JGPP
Available online at http://journal.umy.ac.id/index.php/GPP/index

Journal of Governance and Public Policy
ISSN: 2460-0164 (Print), 2549-7669 (Online)
https://doi.org/10.18196/jgpp.72124
Volume: 7 Issue: June-2020
International
Open Access





Page no.-
78-87

78 Nalim Nalim
1
, Siswoyo Haryono
2
, Murniady Muchran
3
, JGPP Vol 7, No 2 (2020): June 2020

The Effect of Leadership Style and Compensation on the
Work Performance of Merangin District Office Employees,
Jambi: The Role of Work Motivation

Nalim Nalim
1
, Siswoyo Haryono
2
, Murniady Muchran
3

1
The Regent of Merangin, Management, Faculty of Economics, Universitas Persada Indonesia, Jakarta
2 Doctor of Management, Postgraduate Program, Universitas Muhammadiyah Yogyakarta
3
Doctor of

Management, Postgraduate Program, Universitas Muhammadiyah Yogyakarta
Corresponding Author: [email protected]
Article Info
Keyword:
Leadership Style;
Compensation;
Work Motivation;
Performance.












Kata Kunci:
Gaya Kepemimpinan;
Kompensasi;
Motivasi Kerja;
Kinerja.
Abstract: The purpose of this study was to examine the effect of leadership style
and compensation on work motivation and its implications for the performance
of the staff of the Merangin Regency Secretariat, Jambi, Indonesia. Research on
245 respondents from the Merangin Regency Secretariat staff, Jambi, Indonesia.
The research method uses descriptive research and survey methods. The
analysis model uses SEM (Structural Equation Modeling) analysis. The results
showed: (1) There was a positive and significant influence of leadership style on
work motivation, (2) There was a positive and significant effect of compensation
on work motivation, (3) There was a positive and significant influence of
leadership style on employee performance. (4) There is no effect of
compensation on employee performance, (5) There is a positive and significant
effect of work motivation on employee performance. From the results of the
analysis of direct and indirect effects, motivation in this study is an intervening
variable. The work motivation variable is intervening, especially for the
compensation variable. It is recommended to the Merangin Regency Secretariat,
Jambi, to improve employee performance, it is necessary to pay attention to the
variables of leadership style, compensation, and work motivation.

Abstrak: Tujuan penelitian adalah untuk menguji pengaruh gaya kepemimpinan
dan kompensasi terhadap motivasi kerja dan implikasinya terhadap kinerja staf
Sekretariat Kabupaten Merangin, Jambi, Indonesia. Penelitian terhadap 245
responden karyawan Sekretariat Kabupaten Merangin, Jambi, Indonesia. Metode
penelitian menggunakan metode penelitian deskriptif dan survei. Model analisis
menggunakan analisis SEM (Structural Equation Modeling). Hasil penelitian
menunjukkan: (1) ada pengaruh positif dan signifikan gaya kepemimpinan
terhadap motivasi kerja, (2) ada pengaruh positif dan signifikan kompensasi
terhadap motivasi kerja, (3) ada pengaruh positif dan signifikan gaya
kepemimpinan pada kinerja karyawan. (4) tidak ada pengaruh kompensasi
terhadap kinerja karyawan, (5) terdapat pengaruh positif dan signifikan motivasi
kerja terhadap kinerja karyawan. Dari hasil analisis efek langsung dan tidak
langsung, dapat disimpulkan bahwa motivasi kerja dalam penelitian ini adalah
variabel intervening. Variabel motivasi kerja adalah intervening, terutama untuk
variabel kompensasi. Direkomendasikan kepada Sekretariat Kabupaten Merangin,
Jambi, untuk meningkatkan kinerja karyawan, perlu memperhatikan variabel
gaya kepemimpinan, kompensasi, dan motivasi kerja.

