An Analysis on Employees’ Performance Appraisal System and Its

Implication on Their Work Satisfaction at Oil Palm Research Center,

Medan

Refli Renaldi

, Sukaria Sinulingga

and Iskandarini

Magister Manajemen, Universitas Sumatera Utara, Medan-Indonesia

Keywords: Work Performance Appraisal System, Work Satisfaction

Abstract:

Oil Palm Research Center, Medan, is a company which operates in oil palm research and

propagation. Highly competitive human resources are needed to achieve a company’s goal. It is

found that the performance appraisal system at the PPKS (Oil Palm Research Center), Medan, is

still not able to provide employees’ work satisfaction due to some small frictions among the

employees. There are also the wish and demand from the company to increase its employees’

performance.The objective of the research was to evaluate some factors which caused the

performance appraisal system on employees at PPKS, Medan, not to be able to increase their

work satisfaction, and what policy which had to be made in order that the its employees

performance appraisal system became more effective in increasing employees’ work satisfaction

at PPKS, Medan.The research used some theories and thoughts of some experts. That it is the

responsibility of a company’s manager to create his employees’ work satisfaction.The research

also used causal method. Questionnaires were distributed to 103 employees of PPKS, Medan.

The samples were taken by using Stratified Random Sampling technique. The data were analyzed

by using multiple regression analysis with F-test (simultaneous) and t-test (partial) at the

significance level of 95%.The result of the research showed that there was the influence of 61%

of the variable of service quality on employees’ satisfaction, while the remaining 39% was

influenced by the other variables excluded from independent variables. The result of F-test

showed that the four independent variables (reliability, competence, credibility, and

communication) had positive and significant influence on employees’ work satisfaction at PPKS,

Medan. The result of t-test showed that the variables which had significant influence on

employees’ work satisfaction at PPKS, Medan, were the variables of reliability and

communication.

1 INTRODUCTION

In today's modern era, organizations are required to

create high employee performance as a step to

succeed organizational development. The success of

the organization is influenced by various factors; one

important factor is human resources. Organizations

must think of ways in which human resources or

implementers can improve their work performance

for the achievement of organizational goals. One

way is to increase employee satisfaction in work. To

see the high level of work achievement that has been

achieved by the employee, then implemented a

performance appraisal programconducted in a

certain period. Mathis and Jackson (2006) state that:

"Performance Appraisal is the process of evaluating

how well employees perform their work when

compared to a set of standards, and then

communicating with employees."

Employee job satisfaction will grow if the

appraisal of work performance done fairly, rational

and objective and well documented. This is

supported by the opinion of Rivai (2009) stating

that: "people will be satisfied or dissatisfied;

538

Renaldi, R., Sinulingga, S. and Iskandarini, .

An Analysis on Employees’ Performance Appraisal System and Its Implication on Their Work Satisfaction at Oil Palm Research Center, Medan.

DOI: 10.5220/0009505205380544

In Proceedings of the 1st Unimed International Conference on Economics Education and Social Science (UNICEES 2018), pages 538-544

ISBN: 978-989-758-432-9

depending on the presence or absence of equity in a

situation, especially the work situation (Theory of

Justice) ". The main components in the theory of

justice are input, outcome, justice and injustice.

Input is a valuable factor for employees who are

considered to support their work such as education,

experience, skills, number of tasks, equipment or

equipment used to carry out their work. The result is

something that employees consider to be valuable

from their work; such as wages or salaries, side

benefits, symbols, status, rewards and opportunities

for growth or self-actualization. Organizations must

be able to improve employee job satisfaction; which

one of them by looking at what factors become the

determinant ofemployee job satisfaction. According

to Luthans (2006) the factors that affect job

satisfaction include: the job itself, salary, promotion

opportunities, supervision, colleagues and working

conditions. Through this basis, the organization

caneasily determine what steps to take to improve

job satisfaction. The quality of human resources is

determined by the extent to which the system in

thefield of human resources isable to support and

satisfy the wishes of employees and companies. To

create employee job satisfaction is not easy; because

job satisfaction can only be created if the employee

performance appraisalsystem is made well and fair

and implemented as well as possible. Gibson (1996)

in Ermayanti (2001) and Brahmasari (2008),

suggests that organizational performance depends on

individual performance. So it can be understood that

individual performance will contribute to

organizational performance. Every company or

institution needs to create high employee job

satisfaction that will have implications for good

individual performance that will ultimately

contribute positively to the organization's

performance.

