ISSN 0798 1015

Vol. 39 (Number 24) Year 2018 • Page 3

The Influence of Incentives on Work Achievement of Agents in Takaful Keluarga Insurance at Riau Agency Representative Office of Pekanbaru City (Indonesia)

La influencia de los incentivos en el rendimiento laboral del personal de Seguros Takaful Keluarga, Agencia Riau, Pekanbaru City (Indonesia)

Zulkifli RUSBY 1

Received: 18/01/2018 • Approved: 15/02/2018

Content

1. Introduction

2. Theoritical concept

3. Method

4. Data analysis

5. Discussion

6. Conclusion

Acknowledgments

References

1. Introduction

In today's highly competitive and fierce business world competition, it demands and realizes business people to be professionals. So, professionalism becomes a must in doing business activities. Unfortunately, it is just that often the professional attitude refers to the business world limited by technical skills and related to business-related skills and expertise, such as: management, production, marketing, finance, personnel, and so on. These are mainly related to the principles of efficiency and effectiveness in order to get maximum profit and human resources (Agus Arijanto, 2006: 2). Human resource is the only resource that has sense of feelings, desires, skills, knowledge, encouragement, power, and work (ratio, taste, and initiation). All of the human resource potential affects the organization's efforts in achieving its goals. No matter how advanced the technology, the development of information, the availability of capital and adequate materials, but without adequate human resources, it will be very difficult for the organization to achieve its goals (Edi Sutrisno 2009: 3).

However, to maintain the maximum productivity of the company, the workers employed in a company must have high motivation and achievement so that they can provide significant benefits to the company. Therefore, the company management must be able to manage human resources very well so that the employees will work with high motivation and work performance to achieve the goals as expected by the company. In fact, the level of work performance of employees is influenced by several factors such as incentive, leadership style, work motivation, education and job training and work environment. Thus, an incentive is one of the factors that determine the achievement of employees’ productivity. Providing fair and decent incentives supports life insurance and welfare for employees. So that the employees will always show their spirit and attitude of loyalty in work.

Therefore, any company that wants to achieve optimal performance, then the management company should provide fair and decent incentives for its employees. This idea emerges because the incentive is one of the most effective way to satisfy the needs of employees. In general, employees will strive to do their work performance optimally if all needs and desires have been met properly and fairly by the company.

The incentive policy is very important to note, because it is related to the work of the employees in doing the job and achievement of the task. By providing an incentive in accordance with predetermined work standards, it means giving satisfaction and creating a stronger relationship between the employees and the agency where they work. Therefore, the linkage that leads to the achievement of the goals may produce very profitable results for the company, including those are at Riau Agency Representative Office of Takaful Keluarga Insurance in Pekanbaru city. Takaful Keluarga Insurance is a company engaged in the field of sharia insurance services. In this company, the agents run the function of marketing insurance services that exist within the company. The number and position of agents at Riau Agency Representative Office of Takaful Keluarga Insurance in Pekanbaru city as in table 1.

Table 1
The Position of Agents at Riau Agency Representative Office of
Takaful Keluarga Insurance of Pekanbaru City Year 2013-2015

Source: Riau Agency Representative Office of Takaful Keluarga Insurance of Pekanbaru city, 2015

The data in Table 1 is the number and position of agents in Takaful Keluarga Insurance at Riau Agency Representative Office of Pekanbaru city. The total number of agents is 28 people consisting of various positions and duties. Each position has a job and responsibility to achieve one goal of gaining profit and excellence by providing the best service to every customer. Agent is a person or legal entity who provides services in marketing insurance services for and on behalf of an insurance company (Andri Soemitra, 2009: 248).

When doing preliminary study, the writers conducted interviews to several agents in Takaful Keluarga Insurance at Riau Agency Representative Office of Pekanbaru city. The writers observed that the agents work hard in finding customers to get incentives. Incentives provided by Takaful Keluarga Insurance at Riau Agency Representative Office of Pekanbaru city are satisfactory enough for the agents who achieve the target. The incentives are given in the form of bonuses, commissions, rewards and life insurance. Every agent who gets a customer will obtain an incentive even if only one person in one month. In general, the commission given by the company to the agent is about 5%, 10%, and 25%, that depends on the premiums and products marketed by the agent.

