THE INFLUENCE OF LEADERSHIP AND COMPENSATION TO EMPLOYEE

PERFORMANCE IN UREA III OPERATIONAL DIVISION PT PUPUK SRIWIDJAJA

PALEMBANG

ILHAM DICARDO

Abstract
The purpose of this study is to determine the influence of leadership, compensation jointly or
partially on employee performance on the Division of Urea III PT Pupuk Sriwidjaja Palembang.
The method of data collection in this research is questionnaire by using Likert scale and sampling
method used is saturated sampling or census as many as 39 samples. The method of analysis used
is double linear regression method. The results in this study indicate that both variables of
leadership and compensation have a significant effect on employee performance on urea III
operational divisions of PT. Pupuk Sriwidjaja. While the partial or each leadership variable has a
significant effect on employee performance while the compensation variable has no significant
effect on employee performance on the operation division of urea III PT. Pupuk Sriwidjaja. In
addition, there is a significant relationship or correlation between leadership variables,
compensation, and employee performance. Leadership variable and compensation variable
influence as many as 27.10% on employee performance in operation division of urea III PT. Pupuk
Sriwidjaja.

Keywords : Leadership, compensation, and employee performance.

Introduction
Human resources provide an important role for the company. In order for the activity of
management runs well, the company must have a knowledgeable and highly skilled employees
and also efforts to manage the company optimally so that employee performance increases.
According Setiyawan, Budi and Waridin (2006) employee performance is the result or working
achievement of employees who assessed in terms of quality and quantity based on working
standards determined by the organization. Good performance is the optimal performance, that is,
performance that conforms to the organization's standards and supports the achievement of
organizational goals.
The raising of employee performance will bring development for the company to survive
in an unstable business environment competition. Therefore, efforts to improve employee
performance are the most serious management challenges because the success to achieve company
goals and survival depends on the quality of human resources performance in it.

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 Basically, leadership that encourages employees extends motivation and the positive
influence that build employees to be more advanced in performing their duties and tend to have an
improvement of their performance. Stress experienced by employees due to tasks that are too much
or because of too much pressure is more likely in terms of employee performance decreased, in
this case leaders more often supervise or monitor in the assignment not to make burden of
employees. Procedures and the ways of compensation also affect employee performance, in this
case a leader influences in terms of providing fair compensation, and then compensation will give
motivation and it influences employee behavior to work more energized and spur a high
performance.
If the compensation program is felt to be fair and competitive by the employee, it will be
easier to attract potential employees, maintain it and motivate employees to improve their
performance, resulting in increased productivity and a company capable of delivering products at
competitive prices.
PT Pupuk Sriwidjaja Palembang (Pusri) is a company established as a pioneer
manufacturer of urea fertilizer in Indonesia. In addition, as a national fertilizer producer, Pusri also
carry out the task in carrying out trading business, providing services and other businesses related
to the fertilizer industry. Pusri is responsible for implementing the distribution and marketing of
subsidized fertilizer to farmers as a form of Public Service Obligation (PSO) implementation to
support the national food program by prioritizing the production and distribution of fertilizer for
farmers throughout Indonesia. The sale of non-subsidized urea fertilizer to fulfill the fertilizer
needs of the plantation, industrial and export sectors becomes part of the company's other activities
outside the responsibility of the implementation of Public Service Obligation (PSO).
However, the CDMI survey found a problem that still binds national fertilizer industry that
is the fertilizer production is still not optimal One way to improve it is by managing proper human
resource to achieve company goals. Improving human resource management can be done by
providing motivation or encouragement to employees. Various provision of encouragement and
motivation can be done by providing compensation in the form of rewards to employees who have
been working optimally and on the other side alsoby giving punishment to employees who work
not optimally. In the urea III division, compensation and leadership are commonplace, such as
overtime compensation that has not gone well with unacceptable demand and overtime payments.
Based on the above issues, the title appointed is "THE INFLUENCE OF LEADERSHIP AND
COMPENSATION TO EMPLOYEE PERFORMANCE IN OPERATIONAL UREA III
DIVISION PT PUPUK SRIWIDJAJA PALEMBANG".