Article History: Received: 2020-03-21, Revised: 2020-06-08, Accepted: 2020-06-18

“The Effect of Leadership Style and Compensation on the Work Performance of Merangin District Office
Employees, Jambi: The Role of Work Motivation”
79 Nalim Nalim
1
, Siswoyo Haryono
2
, Murniady Muchran
3
, JGPP Vol 7, No 2 (2020): June 2020

INTRODUCTION
One of the crucial agendas in developing the government is creating a clean and
authoritative government. Important aspects related to efforts to realize good governance are
openness, accountability, effectiveness, efficiency, upholding the rule of law, and increasing
opportunities for public participation that can ensure the duties and functions of government
and development are smooth, harmonious, and integrated. Type of leadership has a major
positive impact on the efficiency of the employees. Work motivation has a significant positive
effect on the performance of the employees. Job discipline has an significant positive impact on
the output of employees (Azzahrati, 2018). Achieving an organization's objectives requires
human resources as a manager of the system. Of course , in order for this program to work, its
management needs to pay attention to many important aspects such as leadership , motivation,
work climate, efficiency and other (Potu, 2013). Leadership and organizational culture have a
very close relationship, because each leader has a different style of leadership that will ultimately
form a culture of organization (Fahmi et al., 2018). The various policy steps aimed at
institutional change, and effective monitoring and inspection systems are urgently needed. Some
factors affect the success or failure of the development process in this area, including the
condition of government officials. Bureaucracy is the backbone in running the wheels of
government, development program factors s and society and power. Thus, the reform period
gave meaning to the birth of revolutionary leaders with their authority as autonomous regions,
so the government bureaucracy continuously revamped to support the system of performance
appliance management (Ramli, 2017). The main task of the bureaucracy is to provide optimal
services to the community and to do everything that enhances the implementation of
government, development, and community tasks by achieving the targets set. For this purpose,
the realization of good governance and clean governance is a must (Siswoyo Haryono & Arafat,
2017).
Many problems in the bureaucracy, especially in implementing Good Governance. These
problems include recruitment systems, career paths, promotions and mutations, clarity of basic
tasks and functions, quality of human resources, low performance, the orientation of behavioral
and cultural values that do not value achievement, lack of discipline, well-being, not
implementing rewards and punishment, wasteful and slow bureaucracy. Luthans (2013: 175)
defines transformational leadership as a form of leadership in which people engage with others
and create relationships in leaders and followers that increase motivation and morals (Bagus et
al., 2017). All these problems make it difficult for the bureaucracy to carry out its duties, so that
bureaucratic reform is a must, especially to restore the duties and functions of the bureaucracy
as a professional, neutral, legal and modern organization. Human resources (HR) is an essential
role for an organization in achieving its goals. Therefore, in an organization, ethical leadership
and excellent HR performance are needed. Employees who perform work well would get better
compensation. The leader will transfer certain values, such as group emphasis, support from
people or employees, risk tolerance, remuneration criteria and so on, through the leadership of a
person leader (Ismail, 2017). As well as of leadership, this purpose to successful leaders must
have versatile habits or styles of leadership and be able to recognize the situation they face, and
use leadership models suitable to the situation they face (Hakim et al., 2017).
Leadership is not "one size fits all"; often, a manager must adjust their style to suit a
particular situation or group, and this is why it is necessary to understand the various leadership
styles thoroughly; after all, the more approaches that managers are familiar with, the more tools
they can use to lead effectively (A.Murray, 2013). Motivation is the most significant element for
all private or public zones. Motivation plays an essential role in the achievement of any
organization. Motivation requirements come from the word motive. Armstrong defines
compensation as something that is received by an employee, both financial and non-monetary
rewards for employee contributions to the organization. Compensation management is a critical
activity to make employees quite satisfied with their work (Armstrong, 2017).
The most significant driving force for performance is the responsibility, while additional
benefits are the second significant factor. HR management can use various plans or factors to
simulate employees but must remember that different motivational factors or plans will have

“The Effect of Leadership Style and Compensation on the Work Performance of Merangin District Office
Employees, Jambi: The Role of Work Motivation”
80 Nalim Nalim
1
, Siswoyo Haryono
2
, Murniady Muchran
3
, JGPP Vol 7, No 2 (2020): June 2020

