Perceived Organization Support as a Key Factor in Improving Employee Performance (Case Study of Palm Oil Production)

Perceived Organization Support as a Key Factor in Improving Employee Performance (Case Study of Palm Oil Production)

Ardika Dwi Prayoga¹, Yupiter Gulo², Nurti Widayati³

^1,2,3Département of Management, Trisakti School of Management. Jakarta, Indonesia

DOI: https://dx.doi.org/10.47772/IJRISS.2025.9020004

Received: 15 January 2025; Accepted: 25 January 2025; Published: 26 February 2025

ABSTRACT

This study aimed to determine the effect of recognition, appreciation, and work stress on employee performance with perceived organizational support as a mediator. This research uses causality research. The research data were collected from 98 respondents from companies producing palm oil in Indonesia, and using a Likert scale on a scale of 5, the research data were processed using the data analysis method of variance-based structural equation modeling with partial least squares (PLS-SEM). The results showed a significant effect on recognition, appreciation, and work stress on perceived organizational support and employee performance, and perceived organizational support had a significant impact on employee performance. It also shows that the variable perceived organization support mediates the effect of recognition, appreciation, and work stress on employee performance.

Keywords: Recognition, Rewards, Job Stress, Perceived Organization Support, and Employee Performance.

INTRODUCTION

Companies that want to grow and prosper, need to have dynamic HR strategies and policies, considering that technological changes and very dynamic customer demands have created tight competition between companies, and therefore emphasize the importance and urgency of implementing dynamic HR practices. Companies must be able to prepare their human resources well to compete (Faridiningrum and Prabowo 2021). According to Sinambela (Wijaya, 2018), Human resource management is the main thing that comes from quality human and natural resources. Without proper HR practices, development cannot be carried out. Through appropriate HR practices, employees will be more motivated to achieve better results in the future (Hussain et al., 2019)

 To achieve the highest employee performance, every company requires a standard production process for goods and services in great demand by the market. The process starts from the beginning of searching for raw materials to producing targeted products. This study will focus on testing the role of perceived organization support (POS) as a key determinant of employee performance that will continue to grow and develop by the changing situations that will be faced continuously, especially in the palm oil manufacturing industry in Indonesia. Data shows that the company’s sales realization for 3 years has not been achieved, there has even been a drastic decline from 40% to 26%. According to Galib and Hidayat (2018), company performance is a complete display of the company’s condition during a certain period, which is a result or achievement that is influenced by the company’s operational activities in utilizing its resources. Employee performance is very important for an organization, without which they cannot survive. Companies need to consider it as their main goal. So, it is necessary to maintain and appreciate it so that it can work well continuously

According to Edison (Berliana et al., 2020), performance is a result of a process that refers to and is measured over a certain period based on previously established provisions and agreements. Dalimunthe (Syahraini, 2022) stated that performance is the key for every company to achieve a level of productivity, to improve performance, companies are required to manage human resources effectively and efficiently. Mangkunegara (2017, 67) stated that performance is the result of work in terms of quality and quantity achieved by an employee in carrying out their duties according to their responsibilities. Maintaining and improving employee performance is a continuous assessment because performance assessment is the process of assessing the performance of an individual who has worked for a certain period (Morgeson et al., 2020).

Employee performance assessment has three standards applied, namely, low level (less than 60%), medium level (61%–80%), high level (81%–99%), and high-high level (above 99%). Data shows that the object of this study shows a serious problem, namely, a decline in employee performance, which was originally 81% with a high category and, according to Target, fell to 76% the following year, continuing to decline to 72%. According to Mangkunegara (Suryani, 2019), employee performance is the result of work in terms of quality and quantity achieved by an employee in carrying out their duties, which, if it continues to decline, will become a serious problem in the company’s operations. According to Dessler (2020), performance management is an activity to ensure that each employee is meeting the goals set by the company as a whole. According to Hussain et al. (2019), employee performance is influenced by several factors, namely recognition, appreciation, work stress, and perceived organizational support.

