The Effect of Non-Financial Compensation Essay Example for Free

The Effect of Non-Financial Compensation EssayThe Effect of Financial and Non Financial Compensation to the Employee Performance Arik Prasetya and Masanori Kato Graduate School of Asia peaceable Studies, Ritsumeikan Asia Pacific University Beppu-shi, Oita-ken, Japan Abstract This study aims (1) to examine the employee responses in terms of their work to an implementation of the compensation policy that includes both financial and non financial compensations, (2) to analyze the twine of both financial and nonfinancial compensation collectively and on an individual basis.This research was conducted at PT. Telkom Malang Regional Office, by a proportional random sampling technique with the render 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. ground 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 better 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 learn how such factors of compensation scheme take 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 empl oyee performance? . Compensation Compensation is one of the physical needs that influence motivation which in turn will affect the employee performance.Providing appropriate compensation within the meaning of fair and adequate to meet the requirements is one of the personnel department functions that are difficult to implement. Compensation includes the financial returns to the service renered by employees as part of employment relationships. Compensation is a form of rewards that flow to employees arising from their employment (Dessler, 1995). Compensation has a big influence in the enlisting of employees, motivation, productivity and employee turnover (Bernardin Russell, 1993).The level and magnitude of compensation should be of concern because the level of compensation will determine the lifestyle, self esteem, and the value of the company. Cascio (1991) describes that the principles that must be considered in granting effective compensation are a. The principle of fairness, tak ing into account the ratio between the highest and lowest salaries, cost of living, and so forth. b. The principle of justice, where there should be a good element of justice in connection with the element of working time and job performance.