Employees are the most important asset in the company. Fair compensation and high work motivation are believed to be able to increase employee productivity and work quality in an organization, so that employees' abilities can provide their best performance to the company. Compensation and employee performance are two things that are interconnected. The more compensation an employee receives, either directly or indirectly, the more it positively affects performance. This study uses a Systematic Literature Review method with reference articles from Google Scholar published between 2020–2025. The conclusion shows that both compensation and motivation have a positive influence on company performance, making employees more active and enthusiastic in improving organizational outcomes.
Human Resource (HR) is individuals who have abilities, skills, knowledge and potential that can be utilized to achieve organizational goals and the achievement in company goals, especially in improving overall organizational performance. Human Resources (HR) plays a vital role in production and operations management through managing the workforce to achieve organizational goals. In a growing business world, companies are required to not only focus on technical and financial aspects, but also on managing human resources as the main asset. Competent, motivated, and well-managed employees will contribute significantly to the company's operational efficiency, innovation, and competitiveness. In this modern era, HRM challenges are growing along with technological advances, changing workforce demographics, and increasing expectations for employee welfare. Therefore, organizations are required to implement an HRM approach that is adaptive, innovative, and data- driven. The implementation of the right HRM strategy will help organizations create a sustainable competitive advantage in the midst of changing market dynamics. To achieve good performance, there are various influencing factors, including competence, compensation, motivation, leadership style, and work environment (Tinjauan et al., 2024).
According from Mangkunegaran (Setyo Widodo & Yandi, 2022) Performance by employees when job desk give to employee work at the agency where the employee works as job desk that company give to the employee by the company. High employee performance not only has an impact on achieving short-term goals, such as increasing production and profits, but also affects the long-term success of the company (Azizah & Prahiwan, 2024). In addition, good performance from employees also reflects their satisfaction and engagement in work. Therefore, efforts to improve employee performance should be a top priority in human resource management (HRM) strategies, focusing on providing fair compensation, creating a conducive work environment, and providing effective work motivation in improving employee performance will ensure that companies can achieve competitive advantage and sustainable growth. In improving employee performance, companies can use several ways, for example through training, providing motivation, compensation, etc. (Dessler in Widodo & Yandi, 2022).
Motivation can give the spirit to a person to act to achieve a certain goal. It can come from within (intrinsic) or from outside (extrinsic). Compensation is all forms of rewards that the company gives to employees which are considered as a form of reward in the context of their achievements, dedication and contribution to the company. Compensation give for empolyee performance as of basic salary, insentif, allowances, various others forms of benefits. The main purpose of compensation is to attract, motivate and retain qualified employees, as well as ensure that they feel valued and motivated to work well (Andriani & Faris, 2022). covers various rights beyond basic salary, including financial compensation such as bonuses, allowances, and incentives, as well as non- financial benefits such as insurance, leave, and career development programs or
services of workers for the organization or company. Employee compensation structure significantly affects performance (Ali and Anwar in Liu et al., 2025).
The elements of a wise salary certainly provide motivation to employees, maximize performance efficiency and help the organization to achieve performance goals. If the compensation given to employees is not appropriate, it will have an impact on low performance and morale of employees in the organization and will affect the company's performance as a whole. (Dhar et al., Liu et al., 2025). However, good compensation itself is not enough to ensure high performance, there needs to be other supporting factors such as motivation. Motivation is a crucial factor affecting employee performance, because motivation determines how much effort employees will devote to completing their tasks (Hanggono, 2024). Motivation is an internal or external drive that moves a person to act and behave of a human’s perseverance about goals of the life. Good motivation is an inner drive that makes someone excited and strives to achieve goals. Good motivation also involves a positive attitude, the ability to overcome challenges, and consistency in undergoing the process towards success.
The result of reference of the tittle will conduct from systematic literature review research on "The Effect of Compensation (X1) and Motivation (X2) on Employee Performance (Y).
Compensation is another variable that needs to be considered in an organization (Anggriawan et al., 2023). Compensation is all of the thing that give the company to employee in return for their contributions, whether in the form of money (salary, wages, bonuses, etc.) or non-money (allowances, facilities, training). Compensation is reward from the companies give to employees for their contributions. Compensation includes not only basic salary, but also various allowances, bonuses, incentives, and other benefits designed to provide appropriate rewards to employees (Seran et al., 2023). In addition, companies that have a good compensation system will have a positive impact on the company (Tan Evan Tandiyono & Danuarta Ananda Panca H, 2023).