Recognition is the process of giving employees a certain status in an organization (Razak and Suharnanto, 2019), while Baskar and Rajkumar (2015) stated that recognition is feedback on efforts and dedication that is constructive or improving employees in the workplace and the results that have been achieved by employees, and McGregor (Hussain et al., 2019) stated that recognition means appreciating and caring about employee contributions. Companies need to recognize their employees. The variable of reward is a reward, prize, award, or reward that aims to make someone more active in their efforts to improve or increase the performance that has been achieved Pramesti et al., 2019; Sunarto et al. (2017) stated that an award is a form of appreciation to obtain professional employees; even an award is something that is given to someone for having done something (Kawulur et al., 2018). The reward system improves employee performance and keeps them motivated (Hussain et al. 2019). Companies appreciate their employees for their hard work and enthusiasm, showing that rewards can affect employee performance by improving employee abilities, knowledge, and skills (Ajila and Abiola in Hussain et al. 2019)

Job stress also affects employee performance levels, which states that job stress is an internal condition, that can be caused by physical demands, or the environment, and social situations that have the potential to be damaging and uncontrolled (Afandi, 2018). Stress does not just arise, but the causes of stress are generally followed by event factors that affect a person’s psyche, and events (Makkira et al., 2022), where job stress is a condition of tension that affects a person’s emotions, way of thinking and physical condition. Job stress is indicated by feelings of pressure experienced by employees in dealing with work, seen from symptoms, unstable emotions, feelings of restlessness, liking to be alone, difficulty sleeping, excessive smoking, inability to relax, anxiety, tension, being nervous, having increased blood pressure, and experiencing digestive disorders (Mangkunegara (2017). Job stress means when employees have too much workload feel emotional and physical pressure, and arise when there is an increase in job demands, also arise from fear, anger, and guilt (Hussain et. al. 2019). When work stress occurs, it will reduce performance, if not implementing the right HR practices, it will result in low productivity, high turnover, and absenteeism (San et al., 2012)

Perceived organizational support plays a key role in maintaining employee performance. According to Wahyuni and Sulastri (2020), POS is an employee’s belief in the extent to which the organization values employee contributions and cares about their welfare. Something that studies how to gain benefits and advantages from employees by increasing commitment (Andamari, 2019). POS is an employee’s trust in the company where they work and that their contributions are valued to achieve the company’s goals Suhadi (2021). From the results of an interview with an employee in the research object, organizational support is built through the organizational treatment received, such as salary, job promotion, job development, and employee participation in developing organizational policies. The existence of active support from the organization will create a comfortable and conducive work situation so that it produces better performance. In other words, when employees feel supported by the organization or company, they will be more responsible for the organization or company, thus having an impact on improving employee performance.

Perceived organizational support (POS) plays a key role in maintaining employee performance. According to Wahyuni and Sulastri (2020), POS is an employee’s belief in the extent to which the organization values employee contributions and cares about their welfare. Something that studies how to gain benefits and advantages from employees by increasing commitment (Andamari, 2019). POS is an employee’s trust in the company where they work and that their contributions are valued to achieve the company’s goals Suhadi (2021). From the results of an interview with an employee in the research object, organizational support is built through the organizational treatment received, such as salary, job promotion, job development, and employee participation in developing organizational policies. The existence of active support from the organization will create a comfortable and conducive work situation so that it produces better performance. In other words, when employees feel supported by the organization or company, they will be more responsible for the organization or company, thus having an impact on improving employee performance.

The main objective of this study is to test whether POS is the key to continuous improvement of employee performance by mediating the influence of recognition, work stress, and reward variables. The results of this study will contribute to the development of employee performance theory but will also have managerial implications for company leaders to maintain and nurture the highest performance of their employees. The novelty of this study is to test the role of perceived organization support variables in mediating the influence of recognition, reward, and work stress variables on employee performance. In general, research conducted so far has only tried to test the influence between research variables, and not the role of mediation as a key factor that binds all variable relations.