LITERATURE REVIEW
Definition of Leadership
According to Robin and Judge in Fadli, et al (2012: 15) states that leadership as the ability
to influence a group to achieve a vision or set of goals set. Meanwhile, according to Yulk in
Ismainar (2015: 49) leadership is the individual ability to influence, motivate, and make others

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able to contribute to the effectiveness and success of the organization. Irsan (2008: 369) states that
leadership is the behavior of superiors in encouraging and influencing subordinates to achieve
established goals with indicators or style of behavioral to clarify goal path, orient to achievement,
facilitate work, support subordinates, facilitate interaction, make group-oriented decision,
network, and value-based behavior.
Definition of Leadership Style
Leadership style is a way used by a leader in influencing the behavior of others. From this
style, it can be taken advantage of to be used as a leader in leading subordinates or their followers.
Leadership style is a behavioral norm used by a leader when trying to influence the behavior of
others or subordinates.
Types of Leadership Style
Some experts put forward opinions on the various styles of leadership, are as follows:
a. According to Nawawi (2013: 245): authoritarian leadership style, democratic leadership style,
and free leadership style (Laissez Faire).
b. According to Robbins (2008: 93) namely: transactional leadership style, transformational
leadership style, Laissez Faire leadership style.
Leadership Style Indicators
According to Kartini Kartono (2008: 34), the indicator in assessing the style of leadership is
the character, habit, temperament, nature, personality.
Definition of Compensation
Compensation is the reward earned by an employee sourced from the organization, having
done the duty by fulfilling all its duties. Compensation is not only financial but can also be non-
financial. Financial compensation such as salary, wages, bonuses, commissions, employee
insurance, employee social assistance, allowances, holidays, or paid leave, while non-financial
compensation such as attractive assignments, broad challenges, responsibilities as well as
opportunities, interesting job environment recognition (Anthony, in Hidayah 2016: 36).
Indicator of Compensation Assessment
The assessment indicator of compensation according to Michael and Harold in Djati, et al
(2003: 26) is divided into three forms:
1. Material compensation
2. Social compensation
3. Compensation activity
Definition of Performance
Rivai and Basri in Juniantara (2015: 32) state that performance is the result or success rate
of a person as a whole over among a certain period in carrying out the task compared with various
possibilities, such as predefined work standards, target or objectives or criteria agreed together. In
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addition, according to Surianti (2015: 24) performance can also be interpreted as a result and effort
of someone achieved by the ability and deeds in certain situations. While Fadli, et al (2012: 13)
argues that performance is the value of real behavior as the implementation of functions that are a
combination of ability, effort and opportunity performed by each person as work performance in
accordance with the responsibilities given to him.
Performance Indicators
Performance indicators are the measurement aspects in assessing performance. As for the
indicators that become a measure of performance according to Mathis and Jackson (2011: 68) is
the quantity, quality, timeliness, attendance, ability to cooperate.

DATA ANALYSIS AND DISCUSSION

Doubled Linear Regression Test
Doubled linear analysis used in this study is aimed to prove the hypothesis that the variable
of leadership and compensation influence on employee performance. Here is the result of data
processing using SPSS program.
Table Results of Doubled Linear Regression Analysis

Model Unstandardized Standardized

Coefficients Coefficients
Std.
B Error Beta t Sig.
1 (Constant) 1,819 ,378 4,818 ,000
X1 ,283 ,147 ,336 1,934 ,001
X2 ,225 ,155 ,253 1,456 ,154
a. Dependent Variable: Y

The result of the regression equation above can be explained as follows:

1. The value of 0.283 in the leadership variable (X1) is positive. Then leadership variables
(X1) can be said to have a positive effect as many as 0.283 to employee performance
variable (Y), meaning that every increase of 1 unit in leadership style will increase
employee performance of 0.283.
2. Variable compensation (X2) has a coefficient value of 0.225 means positive. Then the
compensation variable has a positive effect on the employee's performance (Y), it also
means that if there is an increase in compensation of 1 unit then it will improve the
performance of the operation of urea III PT. Pupuk Sriwidjaja is 0.225.

