PSYCHOLOGY AND EDUCATION (2021) 58(1): 6258-6265 ISSN: 00333077

The Effect of Leadership Style and Compensation on Employee

Performance in The Project Division at PT.Indomarco Prismatama
Bandung Branch
Muhamad Nurul Aripin*, Muhamad Hapid, Agung Gunawan, Trie Ananda Savira, Sari Dewi Oktari
Undergraduate Program, Management Department, Faculty of Business and Management, Widyatama University, Bandung,
Indonesia
*M.Nurul@widyatama.ac.id

ABSTRACT
This study aims to determine how much the influence of leadership style and compensation on the performance of the project
division employees at PT.Indomarco Prismatama Bandung Branch. Variable tested in this study are leadership style and
compensation as independent variables, while employee performance is the dependent variable. The research method used in this
research is the verification method. The population in this study were employees of PT.Indomarco Prismatama Bandung Branch
totaling 31 employees of the project division at PT.Indomarco Prismatama Bandung Branch. The sampling technique used in this
study is a non-probability sampling technique with a saturated sample technique, so that the sample amounted to 31 employees of
the project division at PT.Indomarco Prismatama Bandung Branch. The analytical method used in this research is multiple linear
regression analysis. The results showed that leadership style and compensation have strong, moderate a moderate or weak effect
on employee performance.

Keywords
Leadership style, compensation, employee performance

Article Received: 18 October 2020, Revised: 3 November 2020, Accepted: 24 December 2020

Introduction produced by certain job functions or activities at

certain jobs during a certain period of time, which
Along with the development of the business shows the quality and quantity of the work
world, especially in Indonesia, the level of (Bernardin and Russel, 2015: 270). But in fact,
competition becomes more competitive. various cases regarding employee performance are
Therefore, it is important for the company to be often experienced by companies, such as
able to increase the company's performance to be PT.Indomarco Prismatama Bandung Branch. PT.
more effective and efficient. One important factor Indomarco Prismatama is a national private
that needs to be considered is human resources. company that manages the Indomaret mini market
Human resources are an important asset that an network with a notary deed No. 207, dated 21
organization must have in achieving November 1988 and SIUP No.789 / 0902 / PB /
organizational goals, therefore employees must be XII / 88 dated 20 December 1988. PT. Indomarco
used as much as possible to achieve Prismatama is engaged in the business of trading
predetermined goals (Fathoni, 2015). Currently, goods / retail (mini market), the types of
many companies realize that human resources are merchandise are agricultural products (agriculture,
the most important company problem, because it livestock), medicines, grocery, cosmetics, medical
is through human resources that causes other devices and others. In addition, holding joint
resources in the company to function or run (Rivai ventures with communities and business entities
& Sagala, 2015). that want to open a business in the trade sector
(retail business) with a franchise system. Below
Human resources, in this case employees, are a will be presented data regarding the performance
source of company capital in achieving company appraisal of project division employees at
goals. Therefore, it is important for companies to PT.Indomarco Prismatama Bandung Branch,
be able to manage and improve employee which are as follows:
performance in order to achieve company goals.
Employee performance is the result that is

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Table 1. Performance appraisal data for project division employees at PT.Indomarco Prismatama Bandung
branch for the 2018-2019 period
Year
Assessment Weight
2018 2019
Criteria (%)
Achievement Score (%) Achievement Score (%)
Cooperation 25 95 23,75 75 18,75
Job Skills 25 85 21,25 75 18,75
Work Quality 25 85 21,25 65 16,25
Work Quantity 25 80 20,00 60 15,00
Total 100 86,25 68,75
Source: Human Resource and Development

