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THE IMPACT OF FINANCIAL REWARDS ON FINANCIAL PERFORMANCE:
THE CASE OF PIONEER INSURANCE COMPANY LIMITED
By
Syed Zubayer Alam
ID: 0420007
An Internship Report Presented in Partial Fulfillment
of the Requirements for the Degree of
Bachelor of Business Administration
INDEPENDENT UNIVERSITY, BANGLADESH
December 2008
THE IMPACT OF FINANCIAL REWARDS ON FINANCIAL PERFORMANCE:
THE CASE OF PIONEER INSURANCE COMPANY LIMITED
THE IMPACT OF FINANCIAL REWARDS ON FINANCIAL PERFORMANCE:
THE CASE OF PIONEER INSURANCE COMPANY LIMITED
By
Syed Zubayer Alam
ID: 0420007
has been approved
December 2008
____________________
Dr. Sarwar Uddin Ahmed Assistant Professor School of Business
Independent University, Bangladesh
December 1, 2008
Dr. Sarwar Uddin Ahmed
Assistant Professor
School of Business
Independent University, Bangladesh
Dear Sir,
With great pleasure, I am submitting my internship report on “The impact of financial
rewards on financial performance: The case of Pioneer Insurance Company Limited.” This
report is a part of my internship program (BBA-499A) for the partial fulfillment of my
Bachelor of Business Administration (BBA). The report will be helpful to the company to
relate financial reward with financial performance as this is a correlation study.
This is the first time I have done a correlation study in a complete form and my optimum
level of efforts has been utilized to make the report. However, there were some limitations
which were not possible to minimize.
I anticipate you will consider the limitations while assessing the study. Your wise
suggestions will help me to do enriched research in future.
With regards
Syed Zubayer Alam
ID: 0420007
Acknowledgement
At first, I would like to thank the supreme almighty Allah for giving me such blessings to
complete my internship and preparing the report. In preparing and finishing my internship
report, I would like to acknowledge the support and guidelines provided by number of peoples
and institution. I am grateful to the management of Pioneer Insurance Company Limited for
giving me the chance to complete my internship in their organization. I would like to mention
the name of Mr. Q.A.F.M Serajul Islam, Managing Director, for allowing me as an intern in
the organization. My gratitude is expressed to my organizational supervisor Mr. Habibur
Rahman Chowdhury, Assistant General Manager, Human Resource Department for providing
me the opportunity to gather certain work experience to enhance my quality in job market. I
am highly respectful to Mr. A.K.M Abdul Alim, Assistant General Manager, Underwriting
and Mr. A.N.M Shakawath Hossain, Assistant Manager, Underwriting for providing me a
pleasant learning time. Finally, I am grateful to my honorable supervisor Dr. Sarwar Uddin
Ahmed, Assistant Professor, School of Business (SB), Independent University, Bangladesh
(IUB) provided valued guideline needed which diluted constraints and encouraged me to
prepare my internship report on: “The impact of financial rewards on financial performance:
The case of Pioneer Insurance Company Limited.”
