Effect of Compensation and Organizational Commitment on Employee Performance During WFH at Digital Company

Ahmad Azmy

doi:10.21831/economia.v18i1.44949

Effect of Compensation and Organizational Commitment on Employee Performance During WFH at Digital Company

Ahmad Azmy, Faculty of Economic & Business, Paramadina University, Indonesia, Indonesia

10.21831/economia.v18i1.44949

Abstract

Abstract

This study discusses the effect of compensation and organizational commitment on the performance of employees working from home during the COVID-19 pandemic. The object of the study was a digital platform-based outsourcing company. Research respondents were employees who work in digital platform-based outsourcing companies. The sampling technique used was a stratified approach by making criteria according to research needs. The method used is Partial Least Square. The data were obtained from a total of 100 respondents. The results showed that compensation and organizational commitment had a significant effect on employee performance. Compensation shows how employees still need financial resources that must be paid on time by the company. Organizational commitment shows the company's support while working from home during the COVID-19 pandemic. The company provides support for access to technology and resources to ensure maximum performance achievement by employees. This study provides recommendations to improve compensation for optimalization performance.

Keywords: Compensation, Organizational Commitment, Work from Home, Employee Performance

Pengaruh Kompensasi dan Komitmen Organisasi terhadap Kinerja Karyawan Selama Bekerja dari Rumah pada Perusahaan Digital Outsourcing

Abstrak

Penelitian ini membahas tentang pengaruh kompensasi dan komitmen organisasi terhadap kinerja karyawan yang bekerja dari rumah selama masa pandemi COVID-19. Objek penelitian dilakukan pada perusahaan outsourcing berbasis platform digital. Responden penelitian adalah karyawan yang bekerja di perusahaan outsourcing berbasis platform digital. Teknik pengambilan sampel menggunakan pendekatan stratified dengan membuat kriteria sesuai kebutuhan penelitian. Metode yang digunakan adalah Partial Least Square. Jumlah data yang digunakan adalah 100 responden. Hasil penelitian menunjukkan bahwa kompensasi dan komitmen organisasi berpengaruh signifikan terhadap kinerja karyawan. Kompensasi menunjukkan bagaimana karyawan masih membutuhkan sumber daya keuangan yang harus dibayar tepat waktu oleh perusahaan. Komitmen organisasi menunjukkan dukungan perusahaan selama bekerja dari rumah selama pandemi COVID-19. Perusahaan memberikan dukungan akses teknologi dan sumber daya untuk memastikan pencapaian kinerja yang maksimal oleh karyawan. Penelitian ini memberikan rekomendasi kepada perusahaan untuk memperhatikan kompensasi dan komitmen organisasi untuk menjamin efektivitas pencapaian kinerja.

Kata kunci: Kompensasi, Komitmen Organisasi, Bekerja dari Rumah, Kinerja Karyawan

Keywords

Compensation, Organizational Commitment, Work from Home, Employee Performance

Full Text:

PDF

References

Abdullah, I., Omar, R., & Rashid, Y. (2013). Effect of personality on organizational commitment and employees’ performance: Empirical evidence from banking sector of pakistan. Middle East Journal of Scientific Research, 18(6), 759–766. https://doi.org/10.5829/idosi.mejsr.2013.18.6.1685

Afthanorhan, A., Awang, Z., & Aimran, N. (2020). An extensive comparison of cb-sem and pls-sem for reliability and validity. International Journal of Data and Network Science, 4(4). https://doi.org/10.5267/j.ijdns.2020.9.003

Anik, L., Aknin, L. B., Norton, M. I., Dunn, E. W., & Quoidbach, J. (2013). Prosocial Bonuses Increase Employee Satisfaction and Team Performance. PLoS ONE, 9(9), 1–8. https://doi.org/10.1371/journal.pone.0075509

Armstrong, M., Brown, D., & Reilly, P. (2011). Increasing the Effectiveness of Reward Management: An Evidence-Based Approach. Employee Relations, 2(2), 1–23. https://doi.org/10.1108/01425451111096668

