The Effect of Compensation and Work Environment on Employee Performance at the Factory of PT XYZ

Puput Tri Handayani (Telkom University)
Ratna Komala Putri (Telkom University)

Formosa Journal of Science and Technology (FJST)
Vol. 4 No. 7 (2025): July 2025

This study investigates the effects of compensation and work environment on employee performance at PT XYZ, a palm oil manufacturing company. Using a quantitative approach with a saturated sampling technique, data were collected from 92 employees across six divisions. The analysis was conducted using Structural Equation Modeling with Partial Least Squares (PLS). Results showed that compensation and work environment were rated as good (75%), while employee performance was also rated good (80%). However, compensation had a positive but insignificant effect, while work environment significantly influenced performance. These findings suggest that improving physical and social work conditions can enhance employee outcomes. The study offers insights for management to improve compensation systems and workplace quality to optimize performance.