How to cite:
Nuzullaila Sitorus Pane, Kasmir. (2022). Effect of Occupational Safety
and Health, Work Environment and Compensation on Employee
Performance. Journal Eduvest. Vol 2(5): 910-923
E-ISSN:
2775-3727
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https://greenpublisher.id/
Eduvest – Journal of Universal Studies
Volume 2 Number 5, May, 2022
p- ISSN 2775-3735- e-ISSN 2775-3727
EFFECT OF OCCUPATIONAL SAFETY AND HEALTH,
WORK ENVIRONMENT AND COMPENSATION ON
EMPLOYEE PERFORMANCE
Nuzullaila Sitorus Pane
1
, Kasmir
2
¹Magister of Management, Mercu Buana University Jakarta, Indonesia
²Lecturer of Postgraduate Mercu Buana University Jakarta, Indonesia
Email: nuzullailaspane@gmail.com
1
, kasmir@mercubuana.ac.id
2
ARTICLE INFO ABSTRACT
Received:
April, 26
th
2022
Revised:
May, 14
th
2022
Approved:
May, 16
th
2022
Performance is the main indicator for the progress of a
company, resulting in increased productivity in all parts of the
system. Basically, performance is an individual thing because
each individual will have a different level of performance in
accordance with the values that apply to each individual. The
more aspects of the job that match the individual's wishes, the
higher the level of performance. This study aims to analyze the
effect of occupational safety and health, work environment
and compensation on employee performance. The subjects of
this study were employees of PT SMG, with a population of 114
people. The data collection technique used a questionnaire
instrument with a Likert scale measurement. The data were
analyzed using the SmartPLS software version 3.3.7. The
results of this study indicate that occupational safety and
health, work environment and compensation have a
significant effect on employee performance.
KEYWORDS
Occupational Safety and Health, Work Environment,
Compensation, Employee Performance
This work is licensed under a Creative Commons
Attribution-ShareAlike 4.0 International
INTRODUCTION
According to data made by the Ministry of Manpower, when the Covid-19
pandemic began to spread to all sectors/business fields. Of course, this phenomenon has a
fairly severe impact on Indonesia's economic conditions in 2020. As a result, labor
Nuzullaila Sitorus Pane, Kasmir
Effect of Occupational Safety and Health, Work Environment and Compensation on
Employee Performance 911
productivity in 2020 also decreased when compared to 2019, which was down by around
3.55 percent (Bank, 2021).
This also happened at PT. SMG, which is one of the companies engaged in the
procurement of goods to support the performance of its industrial partners (Sumbodo,
Supraptono, Meddaoui, Samsudi, & Widodo, 2020). The system works, PT. SMG as a
second party that acts as a vendor and has a work target for a project that has been given
by its partners (Adiyanti & Fathurrahman, 2021). In the current condition due to the
pandemic, there is a work from home system that increasingly makes the company's work
system have to adjust to existing conditions so that it remains optimal to manage the
company's business processes (Dwivedi et al., 2020).
A phenomenon was found if PT. SMG is experiencing a decline in the performance
of its employees due to the impact of this pandemic (Sukandi, RinrinRahmawati,
Hendayani, Apriliani, & Sitorus, 2022). The following is an overview of the data obtained
from the management of PT SMG:
Table 1 Key Performance Indicators of PT SMG
Key Performance Indicator
Weighting
KPI
Target
Realization
Financial Perspective
Operating costs
79
80
60
Increasing the number of tenders/projects
80
95
60
Employee Payroll
80
95
65
Process Internal Perspective
Project processing time
87
95
67
Availability of employees in the project
80
80
66
QHSE at work
80
85
64
Job supervision
88
95
66
HR Management Perspective
Completion of employee tasks
85
96
65
Worker's attendance
88
90
68
Solving problems faced by employees
80
90
64
Employee performance improvement
80
85
67
Notes:
Score 100 = very good Score 89-80 = not good Score 69-80 = not enough
Score 99-90 = good Score 79-70 = enough
Source: PT SMG management data, 2021
With this data, the researcher conducted a pre-survey with a short questionnaire to
the company's employees with a total of 30 people to see how the condition of the company
and determine the factors to be studied (Riyanto, Sutrisno, & Ali, 2017). The following are
the results of the survey conducted by the researcher.
