INTERNATIONAL JOURNAL OF LATEST TECHNOLOGY IN ENGINEERING,  
MANAGEMENT & APPLIED SCIENCE (IJLTEMAS)  
ISSN 2278-2540 | DOI: 10.51583/IJLTEMAS | Volume XIV, Issue XI, November 2025  
Performance Allowance and Work Environment as Determinants of  
Employee Performance in the Public Sector: Evidence from Merauke  
Regency.  
Reynold Bitikaka, Alexander Phuk Tjilen, Ransta L. Lekatompessy  
Magister Administrasi Publik, Universitas Musamus, Indonesia  
DOI : https://doi.org/10.51583/IJLTEMAS.2025.1411000091  
Received: 04 November 2025; Accepted: 09 November 2025; Published: 18 December 2025  
ABSTRACT  
This study examines the effects of performance allowances and work environment on employee performance at  
the Regional Secretariat of Merauke Regency, Indonesia. The research was motivated by the need to enhance  
public sector productivity through effective human resource management in a decentralized administrative  
context. Using a quantitative explanatory design, data were collected from 129 civil servants selected through  
purposive sampling. Data analysis employed multiple linear regression using IBM SPSS Statistics 26. The  
findings reveal that both performance allowances and the work environment significantly and positively  
influence employee performance, both individually and simultaneously. Performance allowances function as  
extrinsic motivators that enhance accountability and work enthusiasm, whereas a supportive work environment  
strengthens psychological comfort, collaboration, and commitment. Among the two factors, the work  
environment demonstrated a stronger influence, underscoring the importance of non-financial determinants in  
sustaining performance. The study concludes that a synergistic combination of fair compensation policies and  
conducive workplace conditions is essential for optimizing employee performance in public organizations.  
Practical implications include policy reform in allowance structures, workplace modernization, and integrated  
capacity development strategies.  
Keywords: Performance Allowance, Work Environment, Employee Performance, Public Sector Management,  
Merauke Regency  
INTRODUCTION  
Public organizations play a vital role in ensuring the effectiveness and efficiency of governance systems,  
particularly in the context of decentralized administrations such as Indonesia’s regional governments. The  
performance of civil servants within local government institutions directly affects the quality of public services  
and the credibility of local administrations in implementing development policies. Employee performance,  
therefore, becomes a crucial determinant of how well a local government fulfills its administrative, social, and  
economic responsibilities. Within this framework, the Regional Secretariat of Merauke Regency serves as a  
strategic administrative unit responsible for coordinating regional development programs, policy  
implementation, and interdepartmental collaboration. Understanding the factors influencing employee  
performance in this institution is critical to enhancing public sector productivity and accountability.  
Among the various determinants of employee performance, performance allowances and the work environment  
stand out as two interrelated dimensions shaping both individual motivation and organizational productivity.  
Performance allowances operate as extrinsic motivators that reward effort and achievement, fostering a sense of  
fairness and accountability among employees (Armstrong 2012). These allowances are not merely financial  
instruments but also policy tools that aim to strengthen performance-based governance and enhance employee  
morale. When properly implemented, performance allowances align personal aspirations with institutional  
objectives, thereby creating a culture of performance orientation within public organizations. However, without  
a supportive work environment, the motivational effects of such incentives may diminish, leading to  
inconsistencies between reward mechanisms and actual performance outcomes.  
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The work environment, encompassing both physical and psychosocial aspects, plays a crucial role in sustaining  
employee engagement and performance quality. Favorable physical conditions, positive interpersonal  
relationships, and an inclusive organizational climate contribute to psychological comfort and commitment at  
work (Bakker, Demerouti, and Sanz-Vergel 2023). Empirical evidence from Indonesian public institutions  
(Dyah Latu Nuswantari, Hutomo, & Mansyur, 2018) suggests that while performance allowances can enhance  
motivation, their effectiveness in improving performance is strongly mediated by environmental factors such as  
leadership support, communication quality, and workload balance (Tjilen, 2025). Hence, an integrative approach  
that combines fair compensation with a conducive work environment is essential to optimize employee  
performance in the public sector, particularly within regional administrative contexts.  
