Analysis Effect of Leadership Style and Work Stress

on Employee Productivity with Moderating Variable Compensation

Andy Angkasa, Kuras Purba, Hendra Jonathan Sibarani, Fenny Krisna Marpaung, Hendry

Universitas Prima Indonesia

Keywords: Leadership Style, Work Stress, Compensation, Employee Productivity.

Abstract: Business competition in the era of globalization is very competitive, providers of products and services must

have the advantage to win the competition with competitors. To support the excellence of service providers,

a service provider company is required to have employees who have a good level of performance in achieving

the goals of the company. The purpose of this study is to determine the effect of leadership style and work

stress on employee productivity with compensation as a moderating variable. A questionnaire was used to

collect primary data related to the variables of leadership style, work stress, compensation, and employee

productivity given to the entire population of field employees from the study, amounting to 34 people. The

analysis method used is descriptive analysis method and analysis method based on Partial Least Square. The

result show that leadership style has a significant positive effect on employee productivity with original

sample equal 0.333, work stress has a significant negative effect on employee productivity with original

sample equal -0.457, compensation moderates (strengthens) the influence of leadership style on employee

productivity with original sample equal 0.453 and compensation moderates (weakens) the effect of work

stress on employee productivity with original sample equal 0.379.

1 INTRODUCTION

In this era of globalization, business competition for

service and product providers is very competitive.

Globalization has a significant impact on the business

continuity of a company and requires business people

to adapt to be able to compete with new competitors

and to be able to retain existing consumers.

The success of a company in doing business is

very dependent on human resources. Human

Resources is one very important factor in a company

in addition to other factors such as capital. One of the

competitive business companies in Medan City, PT

Kencana Optima Indonesia, is working on improving

all the deficiencies, both in terms of human resources,

technology and services.

One of the competitive business companies in the

city of Medan, namely PT Kencana Optima

Indonesia, is working on improving all the

shortcomings, both in terms of human resources,

technology and services. PT Kencana Optima

Indonesia is a company that operates as a provider of

transportation services. In this era of globalization,

PT Kencana Optima Indonesia is in the process of

developing technology to be able to compete

competitively in improving digital services to keep up

with the development of industry 4.0, PT Kencana

Optima Indonesia is also trying to increase the

company's productivity.

Table 1: Average Employee Achievement.

Description Perio

2017 - 2 2018 - 1 2018 -2

Number of

Field

Employees

32 35 36

Activities

per semester

(Trip)

99.75 103.44 103.39

Average

Activity per

Employee

3.12 2.96 2.87

In this case, the productivity phenomenon studied

is by looking at the employee achievement data in

Table 1. Table 1 shows the data on the number of field

employees, activities per semester (trip), namely the

average of all activities in 1 semester and the average

activity per employee, namely activities per semester.

divided by the number of existing employees. It can

be seen that there is an increase in the number of

Angkasa, A., Purba, K., Sibarani, H., Marpaung, F. and Hendry, .

Analysis Effect of Leadership Style and Work Stress on Employee Productivity with Moderating Variable Compensation.

DOI: 10.5220/0010303900003051

In Proceedings of the Inter national Conference on Culture Heritage, Education, Sustainable Tourism, and Innovation Technologies (CESIT 2020), pages 97-104

ISBN: 978-989-758-501-2

employees of 3 people from 2017 semester 2 to 2018

semester 1 and 1 person from 2018 semester 1 to 2018

semester 2. Carried out in order to increase the

number of activities that can be carried out per day.

Based on Table 1, it can be seen that there is an

increase in the number of activities per semester,

which is 3.69 trips or 3.7% in 2018 semester 1 and

there is a decrease of 0.05 trips or 0.05% in 2018

semester 2. The average activity per employee also

decreased by 0.16 trips in 2018 semester 1 and 0.09

trips in 2018 semester 2.

The decrease in productivity at PT Kencana

Optima Indonesia is inversely proportional to the

increase in the number of field employees being

carried out.

The internal factor that will be discussed first is

leadership style. The need for a leader who can

motivate and guide employees is very necessary to be

able to compete in the current era of globalization.