The Center for Oil Palm Research (PPKS) is an

oilpalm research institute in Medan established since

1916 under the name APA (Algemeene Proefstation

der AVROS/ Algemene Vereniging voor

Rubberplanters ter Oostkust van Sumatra). APA

several times renamed according to the conditions at

that time; became RISPA (Research Institute of The

Sumatra Planters Association) in 1957 and became a

Puslitbun in 1987. Finally in 1992 renamed the

Center for Research on Oil Palm (PPKS). Some

awards have been achieved by PPKS include:

IPTEK Superior Center, Accreditation from

KNAPP, Bakrie Award, PPKS Journal

Accreditation, ISO Certification, KAN & Variety

Protection.

But although PPKS's achievements are so proud

but as a service institution, there are a lot of things

that must be maintained and need continuous

improvement; in the form of progressive progressive

improvements, especially those related to human

resources. The development of the company's

management today, especially human

resourcemanagement, is driven by the demand to

paymore attention to the company's applied policies

to its employees.

2 FRAMEWORK CONCEPTS

AND HYPOTHESES

Conceptual framework Research begins by

describing the operational variables contained in the

study of 4 dimensions of service quality: Reliability,

Competence, Credibility and Communication. These

four dimensions of service quality are related to the

employee's response to the performance appraisal

system they get, whether satisfied or dissatisfied.

According to Parasuraman (1990), the embodiment

of satisfaction can beidentified through the four

dimensions of service quality that are reflected from

the service gaps that customers and customers

expect to receive services.

Figure 1 Research Model of Achievement Rating

System Analysis Employee’ Work and Its

Implications on Job Satisfaction Employees at the

Medan Palm Oil Research Center

1. Reliability

H0: Reliability has no significant effect on

job satisfaction employees.

H1: Reliability has a significant effect on job

satisfaction employees.

2. Competence;

H0: Competence has no significant effect on

satisfaction employee work.

H1: Competence has a significant effect on

job satisfaction employees

An Analysis on Employees’ Performance Appraisal System and Its Implication on Their Work Satisfaction at Oil Palm Research Center,

Medan

539

3. Credibility

H0: Credibility has no significant effect on

satisfaction employee work.

H1: Credibility has a significant effect on job

satisfaction employees.

4. Communication

H0: Communication has no significant effect

on satisfaction employee work.

H1: Communication has a significant effect

on job satisfaction employees.

3 METHOD

The research method used is the method of causal

research, research conducted to investigate the

cause-effect relationship by observing the

consequences and possible factors (cause) that cause

these effects. In this study, there are independent

variables (cause) namely the variables that affect and

the dependent variable (effect) is the variable that is

affected.

The population in this study is 162 people who are

employees in PPKS Medan. By using Slavin method

with 6% error rate found the sample of 103. Data

collection method in this study is to use

questionnaires that are given to employees in PPKS

Medan. Then also documents containing information

about PPKS Medan. Data analysis used in this

research is univariate analysis covering frequency

distribution of respondent, validity test and

reliability test. Then proceed with bivariate

regression analysis.

4 RESULT

1. Validity and reliability analysis

To test the validity, a factor analysis was conducted

to see if a variable is feasible to be analyzed further

by using the Factor Analysis Method (KMO). All

the measurement concepts of each variable question

are valid and reliable which means that the

questionnaire used in this study is a reliable

questionnaire.

2. Testing classical assumptions

The classical assumption test must be met in order to

obtain a regression model with unbiased estimation

and reliable testing.

a) Normality Test.

Normality test was performed by Kolmogorov-

Smirnov test. From the results of this testit can be

seen that this regression model meets the

assumption of normality and concluded feasible to

use.

b) Multicollinearity test.