Providing compensation fairly and properly in accordance with employee performance will improve good performance (Sucipto et al., 2023). According to Hasibuan (in Dahlia & Fadli, 2022) Compensation is any form of income obtained from an organization that is given to employees in the form of money or non- money, directly or indirectly as a symbol of appreciation from the organization to its employees. According to Handoko (in Kurniawan, 2022) the definition of compensation is all of the all forms of work results they do in their work. According to Wibowo (in Kurniawan, 2022) the meaning of Compensation is a form of reward for the work or services provided by employees to the company. This compensation is expected to have an impact on employee motivation (Management, 2023).
According to Mangkunegara (Zaqiyah et al., 2023) explains that there are five indicators of compensation, namely:
The level of pay can be given high, average or low depending on the condition of the company.
Payment structure. The payment structure relates to the average pay, pay level and clarification of positions in the company.
Determination of individual pay. Determination of individual compensation pay should be based on the average pay level, education level, length of service and job performance of employees.
Payment method, There are 2 payment methods: First, the payment method is based on time (per hour, per day, per week, per month). The second payment method is based on profit sharing.
Payment control. Payment control is the direct and indirect control of labor costs.
Motivation is one of the most frequently topics in recent years. Motivation is a factor that influences human behavior (Syafitri et al., 2024). Work motivation is defined as encouraging, guiding, and supporting work-related employee behavior. Employee motivation is directing individual needs to behaviors that satisfy individuals and result in employee satisfaction (Zaqiyah et al., 2023). Motivation comes from intrinsic and extrinsic factors moves a person to act in order to achieve a certain goal. It can come from within oneself (intrinsic motivation), such as the desire to develop, or from outside (extrinsic motivation), such as rewards or social recognition. According to Weiner (in Widodo, 2022) Motivation can be interpreted as a form of internal condition that can give employees the drive to achieve organizational goals. Indeed, the concept of motivation is seen as one of the factors that influence the success of organizations and employees: it impacts employee willingness, productivity, active work influence and employee desire to achieve business success. Companies Need to have the ability to raise team spirit employees can do their jobs well (Nabila & Octaviani, 2025).
Indicators to measure work motivation according to Syahyuti (Zaqiyah et al., 2023) are:
An employee who has good work motivation will certainly
have a strong drive within the employee to achieve maximum
work results, which will certainly have an impact on the
goals of the agency where the employee works.
Spirit of the work. The enthusiasm possessed in working
is one form of a very good psychological condition where the
enthusiasm for work will have an impact on happiness which
will later encourage employees to produce better output and
commitment in achieving the goals given by the company where
they work.
Initiative and creative. Initiative can be defined as a
form of strength or perhaps the ability of an employee to
start a form of work with full responsibility without
pressure from other employees or on their own
wishes, while creativity is the ability of an employee to be able to provide new or brilliant ideas in order to find something new in the company, where something new does not mean that it did not exist before, but rather something that has not been found before.
Sense of responsibility. Tanggung jawab. Perilaku dan
sikap dari karyawan yang memiliki motivasi dalam bekerja
yang baik tentunya harus memiliki rasa tanggung jawab yang
pernuh terhadap pekerjaan yang telah mereka selesaikan
sehingga hasil dari pekerjaan tersebut dapat diselesaikan
dengan waktu yang telah ditentukan.
Employee contribution determines the stability and growth of the company (Perkasa & Febrian, 2023). Employee performance is very important for a company in determining the achievement of a goal expected by a company. With good employee performance results, This situation can have a significant impact on the effectiveness of the organization's work (Hendiyani & Iba, 2024). Employee performance reflects their work achievements in terms of quality and quantity of work in a company that has been completed well and constructively influence the company's performance in carrying out the responsibilities assigned by the leadership according to the characteristics of each work unit.
The word 'performance' is adapted from the term 'job performance' which means work achievement or achievements that have actually been produced by an employee The final result of the work carried out by employees according to the workload and responsibilities, is assessed based on how good the quality and quantity is achieved at their place of work (Mangkunegara of the Widodo, 2022). Competent employee performance also contributes to determining the quality, quantity and knowledge of work for a company Bintoro and Daryanto (in Tandiyono, 2023). From some of the explanations above performance is the work results or achievements Acquired by individuals, group or organization In completing work that is part of his responsibilities.
According to Mangkunegara (Zaqiyah, et al. 2023) work indicators include:
Quality Work. Quality is how well an employee does what should be done.
Quantity Work. Quantity is how long an employee works in one day. This work quantity can be seen from the work speed of each employee.
Task execution. Task execution is how far an employee is able to do his job accurately or without errors.
Responsibility. Responsibility for work is an awareness of the obligation for employees to carry out the work given by the company.