The next factor that will be discussed in this study

is compensation, which is the obligation of the

company to support contributions to employees in

order to achieve company goals.

The third factor is work stress, which is working

conditions that make employees feel uncomfortable

or depressed in doing their jobs. The negative

influence that occurs is in fact an indication that

affects employee productivity.

From the background that has been written, the

identification of problems that will be used as

research material is as follows:

1. There is a decrease in company productivity

which is inversely proportional to the increase

in the number of employees.

2. The expected increase in company productivity

did not materialize.

In this study, it is necessary to limit the problem

so that the problem under study does not spread, the

researcher limits the problem only to the analysis of

the influence of leadership style and work stress on

the productivity of field employees with

compensation as a moderating variable at PT

Kencana Optima Indonesia.

Based on the above background, it can be seen

that there is a decrease in productivity at PT Kencana

Optima Indonesia. The aim of this research is:

1. To test and analyze the influence of Leadership

Style on Employee Productivity.

2. To test and analyze the effect of Work Stress

on Employee Productivity.

3. To test and analyze whether Compensation

moderates the influence of Leadership Style on

Employee Productivity.

4. To test and analyze whether Compensation

moderates the effect of Work Stress on

Employee Productivity.

5. To analyze how much the variable leadership

style, work stress and compensation can

explain employee productivity.

Leadership style is a behavioral norm that is used

by someone when that person tries to influence the

behavior of others or subordinates (Miftah Thoha,

2010). Leadership is a process of influencing or

giving an example to followers through a process of

communication in an effort to achieve goals (Rivai,

2009). Leadership is the ability to direct followers to

work together with trust and diligence to do the tasks

given by the leader (Terry, 2012).

Stress is a condition of tension that affects one's

emotions, thoughts and physical conditions (Sondang

P. Siagian, 2014). Stress is a feeling of pressure

experienced by employees in facing work (A.A

Anwar Mangkunegara, 2011). Work stress is a

condition that results from the subjective appreciation

of individuals, which can be in the form of

interactions between individuals and the work

environment that can threaten and exert

psychological, physiological, and individual attitudes

(Wijono, 2010).

Compensation is everything that employees

receive in return for their work (Sedarmayanti, 2011).

Compensation is something that employees receive as

a substitute for their service contribution to the

company (Rivai, 2010). Compensation is all income

in the form of money, direct or indirect goods

received by employees in return for services provided

to the company (Hasibuan, 2017).

Productivity is the ratio between output (output)

and input (input). This formulation applies to

companies, industries and the economy as a whole.

More simply, productivity is a computational

comparison between the amount produced and the

amount of each resource used during the process

(Budiono, 2003). Productivity is the ability to get the

maximum benefit from the facilities and

infrastructure available by producing optimal output

even maximum possible (Siagian, 2002). In addition,

productivity is also defined as a way to make good

use of resources in producing goods. Productivity

implies a mental attitude which always has the view

that "the quality of life today must be better than

yesterday and tomorrow is better than today"

(Sedarmayanti, 2001).

CESIT 2020 - International Conference on Culture Heritage, Education, Sustainable Tourism, and Innovation Technologies

Figure 1: Conceptual framework.

The conceptual framework in Figure 1 shows H1

which represents the hypothesis between the

constructs of Leadership Style and Employee

Productivity, H2 which represents the hypothesis

between the constructs of Work Stress and Employee

Productivity, H3 which represents the hypothesis

between Compensation interactions on the

relationship between Leadership Style and Employee

Productivity and H4 which represents the hypothesis.

Between Compensation interactions and the

relationship between Work Stress and Employee

Productivity.

2 METHOD

The research location will be conducted at PT

Kencana Optima Indonesia, which is located at Jl. KL

Yos Sudarso Km 16,5 No. 16, Medan.

The population in this study were 34 employees

who worked at PT Kencana Optima Indonesia. The

sample technique used in this study is saturated

sample, which is using all members of the population

as the sample. The number of samples used by

researchers was 34 employees of PT Kencana Optima

Indonesia.

