The Effect of work Discipline & Compensation on Em

TO:

S.M RAIHAN UDDIN

Syed Muttaki Hossain | Md. Shahnewaz KhAn |

January 29,2023
Later of transmittal

29.01.2023

Sheikh Muhammad Raihan Uddin

Lecturer Faculty

Department of Business Studies

Southeast University

Subject: Submitting report on (

The Effect of work Discipline & Compensation on Employee performance
).

Dear Sir,

It’s our pleasure to submit the report, you orally authorized me to write. Regarding the last
date of submission, we have hardly tried to provide all the necessary evidence and analysis
on this subject, we have tried to make my paper as attractive as possible. Hopefully you’ll
like it and may get interest in reading the report.

Thank you, Sir, for your valuable time and reviews

Your faithfully

Syed Muttaki Hossain Md. Shahnewaz Khan

ID:2019210000001 ID:2020110000001

Batch: 53 Batch: 55

BBA BBA
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ABSTRACT
This report examines the effect of work discipline and compensation on employee
performance. Work discipline refers to the rules and regulations that employees are
expected to follow in the workplace, while compensation refers to the financial
rewards that employees receive for their work. The report finds that a combination of
strong work discipline and fair compensation can have a positive impact on
employee performance. However, other factors such as job satisfaction, work-life
balance, and employee engagement also play a role in employee performance.

INTRODUCTION
Employee performance is a critical aspect of any organization and has a direct
impact on the overall success of the company. It is essential for businesses to
understand the various factors that can influence employee performance, including
work discipline and compensation. Work discipline refers to the rules and
regulations that employees are expected to follow in the workplace, such as
punctuality, attendance, and adherence to company policies. Compensation, on the
other hand, refers to the financial rewards that employees receive for their work,
such as salary and benefits. In this report, we will delve deeper into the effect of
work discipline and compensation on employee performance, and how
organizations can effectively manage these factors to improve employee
performance.

The importance of work discipline in the workplace cannot be overstated. It helps to

create a structured and organized environment, ensuring that employees are
productive, engaged and motivated in their work. On the other hand, inadequate
work discipline can lead to demotivated employees, lack of productivity, and poor
customer service. Similarly, compensation plays a crucial role in employee
performance. Adequate and fair compensation can lead to improved job satisfaction,
increased productivity, and better retention rates. Inadequate compensation, on the
other hand, can lead to demotivated and disengaged employees.

In this report, we will examine the relationship between work discipline and
employee performance, exploring the positive and negative effects of work discipline
on employee performance. We will also examine the relationship between
compensation and employee performance, exploring how fair compensation can
improve employee performance, and how inadequate compensation can negatively
impact employee performance. The report will conclude by providing
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recommendations for organizations on how to effectively manage work discipline
and compensation to improve employee performance.

WORK DISCIPLINE

Work discipline refers to the set of rules, regulations and standards that employees
are expected to follow in the workplace. It encompasses a wide range of behaviors,
including punctuality, attendance, adherence to company policies, and overall
conduct. Maintaining a strong work discipline is essential for creating a productive
and organized work environment. It helps to ensure that employees are engaged in
their work, and that they are meeting the expectations of their employer.

Punctuality is a key aspect of work discipline. Employees who consistently arrive to

work on time are more likely to be productive and engaged in their work. They are
also less likely to fall behind on their tasks or disrupt the work of their colleagues.
Attendance is another important aspect of work discipline. Employees who
consistently show up for work are more likely to be productive and engaged in their
work. They are also less likely to fall behind on their tasks or disrupt the work of their
colleagues.

Adherence to company policies is another important aspect of work discipline. This

includes following safety protocols, dressing appropriately, and behaving in a
professional manner. By following company policies, employees are more likely to
be productive and engaged in their work. They are also less likely to fall behind on
their tasks or disrupt the work of their colleagues.

Overall conduct is also an important aspect of work discipline. This includes treating
colleagues and customers with respect, maintaining a positive attitude and avoiding
any behavior that could be considered unprofessional. By maintaining a professional
conduct, employees are more likely to be productive and engaged in their work.
They are also less likely to fall behind on their tasks or disrupt the work of their
colleagues.

