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STRUCTURAL EQUATION MODELING (SEM) : DETERMINANTS OF
EMPLOYEES PERFORMANCES OF COOPERATIVES IN KARAWANG
SOLEHUDIN AND ANOESYIRWAN MOEINS
Abtract: The purpose of this study was to determine the effect of leadership,
Compensation for Motivation and its implication on the performance of employees
of cooperatives in Karawang, either partially or jointly. The method used was
descriptive causality with the type of survey. The object of research was
cooperatives employees amounted to 330 respondents. Data analysis using Structural
Equation Model (SEM) with Linear Structural Relationship (LISREL) 8.80
programs. The results showed that: 1) leadership, compensation and significant
positive effect on the motivation with R2 of 0.52 or 52%. 2) leadership, compensation,
and motivation positive and significant impact on employee performance with R2
of 0.75 or 75%. The variables that most influence on performance motivation,
while the most influential variable on the motivation was compensation. Managerial
implication based on the results of the research are to improve the performance of
employees in the employee cooperatives in Karawang district must through Work
motivation Employee Cooperation in Karawang regency which is reflected on the
high dimension of relatedness in a relationship of members, relationships of co-
workers, and relations of the management would be able to be improved if the
Cooperative employees in Karawang regency able to increase the compensation
which is reflected on the high dimensional direct compensation that includes
levels of conformity of salary / wages received, the amount of the incentive, the
amount of food money received, and the amount of money transportation received,
as well as by improving the leadership is reflected in the high dimensional support
which includes the interest rate of employment, working conditions, providing
opportunities, labor conflict, and morale.
Introduction
The survival and development of the cooperative is highly dependent on its
management. Good management will bring a positive impact on cooperatives so
that cooperatives are able to grow rapidly. However, poor management of existing
cooperatives will bring bad impacts on the cooperative and indirectly to the nations
economy. In line with the progress of the times, the development of cooperatives is
not as expected. The contribution to its existence can not be felt directly by the
people. Now the life of the economy The state is dominated by larger corporations
with its capitalist system.
Many factors can cause the decreasing of growth rate, whether growth rates of
number of member, business volume and level of business result (SHU) reached by
cooperative in Karawang. Based on the results of the study of the strategic plan of
the Department of Cooperatives and MSEs Karawang regency (2016) states that
in general the problems faced by cooperatives in Karawang regency, among others:
Keywords: Leadership, Compensation, Motivation and Employee Performance
384 SOLEHUDIN AND ANOESYIRWAN MOEINS
1. Capital and financing
2. Human Resources (SDM)
3. Management
4. Facilities and infrastructure
5. Cooperation with business actors
6. Superior product development
In line with the above statement, Mahmood, Iqbal and Samsaa (2014: 86)
through the results of his research stated that Employee Performance is the most
important factor in an organization success therefore, need to adopt effective
employee performance and creates the culture of high performance in any
organization based on human resource practices . That employee performance is
the most important factor of organizational success therefore, there is a need to
adopt an effective HR strategy that aims to improve employee performance and
create high performance in any organization based on human resource practices.
Motivation is a process whereby needs encourage a person to perform a series
of activities that lead to the achievement of a particular goal. If successfully achieved
will satisfy or meet those needs. Work motivation is one of the bosss tools so that
subordinates will work hard and work smartly in accordance with the expected.
Employees need to be motivated because there are new employees that want to
work after motivated his boss. The motivation generated by the superior is called
extrinsic motivation and self-generated motivation is called intrinsic motivation.
Self-generated motivation will usually last longer than the motivation that comes
from outside.
Compensation is the most fundamental of human resources (employees) that
they exchanged all their energy and mind to getting compensation. Compensation
can eliminate the incentives and benefits that can improve employee motivation
and ultimately improve employee performance. The unfair feelings of employees
will cause less good for achieving organizational goals. This is because there is a
gap between the expectations of employees and the fact that they are organized.
The Purpose of Research
Based on the formulation of the problem, then the purpose of research is to determine
and analyze:
1. The influence of Leadership on work motivation on Cooperatives in
Karawang
2. The influence of compensation on work motivation at the Cooperatives in
Karawang
3. The influence leadership and compensation simultaneously on work of
motivation Cooperatives employees in Karawang
4. The influence Leadership on performance of employees at the cooperatives
employees in Karawang
5. The influence compensation for performance of employees at the cooperatives
employees in Karawang
STRUCTURAL EQUATION MODELING (SEM) 385
6. The influence work of motivation on performance of employees at the
cooperatives employees in Karawang
7. The influence leadership, compensation and work of motivation
simultaneously on performance of employees, at the cooperatives employees
in Karawang
Theoretical
Leadership
Northouse (2004) in Lucy Kagwiria Kuria, Namusonge, and Mike Iravo (2016:
658), defines leadership as a process whereby an individual influences a group of
individuals to achieve common goals. Leaders play an important role in helping
groups and organizations to achieve goals. However leadership skills and leadership
in direction are important factors of leadership effectiveness.