Characteristics of respondents based on gender,

all male respondents were 34 people. Respondents

aged < 20 years are 3 people, 20-29 years 16 people,

30-39 years 12 people and 50-59 years 3 people.

Based on the latest education, there were 5

respondents who completed elementary school, 9

completed junior high school, 17 people completed

high school and 3 undergraduate students. Based on

the length of work, there were 13 people who worked

< 1 year, 4 people who worked 1 - 2 years and 17

people who worked > 4 years.

In this study the authors used a quantitative

approach. This study uses a descriptive approach with

the aim of describing the object of research or

research results. This study uses a questionnaire as a

research instrument. The questionnaire in this study

used closed questions and used a scale of 5. The

questions in the questionnaire were made using a

scale of 1-5 (Likert scale developed) to obtain data

that is interval and given a score or value.

Validity according to (Sugiyono, 2016) shows the

degree of accuracy between the data that actually

occurs on the object and the data collected by

researchers to find the validity of an item, we

correlate the item score with the total of these items.

If the coefficient between items and total items is

equal to or above 0.3 then the item is declared valid,

but if the correlation value is below 0.3 then the item

is declared invalid.

Reliability test is the extent to which the results of

measurements using the same object will produce the

same data (Sugiyono, 2012). The questionnaire

reliability test in this study used the split half item

method. The item is divided into two groups, namely

the odd item group and the even item group. Then

each group's score for each item is added up to

produce a total score. If the correlation is 0.7, it is said

that the item provides a sufficient level of reliability,

on the contrary, if the correlation value is below 0.7,

it is said that the item is less reliable.

In accordance with the hypothesis that has been

formulated, in this study the data analysis used is the

Partial Least Square (PLS). Table 2 are the

assessment criteria for the PLS model proposed by

Chin 1998 in (Ghozali, 2006):

Table 2: PLS Assessment Criteria.

Criteria Desc

tion

Structural Model Evaluation

R2 for

endogenous

variables

R2 results of 0.67, 0.33 and

0.19 for endogenous latent

variables in the structural model

indicate that the model is

"good", "moderate" and "weak"

Estimated

path

coefficients

The estimated values for the

path relationships in the

structural model must be

significant. This significant

value can be obtained by

bootstrapping procedures

f2 for the

effect size

F2 values of 0.2, 0.15 and

0.35 can be interpreted whether

the predictors of latent variables

have a weak, moderate or large

influence at the structural level

Evaluation of the Reflective Measurement

Model

Analysis Effect of Leadership Style and Work Stress on Employee Productivity with Moderating Variable Compensation

factor

The loading factor value

must be above 0.70

Composite

Reliability

Composite Reliability

measures internal consistency

and the value must be above 0.60

Average

Variance

Extracte

Average Variance Extracted

(AVE) value must be above 0.50

Discriminan

t Validity

The square root value of the

AVE must be greater than the

correlation value between latent

variables

3 RESULTS AND DISCUSSIONS

Figure 2: Structural Equation Analysis Model.

The structural equation analysis model can be

observed in Figure 2 with an explanation in Table 3.

Table 3: Construct and Indicator.

Construct Indicato

Leadership Style

(X1)

GK1, GK2, GK3,

GK4, GK5, GK6

Work Stress (X2)

SK1, SK2, SK3, SK4,

SK5

Compensation (Z)

K1, K2, K3, K4, K5,

Employee

Productivity (Y)

PK1, PK2, PK3, PK4,

PK5, PK6, PK7, PK8

Interaction Z * X1

GK1_K1…GK1_K5

Interaction Z * X2

SK1_K1…SK1_K5

Processed Data, 2019

From Table 3 it can be seen that there is a

Leadership Style construct (X1) consisting of 6

indicators, namely GK1, GK2, GK3, GK4, GK5 and

GK6. The Work Stress (X2) construct consists of 5

indicators, namely K1, K2, K3, K4 and K5. The

Compensation Construct (Z) consists of 6 indicators,

namely SK1, SK2, SK3, SK4, SK5 and SK6. The

Employee Productivity (Y) construct consists of 8

indicators, namely PK1, PK2, PK3, PK4, PK5, PK6,

PK7 and PK8. Leadership Style Interaction Construct

* Compensation as a moderating variable of

compensation to the relationship between leadership

style and employee productivity. Work Stress

Interaction Construct * Compensation as a

moderating variable of compensation to the

relationship between Work Stress and employee

productivity. Validity and reliability tests were

carried out for questionnaires to a sample of

companies engaged in the same field as the results in

Table 4 and Table 5.

