A Theoretical Model of Training, Compensation, and Employee Performance in Indonesia’s State-Owned Enterprise

Abstract

Human resources are a strategic source of organizational competitiveness, and employee performance plays a central role in determining organizational outcomes. Training and compensation are two critical mechanisms through which organizations can shape employee behavior and enhance performance. Drawing on human capital theory and social exchange perspectives, this study develops a theoretical model that positions training as a developmental investment and compensation as a motivational driver of performance. The model is empirically examined in the context of Indonesia’s state-owned enterprise sector, using data from 104 employees of PTPN I Regional 2 Bandung. A quantitative approach with regression analysis provides evidence that both training and compensation have a significant positive effect on employee performance. While grounded in a specific organizational context, the findings extend the conceptual understanding of how human resources development (HRD) practices interact to improve performance, particularly in emerging economic settings. The study contributes to human resource development scholarships by offering a framework that underscores the importance of integrating developmental and motivational HR practices. This theoretical positioning highlights the transferability of the model to diverse organizational contexts, making it relevant for broader discussions in HRD and performance management.