Obtained multicollinearity test results as can be see

1. VIF Value Reliability 1 <2.770 <10, meaning

that thereis no multicollinearity in Reliability

the variable.

2. VIF Value Competence 1 <2.289 <10, meaning

there is no multicollinearity in the Competency

variable.

3. VIF Credibility value 1 <2.038 <10, meaning

there is no multicollinearity in the Credibility

variable.

4. VIF value Communication 1 <1,746 <10,

meaning there is no multicollinearity inthe

Communication variable.

From the output data can be seen the calculation of

tolerance values show all independent variables have

a tolerance value > 0.1 which means there is no

multikolineritas between independent variables. The

result of calculation of Variance Inflation Factor

(VIF) value also shows the same thing, there is no

independent variable having linerity between

independent variables.

c) Heteroscedasticity Test.

This study uses Spearman'rho correlation coefficient

test to see whether heteroscedasticityoccurs. From

Table 4, the results of heteroscedasticity test are:

1. 2. Value of reliability significance (0,518)>

(0,05), meaning there is no heteroscedasticity at

variable of reliability.

2. The value of competence significance (0.417)>

(0.05), meaning there is noheteroscedasticity on

competence variables.

3. The value of credibility significance (0.621)>

(0.05), meaning there is no heteroscedasticity on

credibility variables.

4. The value of communication significance

(0.575)> (0.05), meaning there is no

heteroscedasticity on communication variables.

5. From the output data can be seen that the

significance value of the four independent

variables more than 0.05. Thus it can be

concluded that there is no problem of

heteroscedasticity on regression model.

2. Bivariate Analysis of Multiple Linear

RegressionRegression Coefficient Test Results can

be seen from Table 1 below:

UNICEES 2018 - Unimed International Conference on Economics Education and Social Science

540

Table 1: Regression Coefficient Test

Non-

standardi

zed

Coefficie

nts

dardized

Coefficie

nts

Sig.

Std.

Erro

Beta

(Consta

nt)

Reliabili

Compet

ence

Credibil

ity

Commu

nication

1.049

.343

.114

.157

.260

.645

.095

.090

.091

.087

.381

.122

.155

.251

1,62

3.6

1.2

1.7

3.0

.10

.00

.20

.089

003

a. Dependent Variabel: Satisfaction

Mathematically the result of multiple linear

regression analysis can be written as follows:

Y = 1.049 + 0.343 X1 + 0.114 X2 + 0.157 X3 +

0.260 X4

Table 1 shows the effect of each independent

variable (X1, X2, X3, and X4) on the dependent

variable (Y).

Free Variable Correlation Analysis with Satisfaction

From the results of data analysis has been done, can

be seen the results of correlation analysis of

independent variables to the satisfaction variable in

Table 2 below:

Table 2: Correlation Analysis Result

1. Relationship Reliability with Job Satisfaction.

Value of correlation coefficient Reliability with

satisfaction is 0.731 with asignificance level of

0.000.This confirms that there is a positive

relationshipbetween reliability and significant

performance satisfaction.Based on Guilford's theory,

it is known that the relationship of reliability with

job satisfaction is a strong relationship.

2. Relationship Competence with Job Satisfaction.

Value of correlation coefficient of Competence with

Job Satisfaction is equal to 0.626with significance

level equal to 0.000. This confirms that there is a

positive relationship between Competence and

significant job satisfaction. Based on the Guilford

theory, it is known the relationship of

Competencewith Satisfaction is a strong

relationship.

3. Relationship of Credibility with Job Satisfaction.

The relationship Jobvalue of the correlation

coefficient of credibility with job satisfaction is

0.616 witha significance level of 0.000. This

confirms that there is a positive relationship between

credibility and significant job satisfaction.

Based on Guilford's theory, then known credibility

relationship with job satisfaction is a strong

relationship.

4.Communication Relationship with Job

Satisfaction.