Table 4: Validity Test Result.

Indicato

R Status

GK1

0.656

Vali

GK2

0.640

Vali

GK3

0.758

Vali

GK4

0.832

Vali

GK5

0.774

Vali

GK6

0.811

Vali

SK1

0.830

Vali

SK2

0.760

Vali

SK3

0.868

Vali

SK4

0.869

Vali

SK5

0.785

Vali

0.816

Vali

0.760

Vali

0.894

Vali

0.787

Vali

0.799

Vali

0.672

Vali

PK1

0.767

Vali

PK2

0.697

Vali

PK3

0.706

Vali

PK4

0.743

Vali

PK5

0.737

Vali

PK6

0.848

Vali

PK7

0.613

Vali

PK8

0.673

Vali

Processed Data, 2019

Table 4 shows that each question item has an R

value greater than 0.3, it can be concluded that all the

questions for all variable are declared valid.

CESIT 2020 - International Conference on Culture Heritage, Education, Sustainable Tourism, and Innovation Technologies

100

Table 5: Validity Test Result.

Construct

Cronbach's

Alpha

N of

Items

Leadership

Style (X1)

.834 6

Work Stress

(X2)

.875 5

Compensation

(Z)

.878 6

Employee

Productivity (Y)

.847 8

Processed Data, 2019

In Table 5 above, it can be seen that all Cronbach's

Alpha values are greater when compared to the value

of 0.7, so it can be concluded that all the questions for

each variable are declared reliable.

Table 6: Descriptive Statistics.

Descriptive Statistics

N Min Max Mean

Std.

Dev

Leadershi

Style

34 14 30 23.35 3.52379

Work

Stress

34 7 16 11.03 2.24938

Compensa

tion

34 18 29 23.35 2.08722

Employee

Productivi

34 23 38 30.65 3.11285

Valid N

(listwise)

Processed Data, 2019

Based on the results of the descriptive analysis in

Table 6, it can be seen that the variable leadership

style (X1) with a sample of 34 respondents has an

average of 23.3529 units with a leadership style of at

least 14 units and a maximum of 30 units and a

standard deviation of 3.52379. The work stress

variable (X2) with a sample of 34 respondents has an

average of 11.0294 units with a minimum work stress

of 7 units and a maximum of 16 units and a standard

deviation of 2.24938. The compensation variable (Z)

with a sample of 34 respondents has an average of

23.3529 units with a minimum work stress of 18 units

and a maximum of 29 units and a standard deviation

of 2.08722. Employee Productivity Variable (Y) with

a sample of 34 respondents has an average 30.6471

units with a minimum work stress of 23 units and a

maximum of 38 units and a standard deviation of

3.11285.

Table 7: First Model Loading Factor Test Results.

X1 Z Y X2

GK1 0.864

GK2 0.841

GK3 0.742

GK4 0.847

GK5 0.858

GK6 -0.049

K1 -0.091

K2 0.422

K3 0.142

K4 0.900

K5 0.898

K6 -0.325

PK1 0.838

PK2 0.880

PK3 0.925

PK4 0.740

PK5 -0.125

PK6 0.824

PK7 -0.583

PK8 0.201

SK1 0.828

SK2 0.359

SK3 0.795

SK4 0.790

SK5 0.166

Processed Data, 2019.

From the Results of the First Loading Factor

Model, the Loading Factor value is obtained as shown

in Table 7. There are indicators that have outer

loadings value <0.6, so these indicators must be

removed from the structural model and re-

algorithmized. The indicators removed were GK6,

SK2, SK5, K1, K2, K3, K6, PK5, PK7 and PK8.