Astuty, I., & Udin, U. (2020). The Effect of Perceived Organizational Support and Transformational Leadership on Affective Commitment and Employee Performance. Journal of Asian Finance, Economics and Business, 7(10), 401–411. https://doi.org/10.13106/jafeb.2020.vol7.no10.401

Ayuningtyas, H. F., & Whidya Utami, C. (2019). The Influence of Leadership Style of First Generation, Compensation and Job Satisfaction Against the Employee Performance in Foundation of Perkumpulan Pengelola Pendidikan Sejahtera Surabaya. International Journal of Scientific and Technology Research, 8(7), 565–569.

Babalola, S. S. (2016). The Effect of Leadership style, Job Satisfaction and Employee-Supervisor Relationship on Job Performance and Organizational Commitment. Journal of Applied Business Research, 32(3), 935–946. https://doi.org/10.19030/jabr.v32i3.9667

Bagis, F., Pratama, B. C., Darmawan, A., & Ikhsani, M. M. (2020). Effect Of Compensation On Employee Performance Through Spirit of Work As a Variabel Of Mediation. Case Study in Employees Of Islamic Education Institution. Jurnal Ilmiah Ekonomi Islam, 6(2). https://doi.org/10.29040/jiei.v6i2.1052

Biron, M., Peretz, H., & Turgeman-Lupo, K. (2020). Trait Optimism and Work From Home Adjustment in the COVID-19 Pandemic: Considering the Mediating Role of Situational Optimism and the Moderating Role of Cultural Optimism. Sustainability (Switzerland), 12(22), 1–21. https://doi.org/10.3390/su12229773

Cesário, F., & Chambel, M. J. (2017). Linking Organizational Commitment and Work Engagement to Employee Performance. Knowledge and Process Management, 24(2), 152–158. https://doi.org/10.1002/kpm.1542

Chadee, D., Ren, S., & Tang, G. (2021). Is Digital Technology the Magic Bullet for Performing Work at Home? Lessons Learned for Post COVID-19 Recovery in Hospitality management. International Journal of Hospitality Management, 92(2), 1–35. https://doi.org/10.1016/j.ijhm.2020.102718

Chidir, G., Fayzhall, M., Sopa, A., Mustikasiwi, A., Asbari, M., & Purwanto, A. (2020). The Role of Organizational Commitment, Organizational Culture and Mediator Organizational Citizenship Behavior (OCB) on Employees’ Performance: Evidence from Indonesian Automotive Industry. International Journal of Control and Automation, 13(2), 615–633.

Colbert, A. E., Mount, M. K., Harter, J. K., Witt, L. A., & Barrick, M. R. (2004). Interactive Effects of Personality and Perceptions of the Work Situation on Workplace Deviance. In Journal of Applied Psychology (Vol. 89, Issue 4, pp. 599–609). https://doi.org/10.1037/0021-9010.89.4.599

Francesco, A. M., & Chen, Z. X. (2004). Collectivism in Action: Its Moderating Effects on the Relationship Between Organizational Commitment and Employee Performance in China. Group and Organization Management, 29(4), 425–441. https://doi.org/10.1177/1059601103257423

Fu, W., & Deshpande, S. P. (2014). The Impact of Caring Climate, Job Satisfaction, and Organizational Commitment on Job Performance of Employees in a China’s Insurance Company. Journal of Business Ethics, 124(2), 339–349. https://doi.org/10.1007/s10551-013-1876-y

Hadian Nasab, A., & Afshari, L. (2019). Authentic Leadership and Employee performance: Mediating Role of Organizational Commitment. Leadership and Organization Development Journal, 40(5), 548–560. https://doi.org/10.1108/LODJ-01-2019-0026

Hair, J. F., Sarstedt, M., Hopkins, L., & Kuppelwieser, V. G. (2014). Partial Least Squares Structural Equation Modeling (PLS-SEM): An Emerging Tool in Business Research. European Business Review, 26(2), 106–121. https://doi.org/10.1108/EBR-10-2013-0128

Hair Jr., J. F., Matthews, L. M., Matthews, R. L., & Sarstedt, M. (2017). PLS-SEM or CB-SEM: updated guidelines on which method to use. International Journal of Multivariate Data Analysis, 1(2). https://doi.org/10.1504/ijmda.2017.10008574

Hidayah, T., & Tobing, D. S. K. (2018). The Influence of Job Satisfaction, Motivation, and Organizational Commitment to Employee Performance. International Journal of Scientific and Technology Research, 7(7), 122–127.