In Figure 1 it can be seen that 67% of employees feel that they do not feel safe at
work, which means that the implementation of company standards in carrying out K3 is
still not good.
Eduvest – Journal of Universal Studies
Volume 2 Number 5, May 2022
912 http://eduvest.greenvest.co.id
Figure 1. Percentage of Occupational Safety and Health
Source: The results of pre-survey data processing PT. SMG (2021)
In Figure 2 it can be seen that 70% of employees are currently not comfortable
doing their jobs because of the lack of two-way communication with superiors and
coworkers.
Figure 2 Percentage of Work Comfort
Source: The results of pre-survey data processing PT. SMG (2021)
Figure 3 shows that 86% of employees feel that the salary given is not enough.
Even though the company has given a salary according to the contract, the deadline for
giving it is late from the agreement, and incentive wages sometimes don't exist due to the
current pandemic.
Figure 3 Percentage of Compensation / Salary
Source: The results of pre-survey data processing PT. SMG (2021)
Thus, it can be concluded that it is assumed that the variables that affect the decline
in the performance of PT SMG's employees are K3, work environment and
compensation, so a more in-depth study is needed to find out.
67%
33%
Persentase Keselamatan dan Kesehatan Kerja
Tidak Aman Aman
70%
30%
Persentase Kenyamanan Kerja
Tidak Nyaman Nyaman
86%
14%
Persentase Kompensasi / Gaji
Tidak Cukup Cukup
Effect of Occupational Safety and Health, Work Environment and Compensation on
Employee Performance 913
RESEARCH METHOD
This type of research uses quantitative research methods, where the data collected
are numbers that will be analyzed using statistics (Bloomfield & Fisher, 2019). This
research is basic research, namely basic research that has a scientific research objective to
improve scientific theories and improve understanding or prediction of business or other
phenomena (Baker et al., 2019). This research uses the SemPLS analysis tool and the
SmartPLS version 3.3.7 application as a statistical tool to find information about the
influence between variables in this study (Asghar, Arif, Iqbal, & Seitamaa-Hakkarainen,
2022).
One of the methods used to determine the number of samples is using the Slovin
formula (Susanti, Soemitro, Suprayitno, & Ratnasari, 2019). The company has 172
employees, and a survey was conducted by taking samples (Islami, Mulolli, & Mustafa,
2018). Samples are required if the error tolerance limit is 5%. Thus, the number of samples
that are considered valid if there are 114 people or more.
The type of data collection method used is primary data, namely data that comes
from the original source obtained directly from the object under study (Ilham, 2019). The
primary data in this study were sourced from respondents' responses or questionnaires
given, and the sampling used several data collection techniques: Literature study, direct
interviews with employees, and questionnaires measured using a Likert scale which is
included in the Ordinal measurement scale (Sileyew, 2019).
RESULT AND DISCUSSION
A. Test the Measurement Model (Outer Model)
The Outer Model, also known as the Outer Relation or Measurement Model,
defines how each indicator block relates to its latent variables (Caraka et al., 2021). This
model is used to determine the validity and reliability of the indicators (Watts, Poore, &
Waldman, 2019). The testing stages of the measurement model (outer model) are carried
out with the following steps:
1. Convergent Validity Test
Based on the rule of thumb used in this study, the parameters measured are load
factor values greater than 0.7 and AVE greater than 0.5. The test results using SmartPLS
will produce load factor values in the model path diagrams and tables.