Table 8: Second Model Loading Factor Test Results.

X1 Z Y X2

GK1 0.872

GK2 0.839

GK3 0.743

GK4 0.849

GK5 0.860

K4 0.934

K5 0.946

PK1 0.837

PK2 0.892

PK3 0.925

PK4 0.764

PK6 0.818

SK1 0.852

SK3 0.793

SK4 0.776

Processed Data, 2019

Analysis Effect of Leadership Style and Work Stress on Employee Productivity with Moderating Variable Compensation

101

From the results of the Second Loading Factor

Model, table 8 show the loading factor values are

above 0.6. It can be concluded that the construct has

good convergent validity.

Table 9: Test Results of Construct Reliability and Validity.

Cronbach's Al

ha rho

Leadership Style

(

)

0.889 0.895

Interaction

X1 * Z

1.000 1.000

Interaction

X2 * Z

1.000 1.000

Compensation (Z) 0.868 0.873

Employee

Productivit

(

)

0.902 0.910

Work Stress (X2) 0.735 0.746

Composite

Reliabilit

Average Variance

Extracted

(

AVE

)

Leadership

(

)

0.919 0.695

Interaction

X1 * Z

1.000 1.000

Interaction

X2 * Z

1.000 1.000

Compensation

(

)

0.938 0.883

Employee

Productivity

(

)

0.928 0.721

Work Stress

(

)

0.849 0.652

Processed Data, 2019.

Table 9 show that the construct has good

reliability, namely the composite reliability value,

Cronbach alpha above 0.7 and the AVE value above

0.5.

Table 10: Test Results of Discriminant Validity.

Leadership

(

)

IX1 * Z X2 * Z

Leadershi

p Style

(

)

0.834

Interaction

X1 * Z

0.082 1.000

Interaction

X2 * Z

-0.059 -0.838 1.000

Compensa

tion

(

)

0.596 -0.269 0.282

Employee

Productivi

ty (Y)

0.861 0.112 -0.020

Work

Stress

-0.757 -0.064 0.244

Compensa

tion (Z)

Employee

Productivity

(

)

Work

Stress

(

)

Leadership

Style (X1)

Interaction

X1 * Z

Interaction

X2 * Z

Compensati

(

)

0.940

Employee

Productivity

(

)

0.713 0.849

Work Stress

(

)

-0.531 -0.775 0.808

Processed Data, 2019.

Table 10 show the AVE root value is higher than

the correlation value between other constructs and

this means that the construct has high discriminant

validity.

Table 11: Test Results of R Square.

R Square

Adjuste

Employee

Productivi

(

)

0.890 0.871

Processed Data, 2019.

The R Square value of 0.871 in Table 11 means

that the variability of the Employee Productivity

construct can be explained by the constructs of

leadership style, work stress, compensation and

interaction of 87.1%. Meanwhile, 12.9% is explained

by other variables not included in this study.

Table 12: Test Results of f Square.

Employee

Productivity (Y)

Leadership Style (X1) 0.316

Interaction X1 * Z 0.581

Interaction X2 * Z 0.398

Com

ensation

(

)

0.349

Employee

Productivit

(

)

Work Stress

(

)

0.519

Processed Data, 2019.

f Square assesses the effect size of the model. The

effect size value in Table 12 shows the f value of

Leadership Style Square (X1), Work Stress (X2),

Interaction of Compensation and Leadership Style

and Interaction of Compensation and Work Stress on

CESIT 2020 - International Conference on Culture Heritage, Education, Sustainable Tourism, and Innovation Technologies

102

Employee Productivity (Y) respectively 0.316, 0.519,

0.581 and 0.398 means that it has a high effect size

value.

Table 13: Test Results of Path Coefficients.

Origina

Sample

(O)

T Statistics

(|O/STDEV|)

Values

X1 ->Y 0.333 2.231 0.026

Interaction

X1*Z->Y

0.453 2.546 0.011

Interaction

X2*Z-> Y

0.379 2.352 0.019

Z ->Y 0.279 2.649 0.008

X2 ->Y -0.457 3.559 0.000

Processed Data, 2019.