From pre-research interview, it was obtained information that the premium income is generally fairly good. However, in general, the performance of agents is still not optimal, including the agents who work in Takaful Keluarga Insurance at Riau agency representative office of Pekanbaru city. Such work performance is influenced by several factors that, according to the agents, the incentive given is still small, the target given is so abundant, and the difficult and impatient opinion to find customers. While the biggest bonus is only calculated in quarterly, semiannual, and yearly period and of course, it depends on marketed products.

2. Theoritical concept

2.1. Incentive

Incentives attribute rewards and performance by rewarding performance not based on seniority or hours of work. Although incentives are given to groups, they often reward an individual behavior. Incentive programs are designed to increase workers’ motivation, (T. Hani Handoko, 2013: 247). Financial incentives are stimulants that are given to employees based on their performance, in the form of money or goods. This material incentive is economically valuable so it can improve the welfare of employees and their families. Some forms of financial incentives provided by employees include:

• First, Bonus is the money paid in exchange for the work done, regularly and specifically given to the employee who has the right to receive it, it is received without a bond in the future. The company sets this incentive system typically based on the percentage of the profits that exceed the specified amount.
• Second, Commission is a bonus given to those who generate good sales and commonly taken from a part of the sale.
• Third, Reward is one of the incentives set in terms of payment and can be followed by a variety of patterns, usually received by the employees taken from a portion of net income deposited into the amount of funds and then included in the list of income of each participant.
• Fourth, Insurance is a guarantee for the employess provided by the company in the form of future security.

Non-Financial Incentives are stimulative power given to employees in the form of awards and the measurements are based on their work performance. Some forms of non-financial incentives include:

• First, the provision of a mark or a medal is an award given by the company to an employee in the form of appreciating the services done by the employee.
• Second, the award presentation is an award given by the company to an employee in the form of concern or care for the services provided by employees.
• Third, the oral or written praise is an award given by the company to an employee in the form of oral or written praise as a form of concern for the services provided by employees to the company.
• Fourth, formal and informal gratitude is an award given by the company to employees in the form of appreciating the services provided by some employees to the company, however, it is usually a culture within the company.

2.2. The purpose of Providing Incentives

The purpose of providing incentives is to meet the interests of various parties, namely:

For the company, First, to maintain skilled and competent workforce for high loyalty to the company. Second, to maintain and improve employee morale and decrease the level of labor turnover and absenteeism. Third, to increase the productivity of the company which means increasing the production for each unit and sale.

For employees, the implementation of incentives is expected to: first, increase the income, second, increase the standard of living from the incentive payments; third, increase the employees’ morale to encourage them to perform better.

2.3. Factors Affecting the Incentive Level

First, job level or Position, a person who occupies a higher level or position within a company automatically has greater responsibility and scope of work.

Second, Achievement of work, an employee who has a good work performance will be given more incentives compared with some employees whose standard achievement.

Third, the company's profit, providing incentives by a company to its employees is not only beneficial for its employees, but it will be beneficial for the company as well. When someone is offered a reward that is quite profitable for him, then he will be motivated to get it. The powerful motivation is emerged by providing incentives.

Providing incentives, especially material incentives, is required to meet the material needs of employees. With the fulfillment of material needs, those employees are expected to work better and more efficient in accordance with company standards, so that the output generated from the input can increase and eventually the employee's performance can increase as well.

2.4. Work Achievement

Work achievement is as a result of work that someone has achieved from his work behavior in carrying out job activities and information about the high or low performance of an employee (Edi Sutrisno, 2009: 151). Work achievement is directed to four aspects that become key areas of achievement for the company, they are:

First, the result of work is the level of quantity and quality that has been produced and its supervision.

Second, accuracy is the level of knowledge associated with the job tasks and it affects directly to the quantity and quality of the work.