Based on Table 1 shows that in 2018 the successfully anticipated change, exploited
percentage value of the performance of the project extraordinary opportunities, motivated their
division employees at PT Indomarco Prismatama followers to higher levels of productivity,
Bandung Branch was 86.25%, including in the improved poor performance and directed the
good category. Meanwhile, in 2019, the organization to its goals (Robbins & Judge, 2015).
percentage value of the project division's Leadership as the ability to influence a group
employee performance at PT.Indomarco towards achieving the goals and objectives of the
Prismatama Bandung Branch was 68.75%, organization is a reflection of employee
including in the unfavorable category. This shows performance. Leadership style plays a big role in
that there is a decline in the performance of the improving employee performance (Khairizah et
project division employees at PT.Indomarco al., 2017). Leadership that is shown and applied
Prismatama Bandung Branch in 2018-2019. In into a leadership style is one of the factors in
addition, the results of the pre-survey show that increasing employee performance, because
the performance of the project division employees basically as the backbone of organizational
at PT Indomarco Prismatama Bandung Branch is development in encouraging and influencing good
still low. This is related to the lack of conformity morale to subordinates, leaders need to think
with work completion with work targets and about and show the right leadership style in its
standards, the large number of jobs, time to application (Noer, 2020).
complete work, management of company
resources, and lack of employee initiative. Apart from leadership style, compensation can
also be a factor that can affect employee
Based on the pre-survey results, it was found that performance. Compensation is a reward received
One of the factors that can affect employee by employees as compensation for services
performance is leadership style shown by the provided which aim to attract, retain and motivate
leadership in the company. Leadership style is a employees (Mondy & Noe, 2013). The results of
behavioral approach based on the idea that the the pre-survey show that the compensation
success or failure of a leader is determined by the provided by PT.Indomarco Prismatama Bandung
attitude and action style of the leader concerned Branch is still low. This is related to inadequate
(Sutrisno, 2016). The results of the pre-survey salaries, lack of incentives or bonuses, lack of
show that the leadership style is still low as shown career opportunities, and lack of rewards.
by the leadership in the project division that
PT.Indomarco Prismatama Bandung Branch. This One way for management to increase employee
is related to the lack of involvement of employees motivation and performance is through
in decision making, Kruang leaders provide compensation in return for their work (Mathis &
motivation to employees, leaders are less clear in Jackson, 2015). Compensation given must be
providing direction, and leaders sometimes get given fairly and not far from employee
angry when they face work problems. expectations. If this can be fulfilled, employee
satisfaction can be a trigger to improve
Leaders who succeed in influencing performance. If the compensation is not provided
organizational results are leaders who have on time, it will result in discipline, employee
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attitude and morale. One of the compensation 2) Allowances

functions is that it can be a motivational factor for 2. Non-financial compensation, including
employees to work better. To get good various forms of satisfaction received by
compensation and it is hoped that the employees someone from the job itself or in the form of:
will work better. In theory the compensation given a. Promotion opportunities
to employees is related and has a positive b. Recognition
influence on employee performance (Nugraha & c. Sense of secure
Tjahjawati, 2017). d. Award for achievement
e. Convenience
Several previous studies related to this research
such as research conducted by Khairizah et al. Employee Performance
(2017) and Turunan (2017) show that leadership
style affects employee performance. Research Employee performance is the result that is
conducted by Nugraha and Tjahjawati (2017), produced by certain job functions or activities at
Dwianto and Purnamasari (2019), the results of certain jobs during a certain period of time, which
their research show that compensation has an shows the quality and quantity of the work.
effect on employee performance. Bernardin and Russel (2015) state that employee
performance indicators include work quality,
Literature Review work quantity, timeliness, cost effectiveness,
need for supervision, and interpersonal
Leadership Style relationships.