Eduvest – Journal of Universal Studies
Volume 2 Number 5, May 2022
914 http://eduvest.greenvest.co.id
Figure 4 Convergent Validity Test
Source: Data processing output on SmartPLS 3.3.7 (2022)
Based on the analysis of the path diagram above, the model uses SmartPLS, then
produces the loading factor values in the form of a path diagram model. It can be seen that
all indicators are above 0.7 which means that the indicator is declared valid. Then, you can
see the presentation of the data in the following Outer Loadings table:
Table 2 Outer Loading
Indicator
K3(X1)
Work
Environment
(X2)
Work
Environment
(X2)
Work
Environment
(X2)
Description
KK1
0.848
Valid
KK2
0.888
Valid
KK3
0.870
Valid
KK4
0.864
Valid
KK5
0.885
Valid
KK6
0.863
Valid
KK7
0.869
Valid
KK8
0.884
Valid
LK1
0.930
Valid
LK2
0.918
Valid
LK3
0.929
Valid
LK4
0.904
Valid
Nuzullaila Sitorus Pane, Kasmir
Effect of Occupational Safety and Health, Work Environment and Compensation on
Employee Performance 915
LK5
0.903
Valid
LK6
0.915
Valid
LK7
0.881
Valid
KI1
0.861
Valid
KI2
0.774
Valid
KI3
0.810
Valid
KI4
0.762
Valid
KI5
0.877
Valid
KI6
0.867
Valid
KN1
0.877
Valid
KN2
0.844
Valid
KN3
0.843
Valid
KN4
0.865
Valid
KN5
0.853
Valid
KN6
0.898
Valid
KN7
0.831
Valid
KN8
0.859
Valid
KN9
0.850
Valid
KN10
0.778
Valid
KN11
0.896
Valid
Source: Data processing output on SmartPLS 3.3.7 (2022)
It can be seen that K3 has a value between 0.848 - 0.888, the next result is LK,
namely the Work Environment with a value between 0.881 - 0.930, then Compensation
(KI) with a value between 0.762 - 0.877, and Employee Performance (KN) between 0.778
- 0.896. The results of the outer loadings table above show that all the questions on each
latent variable in this study can be understood by the respondents. By referring to a
minimum number of more than 0.7, it means that the data is declared valid (Hidayat &
Latief, 2018). So that all data, nothing is removed and all data has met convergent validity.
2. Discriminant Validity Test
Discriminant validity of the measurement model with reflective indicators is
assessed based on cross loading measurements with constructs. If the construct's correlation
with the measurement item is greater than the size of the other constructs, it indicates that
the latent construct predicts block size better than other block sizes. Discriminant validity
serves to measure the accuracy of the reflective model and for the AVE value of
discriminant validity a minimum number of 0.5 is set and better results are more than 0.5.
Eduvest – Journal of Universal Studies
Volume 2 Number 5, May 2022
916 http://eduvest.greenvest.co.id
Tabel 3 Cross Loading
Indicator
K3(X1)
Work
Environment
(X2)
Work
Environment
(X2)
Work
Environment
(X2)
Description
KK1
0.848
0.591
0.366
0.508
Valid
KK2
0.888
0.584
0.435
0.567
Valid
KK3
0.870
0.609
0.315
0.465
Valid
KK4
0.864
0.577
0.411
0.543
Valid
KK5
0.885
0.605
0.423
0.564
Valid
KK6
0.863
0.733
0.551
0.673
Valid
KK7
0.869
0.736
0.496
0.636
Valid
KK8
0.884
0.729
0.515
0.659
Valid
LK1
0.691
0.930
0.719
0.527
Valid
LK2
0.704
0.918
0.690
0.504
Valid
LK3
0.721
0.929
0.697
0.486
Valid
LK4
0.689
0.904
0.740
0.512
Valid
LK5
0.674
0.903
0.711
0.512
Valid
LK6
0.664
0.915
0.740
0.532
Valid
LK7
0.638
0.881
0.719
0.570
Valid
KI1
0.446
0.711
0.861
0.475
Valid
KI2
0.400
0.644
0.774
0.445
Valid
KI3
0.476
0.702
0.810
0.495
Valid
KI4
0.414
0.625
0.762
0.525
Valid
KI5
0.401
0.618
0.877
0.628
Valid
KI6
0.422
0.628
0.867
0.577
Valid
KN1
0.544
0.467
0.563
0.877
Valid
KN2
0.592
0.513
0.630
0.844
Valid
KN3
0.515
0.419
0.552
0.843
Valid
KN4
0.589
0.501
0.554
0.865
Valid
KN5
0.526
0.432
0.455
0.853
Valid
KN6
0.605
0.517
0.528
0.898
Valid
KN7
0.617
0.530
0.528
0.831
Valid
KN8
0.563
0.490
0.559
0.859
Valid
KN9
0.592
0.527
0.547
0.850
Valid
KN10
0.604
0.499
0.516
0.778
Valid
KN11
0.548
0.472
0.576
0.896
Valid
Source: Data processing output on SmartPLS 3.3.7 (2022)
Based on the results of discriminant validity testing after model modification at the
convergent validity stage, it can be seen in table 3 that all indicators have a cross loading
value of their constructs that is greater than the cross loading value of other constructs so
that they are declared valid.