However, empirical gaps remain concerning the simultaneous relationship among these variables in local  
government contexts. Most prior studies have examined performance allowances or work environment as  
separate factors, without analyzing their combined effect on motivation and performance, particularly within  
regional secretariats that have distinct administrative cultures and compensation systems. Additionally,  
contextual factors such as local governance structure, resource availability, and organizational culture may  
influence how performance-based incentives operate in practice (Mahmudi, 2019; Kim & Holzer, 2019).  
Therefore, this study aims to analyze (1) the effect of performance allowances on employee performance, (2)  
the influence of the work environment on employee performance, and (3) the simultaneous effect of performance  
allowances and work environment on employee performance at the Regional Secretariat of Merauke Regency.  
The findings are expected to contribute both theoretically—by expanding the literature on public sector  
performance management—and practically—by providing policy recommendations for improving human  
resource effectiveness in local governments.  
LITERATURE REVIEW / THEORETICAL FRAMEWORK  
Employee Performance  
Employee performance refers to the level of achievement attained by employees in carrying out their  
responsibilities to accomplish the organization’s vision, mission, and strategic objectives. According to  
Mangkunegara (2020), performance is the result of both work quantity and quality achieved by an individual in  
executing tasks based on their assigned responsibilities. High performance is influenced by factors such as skills,  
discipline, motivation, and commitment, while poor performance often results from weak supervision, unclear  
job descriptions, and low morale.  
In the public sector, employee performance plays a pivotal role in determining institutional efficiency and service  
quality. The emphasize that public employees’ effectiveness reflects the integrity of the bureaucratic system.  
Inadequate performance not only reduces service quality but also undermines public trust. Moreover, Locke and  
Latham’s (2019) Goal-Setting Theory suggests that specific and challenging goals enhance performance through  
motivation and focus.  
Performance indicators commonly include work quantity, work quality, timeliness, efficiency, discipline, and  
initiative (Nurjaya, 2021). These dimensions provide a comprehensive measure of how effectively public  
servants achieve expected results. Therefore, employee performance represents not merely the completion of  
tasks but also the realization of organizational values through competence and accountability.  
Performance Allowance  
Performance allowance (or tunjangan kinerja) is a monetary reward given to employees based on their individual  
and organizational performance outcomes. In Indonesia, this policy is regulated under the Ministry of  
Administrative and Bureaucratic Reform (Permenpan RB) No. 63 of 2011, aiming to enhance productivity,  
discipline, and motivation among civil servants.  
According to Mangkunegara (2020), performance-based pay is both a recognition of effort and a stimulus for  
continuous improvement. Handoko (2019) highlights that financial compensation motivates employees to  
exceed performance standards. This aligns with Herzberg’s Two-Factor Theory, which differentiates between  
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hygiene factors—such as salary and working conditions—and motivators, including achievement and  
recognition (Herzberg, Mausner, & Snyderman, 2011). While financial incentives prevent dissatisfaction,  
intrinsic motivators foster long-term engagement.  
From Maslow’s Hierarchy of Needs, performance allowance satisfies lower-order needs related to financial  
security and stability, allowing employees to focus on professional growth. Vroom’s Expectancy Theory further  
explains that employees are motivated when they believe their efforts lead to performance, and performance  
leads to rewards. Recent studies (Gupta & Shaheen, 2021; Kim, 2022) confirm that transparent and performance-  
based remuneration positively influences job satisfaction and productivity in public institutions.  
Thus, a fair and measurable performance allowance system is vital for enhancing employee morale, institutional  
integrity, and the overall effectiveness of bureaucratic reform.  
Work Environment  
The work environment encompasses all physical, social, and psychological conditions that influence employee  
behavior and performance. Sedarmayanti (2018) distinguishes two main components: the physical environment  
(facilities, workspace, comfort, and safety) and the non-physical environment (interpersonal relationships,  
leadership style, and organizational culture).  
A conducive work environment improves motivation and reduces stress, leading to higher performance  
(Rahayaan, 2019). Bakker and Demerouti (2017) in the Job Demands–Resources Theory emphasize that  
sufficient resources—such as supportive supervision, autonomy, and safe working conditions—enhance  
engagement and reduce burnout. Similarly, Rahman et al. (2020) found that supportive work environments  
significantly affect employees’ emotional well-being and productivity.  