LITERATURE REVIEW

Recognition is the process of giving employees a certain status in an organization (Razak and Suharnanto 2019). Rewards are rewards, gifts, awards, or rewards that aim to make someone more active in their efforts to improve or enhance the performance that has been achieved (Pramesti et al. 2019). Job stress is an internal condition that can be caused by physical demands, the environment, and social situations that are potentially damaging and uncontrolled (Afandi 2018, 174). Perceived Organization Support is an employee’s belief about the extent to which the organization values employee contributions and cares about their well-being (Wahyuni and Sulastri 2020)

Performance is a result of a process that refers to and is measured over a certain period based on previously established provisions and agreements (Berliana et al. 2020). Performance is the key for every company to achieve a certain level of productivity, to improve performance, companies are required to manage the existing human resource conditions effectively and efficiently (Dalimunthe and Syahraini, 2022)

Relationship between recognition and employee performance

The results of research from Zeeshan and Ahmad (2017) show a significant influence between recognition and employee performance. Meanwhile, Astuti and Zulaifah (2017) show that work recognition has a positive and significant effect on employee performance. H₁: There is an influence of recognition on employee performance.

Relationship between rewards and employee performance

The results of research from Purnomo et al. (2021) found that rewards have a positive effect on employee performance. According to Nure et al. (2021), rewards have a positive effect on employee performance. H2: There is an effect of rewards on employee performance.

Employee performance and work stress about each other

Employee performance was found to be significantly impacted negatively by work stress, according to research by Natalya et al. (2018). Employee performance suffers when work-related stress is present, claim Steven and Prasetio (2020). H3: Workplace stress has an impact on workers’ productivity.

Relationship between recognition and perceived organizational support

The results of research by Reza Ade (2022) found that recognition has no significant effect on perceived organizational support. According to Aini et al. (2021), recognition has no significant effect on perceived organizational support (POS). Meanwhile, research by Hussain et al. (2019) shows that employee recognition and perceived organizational support have a positive relationship. H4: There is an effect of recognition on perceived organizational support.

Relationship between appreciation and perceived organizational support

The results of research by Reza Ade (2022) found that employee appreciation has a positive and significant effect on perceived organizational support. According to Suhartini and Musafir A (2018), appreciation can have a positive and significant effect on perceived organizational support. H5:There is an effect of appreciation on perceived organizational support

Relationship between work stress and perceived organizational support

The results of research from Purnama et al. (2023) show that work stress has a positive and significant effect on perceived organizational support. Research by Hussain et al. (2019) shows that work stress and perceived organizational support have a significant relationship. H6: There is an effect of work stress on perceived organizational support

Relationship between perceived organizational support and employee performance

The results of research from Pratiwi and Muzakki (2021) show that perceived organizational support has a positive effect on employee performance. Mursidta (2017) also shows that perceived organizational support has a significant effect on employee performance. H7: There is an effect of perceived organizational support on employee performance.

Perceived organizational support mediates the relationship between recognition and employee performance.

The results of Reza Ade’s (2022) study found that perceived organizational support had no significant effect on the relationship between employee recognition and employee performance. According to Hussain et al. (2019), perceived organizational support has a significant relationship with the relationship between employee recognition and employee performance. H8: Perceived organizational support mediates the effect of recognition variables on employee performance.

Perceived organizational support mediates the relationship between rewards and employee performance.

The results of research by Reza Ade (2022) found that perceived organizational support has a significant effect on the relationship between employee rewards and employee performance. Hussain et al. (2019) also showed that perceived organizational support has a significant relationship with the relationship between employee recognition and employee performance. H9: Perceived organizational support mediates the effect of rewards on employee performance.

Perceived organizational support mediates the relationship between work stress and employee performance.

The results of research by Reza Ade (2022) found that perceived organizational support cannot mediate the relationship between work stress and employee performance. Saadeh and Suifan (2019) revealed a significant negative effect of perceived organizational support mediating the relationship between work stress and employee performance. H10: Perceived organizational support mediates the effect of work stress on employees.

Figure 1 Conceptual Research Model

RESEARCH METHOD

The form of research used in this study is quantitative research, as a research method based on the sample of positivism philosophy, used to research a certain population or sample (Sugiyono, 2022). There are 98 employees as a population as well as a research sample using the saturated sample method (Sugiyono 2022). Likert scale measurement is used to measure research variables with a 5-point scale whose indicators are shown in Table 1 below.