This research falls into the category of qualitative research, which aims to produce descriptive data. The method used in this research is literatur review of the sistematic from the artikel or jurnal, is a method of the research collecting data from various literature sources. In this method, the author will analyze various literature materials relevant to the research topic to gain an in-depth understanding of the subject under study. The author collects articles through the google scholar page with the keywords "compensation, work environment, and supervision", which were published in the range of 2020 - 2025. Furthermore, the results of the article search found by the author will be described through a table of literature review results containing numbers, researcher names and years of publication, research titles, research methods, and research results. Data is analyzed through a process of reduction, presentation of results, and interpretation to draw conclusions. The journals used are only related to compensation, motivation and performance.
Search results on Google Scholar show that there are 42,400 articles related to contribution of compensation and motivation factors in determining the quality of workforce performance in the organisation. Of these, 15 articles have been selected that are relevant to the research theme. The following are the results of data processing obtained from previous research.
| No. | The Researcher and Year | The Title of Research | Research Method | Result of Research |
|---|---|---|---|---|
| 1 | Alya Putri Nabila, Irma Sari Octaviani (2025) | Pengaruh variabel kompensasi dan variabel motivasi kerja terhadap kinerja karyawan pada PT Futari Mecca Utama di Tambun Selatan Kabupaten Bekasi | Quantitative | The findings of this study indicate that compensation and motivation together contribute significantly to employee performance at PT. Futari Mecca Utama in Tambun Selatan, Bekasi Regency. |
| 2 | Khoirunnisa Istiqomah, Bakaruddin, Yuslim (2025) | Pengaruh kompensasi, disiplin kerja dan motivasi terhadap kinerja karyawan pada CV. Inesa Graha Bangunan | Quantitative | The research results show that the variables of compensation, discipline and motivation have a significant impact on employee work effectiveness. |
| 3 | Surahman Pujitno, Monica Elizabeth (2024) | Pengaruh variabel kompetensi, kompensasi dan motivasi terhadap kinerja karyawan Bagian Pengiriman pada PT. X Cabang Cileungsi | Quantitative | This study proves that there is a significant relationship between the variables of competence, compensation, and motivation with employee work performance. |
| 4 | Jeni Aina Putri, Ade Indah Sari, Teguh Setiawan (2024) | Pengaruh Kompetensi, Kompensasi dan Komunikasi terhadap kinerja Pegawai pada Dinas Kebudayaan dan Pariwisata Provinsi Sumatera Utara. | Quantitative | This study confirms that these three variables have a significant impact on employee work effectiveness. |
| 5 | Tan Evan Tandiyono dan Danuarta Ananda Panca H (2023) | Pengaruh Kompetensi, Kompensasi serta Disiplin Kerja Terhadap Kinerja Karyawan Pada Perusahaan Keluarga Di Surabaya | Quantitative | From the results of this study, it can be concluded that employee performance is significantly influenced by the level of motivation, work discipline, and the quality of the work environment. |
| 6 | Arifin, Magto, Didin Hikmah Perkasa, Wenny Destiy Febrian (2023) | Pengaruh Kompetensi, Kompensasi dan Konflik Kerja terhadap Kinerja Karyawan | Quantitative | Based on the research results, it is known that the compensation variable has not been proven to have a significant impact on employee work performance, but work conflict has not been proven to have a significant impact at PT. Karina North Jakarta. |
| 7 | Bagas Satria Anggriawan, Endang Rusdianti, Djoko Santoso (2023) | Pengaruh Kompetensi, pelatihan dan kompensasi terhadap kinerja pegawai dengan komitmen afektif sebagai variabel intervening | Quantitative | This study shows that competence, training, and compensation have a positive and significant influence on employee performance. In addition, the three variables also have a significant influence on affective commitment. Affective commitment itself has been proven to have a positive impact on improving employee performance. The mediation test revealed that affective commitment can be a mediator in the indirect relationship between competence, training, and compensation on employee performance. |
| 8 | Euis Lestari Nurzakiah, Wenny Destiy Febiani (2024) | Pengaruh Disiplin Kerja, Motivasi dan Kompensasi Terhadap Kinerja Karyawan (Studi pada PT Billy Indonesia) | Quantitative | This research proves that discipline, motivation, and compensation systems have a significant correlation with employee work performance. |
| 9 | Putri Apriliya (2024) | Pengaruh Kompetensi Dan Kompensasi Terhadap Kinerja Karyawan Melalui Motivasi Sebagai Variabel Intervening Pada Kecamatan Wiyung Kota Surabaya | Quantitative | This study reveals that competence, compensation, and motivation contribute positively and significantly to employee performance. In addition, competence and compensation are also proven to significantly influence work motivation, which ultimately acts as a mediator in the relationship between competence and compensation on employee performance. |