Ho, J. L. Y., Lee, L. C., & Wu, A. (2009). How Changes in Compensation Plans Affect Employee Performance, Recruitment, and Retention: An Empirical Study of a Car Dealership. Contemporary Accounting Research, 26(1), 167–199. https://doi.org/10.1506/car.26.1.6

Idris, M. (2015). The Impact of Organisational Commitment, Motivation and Financial Compensation on Work Satisfaction and Employees’ Performance: An Evidence From Small Business Firms in South Sumatera-Indonesia. International Journal of Applied Business and Economic Research, 13(4), 1549–1562.

Indrasari, M., Syamsudin, N., Purnomo, R. B., & Yunus, E. (2019). Compensation, Organizational Communication, and Career Path as Determinants of Employee Performance Improvement. Humanities and Social Sciences Reviews, 7(4), 956–961. https://doi.org/10.18510/hssr.2019.74130

Ingsih, K., Astuti, S. D., & Asri, D. I. P. (2017). Compensation as the most important factor in improving employee’s Performance. International Journal of Economic Research, 4(6), 105–119.

Jean, K. N., Ngui, T. K., & Robert, A. (2017). Effect of Compensation Strategies on Employee Performance: A Case Study of Mombasa Cement Limited. International Journal of Innovative Social Sciences & Humanities Research, 5(3), 25–42.

Kelly, J. A. (2020). Work-in-Progress-The Sudden Requirement to Work from Home Due to COVID-19 Pandemic Restrictions: Attitudes and Changes in Perceived Value of Physical and Immersive Workspaces. Proceedings of 6th International Conference of the Immersive Learning Research Network, ILRN 2020, 385–388. https://doi.org/10.23919/iLRN47897.2020.9155210

Khan, M. R., Ziauddin, Z., Jam, F. A., & Ramay, M. I. (2010). The Impacts of Organizational Commitment on Employee Job Performance. European Journal of Social Sciences, 15(3), 292–298.

Kim, B. J. (2020). Unstable Jobs Harm Performance: The Importance of Psychological Safety and Organizational Commitment in Employees. SAGE Open, 10(2), 1–10. https://doi.org/10.1177/2158244020920617

Kim, H. S., & Jang, S. C. (Shawn). (2020). The Effect of Increasing Employee Compensation on Firm Performance: Evidence from the Restaurant Industry. International Journal of Hospitality Management, 88(102513), 1–9. https://doi.org/10.1016/j.ijhm.2020.102513

Kramer, A., & Kramer, K. Z. (2020). The Potential Impact of the Covid-19 Pandemic on Occupational Status, Work From Home, and Occupational Mobility. In Journal of Vocational Behavior (Vol. 103, Issue 442, pp. 1–13). https://doi.org/10.1016/j.jvb.2020.103442

Lamalewa, F., Kore, E. L. R., & Kalalo, C. N. (2018). The Influence of Practices of Human Resources Management, Compensation, Work Satisfaction and Motivation on Performance of Bank Employees in Merauke City. International Journal of Mechanical Engineering and Technology, 9(10), 64–71.

Langford, D., Fellows, R. F., Hancock, M. R., & Gale, A. W. (2020). Organizational Behaviour. In Human Resources Management in Construction (p. 216). Routhledge - Taylor Francis Group. https://doi.org/10.4324/9781315844695-9

Larkin, I., Pierce, L., & Gino, F. (2012). The Psychological Costs of pay-for-performance: Implications for the Strategic Compensation of Employees. Strategic Management Journal, 33(10), 1194–1214. https://doi.org/10.1002/smj.1974

Mathis, R. L., Jackson, J. H., & Valentine, S. R. (2015). Human Resource Management: Essential Perspectives. In Human Resource Management (7th ed.). Cengage Learning, Boston.