different motivational effects on different employees (Ghaffari et al., 2017). A manager must
consider various incentive plans to influence employees in different ways and positions,
according to the situation, needs, and goals of individual employees (Haryono & Arafat, Yasir,
2017). In the motivational plans, HR management must understand the differences in values,
needs, tasks, and motivational levels of employee satisfaction in terms of improving work
performance and productivity. Lan Study by (Ali & Ahmad, 2014), motivation plays a vital role in
employee performance and job satisfaction in the IT Park (home software) sector of Peshawar,
Pakistan. Research by (Darma & Supriyanto, 2017) The results show that compensation affects
employee satisfaction and employee performance at PT. Indonesian Telecommunications. While
a study by (Nawoseing’ollan & Roussel, 2017) revealed that there is no perfect leadership style.
According to this research, the following leadership style affects the work performance of
women; affiliate leadership, an authoritative leadership style of employee performance and it
was concluded that the two leadership styles influence the style of local government employees
in Turkana District and therefore both styles must be adopted and not each style alone.
Motivasi is a set of attitudes and values that influence individuals to achieve certain things
with individual goals. Attitudes and values give strength to encourage individuals to behave in
achieving their goals. Encouragement consists of two components, namely the direction of
behavior that is working to achieve goals, and the strength of behavior that is how strong
individual efforts at work (Mathis, L., 2016). While the leadership is an attempt to influence many
people through communication to achieve the intended objectives, how it affects many people
through instructions or orders (Hersey, P., Kenneth H, Blanchard, and Dewey, 2012) style of
leadership is an important aspect to achieve and improve the success of leadership d nature of an
organization. G aya leadership is the norm of behavior that is used by a person to influence the
behavior of others or subordinates (Geier, 2016). Leadership style is a set of characteristics used
by leaders to influence subordinates so that organizational goals achieved or can also be said
leadership style is a pattern of behavior and strategies that are liked and often applied by a
leader (Gencer & Samur, 2016). Some previous studies that discussed the same issues as in this
study, including conducted by (Nawoseing’ollan & Roussel, 2017; Razak et al., 2018; Musty, 2015;
Syafii et al., 2015) wherein general the results of their study said that leadership style affects
employee work motivation. Based on the theories and opinions of experts and relevant previous
research, there is an influence of leadership style on work motivation. So based on the
description of the theory and previous research above t can be assumed that there is an influence
of leadership style on work motivation.

H1: There is an influence of leadership style on work motivation
Work Compensation is everything received by the employee as a reward for their
contribution to the company (Ardana, 2012). Furthermore, Williamson (2012) defines
compensation as any form of payment given to employees arising from their work.
Compensation is a factor that can increase employee motivation to create a spirit for employees
to resolve any responsibility given by the company. Therefore it is essential for companies to pay
attention to a compensation system that is applied to maintain and improve employee
motivation (Ganta, 2014) In a study conducted by (Imran et al., 2016; Ketut et al., 2018; Maria,
2019; Papilaya et al., 2019) the results of their research indicate that the compensation variable
influences work motivation. Based on the theories and opinions of experts and relevant previous
research, that there is a compensation effect on work motivation.

H2: There is a compensation effect on work motivation
Leadership style is a behavior pattern in the form of the words and actions of a leader is
perceived by others (Hersey, P., Kenneth H, Blanchard, and Dewey, 2012). A leader has the
characteristics, habits, temperament, character, and personality is unique, so the behavior and
style that distinguish themselves from others. His style or lifestyle will color his behavior and
type of leadership. K low employee not only because of the employee's fault, but there is the
possibility of leadership that was less precise (Yukl, 2018). Performance is the result of work that
is closely related to the goals of the Organization and consumers contributing to the economy

“The Effect of Leadership Style and Compensation on the Work Performance of Merangin District Office
Employees, Jambi: The Role of Work Motivation”
81 Nalim Nalim
1
, Siswoyo Haryono
2
, Murniady Muchran
3
, JGPP Vol 7, No 2 (2020): June 2020

(Armstrong, 2017) Based on previous research conducted by (Asrar-ul-Haq & Kuchinke, 2016;
Chou et al., 2013; Creţu, 2015; Razak et al., 2018; Wahyu, 2019), the findings of this study
indicate that leadership style has a good effect on improving performance. Based on theories and
opinions of experts and previous research that is relevant, are suspected influence of leadership
style on performance.