In public administration, environmental factors such as effective communication, collaboration, and trust  
between leaders and subordinates determine the success of service delivery . Gupta and Shaheen (2021) observed  
that employees working in well-managed environments tend to demonstrate stronger commitment and  
performance consistency. Therefore, creating a balanced and supportive work environment is essential for  
improving both individual and organizational performance outcomes.  
Conceptual Framework  
The theoretical foundation of this study integrates the perspectives of Motivation Theory, Herzberg’s Two-  
Factor Theory, and Job Demands–Resources Theory. These theories collectively explain how performance  
allowance (X₁) and work environment (X₂) influence employee performance (Y).  
Performance Allowance (X₁) provides external motivation (hygiene and reward factors) that reinforces  
desirable behavior and encourages higher effort.  
Work Environment (X₂) serves as a contextual factor that nurtures intrinsic motivation by improving comfort,  
communication, and psychological well-being.  
Employee Performance (Y) is the outcome variable reflecting the effectiveness of task completion, quality of  
service, and organizational contribution.  
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Figure 1. Conceptual framework illustrating the influence of performance allowance (X₁) and work environment  
(X₂) on employee performance (Y). The model is developed based on Herzberg’s Two-Factor Theory  
(Alshmemri, Shahwan-Akl, and Maude 2017), Job Demands–Resources Theory (Bakker, Demerouti, and Sanz-  
Vergel 2023), and Expectancy Theory (Vroom, Porter, and Lawler 2015).  
METHODS  
Research Design  
This study employed a quantitative explanatory research design, which aims to test hypotheses and explain  
the relationship between variables through statistical analysis. According to Sugiyono (2019), quantitative  
methods are based on the philosophy of positivism, characterized by objectivity, measurability, rationality, and  
systematic procedures. The explanatory design was chosen to identify the causal relationship between  
independent variables—Performance Allowance (X₁) and Work Environment (X₂)—and the dependent  
variable, Employee Performance (Y), within the Regional Secretariat of Merauke Regency.  
Population and Sample  
The population in this study consisted of 190 civil servants (Aparatur Sipil Negara, ASN) working at the  
Regional Secretariat of Merauke Regency. Based on the Slovin formula with a 5% margin of error, a total of  
129 respondents were selected as the study sample. The sampling technique used was purposive sampling,  
considering employees who had received performance allowances for at least one year and were directly  
involved in administrative and service functions. This approach ensures that the respondents possess sufficient  
experience and knowledge to assess the research variables accurately.  
Data Collection Techniques  
Data were collected through four complementary methods to enhance validity and reliability:  
Questionnaire (Primary Data)  
The main data collection instrument was a structured questionnaire using a five-point Likert scale (1 =  
strongly disagree to 5 = strongly agree). The questionnaire consisted of 30 statements divided into:  
o
Performance Allowance (X₁) – 10 items  
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o
o
Work Environment (X₂) – 10 items  
Employee Performance (Y) – 10 items  
Respondents evaluated each item based on their perceptions of work conditions and organizational practices.  
Documentation (Secondary Data)  
Secondary data were obtained from institutional documents such as:  
o
o
o
o
o
The organizational structure of the Regional Secretariat  
Employee demographic data  
Regulations on additional income or performance-based pay  
Annual performance reports  
Local government decrees concerning human resource management  
Observation  
Non-participatory observation was conducted to verify the physical work environment, employee interactions,  
and discipline practices. This method complemented quantitative data by providing contextual understanding of  
workplace conditions (Nasution, 2011).  
Interviews  
Structured interviews were carried out with key officials, including the Head of the Human Resource Division  
and section managers, to clarify policies related to performance allowances and workplace management. As  
Moleong (2014) notes, interviews in quantitative research serve as supporting or confirmatory data rather than  
the main data source.  
Variable Operationalization  
Each research variable was operationalized into measurable indicators based on relevant theoretical foundations.  
Table 1 presents the operational definition and measurement indicators for each variable.  