Table 1 Research Variables and Indicators

RESULTS AND DISCUSSION

The respondents of this study were 84 men or 85.7%. While the female respondents were 14 people or 14.3%. Age <25 years as many as 8 people, or 8.2%, respondents aged 26-45 years as many as 42, or 42.9%, and aged 46-55 years as many as 46 people, or 46.9%, respondents with age > 56 years as many as 2 people, or 2.0%. Respondents with SLT education as many as 28 people or 28.6%, D3 education as many as 5.1%, respondents with S1 education as many as 61 people or 62.2%, and respondents with S2 education as many as 4 people or 4.1%. Respondents’ work status, contractual work of as many as 10 people, or 10.2%, and permanent work status of as many as 88 people, or 89.8%. Respondents with a length of work <1 year as many as 9 people, or 9.2%. Respondents with a working period of 2-4 years were 4 people or 4.1%. Then respondents with a working period of 5-10 years were 6 people, or 6.1%. Furthermore, respondents with a working period of > 10 years were 79 employees or 80.6%.

Table 2: Characteristics of Respondent

Figure 2 Structural Model with Loading Factor Analysis

Table 3 shows that the construct indicators meet the convergent validity requirements with a loading factor value of > 0.70 (valid). Reliability testing meets the requirements, with a composite reliability value for each variable > 0.70. All composite reliabilities have a value of more than 0.80. The R-squared value of the perceived organization support variable is 0.659. And the employee performance variable is 0.756. Although still feasible, it is concluded that the model is classified as weak (Ghozali, 2021). Then, the Q-Square value has good predictive relevance because the Q-Square value is > 0, and it can be concluded that the Q-Square value shows that the research model is classified as moderate (Ghozali, 2021).

Table 3 Measurement Scales and Reliabilities Results

Table 4 shows that the value for the correlation of the association constructs has a greater value than the correlation between constructs in other models, so the FL Criterion has a good discriminant validity value.

Table 4 Fornell-Lacker Criterion of Discriminant Validity

Ref: Primary data analysis

According to Henseler et al. in Ghozali (2021, 69) the Heterotrait-Monotrait Ratio (HTMT) <0.90 is very good and Discriminant Validity has been achieved between pairs of reflective constructs. Table 5 shows that all variables have met the requirements because the HTMT value is <0.90.

Table 5 Heterotrait-Monotrait Ratio

Figure 3:  Results of Inner Model

Table- 6: Summary of the Structural Model

Table 6 shows that hypothesis 1 (H1) has an original sample of 0.228, which means a positive value. While the t-value is 2.074 and the p-value is 0.041 <0.050, so Ho is rejected and Ha is accepted, meaning that recognition has a significant effect on employee performance. The results of this study are in line with Hussain et al. (2019), Zeeshan and Ahmad (2017), and Astuti and Zulaifah (2017). Hypothesis-2 (H2) has an original sample of 0.626, which means a positive value. While the t-value is 5.734 and the p-value is 0.000 <0.050, so Ho is rejected and Ha is accepted, meaning that recognition affects employee performance. The results of this study are in line with Hussain et al. (2019), Purnomo et al. (2021), and Nure et al. (2021). Hypothesis-3 (H3) has an original sample of -2.37, which means a negative value. While the t-value is 2.195 and the p-value is 0.031 <0.050, so Ho is rejected and Ha is accepted, meaning that work stress affects employee performance. The results of this study are in line with Hussain et al. (2019), Natalya et al. (2018), and Steven and Prasetio (2020).

Hypothesis-4 (H4) has an original sample of 0.677, which means a positive value. While the t-value is 6.517 and the p-value is 0.000 <0.050, so Ho is rejected and Ha is accepted, meaning that recognition affects perceived organizational support. The results of this study are in line with Hussain et al. (2019), Reza Ade (2022), and Aini et al. (2021). Hypothesis-5 (H5) has an original sample of 0.552, which means a positive value. While the t-value is 4.353 and the p-value is 0.000 <0.050, so Ho is rejected and Ha is accepted, meaning that recognition affects perceived organizational support. The results of this study are in line with Hussain et al. (2019), Reza Ade (2022), Suhartini, and Musafir A (2018). Hypothesis-6 (H6) has an original sample of 4.56, which means a negative value. While the t-value is 4.426 and the p-value is 0.000 <0.050, so Ho is rejected and Ha is accepted, meaning that work stress affects perceived organizational support. The results of this study are in line with Hussain et al. (2019) and Purnama et al. (2023). Hypothesis-7 (H7) has an original sample of 0.290, which means a negative value. While the t-value is 3.067 and the p-value is 0.003 <0.050, so Ho is rejected and Ha is accepted, meaning that perceived organizational support affects employee performance. Hipotesis-4 (H4) memiliki original sample 0,677 yang artinya nilai positif. Sedangkan nilai tvalue 6,517 dan p-value 0,000 < 0,050, sehingga Ho ditolak dan Ha diterima, artinya pengakuan berpengaruh terhadap perceived organization support. Hasil penelitian ini sejalan dengan Hussain et al. (2019), Reza Ade (2022), Aini et al. (2021).