Third, the sincerity of the knowledge and skills possessed by the individual and also their anxiety or feeling fear of the failure.

Fourth, Time is the improvement of determined work performance and the ability of work speed owned by individuals.

2.5. The Advantages of Performance Appraisal

According to Ruky in Abdurahman (2014: 179), there are several goals that organizations can usually achieve by applying a performance management system: First, improving employees’ performance, both individuals and groups, by providing them the opportunity to fulfill self-actualization needs in order to achieve company goals.

Second, increasing in each individual employee achievement will lead to an overall performance of human resources, reflected in increased productivity.

Third, developing personal interests with the purpose of improving employees’ job performance, personal achievements and potential by giving them feedback on their accomplishments.

Fourth, Assisting the company to be able to draft the program of employee development and training program properly.

Fifth, providing a means to compare employee performance with the level of salary or wages as a policy and a good reward system.

Sixth, providing an opportunity for employees to release feelings about work obstacles or things that have to do with work.

Basically, human beings have different needs and desires. It causes the varying ways to meet these needs. The existence of the need and the desire encourages people to do a job and activity. How much the drive to do the work depends on the level of needs and level of achievement.

2.5. Takaful Insurance Application

When the customer pays the premium, the customer must already know how much ujrah and the amount of tabarru' of premium paid. Ujrah belongs to the company allocated for the cost of business operations (salary employees, marketing, fees and so on). The tabarru’ funds are used as a financial aid-helping and the property still belongs to the customers (Ahmad Rodoni, 2015: 53). Tabarru' funds are invested in sharia investments. The results from these investments will accumulate tabarru' funds into customers' property. Tabarru’ fund collection and investment proceeds are used to claim fee (takaful benefit), reinsurance and so on.

Basically, the profit (ujrah) is taken from the premium of each product for the company allocation or the cost of the delegation, especially the Takaful Insurance is 5%, 10%, and 25%, and that includes the incentives for the employees or the takaful insurance agents. Based on the previous theoretical concepts, the variables of this study are incentives and work achievement. In this study, the independent variable (X) is the incentive and the dependent variable (Y) is the work achievement of the agents in Takaful Keluarga Insurance at Riau Agency Representative Office of Pekanbaru city. The hypothesis of this study is that there is a significant influence of incentives on work achievement of agents in Takaful Keluarga Insurance at Riau Agency Representative Office of Pekanbaru city.

2.6. Takaful Insurance Agency

Agents are individuals who influence organizational change to make decisions. The agents may be regular employees, production managers, accountants, supervisors, or they may be external agencies employed by the company concerned to bring about change (Winardi , 2008: 271). In the business of insurance services, the marketer of insurance products is called Agent Consultant, Representative Agent, or Consultant Agent. However, the most popular term used is the agent, so that this term is common used in each institutional insurance such as at marketing office, in insurance associations Division of Finance and in Agency Commission.

The agents are employees who are tied to the contract of an insurance company that act to find customers, negotiate policy terms and serve policy holders (Nisrina Muthohari, 2012: 12). On the other hand, under the Insurance Law No.2 year 1992, the definition of an insurance agent is a person or a legal entity whose activities to provide services in marketing insurance for and on behalf of the insurer. So, it can be concluded that an insurance agent is a person or somebody that markets insurance services or offer the products to prospective buyers or clients, whether individually or more, to buy insurance services.

3. Method

This research was conducted at Riau Agency Representative Office of Takaful Keluarga Insurance located at Setia Maharaja, Grand Sudirman Block D 2, Pekanbaru. The population of this study was all agents who join the company of Takaful Keluarga Insurance at Riau Agency Representative Office of Pekanbaru city, which number of population was 28 people. While the sample of this study was obtained by using saturation sampling, it means that all samples are taken (28 people). The data used in this study was primary data obtained from the respondents and the data collection technique used was questionnaires consisting of 22 question items, then the Likert scale consisting of five alternative answers was used as well (Iqbal Hasan, 2010: 19).