Variable  
Conceptual Definition  
Indicators  
Scale  
Source  
Financial  
provided  
employee  
achievements.  
compensation (1) Timeliness of allowance Likert  
based on disbursement, (2) fairness and (1–5)  
performance transparency, (3) alignment with  
World  
Bank  
Performance  
Allowance (X₁)  
(2021);  
Silitonga  
(2024)  
performance  
adequacy  
targets,  
amount,  
(4)  
(5)  
of  
motivational effect.  
The physical and non- (1) Physical comfort, (2) safety, Likert  
Zhenjing et al.  
(2022); (Iis et  
al. 2022)  
Work  
Environment  
(X₂)  
physical  
conditions (3)  
coworker  
relations,  
patterns,  
(4) (1–5)  
surrounding employees that communication  
(5)  
influence their ability and leadership support.  
motivation to perform.  
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The level of achievement of (1) Quality of work, (2) quantity Likert  
employees in carrying out of work, (3) timeliness, (4) (1–5)  
their duties according to discipline, (5) teamwork and  
Robbins  
Judge  
Nuswantari  
al. (2018)  
&
(2013);  
Employee  
Performance  
(Y)  
et  
assigned responsibilities.  
responsibility.  
Data Analysis Techniques  
The collected data were analyzed using IBM SPSS Statistics version 26. The analysis procedure included:  
Validity and Reliability Testing  
Validity was assessed using Pearson’s product-moment correlation with a minimum r-value of 0.30.  
Reliability was tested using Cronbach’s Alpha, where coefficients ≥ 0.70 indicated acceptable internal  
consistency.  
Classical Assumption Tests  
Prior to regression analysis, the data were tested for normality, multicollinearity, and heteroscedasticity to  
ensure compliance with linear regression assumptions.  
Multiple Linear Regression Analysis  
The main analysis used multiple regression to evaluate both partial and simultaneous effects of independent  
variables on employee performance, with the following model:  
Y=α+β1X1+β2X2+ε  
Where:  
(Y)=Employee Performance  
(X_1)= Performance Allowance  
( X_2 ) = Work Environment  
( alpha ) = Constant  
( beta_1, beta_2 ) = Regression Coefficients  
( varepsilon ) = Error Term  
Hypothesis Testing  
o
o
o
t-test was conducted to examine the partial effects of X₁ and X₂ on Y.  
F-test was used to test the simultaneous effect of X₁ and X₂.  
The coefficient of determination (R²) measured the proportion of variance in employee performance  
explained by the two predictors.  
Research Ethics  
This study adhered to ethical research principles, including voluntary participation, respondent anonymity, and  
the confidentiality of all collected data. Permission for data collection was obtained from the Regional Personnel  
and Human Resource Development Agency (BKPSDM) of Merauke Regency.  
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RESULTS AND DISCUSSION  
Overview of Research Context  
The selection of the Regional Secretariat of Merauke Regency as the research site is highly relevant considering  
its strategic administrative role in coordinating governmental functions and providing managerial support to  
regional leaders. With its complex organizational structure and a large number of civil servants, performance  
demands at the Secretariat are high.  
This study focuses on two key factors that may influence employee performance: performance allowances and  
the work environment. Adequate and transparent allowances are expected to enhance employee motivation,  
while a supportive work environment contributes to comfort and productivity. The study thus provides both  
academic and practical value by offering insights for leadership in evaluating allowance policies, improving the  
work environment, and developing sustainable performance strategies.  
Characteristics of Respondents  
The study involved 129 respondents who were employees of the Regional Secretariat of Merauke Regency.  
Respondent characteristics included gender, age, educational level, years of service, and job position.  
Most respondents were male (52.71%), and the majority fell within the 40–49 age group (53.49%), reflecting  
a mature and productive workforce. Educationally, SMA/SMK and undergraduate degree holders dominated  
(42.64%), indicating adequate academic qualifications.  
In terms of tenure, most respondents had long service periods, implying institutional loyalty. The majority served  
as operational or staff-level employees, whose perceptions represent the front line of administrative and  
bureaucratic work. Their views are thus essential in evaluating the impact of allowances and work environment  
on performance.  
Instrument Validity and Reliability  
Instrument testing confirmed that the research questionnaire was both valid and reliable.  
Validity test results: All 30 items (10 for each variable—X₁, X₂, and Y) met the criteria with r-count >  
0.173 and Sig. < 0.05, confirming item validity.  