Table of Contents
List of Tables I
List of Figure I
Executive Summery II
1.0 Introduction 1
2.0 Statement of the Problem 2
3.0 Purpose of the Study 2
4.0 Research Timeline 3
5.0 Limitations of the Study 3
6.0 Review of Literature 5
6.1.0 Orientation of Variables 5
6.1.1 Dependent Variable: Financial Performance 5
6.1.2 Independent Variable: Financial Reward 6
6.2 Relationship between Financial Rewards and Financial Performance 7
6.3 Contradiction to the Theory 8
6.4 General Assumption of the Study 10
7.0 Research Timeline 11
8.0 Research Hypothesis 11
9.0 Development of Conceptual Framework 12
10.0 Operational Definition 12
11.0 Methodology 12
11.1 Research Design 12
11.2 Research Approach 13
11.3 Sampling Method 13
11.4 Research Instruments 13
11.5 Pilot Testing 14
11.6 Data Collection 15
11.7 Data Analysis 15
12.0 Results 16
12.1 Descriptive Statistics and Reliability Coefficient 16
12.2 Correlation Analysis 17
12.3.0 Regression 18
12.3.1 Standardized Regression 18
12.3.2 Forward Stepwise Regression 19
13.0 Discussion 20
14.0 Assessment of Hypothesis 21
15.0 Significance of the Study 22
16.0 Recommendation for Future Research 23
17.0 Conclusion 24
Reference 25
Appendices 28
Appendix-1 29
Appendix-2 31
Appendix-3 32
Appendix-4 38
Appendix-5 44
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List of Tables
1. Timeline for conducting the research 3
2. Operational definition of measured variables 12
3. Descriptive statistics and reliability coefficient 16
4. Levels of correlation among the studied variables 17
5. Benchmark of measuring the strength of relationships among studied variables 17
6. Standardized regression 18
7. Stepwise regression on financial performance 19
List of Figure
1. Conceptual framework of independent and dependent variables 12
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Executive Summary
This is a research paper has been prepared to investigate the relationship between several
financial reward practiced in the context of Pioneer Insurance Company Limited and its
financial performance. The results of the investigation will help the company to resolve its
problem that has been described in statement of the problem and other users to generalize the
findings so that they can apply the decision suggested if similar problem faced in different
contexts. The researcher of this study tried to describe all possible typologies used and prior
evidences of similar study, applied designs, sources of data, tools of investigation and
decision criteria. Limitations are the most prominent section in this study. The researcher has
also tried to suggest some guidelines to those who have interest to conduct research further on
the same areas of interests.
1.0 Introduction
The practice of insurance has been increasing day by day in Bangladesh. Government
regulation requires insurances of motor vehicles to permit transportation. There are a lot of
loans available in commercial banks in the country for business development, production
procurement and various other long term or short term projects. The banks require certificates
of insurances in order to approve the loan request. Pioneer Insurance Company Limited
(PICL) is one of the leading general insurance (non-life) companies of Bangladesh. The
company has started its journey since 1996 sponsored by several well established
industrialists. The company has authorization to issue shares in both Dhaka Stock Exchange
(DSC) and Chittagong Stock Exchange (CSE). Regular declarations of dividends from its very
birth proved its financial strength. The selling price of the company share is 375TK each
where the book value is 100TK. The company is capable of paying high claims. The
company’s mission is to become fast growing insurance company in Bangladesh. Its aim is to
boost the industrial and economic growth of the country with help of competitive price. In
addition, the company wants to become leading re-insurer which helps Bangladesh economy,
to develop risk management technologies. Its mission is to serve best to the clients, to protect
shareholders investments, to facilitate employees, to maintain ethics, to collect revenue for
government and to be transparent in disclosing. It covers almost all risks of fire, marine,
motor, engineering, aviation and other miscellaneous insurances. The company applies
relationship marketing strategy. It has big buyers like Advanced Chemical Technologies
Limited (ACI group), Boshundhara Group of Industries and Square Group of Industries etc.
The organization is also enlisted with almost all major local and foreign banks operating in
Bangladesh. The researcher joined the head office as an intern found middle and lower
management personnel’s tendency to shift jobs.
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2.0 Statement of the Problem
Pioneer Insurance Company Limited is experiencing employee turnover tendencies over
the past few years. Most of the employees showing such tendencies work in middle and lower
middle management. These employees are vital to the company’s day to day operations. As
insurance companies are distinctive sector of business, it is an unavoidable loss for a company
when well trained, developed and experienced employees are shifting their job and roaming in
the same industry. The workers of any insurance company are likely to roam in the same
industry as their experience level and training systems are different compared to other
industries. These act of employees putting the company in a double trouble of facing internal
weakness and external threats of competitors at the same time.