H3: There is an influence of leadership style on performance
Compensation under (Armstrong, 2017) consists of two types: (1) financial compensation
and (1) non-financial compensation. Financial compensation consists of direct compensation,
such as (a) basic salary, b) decent salary, salary, bonus, commission, profit sharing, profit sharing,
and stock distribution and (c) different payments. Indirect compensation ( 1 ) benefits programs,
namely health insurance, life insurance, pension, and labor insurance, ( 2 ) payment outside
working hours as holiday programs, annual leave and maternity leave, ( 3 ) the vehicle, office
space, and parking lot. Non- financial compensation can e divided into ( 1 ) work with tasks,
challenges, responsibilities, recognition and an overwhelming sense of achievement and ( 2 )
work environment, such as good policy, competent supervisors, happy work atmosphere, and a
pleasant work environment comfortable to live. Sinambela argues performance is the capacity of
and efforts of a person in determining the ability of (Sinambela, 2016). The force is reinforced by
the motives that emerge from the individual himself (Cooley, Van E; Shen, 2010; Rahabav, 2014).
According to the results of previous studies conducted by (Darma & Supriyanto, 2017; Hameed,
A., Ramzan, M., & Zubair, n.d.; Ketut et al., 2018; Papilaya et al., 2019), the results of their study
showed that the compensation variable would influence performance improvement. Therefore,
based on the theory and the expert opinion and previous research that is relevant, d idea there is
the influence of compensation on performance.

H4: There is an effect of compensation on performance
According to Davis and McClelland, the factors that influence the achievement of
performance are the ability and motivation factors, and according to McClelland, there is a
positive relationship between high achievement motives and performance achievement (Davis,
2010; McClelland, 1987). The motive for high achievers is an encouragement to employees to
carry out an activity or task as best they can to achieve performance with appreciation.
Motivation arises because of two factors: (1) internal factors that arise from within oneself, (2)
external factors come from outside (Armstrong, 2017) (Armstrong, 2017). Motivation is a
process that explains the intensity, direction, and perseverance of someone in trying to achieve
their goals (Wukir, 2013). Motives are needs, desires, impulses. Positive motivational
philosophies and practices can improve productivity and quality of work. According to the
results of research conducted by Pinar, it as found that extrinsic and intrinsic motivation is an
impact on employee performance (Pinar, 2011). Motivation is a top priority for managers.
Managers must develop organizational strategies to motivate employees-the primary goal of
organizational management to improve organizational performance (Zlate & Cucui, 2015).
Research by (Ali Amjad, 2017; Ghaffari et al., 2017; Razak et al., 2018) indicates that there is a
positive influence between work motivation on performance. Based on the theories and opinions
of experts and relevant previous research, there can be three effects of work motivation on
performance.

H5: There is an influence of work motivation on performance

RESEARCH METHOD
The subjects in this study were employees of the Merangin Regency Secretariat, Jambi.
While the object of this research is Merangin Regency Secretariat, Jambi, Indonesia. Data were
collected through questionnaire distribution and face-to-face by researchers. The sample of this
study was 245 employees of the Merangin Regency Secretariat, Jambi, Indonesia. This study
consists of leadership style variables, compensation, work motivation, and performance
measured by instruments with a Likert scale of 1 - 5. The scale represents a rating from 'strongly

“The Effect of Leadership Style and Compensation on the Work Performance of Merangin District Office
Employees, Jambi: The Role of Work Motivation”
82 Nalim Nalim
1
, Siswoyo Haryono
2
, Murniady Muchran
3
, JGPP Vol 7, No 2 (2020): June 2020