Another way to see discriminant validity is to look at the AVE value. The
recommended AVE value is greater than 0.5 than other indicators involving the latent
variable.
Table 4 Construct Reliability dan Validity
Variable
K3(X1)
Work
Environment
(X2)
Work
Environment
(X2)
Work
Environment
(X2)
K3 (X1)
0.871
Nuzullaila Sitorus Pane, Kasmir
Effect of Occupational Safety and Health, Work Environment and Compensation on
Employee Performance 917
Work Environment (X2)
0.748
0.912
0.787
0.572
Compensation (X3)
0.514
0.826
0.642
Employee Performance (Y)
0.671
0.855
Source: Data processing output on SmartPLS 3.3.7 (2022)
The highest value in the Extracted Average Variant is the work environment with
a value of 0.912.
Figure 5 Average Variant Extracted
Source: Data processing output on SmartPLS 3.3.7 (2022)
Based on Table 4 and the graph in Figure 5 Average Variance Extracted (AVE)
shows that all indicators have a value above 0.5 which means the indicators are declared
valid and meet discriminant validity.
3. Reliability Test
The reliability test is carried out by looking at the composite reliability value of the
indicator block that measures the construct. This is necessary to find out whether the
research instrument items, if used twice to measure the same symptoms, will provide
relatively consistent measurement results. The results of composite reliability will show a
satisfactory value if it is above 0.7.
In Table 5 below, it can be seen that all Cronbach alpha values show numbers above
0.81, which means that all the results are satisfactory and very reliable if the research
instrument is used twice to measure all the same symptoms.
Tabel 5 Cronbach alpha
Variable
Cronbach’s Alpha
Description
K3 (X1)
0.955
Reliable
Work Environment (X2)
0.966
Reliable
Compensation (X3)
0.907
Reliable
Employee Performance (Y)
0.963
Reliable
Source: Data processing output on SmartPLS 3.3.7 (2022)
The second test can be by looking at the composite reliability value. In Table 4.13,
where the composite reliability test is used to show the internal consistency of an indicator
Eduvest – Journal of Universal Studies
Volume 2 Number 5, May 2022
918 http://eduvest.greenvest.co.id
in the latent variable. In general, the value of composite reliability tends to be greater than
Cronbach's alpha. Composite reliability is considered reliable if the value is above 0.7.
Table 6 Composite Reliability
Variable
Cronbach’s
Alpha
rho_A
Composite
Reliability
Average Variance
Extracted (AVE)
K3 (X1)
0.955
0.960
0.962
0.759
Work Environment (X2)
0.966
0.967
0.972
0.831
Compensation (X3)
0.907
0.915
0.928
0.683
Employee Performance (Y)
0.963
0.963
0.967
0.730
Source: Data processing output on SmartPLS 3.3.7 (2022)
B. Structural Model Test (Inner Model)
Inner model (inner relation, structural model, or substantive theory) describes the
relationship between latent variables based on substantive theory. The structural model
(inner model) is an evaluation of the Goodness of Fit Index or to test the hypothesis of a
study. The structural model in SemPLS is first evaluated by using R2 for the dependent
construct, the path coefficient value or the t-value of each path for the significant test
between constructs in the structural model. The testing stages of the structural model (inner
model) are carried out with the following steps:
1. Coefficient of Determination Test / R Square (R²)
See the value of R-Square (R2) which is the Goodness of Fit (GoF) model test. In
assessing the model with PLS, it begins by looking at the R-Square (R2) for each dependent
variable. The coefficient of determination R-Square (R2) shows how much the independent
variable explains the dependent variable. The value of R-Square (R2) is zero to one.