Reliability results:  
o
o
o
Performance Allowance (X₁): α = 0.865  
Work Environment (X₂): α = 0.827  
Employee Performance (Y): α = 0.848  
All values exceeded the 0.60 threshold, demonstrating strong internal consistency (Sugiyono, 2019; Hair et al.,  
2021).  
Descriptive Statistics  
Descriptive analysis indicates that all three variables are generally perceived positively:  
Performance Allowance (X₁): Mean = 41.08 → categorized as good  
Work Environment (X₂): Mean = 42.33 → categorized as conducive  
Employee Performance (Y): Mean = 41.25 → categorized as high and consistent  
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These results suggest that employees generally experience fair compensation, supportive environments, and  
satisfactory performance outcomes.  
Classical Assumption Tests  
To ensure the robustness of regression analysis, several assumption tests were conducted:  
Normality: The histogram and P–P plot show residuals distributed normally.  
Multicollinearity: VIF = 3.434 and tolerance = 0.291 → No multicollinearity.  
Heteroskedasticity: Scatterplot shows random residual distribution → No heteroskedasticity.  
Autocorrelation: Durbin-Watson value = 2.194 → within acceptable range (1.5–2.5).  
These results confirm that the dataset meets the requirements for multiple linear regression analysis using IBM  
SPSS Statistics 26.  
Regression Analysis  
The results of multiple linear regression analysis are as follows:  
Y = 34.087 + 0.052X_1 + 0.118X_2  
where:  
( Y ): Employee Performance  
( X_1 ): Performance Allowance  
( X_2 ): Work Environment  
Interpretation:  
The intercept (34.087) represents baseline employee performance when both independent variables are  
zero.  
A one-unit increase in Performance Allowance (X₁) raises performance by 0.052 units, holding X₂  
constant.  
A one-unit increase in Work Environment (X₂) raises performance by 0.118 units, holding X₁  
constant.  
The correlation coefficient (R) of 0.914 indicates a strong relationship between the variables, while the  
coefficient of determination (R²) of 0.836 shows that 83.6% of performance variation can be explained by X₁  
and X₂, with the remaining 16.4% influenced by other factors such as leadership style, motivation, or discipline.  
Hypothesis Testing  
Hypothesis Statement  
Result  
Conclusion  
H1  
Performance Allowance → Employee t = 4.469; Sig. = Accepted  
Performance 0.000 Positive Effect)  
(Significant  
(Significant  
H2  
Work  
Environment  
→
Employee t = 9.696; Sig. = Accepted  
0.000 Positive Effect)  
Performance  
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H3  
X₁ & X₂ → Employee Performance  
F = 320.956; Sig. = Accepted (Model Significant)  
0.000  
Thus, both variables—individually and simultaneously—positively and significantly affect employee  
performance.  
DISCUSSION  
The findings confirm that performance allowances have a significant positive impact on employee performance  
at the Regional Secretariat of Merauke Regency. This result is consistent with Hasibuan (2017), who  
emphasizes that financial incentives act as extrinsic motivators that enhance work enthusiasm and productivity.  
Performance-based allowances encourage employees to align their efforts with organizational objectives,  
reinforcing accountability and motivation.  
Furthermore, the work environment also exerts a strong positive influence, as indicated by its higher regression  
coefficient (0.118). A comfortable, supportive, and collaborative work environment enhances employees’  
psychological well-being and task efficiency. This finding aligns with Sedarmayanti (2017), who asserts that  
conducive workplace conditions improve both satisfaction and performance. It also echoes Herzberg’s Two-  
Factor Theory, suggesting that non-monetary factors like relationships, recognition, and work conditions are  
vital to sustained performance improvement.  
The simultaneous influence of both variables further demonstrates the synergistic relationship between  
compensation and the work environment. Adequate financial rewards motivate employees, while a conducive  
work environment maintains their commitment and creativity. The results validate previous findings by  
Nuswantari et al. (2018) and Tambaip et al. (2023), emphasizing that effective human resource policies should  
integrate both material and non-material incentives to achieve optimal performance outcomes.  
