ARTICLE REVIEW

BIBLIOGRAPHIC INFORMATION

Supriyanto, S. (2018). Compensation effects on job satisfaction and performance. Human

System Management, 37 (281-285).

SUMMARY OF ARTICLE

The article by Supriyanto (2018) seek to determine the relationship between

compensation management with job satisfaction and job performance which focuses on air

traffic control (ATC) officers in PT Angkasa Pura 1. The implementation of compensation

among ATC officers are conducted with the reason that aviation industry nowadays is rapidly

growing where no room for an error are allowed, tighter regulations must be followed. This

has caused increase work pressure and workload among ATC officers. Effective and strategic

compensation management are deemed necessary to ensure optimum job performance and

job satisfaction among ATC officers. The study conducted an explanatory research method

where data were collected from 208 ATC officers through stratified random sampling across

four distinct work domains involving operational structuring and monitoring, functional

departments and executives. Findings from this article revealed that, although compensation

may pose positive impacts towards job satisfaction, if goes unmonitored, it may negatively

affect ATC officers’ job performance. This article later suggest that employees’ commitment

and types of compensations should be investigated in future research as important factors to

job performance and job satisfaction.

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DETAILED ANALYSIS OF THE ARTICLE

Many organizations nowadays strive for compensation management as internal and

external strategies to improve organizational performance and encourage better job

satisfaction among employees. Human resource capital is one of the most vital and valuable

assets of each organization and have been recognized as a crucial key driver and prerequisite

for sustainable success of the company and organizational development. Human resource

management is accountable to build and maintain high quality excellent environment at the

workplace. This is to allow the organization to successfully achieve operational performance

objectives and overall quality of the organization. It also allows changes, improvement and

countermeasure in the face of external and internal problems.

Similarly, Supriyanto (2018) highlight in his article that a success of a company is

bound by the performance of its human resource capital. It influences the level of employees’

contribution for the company, encompasses output quantity and quality, attendance, time

period and cooperative attitude (Page 281). Supriyanto (2018) further emphasize that

minimum wages, lack of motivation, dissatisfaction and discomfort among employees will

affect their performance quality and their job satisfaction. In an aviation industry, where ATC

officers are required to comply to various strict legislations, working under pressure with

constant workload, increasing flight activities over the years, this has motivated the author to

analyses the relationship between compensation and job performance in this domain.

Supriyanto (2018) emphasized that protective policy reformation in Indonesia for

airline industry has contribute to hectic Indonesia air traffic and more responsibility by ATC

officers. Passenger security and safety during flight journey until arrival hugely depends on

high quality performance of ATC officers. Due to this matter, improper compensation to

ATC officers by airline company leads to decrease job performance, reduce employee

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retention and loyalty towards the company (Page 282). Somehow managing and

implementing compensation incentives can be complex especially for gigantic aviation

organization and multinational airlines companies as they employ diverse range of personnel

from operational to functional domains, and the executives. This requires effective

compensation strategies across work domains with various ethical considerations and

performance-related reimburse concept.

Supriyanto (2018) in his article clearly elaborate on compensation as a form of

remuneration received by employees for their performance which later affect their level of

job satisfaction. However, Supriyanto (2018) only mentioned two types of compensation, i)

financial (salary, commission, family benefits) and ii) non-financial compensation (facility,

health insurance, opportunities for training, promotion) without complete elaboration (Page

282). It is suggested that he review other publications on compensation types to provide

complete understanding for readers. For example, bonuses, perks or perquisites, base pay and

long-term incentives applied by airline company in Indonesia should be discussed in the

article. Moreover, details on health insurance, personal leaves or holiday leaves,

technological devices, retirement programs and company parties should be discussed in the

article. This is deemed necessary to provide clear depiction of current trend of compensation

management in Indonesia’s aviation industry. Besides, the compensation policy, the ability of

the company to pay, chain management of employees, job analysis and job description should

be taken into account as factors to effective compensation management and increase

employee’s performance.