Data analysis used in this research was quantitative descriptive method. It analyzes data through the arguments based on the data. The data were also analyzed statistically by using simple regression analysis to measure influence of variable X on variable Y. Then, the data processing analyzed by using a computer program, namely SPSS Version 17.0. The research instrument is a measuring instrument in the research, so a valid instrument means that the research instrument used is valid (Anwar Sanusi, 2014: 67). Validity test is a measure that indicates the validity level or the validity of an instrument. This validity test is conducted to find out what items presented in the questionnaire are truly able to represent the certainty of what is being studied. The way used in the validity test is by analyzing the items whereas each value that exists on each question grid is correlated with the total value of all items for a variable by using the correlation formula. The minimum requirement to be considered valid is r-counted > value of 0.3 (Anwar Sanusi, 2014: 76).

The reliability test is intended to determine the consistency of the instrument or in other words it measures that the instrument has consistent results when it is used at other times. For the reliability test, it is used Cronbach Alpha technique whereas an instrument can be performed reliably (reliable) if its reliability coefficient or alpha is 0.6 or more (Anwar Sanusi, 2014: 82). Hypothesis test is to test the significance of multiple linear regression coefficient partially appropriate with the statement of hypothesis research. Simple Regression Analysis is used to find out or measure the influence of incentives on work achievement of agents presented in mathematical equations.

Y = a + Bx                                                                        (1)

T-test is done to figure out the influence of each independent variable on dependent variable. Correlation Coefficient is to figure out the degree of relationship and the contribution of an independent variable to an dependent variable (Anwar Sanusi, 2014: 151). Coefficient of Determination is to measure the amount of contribution of variable X to variable Y. It uses multiple coefficient determination test (R2). The coefficient of determination (R2) is a quantity that shows how much the dependent variable changes (Y) can be affected by the independent variable (X) (Riduwan, 2010: 81).

4. Data analysis

4.1 Validity Test

Before the data were analyzed by using simple linear regression, the tests of validity and reliability of questionnaire research instrument were conducted. In this research, the test of validity used Corrected Item Total formula with a significance level of 5% (α = 0.05), it means that an item is considered valid if the correlation is significant against the total score. It is known that a r-table value with a significance level of 5% (α = 0.05) is 0.367 (see table r) and this value is compared with the value of r-counted. The r-counted value in this validity test is shown in the column of Item-Total Statistics (Corrected Item-Total). From the result of validity test, it found that the statement items have a greater correlation value than r-table, it means that the statement is declared valid.

Test of Reliability

The value limit of reliability test is 0.6.  If the reliability value is less than 0.6 then the value is less good. The reliability value in this test is involved in the column of Reliability Statistics (Cronbach's Alpha). After doing calculation of the reliability test by using Cranbach's Alpha, it found that that 22 statement points related to the influence of incentives on the work achievement of agents in Takaful Keluarga Insurance at Riau Agency Representative Office of Pekanbaru city can be declared reliable. In addition, as for the table of validity and reliability test can be seen in the following table 2.

Table 2
The Test of Validity and Reliability

Simple Regression Analysis

According to the calculation result of simple regression analysis through SPSS for Windows Version 17.0, it obtained that the values of an independent variable and a dependent variable can be seen in table as in table 3:

Table 3
Simple Regression Analysis

Based on the table 3, it can be compiled simple regression equation as follows:

Y = 2,244 + 1,529                                                         (2)

This means that the numbers in the regression equation are: Value a = 2.244 indicates that if the value of X = 0, then the value of variable Y of 2.244. The value of b = 1.529 indicates that if the value of Incentive variable (X) increases then the job performance variable (Y) will increase by 1,529 units with fixed or consistent variable assumption. After a simple regression analysis is done, then testing the research hypothesis is implemented. The first hypothesis: partial test (t-test) is done to see the influence of each variable, that is the independent variable and the dependent variable. The calculation result of hypothesis of partial test (t-test) through SPSS for Windows Version 17.0, hence it obtained that the values of an independent variable and a dependent variable can be seen in the following table:

Table 4
T-Test Calculations

From the table 4, it can be seen that the value of an incentive variable t-counted (X) of 8.232 and t-table value of 2.052 with a significant level of 0.05 and the degrees of freedom of 27 (dk = n-1 (28-1). It means that: t-counted > t-table or 8,232 > 2.052. It indicates that Ha is accepted and Ho is rejected, so it can be concluded that there is a significant influence of incentives on work performance. Furthermore, the second hypothesis is the test of correlation hypothesis to find out how strong or weak of the influence of an independent variable on the dependent variable. Then the results can be seen in the following table:

Table 5
Correlation Analysis

From the table 4, it can be seen that the value of R shows the correlation between the independent variable and the dependent variable. The R value is 0.850. This means that the correlation between an incentive variable and a work achievement variable has a very strong relationship.

Meanwhile, to find out the amount of contribution of variable X to variable Y, the coefficient determination test is used. The coefficient of determination (R2) is a way to find out how much the change in the dependent variable (Y) affected by the independent variable (X). It is known that an adjusted R Square value of 0.712. This means that the contribution of independent variables (X) to the dependent variable (Y) is 71.2%, meanwhile the rest of 28.8% is influenced by other variables, i.e. individual factors such as business, ability, task and environmental factors such as physical condition, materials, education, and training which are not included in this study.

5. Discussion

This study investigated the influence of incentives on the work achievement of agents in Takaful Keluarga Insurance at Riau Agency Representative Office of Pekanbaru city. It consists of two variables, namely an independent variable (incentives) and a dependent variable (work achievement). The data analysis used in this research is quantitative descriptive method, which analyzes the data in argumentation. It analyzes the data statistically by using simple regression analysis to measure the influence of variable X on variable Y. Then, the data calculation is processed by using computer program SPSS version 17.0.

After the results of analysis were known, then the writers conducted a significant test or partial test between incentives and job achievement. This test was done to find out the influence of incentives on work achievement of the agents. From the tests, it found that there is a significant influence of incentives on the work achievement of agents in Takaful Keluarga Insurance at Riau Agency Representative Office of Pekanbaru city. It found that the value of t-counted (8,232) is greater than the value of t-table (2.052). It means that based on the partial test, it can be concluded that the variable X (Incentives) has more influential on variable Y (work achievement).

Furthermore, the writers then conducted the correlation coefficient test, whereas the correlation coefficient is another way used to find out the type of correlation (relationship) between incentives and agents’ work achievement. Based on the calculation results, it found that the magnitude of correlation coefficient between incentive and work achievement of agents (r) of 85%. So, it means that the relationship between incentives and work performance of agents in Takaful Keluarga Insurance at Riau agency representative office of Pekanbaru city is in involved in the category of very strong correlation. The last analysis done by the writer was the coefficient of determination analysis, whereas the coefficient of determination is a quantity that shows how big contribution of influence of variable X (incentive) on variable Y (work achievement). From the analysis result, it is known the value of contribution between incentives and the work performance of agents equal to 71,2% and the rest of 28,8% is influenced by other factors which are not included in this research.

6. Conclusion

Based on the results discussed in the previous discussion related to the influence of incentives on work performance of agents in Takaful Keluarga Insurance at Riau Agency representative office of Pekanbaru city. The results of partial test, it found that t-counted value is greater than t-table, it means that there is a significant influence of incentives on work performance in Takaful Keluarga Insurance at Riau Agency Representative Office of Pekanbaru city. Meanwhile, the correlation coefficient results stated there is a very strong relationship between incentives and work achievement. The coefficient of determination indicates the value of contribution of incentives to work achievement and the rest is influenced by the other factors which are not involved in this research. Besides, from the results of this study, it is known that the company of Takaful Keluarga Insurance has already provided better incentives to its agents especially to those who work at Riau Agency Representative Office of Pekanbaru city.

Acknowledgments

Author would like to express thank you to Universitas Islam Riau, Indonesia to fund this research.

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