In analyzing and resolving the problem, management is suspecting the employee
satisfactions and motivations are not supported by the rewards they receive compared to the
tenure they provide. As a result, company might face below average financial performance in
the long run. For the company it is important to find out an evident relationship between
financial performance and the financial reward practiced in the organization.
3.0 Purpose of the Study
The purpose of the study is to identify the relationship between financial reward and
financial performance. The researcher used different guidelines to build strong thought about
the relationships which have been identified. In prior researches, the researcher found positive
significant relationships between various financial rewards and financial performance which
were considered evidential proof about the relationships and a rational need to investigate
relationships between rewards and performance. In this study, the research paper of Richard &
Marilyn (2001) had been used as a skeleton. Based on their study, the researcher tried to
rectify the same findings in the context of Pioneer Insurance Company Limited, Bangladesh.
The impact of financial rewards on financial performance: The case of Pioneer Insurance Company Limited.
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The researcher expected likelihood of the findings in the studied area as per prior research
findings.
4.0 Research Timeline
Table 1
Timeline for conducting the research
Activities Timeline
Proposal submission 15th September
Review of literature 12th October
Conceptual framework 27th October
Data collection 10th November
Data analysis and findings interpretation 19th November
Draft Submission 23rd November
Final Submission 1st December
5.0 Limitations of the Study
An unambiguous disclosure of limitation draws a clear picture about the validity of any
research paper. In this paper, only the limitation have acted as an acute barrier in the decision
making process of the users. Several limitations have been discussed in the following:
• Exclusion of an important variable: The researcher had no permission to collect
demographic information of the respondents from the management of the company.
As a result, the moderating effect of ‘career stage life cycle’ in the relationship
between financial rewards and financial performance had been treated as an
extraneous variable. Career stage life cycle describes employees demand for rewards
vary throughout their different stages of careers (Lynn et all, 1996; Weaver, 1976).
The diversity regarding responses of employees in the company could not be possible
to explain without their demographics.
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• Sampling: The context of this research is Pioneer Insurance Company Limited. The
company has 9 workstations throughout Bangladesh. Though simple random sampling
is proven to be bias free sampling technique but the researcher had used non
probability convenience sampling due to program structure and unfavorable
involvement of management. Moreover, as there was no prior study done in the
context, population parameter was not found to plan any sample frame.
• Time limitation: This type of study is difficult to be conducted within three months of
time. If the researcher had the opportunity to conduct research with larger time frame,
the problem statement, conceptual framework, research questions and hypothesis
would have been clearer and findings of data analysis would be more undisputed.
• Relying only on primary data: This type of study can be better conducted through
the involvement of secondary data such as reports of management accounting,
appraisal of competence reports (ACR) and prior related research etc. As the
researcher had no access to management reports, so that the study only relied on
employees attitudes regarding the conceptual framework.
• Experience level of the researcher: The researcher had little or no experience
conducting research. This is the first time for the researcher conducting a complete
research alone. The level of experience of the researcher must be considered before
judging the validity and reliability concerning the analysis and findings of the study
respectively.
• Response error of participation: The researcher has used self administered personal
survey to collect data. The researcher tried to motivate the respondents regarding the
cooperation of the study. But there were still chances of error occurrences in the
participation. The belief of respondents that the survey is important and response must
include the dismissal of mental reservations was still uncontrollable by the researcher.
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• Pilot testing: Pilot testing has not been done in a broad range due to several above
mentioned reasons. Pilot testing helps to improve the reliability of multiple item scale
variance. There were disputes found to benchmark the acceptability about reliability of
scales. Many researchers differently benchmarked the acceptability of Cronbach’s
Alpha value. Moreover, there was no specific guideline found to improve the content
of questionnaires so that the alpha value improves. However, to be acceptable,
Cronbach’s Alpha value requires rational responses of the participants which are still
their liberty.