Muchran, B. (2021). The Effect Of Finansial Compensation on Employee Performance Mediated by Work Satisfaction In DGT Regional of South Sulawesi, West Sulawesi, and South-East Sulawesi. 17.

Musriha, M. (2019). The Implication of Strategy Improving Employees Training, Compensation, Motivation and Organisational Commitment as predictors of work Performance in Private Commercial Banks Indonesia. International Journal of Business Performance Management, 20(1), 1–15. https://doi.org/10.1504/IJBPM.2019.096461

Nath Gangai, K., & Agrawal, R. (2015). Job Satisfaction and Organizational Commitment: Is it Important for Employee Performance. International Journal of Management and Business Research, 5(4), 269–278.

Nur Insan, A. (2020). The Effect of Servant Leadership on Employee Performance with Organizational Culture and Work Involvement as the Mediators. International Journal of Advanced Science and Technology, 29(4), 2008–2024.

Nyberg, A. J., Pieper, J. R., & Trevor, C. O. (2016). Pay-for-Performance’s Effect on Future Employee Performance: Integrating Psychological and Economic Principles Toward a Contingency Perspective. Journal of Management, 42(7), 1753–1783. https://doi.org/10.1177/0149206313515520

Oetomo, H. W., & Budiyono. (2020). Work Motivation and Compensation Towards Work Stress and Employee Performance. Journal of Advanced Research in Dynamical and Control Systems, 12(1), 730–740. https://doi.org/10.5373/JARDCS/V12SP1/20201123

Pauline Ramos, J., & Tri Prasetyo, Y. (2020). The Impact of Work-Home Arrangement on the Productivity of Employees during COVID-19 Pandemic in the Philippines: A Structural Equation Modelling Approach. ACM International Conference Proceeding Series, 135–140. https://doi.org/10.1145/3429551.3429568

Rama Kumari, M., Pradeep Kumar, D., & Narayana Reddy, T. (2017). Influence of Compensation Practices on Employee Performance in Cement Sectors: A Comparative Study. International Journal of Applied Business and Economic Research, 15(5), 495–506.

Richard, P. J., Devinney, T. M., Yip, G. S., & Johnson, G. (2009). Measuring Organizational Performance: Towards Methodological Best Practice. In Journal of Management (Vol. 35, Issue 3, pp. 718–804). Sage Journal. https://doi.org/10.1177/0149206308330560

Robbins, S. P., & Judge, T. A. (2017). Organizational behavior (17 Edition). Pearson.

Roslin, E. N., Ahmed, S., Ahamat, M. A., Bahrom, M. Z., & Ibrahim, N. (2019). The Impact of Employee Involvement and Empowerment in Lean Manufacturing System Implementation Towards Organizational Performances. International Journal on Advanced Science, Engineering and Information Technology, 9(1), 188–193. https://doi.org/10.18517/ijaseit.9.1.7116

Sari, P. A., & Sa’adah, P. N. (2019). Work Placement, Organizatiomal Commitment, and Employee Performance: Evaluation of Public Service Office in Indonesia. Review of Behavioral Aspect in Organizations and Society, 1(2), 129–140. https://doi.org/10.32770/rbaos.vol1129-140

Savić, D. (2020). COVID-19 and Work from Home: Digital transformation of the Workforce. Grey Journal, 16(2), 101–104.