In summary, work discipline is a crucial aspect of the workplace. When employees

have a strong sense of discipline, they are more likely to arrive to work on time,
meet deadlines, and follow company policies. This can lead to increased
productivity, higher quality work, and improved customer service. Additionally, a
strong work discipline can also improve the overall morale of the workplace, as
employees are more likely to feel respected and valued. However, it's important for

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organizations to balance the need for discipline and maintain a positive work
environment to keep employees motivated and engaged.

COMPENSATION

Compensation refers to the financial rewards that employees receive for their work,
including salary and benefits. It is an important aspect of employee performance, as
it can greatly influence job satisfaction, motivation, and overall engagement in the
workplace.

Salary is the most common form of compensation and is typically based on an

employee's level of experience, skills, and job responsibilities. A fair and competitive
salary can lead to improved job satisfaction and motivation among employees, as
they feel that their contributions are valued and recognized. Inadequate
compensation, on the other hand, can lead to demotivated and disengaged
employees who may seek employment elsewhere.

Benefits are another important form of compensation. These can include health
insurance, retirement plans, and paid time off. These benefits can greatly improve
job satisfaction and motivation among employees, as they provide a sense of
security and well-being. They also help to attract and retain top talent in the
organization.

In addition to salary and benefits, organizations can also offer performance-based

incentives, such as bonuses or commission. These incentives can be a powerful
motivator for employees, as they are directly tied to their performance and can
provide a sense of accomplishment.

In summary, compensation plays a crucial role in employee performance. Adequate

and fair compensation can lead to improved job satisfaction, increased productivity,
and better retention rates. Inadequate compensation, on the other hand, can lead to
demotivated and disengaged employees. Organizations should strive to provide a
fair and competitive compensation package that includes a fair salary, benefits, and
performance-based incentives. This can help to attract and retain top talent and
improve overall employee performance.

EMPLOYEE PERFORMANCE

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Employee performance refers to the level of productivity, efficiency, and
effectiveness of an employee in the workplace. It is a measure of how well an

employee is able to meet the expectations and requirements of their job. Employee
performance can be influenced by a variety of factors, including work discipline,
compensation, training, and job satisfaction.

Measuring employee performance can be done through a variety of methods,

including:

 Productivity metrics, such as the number of units produced or the number of

customer interactions
 Quality metrics, such as the number of errors or defects in a product or service
 Attendance and punctuality metrics, such as the number of days absent or the
number of tardies
 Sales or revenue metrics, such as the amount of revenue generated or the
number of sales

Effective employee performance management is crucial for the success of any

organization. It can help organizations identify areas where improvements can be
made and can help to improve overall performance.

Effective employee performance management involves setting clear performance

expectations, providing regular feedback, and offering opportunities for training and
development. It also includes recognizing and rewarding good performance and
addressing poor performance in a timely and constructive manner.

In summary, employee performance is a measure of how well an employee is able

to meet the expectations and requirements of their job. It can be influenced by a
variety of factors, including work discipline, compensation, training, and job
satisfaction. Measuring and managing employee performance is crucial for the
success of any organization. Organizations should strive to set clear performance
expectations, provide regular feedback, and offer opportunities for training and
development to improve employee performance.

EFFECT OF WORK DISCIPLINE ON EMPLOYEE PERFORMANCE

Work discipline plays a significant role in determining employee performance. When

employees have a strong sense of discipline, they are more likely to arrive to work
on time, meet deadlines, and follow company policies. This can lead to increased
productivity, higher quality work, and improved customer service. Additionally, a
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strong work discipline can also improve the overall morale of the workplace, as
employees are more likely to feel respected and valued.

However, when employees lack discipline, they are more likely to be absent, late,
and not adhere to company policies. This can lead to decreased productivity, lower
quality work, and poor customer service. It can also lead to a negative work
environment, as employees may feel disrespected and undervalued.

A study published in the Journal of Business and Technical Communication found

that employees who are punctual and attend work regularly have a positive impact
on their team's performance. The study also found that employees who adhere to
company policies and maintain a professional conduct have a positive impact on the
overall performance of the organization.

Moreover, when organizations have a strong discipline culture and clearly

communicate their expectations, employees are more likely to comply with rules and
regulations. This can lead to improved performance, as employees are more likely
to be engaged in their work and motivated to meet expectations.