Leadership is the ability to influence a group The Influence of Leadership Style on Employee
towards achieving a vision or set of goals Performance
(Robbins & Judge, 2015). Leadership style is a
behavioral approach based on the idea that the Leadership is the ability to influence a group
success or failure of a leader is determined by the towards achieving a vision or set of goals. Leaders
attitude and action style of the leader concerned who succeed in influencing organizational results
(Sutrisno, 2016). Kartono (2014) states that the are leaders who have successfully anticipated
measurement of leadership style includes the change, exploited extraordinary opportunities,
ability to make decisions, the ability to motivate, motivated their followers to higher levels of
the ability to communicate, the ability to control productivity, improved poor performance and
subordinates, responsibility, and the ability to directed the organization to its goals (Robbins &
control emotions. Judge, 2015). Leadership styles are patterns of
behavior that a leader applies in working with
Compensation others as prepared by others. The consistent
behavior patterns referred to here are those that
Compensation is a reward received by employees arise in people when they begin to respond in the
as compensation for services provided which aim same way under similar conditions and these
to attract, retain and motivate employees (Mondy patterns form behavior habits that are at least
& Noe, 2013). Mondy and Noe (2013) divide predictable for those who work with people
compensation into 2 types, namely as follows: (Derivatives, 2017).
1. Financial compensation consists of:
a. Direct financial compensation, namely The leadership style adopted by a leader in a
payment received by someone in the form of: company holds the main key in achieving a good
1) Salary work environment. In order to increase employee
2) Incentives or bonuses motivation carried out by the leader will have an
b. Indirect financial compensation or benefits, impact on increasing employee productivity and
namely all forms of financial compensation performance, so that the main goals the company
that are not included in direct financial wants to achieve can be realized. Effective
compensation, such as: leadership is a leader who can adjust his
1) Insurance leadership style according to the maturity level of
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employees (Siswanto & Hamid, 2017). Leadership Compensation given must be given fairly and not
as the ability to influence a group towards far from employee expectations. If this can be
achieving the goals and objectives of the fulfilled, employee satisfaction can be a trigger to
organization is a reflection of employee improve performance. If the compensation is not
performance. Leadership style plays a big role in provided on time, it will result in discipline,
improving employee performance (Khairizah et employee attitude and morale. One of the
al., 2017). Leadership that is shown and applied compensation functions is that it can be a
into a leadership style is one of the factors in motivational factor for employees to work better.
increasing employee performance, because Compensation given to employees has a positive
basically as the backbone of organizational influence on employee performance (Nugraha &
development in encouraging and influencing good Tjahjawati, 2017). Compensation given to
morale to subordinates, leaders need to think employees greatly affects employee performance,
about and show the right leadership style in its level. An organization that determines the level of
application (Noer, 2020). compensation taking into account normal living
standards, will allow employees to work with
The Influence of Compensation on Employee passion and motivation. Employee performance is
Performance much influenced by the level of compensation
given to employees (Dwianto & Purnamasari,
One way for management to increase employee 2019). Compensation in this case is a reference to
motivation and performance is through encourage better employee motivation, if the
compensation in return for their work (Mathis & compensation they feel is right, it will arise from
Jackson, 2015). Compensation is an important the employee to work. better, vice versa.
factor for employees, because with compensation Providing compensation to employees is closely
employees can meet their physiological needs. related to expectations of increased performance
However, of course, employees also hope that the in a company or an organization (Sangkaen et al.,
compensation they receive is in accordance with 2019).
the sacrifices that have been given in the form of
non-financial matters, which is also very Below will be described a frame of mind as a
important for employees, especially for their form of researcher's thought flow, which is as
career development (Simamora, 2015). follows:

Figure 1. Framework

H1: Leadership style affects employee H3: Leadership style and compensation have an
performance. effect on employee performance.
H2: Compensation affects employee performance.
Methodology

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Results and Discussion

This type of research is quantitative using the
verification method. The population in this study Table 1. Multiple linear regression
were employees of the project division at Model Coefficient
PT.Indomarco Prismatama Bandung Branch, (Constant) 0,474
amounting to 31 people. The sampling technique Leadership Style 0,416
is non-probability sampling technique with Compensation 0,444
saturated sample technique, so that the sample is Source: SPSS Output Results
31 employees of the project division at
PT.Indomarco Prismatama Bandung Branch. Y = 0,474 + 0,416 X1 + 0,444 X2 + e
Types and sources of data are primary data. The
data collection technique is a questionnaire Based on Table 1, the regression equation shows
(questionnaire). The independent variable is that leadership style and compensation have a
leadership style and compensation, while the positive influence on employee performance. This
dependent variable is employee performance. The means that the higher the leadership style and
method of analysis is multiple linear regression compensation, the higher the employee's
analysis. performance, and vice versa.

Table 2. Partial hypothesis testing

Model T Value Prob. Value Result
Leadership Style 2,515>2,048 0,018<0,0,05 H1 Accepted
Compensation 2,678>2,048 0,012<0,0,05 H2 Accepted
Source: SPSS Output Results

Based on Table 2, the results of partial hypothesis compensation have an effect on employee
testing show that leadership style and performance.