Leadership is to ensure direction, alignment and commitment within teams
and organizations (Drath, McCauley, Palus, Van Velsor, OConnor, and McGuire,
2008: 2).
Leadership is an important part of management, as Bennis states in Yukl
(2013: 6) that leaders are the ones who can correctly determine what to do and
managers are the people who can do the right things and responsibilities. Another
opinion expressed by Kottler in Yukl (2013: 4) that distinguishes management with
leadership based on function and activity. Leadership deals with change mitigation,
while management deals with complexity mitigation. This means that leadership is
not the same as management. Leaders determine where the business direction, the
direction of internal and external goals. Leaders are strategists that set organizational
goals, while managers focus on ways that organizations can achieve goals.
Based on the above description, then in this study leadership defined a process
of influencing and supporting major changes in attitudes and assumptions of
organization members to achieve organizational goals. Leadership is measured by
four dimensions, ie:
1. achievement oriented. measured by indicator:
a. Target job
b. High performance subordinates
c. Improve performance.
2. directive. measured by indicator:
a. Explanation of tasks
b. Information on how to charge
c. Employee job relations
d. Clarity of instruction
e. Monitoring of subordinate tasks
3. participative. measured by indicator:
a. Togetherness tasks
b. Cooperation
386 SOLEHUDIN AND ANOESYIRWAN MOEINS
c. Participation
d. Work in group
e. Discuss
4. supportive. measured by indicator:
a. Interest in work
b. Work atmosphere
c. Giving an opportunity
d. Work conflicts
e. Spirit at work
Compensation
Dessler (2005: 76) defines compensation as compensation as all forms of payments
or rewards given to employees which arise from their employment. Compensation
is as any form into payment or compensation paid to employees arising from their
employment. Compensation is one of the basic reasons for employees to find work.
According to Beard (1986) in Khan and Mufti (2012: 4617) compensation can be
divided into three classifications, namely fixed-pay, flexible pay and benefits.
Meanwhile, according to Taylor (1991) still in Khan and Mufti (2012: 4617)
compensation is divided into two classifications, namely Performance-based pay
and Non-performance based pay.
Then another classification of compensation as proposed by Bernardin and
Russell (2003: 445) as follows: Direct Compensation is the basic wage and salaries,
plus performance based pay. Indirect compensation programs for health insurance,
pay for time not worked and various other employee benefits . Direct compensation
consists of wages and salaries and other payments based on performance. Indirect
compensation includes programs such as health insurance, salary payments during
non-employment and other forms of benefit.
Davis and Newstrom (2002: 135-134) argue that compensation warns between
individual, group or organizational achievements that may include: cut wages (wage
period), commissions, bonuses, profit and production. Cut wages (wage period) are
wages of unfavorable employment, since this wage can only be determined if the
work can be measured by a certain size, such as the amount of the amount, the
amount of weight, the amount of breadth of what is done.
Based on the above description, in this study compensation is defined as direct
or indirect compensation (award) given to employees on the basis of employment
value, contribution and employee performance. Compensation is measured by two
dimensions, ie:
1. Direct compensation dimensions are measured by several indicators, ie:
a. Salary / wages conformity received
b. Amount of incentive
c. The amount of food allowance received
d. The amount of transportation money received.
STRUCTURAL EQUATION MODELING (SEM) 387
2. The indirect compensation dimension is measured by several indicators, ie:
a. The amount of health benefits
b. Holiday allowance
c. Work allowances
d. Provision of training
e. Award from the leadership / organization.
Work Motivation
Munandar (2004: 323) motivation is a process whereby needs encourage a person
to perform a series of activities that lead to the achievement of a particular goal.
Motivation is defined by Saraswathi (2011: 18) as a willingness to exert a high level
of effort, toward organizational goals, conditioned by the ability of efforts to meet
multiple individual needs. Three key elements in the further definition are provided
as effort, organizational goals, and needs.
In Fillmore Stanfords view on Mangkunegara (2008: 67), motivation is a
condition that moves people toward a particular goal. Meanwhile Hasibuan (2010:
159) defines motivation is a stimulus of desire and the driving force of ones willingness
to work. While Sinungan (2009: 135) defines motivation as an integral part of the
relationship / industrial in the framework of the process of coaching, development
and directing human resources in a company.