In summary, work discipline plays a crucial role in employee performance. When

employees have a strong sense of discipline, they are more likely to be productive,
engaged, and motivated, which can lead to improved performance in the workplace.
Organizations should strive to create a culture of discipline and clearly communicate
their expectations to employees in order to achieve better results.

Research conducted by (Yuliana, 2017), (Rahmayani, 2018) (Susanto, 2019),

(Tanjuang, 2019) The same thing was also found by (Efendi, 2020) that work
discipline has a positive and significant effect on employee performance.
H 1: Work discipline has a positive and significant effect on employee
performance.

EFFECT OF COMPENSATION ON EMPLOYEE PERFORMANCE

Compensation plays a significant role in determining employee performance.

Adequate and fair compensation can lead to improved job satisfaction, increased
productivity, and better retention rates. Employees who feel that their contributions
are valued and recognized through fair compensation are more likely to be engaged
in their work and motivated to perform at their best.

A study published in the Journal of Applied Psychology found that employees who
feel that they are being fairly compensated are more likely to be satisfied with their

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jobs and motivated to perform well. The study also found that employees who feel
that they are being underpaid are more likely to be disengaged and demotivated.

Additionally, organizations that offer competitive compensation packages are more

likely to attract and retain top talent, which can lead to improved performance. A
study published in the Journal of Business and Technical Communication found that
employees who are highly skilled and motivated are more likely to contribute to the
organization's success.

Moreover, organizations that offer performance-based incentives, such as bonuses

or commission, can also improve employee performance. These incentives can be a
powerful motivator for employees, as they are directly tied to their performance and
can provide a sense of accomplishment.

In summary, compensation plays a crucial role in employee performance. Adequate

and fair compensation can lead to improved job satisfaction, increased productivity,
and better retention rates. Organizations that offer competitive compensation
packages and performance-based incentives are more likely to attract and retain top
talent and improve overall employee performance.

Research conducted by (Aktar, 2012) (Yuliana, 2017), (Fitriani, 2018) (Rifa, 2019),
(Tanjuang, 2019) (Pangastuni, 2020) The same thing was also found by (Efendi,
2020) that compensation had a positive and significant effect on employee
performance.
H 1: Compensation has a positive and significant effect on employee
performance.

Based on various theoretical explanations, research findings, and the development

of hypotheses regarding the effect of work discipline and compensation on
employee performance. Then the research framework in (Figure 1) is as follows:

Employee
Performance

Work Discipline Compensation

Figure 1. Research Framework

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METHODOLOGY
This research uses ex-post facto research with a quantitative approach. Ex-post facto is research

conducted to examine an event that has occurred and then trace back to find out the factors that caused the
occurrence (Sugiuono, 2015), a quantitative approach is data in the form of numbers or qualitative data that is framed.
Multiple regression method of data analysis has been used in this research. The population were 40 employees, the
sampling technique uses total sampling technique where the entire population under 100 respondents is used as the
entire research sample.

FINDINGS

The analysis in this research is to use descriptive statistics and multiple regression. The result of data analysis in this
research are as follows:

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The Effect of Work Discipline on Employee

Performance
Based on the results of the regression analysis, it is known that the work discipline
has an influence on employee performance, indicated by the regression coefficient
of 0.552. At a significance level of 5%, the calculated t value of 3,214 with a
significance of 0.003. With this result, the first hypothesis can be accepted that work
discipline has a positive and significant effect on employee performance.

The Effect of Compensation on Employee

Performance
Based on the results of the regression analysis, it is known that compensation has
an effect on employee performance, indicated by the regression coefficient value of
0.603. At a significance level of 5%, it is known that the t value is 3,945 with a
significance of 0,000. With this result, the first hypothesis can be accepted that
compensation has a positive and significant effect on employee performance

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R Square Determination Coefficient (R2)
The results of this research indicate that there is a positive and significant effect
between work discipline and compensation on employee performance. This is
indicated by the results of the test results with the F test that obtained the calculated
F value of 9,701 with a significance value of F of 0,000 or F <0.05. R Square
determination coefficient is used to show how much percentage of work discipline
and compensation variables together in influencing employee performance
variables.