Findings from the article revealed that compensation has significant influence on job

performance of ATC officers where increase in compensation will significantly improve their

performance. The author has cited previous study by Ashley & Arthur (2009) that able to

invoke the same relationship between compensation and performance which is deemed

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convincing due to the support (Page 283 and 284). Findings also revealed that increase in

compensation will result in an improvement in ATC officers’ job satisfaction (Page 284). In

addition, the article revealed that increase in job satisfaction will decrease the performance of

ATC officers, which are against various research on the same issue (Page 284). This can be

controversial in the field of human research management as the result can be inconsistent

with available research on the relationship between job satisfaction and job performance.

Nevertheless, the authors convinced readers of its findings by stating possible causes to

the event (Page 284). This includes demographic characteristics of ATC officers where

shorter tenure may imply low job satisfaction. Supriyanto (2018) also stated job

characteristics of ATC officers, facilities characteristics and advanced technology equipment

available in the company will affects their performance. The argument made by the author on

this issue is clearly depicted in the article and clearly does not hide behind fancy rhetoric on

compensation management influences. Supriyanto (2018) also provide a comprehensive

layout of his arguments throughout the article which allow complete understanding on the

direction of the research. He also supported his argument by using previous publications that

address the same issue, such as by Tapomy (2009) and Saarce (2015) to appeal to reader on

the arguments made throughout the article.

Aside from the results from structural equation modelling analysis, Supriyanto (2018)

suggest three implementations for compensation management. Firstly, company need to

modify the salary structure as the main remuneration for employee’s performance. Secondly,

company need to open up opportunities for promotion to reward officers with good

performance. Thirdly, company need to promote the implementation of facility programs

such as company’s credit facilities, transport facilities and other facilities to support the work

(Page 284). Other than that, based on personal view, it is suggested that company includes

retention strategy of employees as one of the keys in compensation approach to increase job

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performance and job satisfaction. It is perceptible that the most important objectives of

efficient compensation management are employees’ retention because committed employees

possessed strong intentions and loyalty towards the company and provide better job

performance and organizational commitment. Company may also adopt trust management in

formulating compensation strategy. This is because the fundamental of trust portrays the

positive prospects of an individual in relation to the object of trust behaving reverentially.

This explain the implementation of strategic compensation management plan which mainly to

appraise high quality performance of the employee and to increase employees’ commitment,

trust and productivity. It is important to note that various external (societal impacts, cost of

living, economic trend, demand and supply of labor) and internal factors (compensation

policy, job characteristics, company capability for compensation) may affect compensation

management plan. Therefore, each factor should be taken into account before the actual

development and implementation of strategic compensation strategies.

These findings are significant for human resource management, especially in airline

industry, where it will facilitate the formation of effective compensation management in view

of aviation work domain and its related factors. This article contributes towards the

development of an efficient compensation management with the objective of employees’

retention especially the top-level personnel in the organization. It also allows companies in

maximizing employees’ contribution and involvement in which this approach can be adopted

into other sector as well, for compensation policy development. This research study adds up a

new dimension and highlighted valuable knowledge on compensation management and its

fundamental structure that is significantly important for any organization prior to their

development and implementation of compensation strategy. Most importantly, it further

encourages human resource management to determine the outcomes of compensation

strategies towards employee retention, employees’ productivity, organizational commitment,

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workforce performance and job satisfaction. However, it is suggested that temporal variations

of compensation and employment incentives should be taken into account during the

development of compensation strategy. This is because, without proper understanding it can

mislead the result and lead to flawed conclusion and adverse managerial behavior in airline

industry. It takes into account the environmental and social responsibility expected by the

stakeholders and the public reflecting the ethic of an organization towards the needs and

essentials of their employees. Lastly, the suggestions made for future research which to

investigate employees commitment towards trust, obey, involvement and loyalty, as well as

analyzing wage, bonus commission, family allowance and educational opportunities are

deemed necessary to complement current findings.