Table 7 Value of R Square (R²)
Variable
R Square
Employee performance
0.609
Source: Data processing output on SmartPLS 3.3.7 (2022)
Based on Table 7, it can be seen that the R-square (R2) value of the employee
performance variable is 0.609, which means that the K3 variable, compensation and work
environment affect employee performance by 60.9% while 39.1% is influenced by other
variables not included in the study. this.
2. Test Goodness of Fit Index
The purpose of testing the Goodness of Fit Index (GoF) is to validate the combined
performance of the measurement model (outer model) and structural model (inner model)
obtained through calculations. GoF values range from 0-1 with the following interpretation:
Small Goodness of Fit (GoF) = 0.1, Medium Goodness of Fit (GoF) = 0.25 and Large
Goodness of Fit (GoF) = 0.38. Then the calculation of GoF for this research is as follows:
GoF = (AVE x R2 )
= ((0.759 + 0.831 + 0.683 + 0.730) / 4) x (0.609)
= (0.75075 x 0.609)
= 0.677
From the calculation results, the GoF Index value is considered large because the
value is more than 0.38 (Ghozali, 2014). This indicates that the overall model is
appropriate.
Nuzullaila Sitorus Pane, Kasmir
Effect of Occupational Safety and Health, Work Environment and Compensation on
Employee Performance 919
3. Hypothesis Testing
After obtaining a structural model with good goodness of fit, the next step is to test
the hypothesis. Hypothesis testing can be seen from using Bootstrap on SmartPLS by
looking at the P value or P Values with an error rate of 0.05, then the results are as follows:
Table 8 Path Coefficients
Variable
Original
Sample
(O)
Sample
Mean (M)
Standard
Deviation
(STDEV)
T Statistics
(|O/STDE V|)
P
Values
K3 (X1) > Employee
Performance (Y)
0.660
0.635
0.148
4.464
0.000
Work Environment
(X2) > Employee
Performance (Y)
-0.419
-0.402
0.190
2.205
0.028
Compensation (X3) >
Employee
Performance (Y)
0.633
0.642
0.112
5.665
0.000
Source: Data processing output on SmartPLS 3.3.7 (2022)
The estimation results of t-statistics are seen in the path coefficient (t-statistics)
which can be seen in Figure 6 below:
Eduvest – Journal of Universal Studies
Volume 2 Number 5, May 2022
920 http://eduvest.greenvest.co.id
Figure 6 T-Statistics Table
Figure 6 shows the T-Table that will be used in formulating the T value to be used
is 114 samples and the number of variables is 4, then df = 114 - 4 so that with a df value of
110 at an error rate of 5%, the standard value is 1,981. The estimated value of the causal
relationship from the tested structural model and the results of hypothesis testing with the
t-value of each relationship is said to have a significant effect if the t-values 1.981 as
follows:
Table 9 of Hypothesis Testing Results
Hypotesis
Structural Path
t -
values
Description
Conclusion
H1
K3→Employee
Performance
4.464
Data Supports
Hypothesis
K3 has a significant
effect on employee
performance
H2
Work
Environment→Employee
Performance
2.205
Data Supports
Hypothesis
Work environment
has a significant
effect on employee
performance
H3
Compensation→
Employee Performance
5.665
Data Supports
Hypothesis
Compensation has a
significant effect on
employee
performance
Source: author's data processing (2022)
Figure 7 Hypothesis Test Results
Source: Data processing output on SmartPLS 3.3.7 (2022)
C. Discussion
1) Effect of Occupational Safety and Health on Employee Performance
The better the implementation of K3 it will affect employee performance. Based on
observations of conditions in the field, employees when doing work still pay less attention
to wearing clothes and safety equipment for work that have been provided. Meanwhile,
superiors sometimes do not monitor continuously and periodically when employees work
Nuzullaila Sitorus Pane, Kasmir
Effect of Occupational Safety and Health, Work Environment and Compensation on
Employee Performance 921
on projects because superiors play a more role in carrying out tender negotiations with work
partners.