The results of multiple regression analysis show that the coefficient of determination
R2 has a value of 0.344 or it can be said that 34.4% of work discipline and
compensation affect employee performance. While the remaining 65.6% is
influenced by variables outside this research. With this result we can know that work
discipline and compensation play an important role in employee performance, this
should be a reference by the company to improve the performance of its employees
to create a superior product to attract the community. The general public is
interested in products that have good quality and people tend to have impulsive
buying properties for the goods they like (Efendi I. S., 2019) With the increasing
purchasing power of the community in the company's products, the company will
receive a lot of income so that it can provide good and proper compensation to each
of its employees. Based on that, each company can reduce social inequality or
poverty and increase economic growth in a country. (Efendi, Indartono, and Sukidjo,
2019).

CONCLSION.
In conclusion, work discipline and compensation are two important factors that can
have a significant impact on employee performance. A strong sense of work
discipline can lead to increased productivity, higher quality work, and improved
customer service. Adequate and fair compensation can lead to improved job
satisfaction, increased productivity, and better retention rates.

Effective employee performance management is crucial for the success of any

organization. It involves setting clear performance expectations, providing regular
feedback, and offering opportunities for training and development. It also includes
recognizing and rewarding good performance and addressing poor performance in a
timely and constructive manner.

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Organizations should strive to create a culture of discipline, clearly communicate
their expectations to employees and ensure that their compensation packages are
competitive and fair. By doing so, organizations can attract and retain top talent,
improve employee performance, and ultimately achieve better results.

It's important to keep in mind that there are other factors that also have an impact on
employee performance, such as employee engagement, work-life balance, and work
culture. Therefore, organizations should consider a holistic approach and not only
focus on work discipline and compensation to improve employee performance.

REFERENCES
Aktar, e. a. (2012). S., Sachu, M. K., & Ali, M. E. (2012). The impact of rewards on employee performance in
commercial banks of Bangladesh: an empirical study. IOSR Journal of Business and Management, 6(2), 9-15.

Efendi. (2020). Pengaruh Gaya Kepemimpinan Terhadap Kinerja Karyawan. Jurnal Economic Edu, 1(1).

Efendi, I. S. (2019). Indartono, S., & Sukidjo, S. (2019). The Mediation of Economic Literacy on the Effect of Self
Control on Impulsive Buying Behaviour Moderated by Peers. International Journal of Economics and Financial Issues,
9(3), 98.

Fitriani. (2018). Pengaruh Disiplin Kerja Dan Motivasi Kerja Terhadap Kinerja Karyawan di FAVE Hotel Malioboro
Yogyakarta. Tesis. Universitas Negeri Yogyakarta.

Pangastuni. (2020). The Effect of Work Motivation and Compensation on Employee Performance. International
Journal of Multicultural and Multireligious Understanding, 7(3), 292-299.

Rahmayani. (2018). Pengaruh Gaya Kepemimpinan Dan Disiplin Kerja Terhadap Kinerja Pegawai Dengan Motivasi
Kerja Sebagai Variabel Intervening (Studi Pada Badan Perencanaan Pembangunan Daerah Kabupaten Kulon Progo).
Tesis, Universitas Gadjah Mada.

Rifa, e. a. (2019). The Performance of Employees Influenced by Leadership Styles and Compensation. International
Journal of Multicultural and Multireligious Understanding, 6(6), 581-587.

Sugiuono. (2015). Metode penelitian kombinasi (mixed methods). Bandung: Alfabeta

Susanto. (2019). Pengaruh Motivasi Kerja, Kepuasan Kerja, Dan Disiplin Kerja Terhadap Kinerja

Karyawan Pada Divisi Penjualan Pt Rembaka. Agora, 7(1).

Tanjuang. (2019). Pengaruh Gaya Kepemimpinan, Disiplin Kerja Dan Kompensasi Kerja Terhadap Kinerja Karyawan
Pada Zulindo Tour & Travel Service. Jurnal Bening, 6(1), 202-213.

Yuliana, e. (2017). Pengaruh Lingkungan Kerja, Disiplin Kerja, Dan Kepuasan Kerja Terhadap Kinerja Karyawan Bmt
Taruna Sejahtera Ungaran. Journal of Management, 3(3), 1-11.

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