disagree' to 'strongly agree.' The measurement of leadership style is with eight questions
according to the opinion of Gary A Yukl (Yukl, 2018). The compensation variable consists of 12
questions based on the definition of Lujan P Sinambela (Sinambela, 2016). The work motivation
variable consists of 16 questions developed based on AH Maslow's opinion (Maslow, 2013),
while the employee performance consists of 13 questions developed from the opinion of Dick
Grote (Grote, 201onsists of 1).
This study uses quantitative research by developing valid and reliable research
instruments on research variables, including leadership style variables and compensation for
work motivation and their implications for the performance of employees of the Merangin
Regency Secretariat, Jambi, Indonesia. The research design uses Structural Equation Modeling (S.
Haryono, 2017). The statistical tool used to analyze data and answer hypotheses is the Lisrel
version 8.8 program. The researcher employed the goodness of fit test technique to test the
indicators' validity and reliability. The measurement model will apply convergent validity to test
whether the indicator is valid or not. This study used the Maximum Likelihood Estimation (MLE)
technique. The assessment of questionnaire items was carried out by the Confirmatory Factor
Analysis (CFA) to examine the relationship between constructs and indicators based on the
theory developed. This method also employed Cronbach's Alpha to test construction reliability.
The CFA test results shown in Table.1 show that the value for loading factors (full model fit) in
each question item is > 0.5, which can all question items are valid. Meanwhile, Table.2 shows that
the value of Construct Reliability is ≥ 0.7, and Variance Extracted is ≥ 0.5 for each construct,
which explains that all constructs are reliable. The CFA test results concluded that all indicators
are suitable to measure variables and analyze research data.

Table.1 Validity Test Results Based on Full Model Fit
INDICATOR ESTIMATE
LS02 0.90
LS03 0.92
LS04 0.86
LS07 0.86
LS08 0.80
CS07 0.75
CS08 0.90
CS09 0.79
CS10 0.83
CS11 0.79
MV02 0.86
MV03 0.85
MV08 0.66
MV12 0.94
MV13 0.85
MV14 0.87
PF02 0.81
PF03 0.83
PF04 0.87
PF06 0.81
PF07 0.87
PF08 0.84
PF09 0.80
PF11 0.84
PF13 0.75

“The Effect of Leadership Style and Compensation on the Work Performance of Merangin District Office
Employees, Jambi: The Role of Work Motivation”
83 Nalim Nalim
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, Siswoyo Haryono
2
, Murniady Muchran
3
, JGPP Vol 7, No 2 (2020): June 2020

Table.2 Reliability Test Results Based on the Fit Model
Variables
Construct
Relia ability ≥ 0.7
Variance
Extracted ≥ 0.5
Result
Leadership Style (LS) 0.97 0.93 Reliable
Compensation (CS) 0.82 0.70 Reliable
Motivation (MV) 0.75 0.54 Reliable
Performance (PF) 0.98 0.94 Reliable

RESULT AND DISCUSSION
Hypothesis testing in this research was analyzed using Structural Equation Modeling
(SEM) of the second-order with Lisrel version 8.8. Figure.1 shows Complete SEM test results. e
1. Meanwhile, Table.3 explains the assumptions of test results in SEM development.
Confirmation of the model fit test on the complete model that meets the goodness of fit criteria.
The structural model is used to draw a model of research causality with structural relationships.
Goodness of fit test results are as follows: Chi-Square = 282.38, probability = 0.1, GFI = 0.92,
AGFI = 0.89, CFI = 1.00, TLI = 1.00, IFI = 0 , 97 and RMSEA = 0.02. All research criteria have met
the required cut-off value. This result shows that the research model is suitable and meets the
standard criteria for analyzing and testing the proposed hypothesis.


Figure.1
Effect of Leadership Style and Compensation on Work Motivation and Its Implications on the
Performance of Merangin Regency Secretariat staff, Jambi, Indonesia

Table.3 Path Coefficients
Hypothesis Structural Path
Standardized
Path
Coefficients
t-Value Results
H1 Leadership Style --> Work Motivation 0.28 3.69 Significant
H2 Compensation --> Work Motivation 0.20 2.59 Significant
H3 Leadership Style --> Employee
Performance
0.14 2.37
Significant
H4 Compensation --> Employee
Performance
0.02 -0.37
No-Significant
H5 Work Motivation --> Employee
Performance
0.62 7.17
Significant

“The Effect of Leadership Style and Compensation on the Work Performance of Merangin District Office
Employees, Jambi: The Role of Work Motivation”
84 Nalim Nalim
1
, Siswoyo Haryono
2
, Murniady Muchran
3
, JGPP Vol 7, No 2 (2020): June 2020