From the results of the study, it was assessed the importance of the rules and
application of K3 in the work that the company must pay attention to because there are still
some employees who are not aware of the importance of applying K3 and the machines
used have not been confirmed to be safe. This is in line with the results of research by
Supriyatna (2021) which states that the factors of the application of K3 have an influence
on the performance of workers. Likewise, research by Firmansyah (2021) concluded that
K3 had a significant positive effect on employee performance.
2) Influence of Work Environment on Employee Performance
It is concluded that if the work environment is good, then the employee's
performance will decrease. This anomaly occurs with the previous theory, because from
the original sample it is concluded that the work environment variable has a negative but
significant effect on employee performance. This is concluded because the object of
research is a vendor company, so there is a clash of views from employees who work in a
room with working in the field. Based on observations of conditions in the field, there are
several conditions of the work environment that affect employee performance. For the
physical environment, temperature and weather cannot be predicted for work carried out
outside the building, it is more important to look at the temperature for indoor work, namely
PT SMG's head office. The room used for administrative work is not too good from the
installation of air conditioners and circulation such as inadequate ventilation, including
lighting related to the wattage of the lamps used. If for work in the field, the physical work
environment is not really a priority for field workers, but workers refer to the work
environment from a non-physical perspective, the most important thing to pay attention to
is communication. Sometimes there is often miscommunication between co-workers and
superiors because they are more mobile. This is also one of the reasons for the lack of
supervision by superiors and employees working in the field.
Discomfort at work is a very bad condition for workers in their activities, because
workers will carry out their activities that are less than optimal and will cause a work
environment that is not enthusiastic and boring, on the contrary if workers will carry out
activities optimally, because the conditions of the work environment are very good. and
support. In line with research from Alfiyah and Riyanto (2019), it is stated that in carrying
out work, it is not only related to the physical environment, but also the non-physical
environment related to good communication, the relationship between superiors and co-
workers, can help in completing the quantity of work that is also provide good quality.
3) The Effect of Compensation on Employee Performance
It is concluded that if the compensation given is not commensurate with the
workload, then the employee's performance will decrease. Based on the results of the study,
compensation cannot be justified, of course there are rules for giving salaries that have been
set by the company. However, some employees expect an incentive bonus if the employee
delivers more work than the target. There are also employees who expect an award in the
form of a salary increase or position if they have worked for a certain period of time.
However, the company pays less attention to this which could be a factor to increase
employee motivation and performance so that employees are more active at work.
Naturally, if compensation is the concern of employees and employees feel entitled
to compensation, it should be balanced with the workload carried. If the compensation
given is not appropriate, it can be estimated that the employee's performance is less stable.
This is in line with research by Alfiyah and Riyanto (2019) concluding based on the
incentive dimension explaining that the rewards provided by the company can increase
Eduvest – Journal of Universal Studies
Volume 2 Number 5, May 2022
922 http://eduvest.greenvest.co.id
employee morale and encourage them to do their jobs and duties and responsibilities well.
CONCLUSION
Based on the results of research and discussion in the previous chapter regarding the
effect of K3, work environment, and compensation on employee performance at PT SMG
as follows: K3 affects employee performance. From the results of the study, it was assessed
the importance of the rules and application of K3 in the work that the company must pay
attention to because there are still some employees who are not aware of the importance of
applying K3 and the machines used have not been confirmed to be safe. The work
environment has an effect on employee performance. It can be concluded that companies
need to pay attention to the physical and non-physical work environment so that employee
performance can be maintained. Compensation affects employee performance. It can be
concluded that the compensation given at this time should be adjusted according to the
workload in order to improve the performance of employees at PT SMG.
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