According to Schermerhorn et. al. in Mangkunegara (2008: 94) states that
work motivation is a term used in organizational behavior to describe the forces
within the individual, which describe the level, direction and persistence of effort
expended at work. Meanwhile, the opinion of Ernes Mc Cormick (2001: 94) suggests
work motivation is defined as conditions that affect the passion, direction and
maintenance of behavior relevant to work settings.
Based on the above description of the theory, then in this study work
motivation is defined as the willingness of employees to exert a high level of
effort, toward the goals of the organization, which is conditioned by the ability of
efforts to meet some individual needs. Work motivation is measured by three
dimensions, ie:
1. Dimensions existence measured by indicator:
a. in accordance with salary requirements
b. in accordance incentive need
c. Suitability of benefits of needs
d. Certainty of continuity of work.
2. The relatedness dimension is measured by the indicator:
a. Relationship of members
b. Relationship of colleagues
c. Relationship of the board
3. Dimensions of growth of indicators:
a. Recognition of the work
388 SOLEHUDIN AND ANOESYIRWAN MOEINS
b. Award given for the work
c. Opportunities to develop skills in employment
Employee performance
Ivancevich, Konopaske and Matteson (2008: 109) define performance as a function
of the ability to perform, the opportunity to perform and the willingness to perform.
Performance can be seen the capacity of individual employees to perform performance
in accordance with the capacity, opportunity and ability to be demonstrated. While
Gibson et. al. (2012: 374), performance as a result of work related to organizational
goals such as quality, efficiency, and other effectiveness criteria. Robbins and Coulter
(2012: 492) identifies performance as the end result of an activity that is one of the
benchmarks of individual performance.
Jayaweera (2015) states that performance is a manifestation of work performed
by employees that are usually used as a basis of assessment of employees or
organizations. Good performance is a step toward achieving organizational goals.
Therefore, efforts should be made to improve performance. But this is not easy
because many factors affect the high and low performance of a person.
Afshan Sultana et al. (2012: 647) performance is defined as the achievement of
certain tasks measured against predetermined or in the identification of standards
of accuracy, completeness, cost and speed. Prasetya and Kato (2011), performance
is defined as the achievable outcome of the action with employee skills that appear
in some situations. Meanwhile, according to Rivai (2008: 309), states performance
is a function of motivation and ability.
Based on the above description of the theory, then in this study employee
performance defined the work achieved on the ability of employees in implementing
and completing the work in accordance with the responsibilities given to him in
accordance with the criteria and goals set by the organization. Employee performance
is measured by six dimensions, ie:
1. The quality of work dimension is measured by indicator:
a. Conformity with work preparedness
b. Conformity with work standards
2. The quantity of work dimension is measured by the indicator:
a. Conformity with work targets
b. Accuracy of work completion
c. Work completion over standard time.
3. The dimension of job knowledge is measured by the indicator:
a. Level of knowledge in work
b. Skill level in work
c. A careful levels of work.
4. Dimensions of cooperation are measured by indicators:
a. Willingness of cooperation with colleagues
b. Willingness of cooperation with the leadership.
STRUCTURAL EQUATION MODELING (SEM) 389
5. The initiative dimension is measured by indicators:
a. Initiatives to carry out the work
b. Initiative to find solutions to solve problems
c. Excitement in carrying out new work
6. The dimensions of personal qualities are measured by indicators:
a. Honest and responsible
b. Loyal to the boss
c. Loyal to the organization
Figure 1: Framework
Hypothesis
1. There is influence of leadership to work motivation at Employee Cooperative
in Karawang.
2. There is influence of compensation to work motivation at Employee Cooperative
in Karawang.
3. There is influence of leadership and compensation jointly to work motivation
at Employee Cooperative in Karawang.
4. There is influence of leadership on employee performance at Employee
Cooperative in Karawang.
5. There is influence compensation for employee performance at Employee
Cooperative in Karawang.
6. There is influence of work motivation on employee performance at Employee
Cooperative in Karawang.
7. There is influence of leadership, compensation and work motivation together
to employee performance at Employee Cooperative in Karawang.