Hypothesis-8 (H8) has an indirect influence value with the original sample of 0.197, a t-value of 2.689, and a p-value of 0.008 <0.050, and a direct influence value with a t-value of 2.074 and a p-value of 0.041 <0.050, so Ho is rejected and Ha is accepted, meaning that perceived organization support mediates the relationship between recognition and employee performance on employees. The results of this study are in line with Hussain et al. (2019), and Reza Ade (2022). Hypothesis-9 (H9) has an indirect influence value with the original sample of 0.160, a t-value of 2.586, and a p-value of 0.011 <0.050, and a direct influence value with a t-value of 5.734 and a p-value of 0.000 <0.050, so Ho is rejected and Ha is accepted, meaning that perceived organization support mediates the relationship between recognition and employee performance. The results of this study are in line with Hussain et al. (2019) and Reza Ade (2022). Hypothesis-10 (H10) has an indirect influence value with the original sample of -1.32, a t-value of 2.405, a p-value of 0.018<0.050, and a direct influence value with a t-value of 2.195 and a p-value of < 0.031<0.050, so Ho is rejected and Ha is accepted, meaning that perceived organizational support mediates the relationship between work stress and employee performance. The results of this study are in line with Hussain et al. (2019), Reza Ade (2022), and Saadeh and Suifan (2019).

 CONCLUSIONS

Based on the results of the analysis, especially the results of the hypothesis test, this study confirms that the variable perceived organization support (POS) significantly mediates the influence of the variables of recognition, appreciation, and work stress on employee performance in the company that is the object of the study. This means that the consistent application of perceived organizational support to all employees will be the key to maintaining continuous improvement in employee performance. In other words, the influence of the variables of recognition, appreciation, and work stress may only be effective in improving employee performance if the POS variable is applied.

However, if anyone is interested and challenged, it will be important for this study to also be conducted in other companies or industries. Given that this study is limited to a case study of a company that produces palm oil with relatively limited respondents, namely 98 employees. It will be complete if it is carried out in various industries or different companies. Likewise, the independent variables need to be added according to the needs or types of objects to be studied.

The practical benefits of the results of this study are that it is necessary and important for companies to pay extra attention to providing recognition and appreciation to their employees and managing work stress that is very likely to be faced by employees in their daily work. Companies need to set strategies and policies to implement POS for the work done by all employees. Because POS is the key to keeping employee performance under control and increasing continuously. The results of this study have serious managerial implications, namely the importance of POS for the development and growth of the company. Management controllers must pay special and continuous attention to the POS factor as one of the keys to continuously improving employee performance to survive in increasingly tight competition.

Research limitations: The results of this study are very interesting, but have several limitations that must be considered, namely (i) only focusing on one company, namely Palm Oil Production, (ii). The variables studied are very limited (iii). the number of samples is relatively small, and (iv) the use of a Likert scale will tend to give respondents answers/responses that benefit themselves, so that bias can occur.

Research recommendations: Based on the results of the study and especially its limitations, several recommendations are given to further researchers, or other researchers, namely (i). Consider conducting longitudinal research to establish stronger causal relationships, (ii) expand the study to cover other industries or geographic locations to increase generalizability, (iii) use mixed methods research (e.g., qualitative interviews) to complement quantitative data and gain deeper insights., and (iv). Control confounding variables to isolate the effects of recognition, rewards, and work stress more precisely.

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