The value of correlation coefficient of

communication with job satisfaction is 0.638 with a

significance level of 0.000. This confirms that there

is a positive relationship between communication

and significant job satisfaction. Based on Guilford's

theory, it is known that the relationship of

communication with job satisfactionis a strong

relationship.

c).Hypothesis Test Results

1. Simultaneous Test Results (F-Test)

This test is also called ANOVA or variance analysis,

which is the test of regression coefficient together

(F-test) to test the significance of independent

variable influence (reliability, competence,

credibility and communication) to the dependent

variable (job satisfaction). The test used α 0.05

significance level.

The test is also used to find out whether the

regression model can be used to predict the

dependent variable. The test results are seen in Table

3 below:

An Analysis on Employees’ Performance Appraisal System and Its Implication on Their Work Satisfaction at Oil Palm Research Center,

Medan

541

Based on the results, it is found that the sig.α (.000a)

value is less than the alpha of 5% (0.05). This

indicates that the research results reject H0 and

receive H1. Other results are also shown from the

value of fcount that is equal to 38.328 where this

value is greater than the ftable value of 3.933.Thus

simultaneously or simultaneously four (4) factors

namely reliability, competence, credibility, and

communication have a positive and significant

impact on job satisfaction of PPKS Medan

employees.

2. Partial Test Results (T-test)

T-test aims to determine the magnitude of the

influence of each independent variable individually

(partial) to the dependent variable. The test criteria

are as follows:

1. H0: X1 = 0, meaning that the variable reliability

does not significantly affect employee job

satisfaction variable.

H1: X1 ≠ 0, meaning that the variable of

reliability has a significant effect on employee

satisfaction variable.

2. H0: X1 = 0, meaning that the variable reliability

does not significantly affect employee job

satisfaction variable.

H1: X1 ≠ 0, meaning that the variable of

reliability has a significant effect on employee

satisfaction variable.

3. H0: X2 = 0, meaning that the competency

variable has no significant effect on employee

job satisfaction variable

H1: X2 ≠ 0, meaning that the competence

variable has a significant effect on employee

satisfaction variable.

4. H0: X3 = 0, meaning that the credibility

variable has no significant effect on employee

job satisfaction variable.

H1: X3 ≠ 0, meaning that credibility variable

significantly influence employee job satisfaction

variable.

5. H0: X4 = 0, meaning the communication

variable has no significant effect on employee

satisfaction variable.

H1: X4 ≠ 0, meaning that communication

variables have a significanteffecton employee

job satisfaction variable.

Criterion of decision making:

H0: received when the significance value> 0.05

H0: rejected if the value of significance <0.05

The results of this test can be seen in the appendix

and in Table 4 below:

Tabel 4 :T-test

Model

Unstanda

rdized

Coefficients

Standardi

zed

Coefficients

Sig

. B

Std.

Error Beta

1(Constan

1.049 .645

1.6

.10

Reliabilit

.343 .095 .381 3.6

.00

Competen

.114 .090 .122 1.2

.20

Credibilit

.157 .091 .155 1.7

.08

Communi

cation

.260 .087 .251 3.0

.00

a. Dependent Variable: Satisfaction

From Table 4 contained in the attachment of T test

the following results are obtained:

1. Value significance (0,000) <(0.05), then Ho:

rejected, meaning reliability has a positive and

significant effect on job satisfaction.

2. The value of significance (0.206)> (0.05), then

Ho: accepted, meaning that the competence

does not have a positive and insignificant effect

on job satisfaction.

3. The value of significance (0.089> (0.05), then

Ho: accepted, meaning that credibility has no

positive and significant effect on job

satisfaction.

4. Significance value (0.003 <(0.05), then Ho:

rejected, meaning that communication has a

positive and significant effect on job

satisfaction.

