Page 1 of 5
Journal for Studies in Management and Planning
Available at
http://edupediapublications.org/journals/index.php/JSMaP/
ISSN: 2395-0463
Volume 03 Issue 11
October 2017
Available online: http://edupediapublications.org/journals/index.php/JSMaP/ P a g e | 138
Study on the relationship between incentive schemes on
Employee’s Performance with Special Reference to AIA
Insurance Lanka Plc. Karapitiya Branch
Payagalage Ayanthi Madumali
Department of Business and Management Studies
Eastern University, Sri Lanka
ayanthimadhumali@gmail.com
Abstract – Today many organizations offer
incentives to motivate their staff with the aim of
achieving motivating high employees’
performance. Those organizations use incentive
scheme to increase labour productivity. This
study investigates the relationship between
incentive scheme on employees’ performance in
AIA Insurance Lanka (plc) in karapitiya
Branch. The study had the following objectives:
to establish the relationship between financial
incentives and employee performance and the
relationship between non-financial incentives
and employee performance. To achieve these
goals, 60 employees in AIA Insurance
(Karapitiya Branch) were selected and sixty
structured questionnaires were designed based
on the objectives. The theoretical framework
has been drawn out by taking independent
variable as incentive schemes and dependent
variable as employee performance.
Hypotheses were developed to study the
determinants and tested with SPSS and few
hypotheses were accepted. According to the
findings and discussions there is no significant
relationship between financial incentive and
employee performance and positive moderate
relationship between financial incentive and
employee performance for AIA Insurance
Lanka (PLC). The study recommends the
establishment of a unit to look at issues of
incentives that will enhance employee
performance. Finding of this study are useful for
employers and policy makers of the
organization.
Key Words: incentives, employee performance,
impact, firms and relationship
I. INTRODUCTION
Today many organizations offer incentives to
motivate their staff with the aim of achieving
motivating high employees’ performance. Those
organizations use incentive scheme to increase
labour productivity in other words, to increase
efficiency and effectiveness of employees. So here
Human Resource is the most valuable in every
business. Zaman (2011) said that Human resource
use for an organization to achieve sustainable
competitive advantage. Since organizations are
operating in a dynamic and competitive business
environment, they need to develop strategies to
acquire and retain the competent work force enable
to maintain a significant economic growth together
with rapid industrialization.
The success of the organization depends on
employee performance. So they use many factors to
improve employee performance. According to
Mayhew (2012) said that employee performance
means employee productivity and output as a result
of employee development. Employee performance
affects the organizational effectiveness. Employee
performance can make or break the organization's
success. Vitez (2011) pointed the importance of
employee performance. Performance is an essential
function in every organization. Employee
performance is a key element of a company
success. Employees usually represent the largest
expensive for a company, Poor employee
performance can result in wasted resources and
higher business operating costs. The organization's
human capital is paramount in helping to achieve
goals and objectives.
Purpose of selecting AIA insurance company is
AIA is today leading foreign owned company in
our country. It’s the only one foreign owned
company which was in first three ranks.AIA is in
the 3rd place in insurance industry in Sri Lanka.
Section 7.0 insurance industry report mention about
that. Other two companies are Sri Lankan Owned
Companies. Day by day AIA Insurance expands
their coverage whole over the country.
Page 2 of 5
Journal for Studies in Management and Planning
Available at
http://edupediapublications.org/journals/index.php/JSMaP/
ISSN: 2395-0463
Volume 03 Issue 11
October 2017
Available online: http://edupediapublications.org/journals/index.php/JSMaP/ P a g e | 139
A balanced incentive program introduced in an
organization is likely to motivate employees and as
a result lead to improved performance (Petrescu
and Simon, 2008). Even though companies
provide more incentives sometimes they don't have
any expected impact of the employees’
performance. Therefore, this study attempt to find
out whether there is a relationship between
incentive scheme provided to employees and
employee performance. There were some
researchers conducted in university sector, hospital
sector, banking sector etc. But there are very few
researches in insurance sector especially in Sri
Lanka. Due to the limitations the current study is
conducted in AIA Insurance Lanka PLC.AIA
insurance use so many incentives. But there are no
expected performances in their employees. Because
nowadays there are lot of people are insuring the
policies. So the wealth planers (field workers)
difficult to catch the customers. The company
given sufficient incentives to the employees but
performance will low because of that.
The researcher intends to study the Study on the
relationship between incentive schemes on
Employee’s Performance
II. RESEARCH QUESTIONS
What is the relationship between financial incentive
and employee performance?
What is the relationship between non-financial
incentive and employee performance?