| 10 | Ismail, Dina Hendiyani dan Zainuddin Iba (2024) | Pengaruh Kompetensi Dan Kompensasi Terhadap Motivasi Serta Implikasinya Pada Kinerja Pegawai Puskesmas Tanah Jambo Aye Kabupaten Aceh Utara | Quantitative | This study reveals that competence, compensation, and motivation contribute positively and significantly to employee performance. In addition, competence and compensation are also proven to significantly influence work motivation, which ultimately acts as a mediator in the relationship between competence and compensation on employee performance. |
| 11 | Bayu Hanggono (2024) | Peran Strategis Kompetensi, Kompensasi dan Motivasi dalam Peningkatan Kinerja Pegawai. | Quantitative | The findings of this study indicate a positive influence of these three variables on employee work performance. |
| 12 | Yuddy Giovanna Priscilla dan Ferdinato Riady (2023) | Analisis Pengaruh Kompetensi, Kompensasi, Motivasi, Leadership Dan Kepuasan Kerja Terhadap Kinerja Karyawan Manufaktur Kota Batam. | Quantitative | This study reveals that competence, leadership, and work environment both directly and through the mediation of job satisfaction have a positive and significant effect on employee performance. In contrast, compensation and motivation do not show a significant effect. |
| 13 | Muhamad Wahrudi, Suyanto (2024) | Analisis Pengaruh Kompetensi Dan Kompensasi Terhadap Kinerja Karyawan Dengan Budaya Organisasi Sebagai Variabel Moderating | Quantitative | This study reveals that work motivation, level of competence, and compensation received by employees together have a significant impact on improving performance. Meanwhile, Culture of the culture can mediate the relationship between Motivation, Competence and Performance. Meanwhile, Organizational Culture Does not act as an intermediary in the relationship between employee compensation and performance. |
| 14 | Jihan Nur Azizah, Wawan Prahiawan (2024) | Pengaruh Kompensasi, Lingkungan Kerja, dan Pengawasan Terhadap Kinerja Karyawan | Literature Review | The results of research on 15 selected journals show that fair and competitive compensation has been significantly proven to influence employee performance levels in an organizational environment. |
| 15 | Fanti Nurul Zaqiyah, Tasya Nailatall Istiqomah, Nur Fadilla, Prasetyo Hafid Mardiantio, Riyan Sisawan Putra (2023) | Pengaruh Kompensasi Dan Motivasi Terhadap Kinerja Karyawan | Literature Review | This study reveals a relationship between compensation and motivation with employee performance levels, because with compensation and motivation employees will feel more active and enthusiastic, which will have an impact on improving company performance. |
The result of the study of 15 selected journals show that fair and competitive compensation give the significant impact to employee performance. Besides that, effective motivation has also been shown to improve Employee performance can be improved through structured direction, consistent support, and constructive feedback. The interaction between these factors reflects the dynamics that influence each other in boosting work performance.
Compensation is closely related to employee performance; when the rewards given are fair and competitive, it can encourage increased employee motivation, productivity, and loyalty. This study provides additional evidence that is consistent with research that has been conducted by other researchers as Alya et al., (2025), Khoirunnisa et al., (2025), Surahman et al., (2024), Jeni et al., (2024), Bagas et al., (2023), Euis et al., (2024), Putri (2024), Ismail et al., (2024), Bayu (2024), Muhamad et al., (2024), and Fanti et al., (2023). When employees feel valued through appropriate salaries, bonuses, and other benefits, This encourages them to increase their efforts and commitment in achieving their goals of the company. Adequate compensation contributes to job satisfaction which Encourage the growth of a sense of responsibility and dedication among employees towards the company. Conversely, dissatisfaction with compensation can decrease motivation and performance, and increase turnover. Overall, good compensation management can be a powerful tool to drive optimal performance and achieve company success.
Motivation to have an urgent important relationship with employee performance, motivation is a supporting component in an organisation to achieve the goals of the company. Motivation is a process that drives, directs, and maintains a person's behavior to achieve certain goals. When the leader is able to provide this motivation by way of appreciation and praise of all the work done. The higher these work expectations can be met, the higher the level of employee A feeling of satisfaction that arises as a result of a pleasant and meaningful work experience. Overall, these findings conclude that employee motivation and performance are two things that are interrelated with each other to jointly produce the goals of the organization. Motivation can be understood as a mental mechanism that drives individuals to act towards achieving needs or desires act and maintain certain behaviors in order to achieve goals. Motivation can come from internal factors, such as pleasure, satisfaction, or the need for achievement (intrinsic motivation), or triggered by external aspects, such as appreciation, public recognition, or social expectations.