Table 3 : Result of Simultaneous Test (F)

ANOVA

Model

Sum of

Squares df

Mean

Square F Si

Regre

ssion

445.228 4 111.30

38.328 .000

Resid

ual

284.597 98 2.904

Total 729.825 10

a. Predictors: (Constant), Communication,

Credibility, Competence, Reliability

. Dependent Variable: Satisfaction

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542

5 DISCUSSION

After performing various tests both on the

questionnaire and on the variables; it turns out that

this research deserves to be continued by multiple

linear analysis. In multiple linear regression test to

four independent variable of reliability, competence,

credibility and communication have influence to

employee job satisfaction. The effect of these four

variables varies greatly. Reliability has the greatest

influence; followed by communication, then

credibility and competence. The four variables gave

effect of 61.0%, meaning 39.0% influence on

satisfaction contributed by other variables not

included in this research model. Similarly, the

correlation of each independent variable with

satisfaction indicates that the most dominant and

strongest positive correlation is between the variable

of reliability and job satisfaction, followed by

communication variables with job satisfaction,

competence with job satisfaction and lastly between

credibility and jobsatisfaction.

In hypothesis test by simultaneous test method (F

Test) also called ANOVA, it turns out sig value

alpha 0.000 < alpha 5% (0.05). The value of f

arithmetic is also greater than f table. This means

that four variables together will have a positive and

significant impact on job satisfaction.In the Partial

Test (Test T), it is found that the variable reliability

and communication significantly affect job

satisfaction, but the credibility and competence

variables do not significantly affect job satisfaction.

The variable of reliability in the performance

appraisal system gives a significant influence in

affecting job satisfaction, which means satisfaction

and job dissatisfaction of employees influenced by

variable reliability.

Based on the background of research that the

performance appraisal system has not been able to

provide job satisfaction, so the variable reliability is

one factor in the performance appraisal system that

has not been able to provide job satisfaction. This

can be explained through several things, employees

feel reward or punishment miss promotion

promotion, increase salary levels are often not based

on performance appraisal results; so that employees

feel the performance appraisal is not done or

executed as promised. Or the company is often late

in doing performance appraisal which will then slow

down the promotion process or a raise.

Communication variables also gained a significant

influence in affecting job satisfaction, which means

communication in the performance appraisal system

is one factor that has not been able to provide job

satisfaction. This can be explained by several things;

the company has not really explained well the

performance appraisal system. The company also

rarely discusses the employee'sappraisal system that

has not been able to provide job satisfaction. This

can be explained through several things, employees

feel reward or punishment miss promotion

promotion, increase salary levels are often not based

on performance appraisal results; so that employees

feel the performance appraisal is not done or

executed as promised. Or the company is often late

in doing performance appraisal which will then slow

down the promotion process or a raise.

Communication variables also gained a significant

influence in affecting job satisfaction, which means

communication in the performance appraisal system

is one factor that has not been able to provide job

satisfaction. This can be explained by several things;

the company has not really explained well the

performance appraisal system. The company also

rarely discusses the employee's next performance

plan after the performance appraisal. Employees

expect performance planning together with the

company. Competence variables, although partially

ineffective in affecting job satisfaction but together

with other variables have an influence on

satisfaction. Officers who carry out assessment in

the eyes of employees is quite strong and skilled and

have sufficient knowledge; but it is not a major

factor that gives a sense of satisfaction. Credibility

variables are also partially ineffective in influencing

job satisfaction, but together with other variables

have an influence on satisfaction. The courteous,

honest and respectful examiner is the capital to be an

appraiser that pleases employees; but it is not

enough if it does not get a reliable and well-

understood performance appraisal system.

6 CONCLUSIONS

Conclusion Based on the discussion, the following

conclusions can be drawn:

1. Reliability factor has a positive and significant

effect on employee job satisfaction related to

the application of performance appraisal system.

This is based on the following results:

a. Reward and punishment done by the

company is not always based on the result

of performance appraisal.

b. Reliability factor has a positive and

significant effect on employee job

satisfaction related to the application of

An Analysis on Employees’ Performance Appraisal System and Its Implication on Their Work Satisfaction at Oil Palm Research Center,

Medan

543

performance appraisal system. This is

based on the following results:

2. Communication factors have a positive and

significant impact on job satisfaction related to

the implementation of performance appraisal

system. This is based on the following results:

a. The company has not really explained the

performance appraisal system to employees

well.

b. Performance appraisal has not been done

on a regular basis and not on time.

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