Based on Table 13, it can be seen that the

Leadership Style construct affects employee

productivity with T Statistics> 1.96 and P values

<0.05, namely with T Statistics of 2.231 and P values

of 0.026. Leadership Style has an Original Sample(O)

value of 0.333 which means that Leadership Style has

a positive effect on Employee Productivity.

The results of this study are in line with research

by Paula Goren which states that there is positive

significant relationship between democratic

leadership style and employee productivity (Paula

Goren, 2018).

Democratic and transformational leadership have

a significant positive relationship with the

performance of employees (Sugandha Agarwal,

2020). The leadership style positive and significant

impact on employee productivity (Retna and

Handriyono, 2019).

The work stress construct affects employee

productivity with T Statistics> 1.96 and P

values<0.05, namely with T Statistics of 3.559 and P

values of 0.000. Work stress has an Original Sample

(O) value of -0.457 which means that Work Stress has

a negative effect on Productivity.

The results of this study are in line with research

by Muhammad and Kishwar which state that there is

significant relationship between work stress and

employee's productivity in banking sector

(Muhammad and Kishwar, 2019). Productivity gets

affected due to stress in organization. (Abhijeet and

Sneha, 2018).

However, the result are not in line with research

by Suharno and Dini which state that job stress did

not affect employee productivity (Suharno and Dini,

2018).

In addition, in this study, the compensation

construct moderates the relationship between

leadership style and employee productivity with T

Statistics> 1.96 and P values <0.05, namely with T

Statistics of 2.546 and P values of 0.011. The

Compensation Interaction has an Original Sample (O)

value of 0.453 which means that compensation

moderates (strengthens) the relationship between

leadership style and productivity.

Compensation construct also moderates the

relationship between work stress and employee

productivity with T Statistics> 1.96 and P values

<0.05, namely with T Statistics of 2.352 and P values

of 0.019. The Compensation Interaction has an

Original Sample (O) value of 0.379 which means that

compensation moderates (weakens) the relationship

of work stress to productivity.

The results of this study are in line with research

by Suharno and Dini which states that compensation

affects employee productivity (Suharno and Dini,

2018). Compensation positive and significant impact

on employee productivity (Retna and Handriyono,

2019).

Occupational stress is considered a stigma among

employees who are facing stress at the workplace. We

can conclude that if employees are happy and healthy,

they can be their most productive (Samma et al.,

2020). Good compensation plan enhances teachers’

productivity (Uwannah et al., 2019).

4 CONCLUSIONS

Based on the previous explanations, this research

draws the following conclusions:

 Leadership style has a significant positive

effect on employee productivity.

 Work stress has a significant negative effect on

employee productivity.

 Compensation moderates (strengthens) the

influence of leadership style on employee

productivity.

 Compensation moderates (weakens) the effect

of work stress on employee productivity.

 The variable ability of leadership style, work

stress and compensation can explain the

employees productivity, which is 87.1%, while

the remaining 12.9% is explained by other

variables not included in this research model.

Based on the conclusion, the researchers provide

the following suggestions:

 For company to be able to increase the

leadership style factor by fostering better

communication and being able to receive ideas

and suggestions from employees in terms of

Analysis Effect of Leadership Style and Work Stress on Employee Productivity with Moderating Variable Compensation

103

running operational activities and increasing

the company's compensation to be able to

support a good leadership style and reduce the

impact of stress work experienced on employee

productivity.

 For company to be able to reduce the work

stress of employees by resolving conflicts that

arise as a result of assigning divergent tasks

from superiors in operational activities by

means of deliberation to prevent miss-

communication and increase employee

productivity.

The factors that are considered in order to increase

employee productivity are leadership style, work

stress and compensation, however there are still many

factors that affect the productivity. Researchers

provide suggestions in order to develop other factors

that can affect the productivity of the employees.

Further research is suggested to conduct research in

other companies and add other independent variables

to get a broader picture of employee productivity.

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