Finally of this study are certainly in line with Observations made by Alya et al., (2025), Khoirunnisa et al., (2025), Surahman et al., (2024), Euis et al., (2024), Ismai et al., (2024), Bayu (2024), Muhamad et al., (2024) and Fanti et al., (2023). With the motivation of employees will certainly feel more enthusiastic, which Supporting the achievement of the company's best work results. The better the motivation from employee performance, give the best working for the company. Naturally, minimal motivation from the company without providing support or constructive feedback can lead to stress, dissatisfaction, and even resistance from employees. Therefore, balanced motivation that focuses on employee development is the key to improving performance and achieving company goals effectively.
Based on the literature review that has been conducted, it can be concluded that compensation and motivation factors have an important role in improving employee performance. Compensation and motivation are two important factors that are interrelated and Also has a strong influence on the level of employee productivity in an organization. Compensation that is fair, competitive, and in accordance with employee contributions can increase job satisfaction, Loyalty and concern for the sustainability of the company. Fair and competitive compensation (both financial such as salary and bonus, and non- financial such as allowances and work facilities) provides job satisfaction, which encourages employee loyalty and work enthusiasm. Fair and appropriate compensation (both financial and non-financial) increases employee job satisfaction and loyalty. When employees feel properly appreciated, they are more motivated to give their best performance. Fair and appropriate compensation for employee performance can increase employee job satisfaction and loyalty. A transparent and competitive compensation system can attract and retain quality employees, and arouse them to improve their performance. Unfair
or inappropriate compensation can reduce work motivation and have a negative impact on employee performance.
From another point of view, motivation plays a role in driving morale and productivity. The combination of an effective compensation system and the right motivation enhancement strategy will create a work environment that is conducive to improved performance. High motivation, both intrinsic (inner drive such as job satisfaction, personal goals) and extrinsic (recognition, awards), When work motivation is at a high level, employees tend to be more disciplined, creative, and have a high sense of responsibility and loyalty towards their work. Motivated employees tend to have a greater commitment to the tasks and goals of the organization. Motivation, both intrinsic and extrinsic, encourages employees to work harder and contribute optimally, while fair and adequate compensation increases employee satisfaction and loyalty. Work motivation acts as the main driver for employees to Complete obligations with full responsibility. Motivated Individuals in organizations are more inclined to productive, innovative, and dedicated to their work. High motivation can result in better performance because employees feel driven to achieve company goals and are rewarded for their achievements.
If motivation and compensation are managed well, this situation supports the creation of a positive work climate, strengthens employee and group performance, and encourages the achievement of organizational goals comprehensively. Integration of work spirit and deep-rooted goals and adequate compensation has been proven to simultaneously increase productivity and work effectiveness. Companies that pay attention to both of these aspects tend to have higher employee retention rates and healthier work cultures. The combination of motivation and compensation can explain most of the variation in employee performance, although there are still other factors outside of these two variables that also have an influence
Therefore, companies need to design human resource policies that not only focus on financial rewards, but also pay attention to the psychological and emotional aspects of employees in order to create optimal and sustainable performance. The study also emphasized the importance of management to continuously improve motivation and provide competitive compensation so that employee performance remains optimal. In addition, performance improvement strategies should be carried out comprehensively by considering other aspects such as training and work discipline. Overall, motivation and compensation are the main keys in building a work atmosphere that supports productivity along with supporting the achievement of organizational goals.
Motivation and compensation systems complement each other in supporting improved employee work performance. Both complement and support each other. When employees feel motivated and receive fair compensation, they tend to perform better. Management should consider carefully to both aspects in a balanced way to create a positive and productive work environment. Motivation and compensation are two important factors that are interrelated and has a big influence on employee work performance. Companies need to create an effective motivation system and provide fair
compensation to improve employee performance and achieve organizational goals.
It is recommended that further research explore the mediation and moderation mechanisms, particularly those related to job satisfaction, organizational commitment, leadership style, and corporate culture, in explaining the influence of compensation and motivation on HR performance. Qualitative approaches should also be considered to explore employees’ emotional and psychological perceptions in more depth. In addition, comparative studies across industry sectors can be conducted to see the differences in influence that may arise in different contexts. Longitudinal research is also important to evaluate the long-term impact of compensation policies and motivation strategies. Finally, the use of human resource (HR) technology such as HRIS can be studied as a tool to optimize compensation and motivation management efficiently.