The Effect of Non-Financial Compensation on Employee Performance

The Effect of Financial and Non Financial Compensation to the Employee Performance
Arik Prasetya† and Masanori Kato Graduate School of Asia Pacific Studies, Ritsumeikan Asia Pacific University Beppu-shi, Oita-ken, Japan
Abstract-- This study aims (1) to examine the employee responses in terms of their performance to an implementation of the compensation policy that includes both financial and non financial compensations, (2) to analyze the influence of both financial and nonfinancial compensation collectively and individually. This research was conducted at PT. Telkom Malang Regional Office, by a proportional random sampling technique with the sample size of 57 employees. The results of the descriptive statistical analysis of financial and nonfinancial compensation showed that the compensation policy of PT. Telkom Malang Regional Office is in line with expectations of employees. Based on the results of multiple regression analysis, there are significant influences of financial and nonfinancial compensation to the employee performance. However it was noted that promotion did not influence the employee performance in this company. Keywords: financial compensation, salary, incentive, non financial compensation, promotion, employee performance

INTRODUCTION
Job performance is influenced by many factors. According to Kreitner and Kinicki (2007), performance management is “continuous cycle of improving job performance with goal setting, feedback and coaching, and rewards and positive reinforcement”. In this study the focus was given to compensation scheme. An investigation was conducted at PT. Telkom Malang Regional Office to see how such factors of compensation scheme affect job performance of the employees. The question that prompted the current investigation was "What degrees at which the salary, incentives, benefits, promotion, self-development, and work environment collectively or individually have influence on employee performance?".

Compensation

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