III. METHODOLOGY AND METHODS
While there is a mass of literature concerning
incentive scheme and employee’s performance there
is no generally agreed theoretical framework for
carrying out research in this field. In order to
facilitate research and understanding of a vast
literature on business formation researcher
developed a research framework based on the extant
literature. The framework has been designed
specifically to aid research relating to incentive
scheme on employee’ performance. The research
framework is adopted from Ude & Coker (2012),
Luthans (1998) Vartiainen et al. 1998)The
conceptual frame work of the study has been shown
in Figure 1.
FIGURE 1: CONCEPTUAL FRAME WORK
Based on the theoretical framework, the following
hypotheses were derived.
Financial incentives and employee performance
HA: There is a relationship between financial
incentives and employee performance
HO: There is no relationship between financial
incentives and employee performance
Non-financial incentives and employee
performance
HA: There is a relationship between non-financial
incentives and employee performance
HO: There is no relationship between non-financial
incentives and employee performance
A self-designed questionnaire was used to gather
the research data. The questionnaire consisted of
two parts. The first part comprised demographic
characteristic and profile information of the
respondents. Part two consisted of 28 questions
which were intended to measure the relationship
between incentives and employee performance,
using five point likert scale anchored by strongly
agree to strongly disagree.
IV. RESULTS AND DISCUSSION
Descriptive analysis shows that out of 60
respondents, there were more male than female
Financial Incentives
i. Salary
ii. Bonus
iii. Commissions
Non-financial Incentives
Welfare services
i. Medical facilities
ii. Work environment
iii. Recognition
iv. Career development
v. Learning opportunity
Employee performance
Page 3 of 5
Journal for Studies in Management and Planning
Available at
http://edupediapublications.org/journals/index.php/JSMaP/
ISSN: 2395-0463
Volume 03 Issue 11
October 2017
Available online: http://edupediapublications.org/journals/index.php/JSMaP/ P a g e | 140
respondents. The results show that 55% of the
respondents are male & 45 % are female
.
The majority of respondents, a total of 36 (60%)
were aged under 30 years of old, 25 %were aged
between 30 to 45, 15% (09) were aged above 45
years old.
Considering the educational qualification, highest
percentage 55% of employees represent category of
Diploma among the employees.. Very few post
graduate and degree were involving to the insurance
company. It represented only 6% & 7%
Duration of services is another personal factor. The
highest percentages of 25% represent employees
which below 1 year and lowest percentage of 15%
represent more than 4 year services.
When considering the monthly income, it was
shown that highest percentage of 43% represented.
Monthly income Rs.30001-40000. The lowest
18% represented monthly income Rs.10,000-
20,000. It represented 37% between Rs. 20001 -
30000
TABLE 3: MODEL SUMMARY
Model R R
Square
Adjusted
R Square
Std. Error
of the
Estimate
1 0.218 0.047 0.544 0.184
Predictors: (Constant), Salary, Bonus and
Commission.
Value of R (0.218) shows the strong relationship
between dependent and independent variables.
Furthermore, the value of adjusted R Square (0.544)
in the above table represent that the model used in
this study explains 54.4% variation in dependent
variable cause by independent variables
TABLE 4: COEFFICIENTS
Correlations
Empl.
per.
Fin
.ince
Non fin.
Ince.
Emp. per Pea.
Cor
1 .218 .300*
Sig.
(2-t
.094 .020
N 60 60 60
Fin. inc Pea.
Cor.
.218 1 .180
Sig.
(2-t
.094 .168
N 60 60 60
Non fin
inc
Pea
Cor
.300*
.180 1
Sig.
(2-t
.020 .168
N 60 60 60
*. Correlation is significant at the 0.05 level (2-
tailed).
* Significant # Not Significant
The result indicates that Pearson correlation
coefficient for financial incentives, non-financial
incentives and employee performance. The
correlation coefficient shows .218 in financial
incentives. The relationship is not significant at
0.05 level (2tailed) and implies that there is a no
relationship between financial incentives and
employee performance (p = .094).
There for reject the hypothesis and conclude that
there is a no significant relationship between
financial incentive and employee performance (r
=.218, P>.05).
The correlation coefficient shows .300 in non- financial incentives. This value indicates that there
is correlation in significant at 0.05 level (2tailed)
and implies that there is a positive weak
relationship between non-financial incentives and
employee performance (r = .300).
There for reject the Null hypothesis and conclude
that there is a positive moderate relationship
between non-financial incentive and employee
performance(r =.319, P<.05).
V. CONCLUSION
The study attempts to Study on the relationship
between incentive schemes on Employee’s
Performance with Special Reference to AIA
Insurance Lanka Plc. Karapitiya Branch and found
