Internship

Syed Zubayer Alam

ID: 0420007
 The Impact of Financial Rewards on
Financial Performance:
The Case of Pioneer Insurance Company
Limited
 Introduction
 Established at 1996

 Enlisted in both DSE and CSE

 Declares dividend regularly

 High claim paying capability

 Practices relationship marketing strategy

 Alliance with ACI, Boshundhara, Square Group

 Enlisted with major local and foreign banks

 Statement of the Problem
 Employee turnover tendencies in middle and lower
management

 Long term loss due to shifting jobs and roaming in the

same industry

 Internal weakness and external threats

 Management is suspecting employee motivation for

productive work is not supported by financial rewards

 Possibility of below average financial performance in

the long run
 Purpose of the Study
 The purpose of the study is to find out
relationship between financial rewards and
financial performance

 In prior researches, significant positive

relationships found between financial
rewards and financial performance

 Rational need for investigating the

relationship
 Limitations of the Study
 Exclusion of an important variable

 Sampling

 Time limitation

 Relying only on primary data

 Experience level of the researcher

 Response error of participation

 Pilot testing
 General Assumption of the Study
 “Pay for performance" philosophy

 Incentive plan must start from the top level

management

 For minimizing cost and maximizing benefit

 Should be focused on both financial

performance and quality of products or
service
 General Assumption of the Study
 Motivation through monetary rewards

 Substantiality of rewards

 Post performance pay

 Measurable performance

 Communication and administration

 Contradiction to the Theory
 Safety vs productivity

 Long term vs short term

 Decrease of error rate

 True exposure vs compliance

 Contradiction to the Theory
 Rewarding for incomplete tasks

 Treating rewards as a cost of

operation

 Budget constraints

 Improper use of budget

 Research Question
 1. Is there is any significant relationship between the basic
salary paid to the employees and the company’s financial
performance?

 2. Is there is any significant relationship between paying the

employees for their performance and the company’s
financial performance?

 3. Is there is any significant relationship between receiving

various allowances by the employees and the company’s
financial performance?

 4. Is there is any significant relationship between other

financial reward received by the employees and company’s
financial performance?
 Research Hypothesis
 1. There is a significant relationship between the basic
salary paid to the employees and the company’s financial
performance.

 2. There is a significant relationship between paying the

employees for their performance and the company’s
financial performance.

 3. There is a significant relationship between receiving

various allowances by the employees and the company’s
financial performance.

 4. There is a significant relationship between other financial

reward received by the employees and company’s financial
performance.
 Development of Conceptual
framework
Independent Dependent
Variable Variable

Financial
Reward Financial
Performance
Basic Salary
Performance
Allowance
Others
 Operational Definition
 Financial performance:

Financial success includes sales, profit, cash flow,

turnover, returns on investment, growth return on
capital and inventory turnover.

 Financial rewards:

A rewarding is an integrated approach based on

employees contribution, skill, competence and their
market worth. They are basic salary, performance
related pay, allowances and other financial rewards.
 Methodology

 Research design: Correlation study

 Research approach: Retrieving preliminary

data through questionnaire survey

 Sampling method: Non-probability

convenience sampling. (n=60)

 Research instrument: Structured likert-type

questionnaires
 Methodology
 Pilot testing: Limited

 Data collection: In person

 Data analysis: Cronbach's alpha,

mean, Standard deviation, correlation
coefficient, regression
 Results
Descriptive Statistics and Reliability Coefficient

Variables Items Alpha M SD

Basic Salary 4 0.091 2.94 0.41

Performance 3 0.138 3.06 0.50

Allowance 6 0.017 3.03 0.34

Others 2 0.07 2.97 0.57

Financial 7 -0.533 3.95 0.25

Performance
 Results
Correlation Analysis
Variables Basic Salary Performance Allowance Others Financial
Performance

Basic Salary 1

Performance -0.04416 1

Allowance 0.047861 0.112234 1

Others -0.07146 0.172886 0.128192 1

Financial -0.05528 -0.04256 -0.04127 -0.05509 1

Performance
 Results
Standardized Regression
Variables Beta R-Square Significance
Coefficient F\P
0.0086 0.9751

Basic Salary -0.0350 0.6638

Performance -0.0163 0.8085

Allowance -0.0205 0.8361

Others -0.0213 0.7181

 Results
Forward Stepwise Regression
Model Beta R-Square Significance
Coefficient F/P
Step 1 0.6749

BS-FP -0.0328 0.0031

Step 2

(BS+O)-FP 0.0066 0.8290

BS -0.0353 0.6546

O -0.0253 0.6556
 Assesment of Hypothesis
 H1: Insignificant, negative, negligible

 H2: Insignificant, negative , negligible

 H3: Insignificant, negative , negligible

 H4: Insignificant, negative , negligible

 Significance of the Study
 Prerequisites to direct financial rewards to financial
performance may not be considered

 Employees may be wrongly motivated through the

current practice of rewards

 Company policy might not be focused on financial

performance at the time when the research was
conducted

 Nature of the studied area is distinctive regarding

structure, employee competence, demand on job
market
 Suggestion to the company
 Decision should be taken considering the limitations of
the study

 Management should try to motivate employees with

non-monetary motivation inputs (e.g. employee of the
month, oral appreciations etc)

 May take appropriate steps so that employees get

motivated by monetary rewards as it is hypothetically
proven that financial rewards have positive significant
relationship with financial performance
 Recommendation for Future
Research
 Considering all relevant variable

 Overcome time limitation

 Bias free sampling

 Access to secondary information

 Authentication and guidelines to conduct pilot testing

 The context should follow the prerequisites and

conditions before executing any financial rewards plan
to enhance financial performance
 Conclusion
 Business process efficiency best complies
with increasing demand

 Motivation of employees smoothens

business process

 As money is the most effective and efficient

motivation tool, so reward policies should
be implemented in accurate manners
Thank You