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Research Article

The Impact of Compensation and Motivation on Turnover Intention of Employees Providing Labor Services in Mining Business License Areas, Mimika Regency, Papua Province

Authors

  • Periyadi Student, Masters Management Program, Faculty of Economic and Business Telkom University, Bandung, Indonesia
  • Dian Indiyati Lecturer, Masters Management Program, Faculty of Economic and Business Telkom University, Bandung, Indonesia
  • Fetty Poerwita Sary Lecturer, Masters Management Program, Faculty of Economic and Business Telkom University, Bandung, Indonesia

Abstract

Regulatory changes by the Indonesian government that affect labor service providers in the Mimika region, particularly the transition from fixed-term contracts (PKWT) to permanent contracts (PKWTT), have led to increased wage disparities and employee turnover. This study aims to analyze the impact of compensation and motivation on turnover intention, as well as to understand the factors that influence employee work motivation when facing operational and structural challenges. The methodology used is Structural Equation Modeling (SEM) with Partial Least Squares (PLS) technique using SmartPLS software version 3.2.8. Survey results indicate that the average intention of employees to leave the company is 79.4%. Conversely, employee compensation and motivation are low, with 45.1% and 44.8%, respectively. Hypothesis results show that compensation and motivation significantly reduce turnover, with compensation influencing at -0.542 and motivation at -0.228. This highlights the importance of fair compensation strategies and effective motivation and suggests that companies should enhance both aspects to reduce turnover intentions. This study also provides important managerial insights in addressing ongoing dynamics in the mining sector in Mimika Regency.

Article information

Journal

Journal of Business and Management Studies

Volume (Issue)

6 (3)

Pages

85-93

Published

2024-05-21

How to Cite

Periyadi, Indiyati, D., & Sary, F. P. (2024). The Impact of Compensation and Motivation on Turnover Intention of Employees Providing Labor Services in Mining Business License Areas, Mimika Regency, Papua Province. Journal of Business and Management Studies, 6(3), 85–93. https://doi.org/10.32996/jbms.2024.6.3.9

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Keywords:

Periyadi, Dian Indiyati, Fetty Poerwita Sary