Based on testing hypothesis 1, there is a positive and significant influence of leadership
style on work motivation, based on (t arithmetic = 3.69 > 1.96). These results are consistent
with research conducted by (Razak, 2018), (NawoseIng'ollan, 2017), (Musty, 2015), and (Syafi'i,
2015). The results of their study show that leadership style influences work motivation. Based
on the findings of testing the hypothesis and previous research, leadership style is an essential
aspect of achieving organizational goals. Leadership style is a set of characteristics used by
leaders to influence subordinates so to achieve organizational goals.e achieved, or it can also be
aid that the leadership style is a pattern of behavior and strategies that are preferred and often
applied by a leader.
Based on testing hypothesis 2, it s concluded that there is an effect of compensation on
work motivation, based on (t arithmetic = 2.59 > 1.96). The results of this study are consistent
with previous studies by (Maria 2019), (Papilaya, 2019), (Rasheed, 2016), and (Sudiardhita,
2018), where their results showed that variable compensation affected work motivation. Based
on the results of hypothesis testing and previous research, it can e said that the compensation is
one of the factors that can increase employee motivation and also be able to create enthusiasm
for employees in completing any responsibilities. Therefore, companies need to pay attention to
a compensation system that is applied to maintain and enhance employee work motivation the
employee.
Based on testing hypothesis 3, it is concluded that there is an influence of leadership style
on performance, with (t arithmetic = 2.37 > 1.96). These results are consistent with research
conducted by (Cretu, 2015), (Musty, 2015), (Asrar, 2016), (Razak, 2018), (Chou, 2013), and
(Wahyu, 2019), their research findings indicate that leadership has a good effect on improving
performance. Based on the results of testing hypotheses and previous research, it can e said that
low performance is not only due to the mistakes of the employees themselves, but there is a
possibility that the leadership style of the leader is inappropriate.
Based on testing hypothesis 4, it s concluded that there is no effect of compensation on
performance, based on (t arithmetic = -0.37 <1.96). The results of this study are in line with
previous studies conducted by (Papilaya, 2019). The findings of this study indicate that
compensation does not show a direct effect on performance, but must first go through the
variables of transparency and motivation. Based on the results of hypothesis testing and
previous research, that one way to motivate employees is through compensation. Likewise,
Grote states that compensation has a positive effect on performance, but through motivation as
an intervening variable. Satisfaction with compensation provided by companies in the form of
salaries, bonus allowances, and a variety of adequate facilities will foster employee motivation
because they feel valued and supported at work. High motivation makes employees more
focused and attentive to efforts to achieve the excellent work that the company expects from
them (Grote, 2011).
Based on testing hypothesis 5, it s concluded that there is an influence of work motivation
on performance, based on (t arithmetic = 7.17 > 1.96). These results are consistent with
research conducted by (Razak 2018), (Ali Amjad, 2017) (Ghaffari, 2017) in which the results of
the study showed that motivation affects performance. Based on the results of testing
hypotheses and previous research, dit s expected that the company or organization can develop
organizational strategies to motivate employees, so this becomes the primary goal of
organizational management to improve organizational performance.

CONCLUSION
Based on testing the research hypothesis, it as found that the leadership style and work
motivation partially had a positive and significant effect on performance. As for the
compensation variable, it does not directly affect performance but can through work motivation
first. Based on the results of the analysis and conclusions from this study also obtained some
empirical evidence can e used as input for a staff of the Secretariat of Merangin Regency, Jambi,
Indonesia, to improve work motivation and employee performance. Leadership and
compensation partly influence work motivation. This view implies that motivating employees
through various efforts, including the application of appropriate leadership styles and also

“The Effect of Leadership Style and Compensation on the Work Performance of Merangin District Office
Employees, Jambi: The Role of Work Motivation”
85 Nalim Nalim
1
, Siswoyo Haryono
2
, Murniady Muchran
3
, JGPP Vol 7, No 2 (2020): June 2020

compensating employees. Based on direct and indirect effects, the compensation variable does
not have a direct influence on performance but must go through the work motivation variable
first. So to improve employee performance to be more optimal, what must e is to motivate
employees through the application of appropriate leadership styles and also providing
compensation for employees.

ACKNOWLEDGMENT
The author realizes that there are still many shortcomings in this study, so the authors
expect input and suggestions to improve this research in the future. The authors thank those
who have helped and contributed to the realization of writing this research.

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“The Effect of Leadership Style and Compensation on the Work Performance of Merangin District Office
Employees, Jambi: The Role of Work Motivation”
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, Siswoyo Haryono
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