390 SOLEHUDIN AND ANOESYIRWAN MOEINS
Research Methodology
The method used is explanatory survey. Descriptive data collection was conducted
on 330 Persons of Cooperatives in Karawang, with sampling technique using
proportional random sampling. Data analysis was done by several sources, both
secondary data and primary data, such as employee perception data to every
question in questionnaire, which revealed every question about leadership,
compensation, work motivation, and employee performance, validity and reliability
using sample from 30 employees outside respondent , on one question, consisting of
18 questions of leadership variables, 9 question compensation, work motivation 10
questions and employee performance 16 questions. The analysis tool uses Structural
Equation Model (SEM). The reason for choosing this method is because of its
ability to measure constructs indirectly through indicators and simultaneously
analyzing indicator variables and latent variables, and relationships between latent
indicator variables, and relationships among variables with other variables, together
with the measurement of errors involved. The results of this study are expected to
provide an overview of the clarity of the relationship and the magnitude of the
effect of variables that are useful to explore in detail various factors that can
improve employee motivation and performance in order to provide comprehensive
understanding for the parties concerned in an effort to improve the quality of
education in Indonesia especially in Karawang regency
Results and Discussion
The full model of the SEM equation using Lisrel 8.70 program derives two path
models, the model diagram of the standard and the t-value model, of each model
shown in the following figure
Figure 2: Model Hybrid SEM(Standardized Corfficient)
STRUCTURAL EQUATION MODELING (SEM) 391
Figure 3: Model Hybrid SEM (t-value Model)
Based on figure 1 and figure 2 above, the following will be presented the next
test parameters and the coefficient (loading factor on the model of the exogenous)
structural dimensions and endogenous variables. testing is intended to find a causal
relationship or the influence of one latent variable for other latent variables, and
the indicator of each latent variable (construct).
From the results obtained by using the Lisrel 8.70 program for structural
model, the equation has been in accordance with the hypothesis presented, as seen
in the structural equation below
MK = 0.31*KP+0.43*KS
Errorvar = 0.48, R² = 0.52
KK =0.53*MK+0.19*KP+0.18*KS
Errorvar.= 0.25 , R² = 0.75
Leadership directly affects employee performance variables of 0.036 or 3.6%.
While the leadership indirectly affects employee performance through work
motivation is equal to 0.164 or 16.4%. thereby leadership can improve employee
performance indirectly through work motivation.
The magnitude of the direct impact on compensation for employee performance
variables is 0.032 or 3.2%. While the contribution to indirect influence of
compensation for employee performance through motivation is equal to 0,228 or
22,8%. so that compensation can improve employee performance indirectly through
work motivation.
The magnitude of the direct influence of work motivation variable on employee
performance variable is 0.53 or 53%.
392 SOLEHUDIN AND ANOESYIRWAN MOEINS
Referring to the test results, leadership and compensation variables directly
affect the work motivation variable with a total contribution of 52%. whereas if
through motivation, then the variables of leadership, compensation and motivation
will have a greater effect with a total contribution of 75% on employee performance.
The total contribution of the most dominant influence on employee performance
are the work motivation, with a contribution value of 53%, being the variable with
the largest contribution than the 10% leadership variable and the compensation for
18%.
Furthermore, because the leadership and compensation, partially or jointly
either directly or indirectly, have a positive effect both on the motivation variable
and employee performance, so if referring to the type of mediation, the motivation
variable of work in this study serves as a variable that is Full Mediating against
performance of teachers.
Conclusion
1. Leadership is partially positive and has a significant impact on Employee
Motivation Employees Cooperatives in Karawang regency.
2. Partial compensation has a positive effect and has a significant impact on
Cooperative Employee Motivation in Karawang.
3. Leadership and Compensation simultaneously have a positive effect and have a
significant impact on Cooperative Employee Motivation in Karawang.
4. Leadership is partially positive and has a significant impact on the performance
of cooperative employees in Karawang.
5. Partial compensation has a positive effect and has a significant impact on the
performance of cooperative employees in Karawang.
6. Motivation partially has a positive effect and have a significant impact on the
performance of cooperative employees in Karawang.
7. Leadership, compensation and work motivation simultaneously have a positive
effect and have a significant impact on the performance of cooperative employees
in Karawang with the coefficient of determination (R2) of 75%, while 25% is
influenced by other variables that are not examined.
Managerial Implications
1. Leadership of cooperatives in Karawang regency of West Java Province,
especially in the dimension of support can be improved if the cooperative able
to increase Compensation, especially in the direct compensation dimension,
and can improve motivation, especially in the relatedness dimension.
2. The performance of cooperative employees in Karawang West Java Province,
especially in cooperation dimension can be improved if the cooperative in
Karawang regency can increase work motivation, especially in relatedness
dimension, where motivation will increase if cooperative able to increase
compensation, especially on direct compensation dimension, leadership mainly
in the supportive dimension.
STRUCTURAL EQUATION MODELING (SEM) 393
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