Table 3. Simultaneous hypothesis testing

Model F Value Prob. Value Result
Leadership Style and Compensation 21,450>3,34 0,000<0,0,05 H3 Accepted
Source: SPSS Output Results

Based on Table 3, the simultaneous hypothesis Compensation 0,314 31,4%

testing results show that leadership style and Source: SPSS Output Results
compensation have an effect on employee
performance. Based on Table 5, it shows that the magnitude of
the influence of leadership style on employee
Table 4. Simultaneous determination coefficient performance is 29.1%, while the magnitude of the
testing effect of compensation on employee performance
Information Value Percentage is 31.4%.
R-squared 0,605 60,5%
Source: SPSS Output Results The Influence of Leadership Style on Employee
Performance at PT.Indomarco Prismatama
Based on Table 4, it shows that the influence of Bandung Branch
leadership style and compensation on employee
performance is 60.5%. The results showed that the leadership style had
an effect on employee performance. The amount
Table 5. Partial determination coefficient testing of influence of leadership style on employee
Information Value Percentage performance is 29.1%. The results of this study
Leadership Style 0,291 29,1% are supported by the theoretical basis in the

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previous discussion which states that leadership is

the ability to influence a group towards achieving The results showed that compensation has an
a vision or set of goals. Leaders who succeed in effect on employee performance. The amount of
influencing organizational results are leaders who influence of compensation on employee
have successfully anticipated change, exploited performance is 31.4%. The results of this study
extraordinary opportunities, motivated their are supported by the theoretical basis in the
followers to higher levels of productivity, previous discussion which states that One way for
improved poor performance and directed the management to increase employee motivation and
organization to its goals (Robbins & Judge, 2015). performance is through compensation in return for
Leadership styles are patterns of behavior that a their work (Mathis & Jackson, 2015).
leader applies in working with others as prepared Compensation is an important factor for
by others. The consistent behavior patterns employees, because with compensation employees
referred to here are those that arise in people when can meet their physiological needs. However, of
they begin to respond in the same way under course, employees also hope that the
similar conditions and these patterns form compensation they receive is in accordance with
behavior habits that are at least predictable for the sacrifices that have been given in the form of
those who work with people (Derivatives, 2017). non-financial matters, which is also very
important for employees, especially for their
The leadership style adopted by a leader in a career development (Simamora, 2015).
company holds the main key in achieving a good
work environment. In order to increase employee Compensation given must be given fairly and not
motivation carried out by the leader will have an far from employee expectations. If this can be
impact on increasing employee productivity and fulfilled, employee satisfaction can be a trigger to
performance, so that the main goals the company improve performance. If the compensation is not
wants to achieve can be realized. Effective provided on time, it will result in discipline,
leadership is a leader who can adjust his employee attitude and morale. One of the
leadership style according to the maturity level of compensation functions is that it can be a
employees (Siswanto & Hamid, 2017). Leadership motivational factor for employees to work better.
as the ability to influence a group towards Compensation given to employees has a positive
achieving the goals and objectives of the influence on employee performance (Nugraha &
organization is a reflection of employee Tjahjawati, 2017). Compensation given to
performance. Leadership style plays a big role in employees greatly affects employee performance,
improving employee performance (Khairizah et level. An organization that determines the level of
al, 2017). Leadership that is shown and applied compensation taking into account normal living
into a leadership style is one of the factors in standards, will allow employees to work with
increasing employee performance, because passion and motivation. Employee performance is
basically as the backbone of organizational much influenced by the level of compensation
development in encouraging and influencing good given to employees (Dwianto & Purnamasari,
morale to subordinates, leaders need to think 2019). Compensation in this case is a reference to
about and show the right leadership style in its encourage better employee motivation, if the
application (Noer, 2020). The results of this study compensation they feel is right, it will arise from
are in line with research conducted by Khairizah the employee to work. better, vice versa.
et al. (2017), Derunan (2017), Siswanto and Providing compensation to employees is closely
Hamid (2017), Shafie (2013) and Rathore et al. related to expectations of increased performance
(2017). The results of his research indicate that in a company or an organization (Sangkaen et al.,
leadership style affects employee performance. 2019). The results of this study are in line with
research conducted by Dwianto and Purnamasari
The Influence of Compensation on Employee (2019), Nugraha and Tjahjawati (2017), Sangkaen
Performance At PT.Indomarco Prismatama et al. (2019), Eguji et al. (2020) and Sharma et al.
Bandung Branch (2020). The results of his research show that
compensation has an effect on employee
performance.
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targets and standards, providing the amount

Conclusion of work in accordance with employee limits
and abilities, increasing a sense of
Conclusion responsibility for work, completing work with
fast and on time, increase employee initiative
Research on the influence of leadership style and with compensation so as to further motivate
compensation on employee performance in the employee performance, and learn to be
project division at PT. Indomarco Prismatama independent in solving problems at work.
Bandung branch that has been done and has been
described in the previous chapter, the following References
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