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T-Test
T-test is a statistical test tool to see whether the partial regression coefficient of independent
variables affect the dependent variable. Based on table 4.10 has been obtained each t-count on
each variable. While with α 0.05 and df equal to 35 then obtained t table value equal to 1.684 so
obtained by analysis as follows.
a. Leadership (X1)
The value of t-count of leadership variables of 1.934 and significance of 0.001 <0.05 means
significant. This means that the value of t-count > t-table or H0 rejected then leadership
variables significantly influence the performance of employees in the urea III operational
division PT. Pupuk Sriwidjaja.

b. Compensation (X2)
The value of t-count of leadership variables of 1.456 and significance of 0.154 > 0.05 can
be considered not significant. This means that the value of t-count < t-table or H0 is
accepted then the compensation variable has no significant effect on the employee's
performance on the operation division of urea III PT. Pupuk Sriwidjaja.
F Test Statistics
The F-statistic test in this research is used to see the influence of leadership and
compensation on employee performance on urea operation division of PT. Fertilizer Sriwidjaja.
The measurement of F test that if F-count > F-table then H0 processed means to influence together.
Known as α 0.05 and df 35 then F-table is 3.23.
Table F Test Result Statistics
ANOVAb
Model Sum of
Squares df Mean Square F Sig.
1 Regression ,850 2 ,425 6,517 ,004a
Residual 2,284 35 ,065
Total 3,134 37
a. Predictors: (Constant), X2, X1
b. Dependent Variable: Y

Based on the above table has been obtained F-count of 6,517 and significance of 0.004.
The results of this statistical calculation showed that the F-count is greater than the F-table then
H0 is rejected means the leadership and compensation variables affect together on the performance
of employees in the urea operational division of PT. Pupuk Sriwidjaja. Table 4:11 also shows
significance test of 0.005<0.05 means significant, then leadership and compensation have
significant effect on employee performance on the operation division of urea III PT. Pupuk
Sriwidjaja.

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Correlation between Variables Research
Correlation is a statistical technique used to examine the presence or absence of
relationship and the direction of the relationship between two or more variables, expressed in the
form of positive and negative relationships, while the strength of the relationship expressed in the
magnitude of the correlation coefficient. To see the correlation between variables are then analyzed
by Pearson Correlation technique because in this research there are more than two variables. If
correlation coefficient > r-table, then there is a significant correlation (H1 accepted) and if sig
value < 0.05 then there is a significant correlation (H1 accepted).
Table Correlations
Y X1 X2
Pearson Correlation Y 1,000 ,477 ,440
X1 ,477 1,000 ,557
X2 ,440 ,557 1,000
Sig. (1-tailed) Y . ,001 ,003
X1 ,001 . ,000
X2 ,003 ,000 .
N Y 38 38 38
X1 38 38 38
X2 38 38 38
Source: Primary Data, processed, 2018
Based on the table, it has obtained the correlation coefficient of 0.557, the value of .sig of
0.000, while the value of r-table with α 0.05 is 0.168. The above correlation results can be
explained as follows.
1. The value of correlation coefficient is positive, meaning that if there is improvement in
leadership and compensation variable it will increase employee performance variable vice
versa, and if there is an increase in leadership variable will increase the variable of
compensation as well as vice versa.
2. The correlation coefficient is 0.557 > 0.168 (r-table), meaning there is a significant
correlation between leadership variables (X1), compensation (X2), and employee
performance (Y).
3. Sig value 0.000 < 0.05, meaning the relationship between leadership variables (X1),
compensation (X2), and employee performance (Y) is significant.

DISCUSSION
Based on the results of statistical tests that have been done, it is already very clearly visible
that results of this study is that leadership variables significantly influence the dependent variable
of employee performance, it can be explained why it can happen and things become the supporting
factor.