IMPLICATIONS  
From a managerial standpoint, the findings underscore the necessity for an integrated policy approach that aligns  
financial incentives with workplace conditions to maximize employee performance. The BKPSDM Merauke  
should regularly evaluate the effectiveness of performance-based allowance systems, ensuring that they are fair,  
transparent, and directly linked to measurable performance indicators. Establishing a clear framework that ties  
rewards to specific outcomes will not only strengthen accountability but also motivate employees to achieve  
higher productivity levels and meet institutional goals.  
In addition, improving the physical and psychosocial aspects of the work environment is equally vital.  
Investments in ergonomic workspaces, adequate lighting, and reliable digital infrastructure can enhance comfort,  
reduce fatigue, and streamline administrative efficiency. Furthermore, fostering a culture of open  
communication, collaboration, and respect within the workplace can create a supportive climate that promotes  
trust, innovation, and professional growth.  
From a broader policy perspective, these efforts contribute to sustainable human resource development within  
the public sector. By harmonizing financial incentives with conducive working conditions, local governments  
can cultivate a performance-driven culture while maintaining employee well-being and institutional integrity.  
This balanced approach ensures that productivity improvements are sustainable and aligned with the principles  
of good governance.  
CONCLUSION AND RECOMMENDATIONS  
Based on the results of descriptive and inferential statistical analyses, several conclusions can be drawn as  
follows:  
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Performance allowances have a positive and significant influence on employee performance. This finding  
confirms that financial incentives serve as external motivators that enhance employees’ enthusiasm,  
responsibility, and commitment to achieving organizational goals. The greater the alignment between allowances  
and actual performance, the stronger the employees’ motivation to improve their work outcomes.  
The work environment has a stronger and more dominant influence compared to performance allowances. A  
supportive, safe, and collaborative work environment promotes psychological comfort, reduces work stress, and  
increases overall productivity. This result emphasizes that non-financial aspects—such as interpersonal  
relationships, leadership support, and workplace facilities—play an essential role in maintaining employee  
performance.  
The simultaneous influence of both variables indicates that employee performance is shaped not only by material  
compensation but also by contextual factors that affect employee engagement and job satisfaction. Therefore,  
performance improvement strategies should adopt a balanced approach by integrating both financial and non-  
financial motivational dimensions.  
Overall, this study empirically confirms that the synergistic interaction between fair compensation policies and  
a conducive work environment plays a crucial role in optimizing public sector performance, particularly within  
local government institutions such as the Regional Secretariat of Merauke Regency.  
Recommendations  
Based on these findings, several practical and policy-oriented recommendations are proposed:  
Policy Review on Performance Allowances.  
The Merauke Regency Government should periodically evaluate the structure and distribution mechanisms of  
performance allowances to ensure fairness, transparency, and alignment with measurable performance  
indicators. Linking allowances to performance outcomes and innovation metrics can strengthen accountability  
and productivity.  
Work Environment Enhancement.  
Efforts should focus on improving both the physical and psychological dimensions of the work environment.  
This includes modernizing office facilities, enhancing digital infrastructure, maintaining hygiene and safety  
standards, and fostering a positive organizational culture that encourages collaboration and open communication.  
Human Resource Development.  
Training and professional development programs should be integrated into regular performance management  
systems. Providing opportunities for capacity building can improve employees’ competencies and job  
satisfaction, leading to higher organizational performance.  
Sustainable Motivation Strategy.  
Beyond short-term incentives, the Regional Secretariat should establish a sustainable motivation framework that  
combines intrinsic and extrinsic rewards—such as recognition programs, career development pathways, and  
participatory decision-making processes—to maintain long-term engagement.  
Future Research Directions.  
Future studies could expand the scope by incorporating other influential factors such as leadership style,  
organizational commitment, and digital transformation readiness, which may mediate or moderate the  
relationship between allowances, work environment, and performance. Comparative studies across different  
regional agencies would also enhance the generalizability of these findings.  
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ACKNOWLEDGMENT  
The authors express sincere gratitude to the Regional Secretariat of Merauke Regency and the Human Resource  
Development Agency (BKPSDM) for their support and cooperation. Appreciation is also extended to all  
respondents for their valuable participation and to Universitas Musamus Merauke for providing academic and  
institutional assistance throughout this research.  
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