodness-of-Fit Index (GFI) has value >0.90 means that this model is suitable.
5. Adjusted Goodness of Fit Index (AGFI) value of ≥ 0.90 is good fit, meaning the value of 0.90 shows the better model.
6. Tucker-Lewis Index or Non-Normed Fit Index (TLI or NNFI) is ≥ 0.95 is good fit, moderate
7. Comparative Fit Index (CFI), the value of ≥ 0.95 is suitable
Hypothesis Testing
There are six paths hypothesized in the compiled model. So there are 6 pairs of hypotheses to be tested. In the Table 2 below, it appears that in the hypothesized model, of the six proposed hypotheses, all are proven statistically significant. The results of hypothesis testing as complete as follows:
| Table 2 Hypothesis Testing |
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| No | Hypothesis | Loading | T-Value | Decision | ||
| 1 | Compensation | --> | Work Motivation | 0.56 | 10.13 | Significant |
| 2 | Compensation | --> | Job Satisfaction | 0.16 | 2.68 | Significant |
| 3 | Work Motivation | --> | Job Satisfaction | 0.45 | 7.05 | Significant |
| 4 | Compensation | --> | Employee Performance | 0.37 | 7.58 | Significant |
| 5 | Work Motivation | --> | Employee Performance | 0.41 | 7.53 | Significant |
| 6 | Job Satisfaction | --> | Employee Performance | 0.17 | 3.83 | Significant |
Table 2 shows that the motivation variable significantly influences employee performance, with value T-Value 7.53 bigger than t-table. Similarly, job satisfaction variables significantly affect employee performance, with T-Value of 3.58 is greater than T-table.
The result of the hypothesis test shows that compensation significantly influences employee's work motivation, where t-value is greater than the critical t value 1.96. The value of the loading factor (standard error) of 0.56 and the path coefficient γ1 (gamma) of 10.13 (>1.96), indicates the effect of compensation on employee motivation PT. Bank XYZ (Persero) Tbk is positive and significant. This means that efforts to increase compensation given to employees will be a driving factor in improving employee motivation; this is also in line with research conducted by Rizal et al. (2014) as well as research by Negash et al. who concluded that compensation has a positive and significant effect on work motivation. Good compensation should apply the principles of fairness and fairness, the amount of compensation should be related to the relative value of a job or occupation.
Provision of compensation is of course also adjusted to the size of the sacrifice, or the risk of work done, the higher the sacrifice, or job risk, then the compensation should also be higher. Compensation should also be reasonable and able to meet the standard of living of the employee's needs reasonably. This means that a fair and acceptable compensation amount, both financial and non-financial compensation will increase employee motivation, but employee work motivation will decrease if the compensation received by employees is not sufficient to meet the needs of employees. So it can be concluded that the higher the compensation given will increase employee work motivation.
Compensation has a significant effect on job satisfaction; it is proved that the value of t-value is greater than the critical t value of 1.96. The loading factor value of 0.16 and the path coefficient γ2 (gamma) of 2.68 (>1.96) indicates the effect of compensation on employee job satisfaction of PT. Bank XYZ (Persero) Tbk is positive and significant. The results of this study is in line with the results of research conducted by Dewi Adnyani and research by Sudarno et al. who asserted that compensation has a positive and significant effect on employee job satisfaction. A good compensation system, in addition to being fair and worthy should also be more attractive, competitive and motivating. Compensation must be attractive to employees, able to compete with other companies, in accordance with the size of the responsibilities undertaken or the level of complexity of work and can stimulate employees to better achievement because of a value of appropriate or higher rewards. This means that the size of the compensation received by employees will result in high employee job satisfaction, the higher the compensation received for the work done then the employee job satisfaction will also increase.
In more detail, the result of t-value calculation of each indicator by applying Lisrel 8.8 can be seen in Figure 2 below.
Figure 2: T-Value Results Each Indicator
Motivation significantly affects job satisfaction; it is proved that t-value value is greater than the critical t-value of 1.96. The loading factor value of 0.45 and the path coefficient γ3 (gamma) of 7.05 (>1.96) indicates the effect of motivation on employee work satisfaction of PT. Bank XYZ (Persero) Tbk is positive and significant. The same study was conducted by Sohail et al. (2014) and research conducted by Pangemanan & Maria Tielung (2015) who asserted that motivation of work influences positive and significant to job satisfaction. The motivation of work is needed by employees to be able to achieve a high job satisfaction although by its nature job satisfaction is relative or different from one person to another. This means that employees having a high level of work motivation in carrying out the tasks assigned to them indicates that the level of job satisfaction is also increasing. It can be concluded the higher the employee's motivation, the higher the employee's job satisfaction.
Compensation significantly affects Employee performance; it is proved that the value of t-value is greater than the critical t value of 1.96. The loading factor value of 0.37 and the path coefficient γ4 (gamma) of 7.58 (>1.96) indicates the effect of compensation on employee performance of PT. Bank XYZ (Persero) Tbk is positive and significant. Provision of compensation can be either financial compensation or non-financial compensation other than in the form of money. Provision of compensation can be either financial compensation or non-financial compensation other than in the form of money. The results of this study are in line with the results of research conducted by Sopiah which concludes that both financial and non-financial compensation have positive and significant influence.