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 The research has been conducted on the employees of urea III operating division of PT.
Pupuk Sriwidjaja where question indicator of leadership variable consists of sub-section of
characters, habits, temperament, nature, and personality. This means that can be spelled out this
style of leadership can affect employee performance. It is also supported by t-statistic test and
significance that is t-count value of leadership variable equal to 1,934 and significance equal to
0.001 < 0.05 mean significant. This means that the value of t-count > t-table or H0 rejected then
leadership variables significantly influence the performance of employees in the division of
operations urea III PT. Pupuk Sriwidjaja. These results strongly reflect that the style of leadership
that is applied will greatly affect the quality and quantity that has been applied by employees of
the operation division of urea III PT. Pupuk Sriwidjaja, in addition the results of this study is also
in accordance with previous theories and research. Thoha, in Darwito, 2008:3 says that an effective
leader in applying certain styles in leadership must first understand who his subordinates are,
understand the strengths and weaknesses of his subordinates, and understand how to harness
subordinate powers to compensate for their weaknesses.
Based on the results of statistical tests that have been done already very clearly visible
results of this study that the compensation variable has no significant effect on the dependent
variable of employee performance, it can be explained why it can happen and things become the
supporting factor.
Research has been conducted on compensation variables divided into sub-sections, as
follows material compensation, social compensation and activity compensation. From the results
of the distribution of respondents' answers can be said that the compensation variable has not
affected the performance of employees in the operation division of urea III PT. Pupuk Sriwidjaja.
This is supported in Table 4.7 where as many as 30 or 85.71 respondents are more likely to agree
with compensation in the form of activity that is questions about the company providing training
and development to employees. While statements about sub compensation of materials and
especially social compensation many respondents disagree. This is also supported by t-statistical
test and significance, where the value of t-compute ratio of 1.456 and significance of 0.154 > 0.05
can be considered insignificant. This means that the value of t-count < t-table or H0 is accepted
then the compensation variable has no significant effect on the employee's performance on the
operation division of urea III PT. Pupuk Sriwidjaja.

SUMMARY
Based on the results of research and discussion it can be concluded this research as follows:
a. Based on the F statistic test, the leadership and compensation variables together
significantly influence the employee's performance on urea III operations division of PT.
Pupuk Sriwidjaja.
b. Based on statistical t test and significance test show that leadership variable significantly
influencing employee performance on division of operation of urea III PT. Fertilizer
Sriwidjaja, while the compensation variable has no significant effect on the employee's
performance on the operation division of urea III PT. Pupuk Sriwidjaja. In addition, there

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 is a significant correlation between leadership variables (X1), compensation (X2), and
employee performance (Y)
c. Leadership variable (X1) and compensation variable (X2) have an effect of 27.10% on
employee performance (Y) in urea III division of PT. Pupuk Sriwidjaja.
Based on the results of this study then there are still some things that need to be improved and
given some suggestions, namely:
a. For the performance of employees only need to be improved just because of the
questionnaire generated in this study of the five indicators used in measuring employee
performance has obtained very good results. So, employees just need to maintain and
continue to improve their performance again.
b. For the first leadership, the head of urea operations division III PT. Pupuk Sriwidjaja is
required to provide opportunities to all employees without exception to follow the selection
of staffing level in accordance with the potential that is because for this statement the
results do not agree high enough that is 55.26% it is also to know the potential of employees
so they can work in accordance with their potential and can have an impact on their
performance that may get better. Second, the leaders need to give encouragement to
employees because for this statement also the result is not high enough that 57.89%
encouragement of employee motivation can be a separate motivation for employees to
work better so that targets set by the company can fulfilled.
c. In terms of compensation, companies need to reward employees, because employees are
one part of the input, employees are also an important factor in a company therefore when
employees do overtime payment must also be in accordance with that employed by the
employee because at this revelation level of disagreement high enough that 92.21 because
it could be with the payment of overtime appropriate employees can work more optimally
than usual.
d. The compensation factor has no effect on employee performance on PT urea operating
division. Pupuk Sriwidjaja, this is because the respondents in the study only dominant
answer about compensation activities only with the answer agree of 85.71% of employees
like this. So, things that must be addressed are the business owners, especially the leader
of urea operations division III PT. Pupuk Sriwidjaja to improve employee performance
should pay more attention to all aspects either in the form of material compensation, social
compensation, and compensation activities.
e. For further research, the results of this study can be used as a reference or further study
with the problems and the same research topics so as to refine the results of research that
has been the author carefully about things that affect the performance of an employee,
especially in terms of leadership style and compensation.

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