The Effect of Compensation and Work Environment on Employee Performance with Motivation as an Intervening Variable at PT Transcoal Pacific Sangatta

ABSTRACT : This study aims to analyze the effect of compensation and work environment on employee performance, with motivation as an intervening variable, at PT Transcoal Pacific Sangatta. Employee performance in this company shows a decline, triggered by compensation discrepancies and lack of system transparency, as well as a less conducive work environment. Using a quantitative approach with a census sample of 55 employees of PT Transcoal Pacific Sangatta, data were collected through a Likert scale questionnaire and analyzed using Partial Least Square – Structural Equation Modeling (PLS-SEM) with SmartPLS 4. The results of the analysis show that compensation and work environment have a positive and significant effect on employee performance. Compensation also has a positive and significant effect on work motivation. However, the work environment has no significant effect on work motivation. Furthermore, work motivation has a positive and significant effect on employee performance. This study also found that motivation significantly mediates the effect of compensation on performance, but does not mediate the effect of work environment on performance. Managerial implications indicate the importance of optimizing compensation and improving the work environment to increase employee motivation and performance.

KEYWORDS : Compensation, Work Environment, Motivation, Performance