Schwab, D. P., & Dyer, L. D. (1973). The Motivational Impact of a Compensation System on Employee Performance. Organizational Behavior and Human Performance, 9(2), 215–225. https://doi.org/10.1016/0030-5073(73)90047-0

Sholikhah, E. I., & Prastiwi, S. K. (2020). The Impact Of Leadership To Serve And Organizational Commitments To Employee Performance With Behavior Organizational Citizenship as Mediation Variable. Journal of Business Management Review, 1(1). https://doi.org/10.47153/jbmr.v1i1.8

Soomro, B. A., & Shah, N. (2019). Determining the Impact of Entrepreneurial Orientation and Organizational Culture on Job Satisfaction, Organizational Commitment, and Employee’s Performance. South Asian Journal of Business Studies, 8(3), 266–282. https://doi.org/10.1108/SAJBS-12-2018-0142

Stavsky, G. (2020). The Moderating Role of Trait Curiosity on the Effect of Role Ambiguity on Motivation to Work and Task Persistence. In ProQuest Dissertations and Theses. Hofstra University.

Stites, J. P., & Michael, J. H. (2011). Organizational Commitment in Manufacturing Employees: Relationships with Corporate Social Performance. Business and Society, 50(1), 50–70. https://doi.org/10.1177/0007650310394311

Sukandi, P., Aprilia, M., & Liana, P. (2019). Compensation Effect on the Performance of Employees pt. Bank Woori Saudara 1906 tbk Bandung. Journal of Advanced Research in Dynamical and Control Systems, 11(7), 731–739.

Syahreza, D. S., Lumbanraja, P., Dalimunthe, R. F., & Absah, Y. (2017). Compensation, Employee Performance, and Mediating Role of Retention: A Study of Differential Semantic Scales. European Research Studies Journal, 20(4A), 151–159. https://doi.org/10.35808/ersj/825

Taba, M. I. (2018). Mediating Effect of Work Performance and Organizational Commitment in the Relationship Between Reward System and Employees’ Work Satisfaction. Journal of Management Development, 37(1), 65–75. https://doi.org/10.1108/JMD-11-2016-0256

Thaief, I., Baharuddin, A., Priyono, & Idrus, M. S. (2015). Effect of Training, Compensation and Work Discipline Against Employee Job Performance: (Studies in the office of PT. PLN (Persero) Service Area and Network Malang). Review of European Studies, 7(11), 25–33. https://doi.org/10.5539/res.v7n11p23

Tripathi, A., & Bagga, T. (2020). Leveraging Work from Home for Business Continuity During COVID-19 Pandemic–with Reference to Bi Solution Adoption. Indian Journal of Economics and Business, 19(1), 19–34.

Tsui, P. L., Lin, Y. S., & Yu, T. H. (2013). The Influence of Psychological Contract and Organizational Commitment on Hospitality Employee Performance. Social Behavior and Personality, 41(3), 443–452. https://doi.org/10.2224/sbp.2013.41.3.443

Tuzovic, S., & Bruhn, M. (2005). Integrating Customer Orientation, Employee Compensation and Performance Management: a Conceptual Framework. International Journal of Business Performance Management, 7(3), 255–274. https://doi.org/10.1504/IJBPM.2005.006719

Wolor, C. W., Supriyati, Y., & Purwana, D. (2019). Effect of Organizational Justice, Conflict Management, Compensation, Work Stress, Work Motivation on Employee Performance Sales People. Humanities and Social Sciences Reviews, 7(1), 1277–1284. https://doi.org/10.18510/hssr.2019.74176

Yang, F. (2016). The Effects of Compensation Schemes and Performance Feedback on Employee’s Self-Selection: An Experimental Investigation. Research in Experimental Economics, 19(2), 159–187. https://doi.org/10.1108/S0193-230620160000019006

Yu, Q., Yen, D. A., Barnes, B. R., & Huang, Y. A. (2019). Enhancing Firm Performance Through Internal Market Orientation and Employee Organizational Commitment. International Journal of Human Resource Management, 30(6), 964–987. https://doi.org/10.1080/09585192.2017.1380059

Zafar, M., Sarwar, A., Zafar, A., & Sheeraz, A. (2021). Impact of Compensation Practices on Employee Job Performance: An Empirical Study. Advances in Intelligent Systems and Computing, 315–324. https://doi.org/10.1007/978-3-030-49889-4_26

DOI: https://doi.org/10.21831/economia.v18i1.44949