6.0 Review of Literature
6.1.0 Orientation of Variables
6.1.1 Dependent variable: Financial performance
Researchers consider business performance as the aggregate results of the activities
undertaken by an organization. That implies organizational performance includes different
types of financial and non-financial success. Financial success includes sales, profit, cash
flow, turnover, returns on investment, growth return on capital and inventory turnover.
Measuring performance in variety of levels such as national, industry, company and product
and services the conclusions of results become difficult. Measuring performance includes
three dimensions such as effectiveness, efficiency and adaptability. There is always trade-offs
among these three. Success in one dimension compromises success in other dimensions. So, it
does not guarantee the accuracy of performance (Richard & Marilyn; 2001). Here is some
brief discussion about several financial performances:
• Return on assets: Indicates profitability of a company relative to its total assets for a
specific period of time (usually for one year). It is the ratio of net income and average
total assets.
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• Net Income: Net income is calculated by taking revenues and subtracting cost of
business, depreciation, interest, taxes and other expenses. The calculation is found on a
company’s income statements.
• Cash Flow: It is a financial performance which represents the amount of cash a
company generates after expending the money required to maintain or expand its
assets. It is an indicator to enhancing shareholder value, developing new products,
making acquisitions, paying dividends and reducing debt. Even a negative cash flow is
considered to be as an indicator of investment. It is difficult to fake cash flow
statements rather than faking net income. Cash flow is calculated by adding
amortization and depreciation with net income and subtracting changes in working
capital and capital expenditure.
• Return on Investments (ROI): It is a financial performance measure by calculating
the ratio of net gain from investment and total cost of investment.
• Dividend: It is a distribution of a portion of company’s earnings, decided by the board
of directors to the shareholders according to the amount of ownerships.
(Source: Investopedia)
6.1.2 Independent variable: Financial reward
Reward can be treated as some offerings in addition to pay. Traditional reward systems
based on positions and longevities. But now a day’s profit sharing, gain sharing and stock
options plan is being practiced as a reward. Modern reward system includes stock grants,
certificate of appreciation, even personal thank you notes. (Nelson, 1994)
According to Walker et al (1979), rewards are classified into extrinsic and intrinsic
rewards. Extrinsic rewards include basic salary and allowances which is needed to fulfill
psychological and safety needs. Intrinsic rewards help individuals’ feelings and perceptions
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about the job situation which is needed to fulfill self-esteem, competence, self-actualization
etc. There are several financial rewards commonly found in sales organizations are salary and
commission, bonus, fringe benefits, stock options, retirement plan which fulfills both extrinsic
and intrinsic needs of employees.
According to Coli (1997), classification of reward and recognition, there are three types of
rewards. They are monetary, awards and developmental rewards. Monetary rewards includes
individual bonus for project completion, stock grants, skill-based pay, gain sharing, targeted
total cash, special individual increase, non-discretionary incentives for the beginning of the
project etc. According to Lyons & Ora (2002), financial performance includes basic salary,
variable pay, other compensations, perquisites and benefits.
Zammit (2004), best described financial rewards. A reward strategy is an integrated
approach to reward employees according to their contribution, skill and competence and their
market worth. The author classified four types of financial reward. They are basic salary,
performance related pay, allowances and other financial rewards. The basic salary is
determined according to management position, standard of living, job market, qualification of
the receivers. The dimensions of performance consist of bonuses, commissions and special
skills. Allowances are most commonly provided for substitution, workstation transfer and
transportation, free or discounted benefits, cultural or religious holidays, telecommunications.
Other financial rewards mostly practiced by offering stock options, pension schemes.
6.2 Relationship between Financial Rewards and Financial Performance
Financial rewards practiced by an organizations plays an important role in motivating
employees to perform. Organization’s financial performance ultimately affects by employee
performance. It is also considered that improper reward practices may result below average
financial performance of organizations. Most agree that reward practices act as motivators that
shape the employees behaviors. According to prior researches, it is commonly believed that if
The impact of financial rewards on financial performance: The case of Pioneer Insurance Company Limited.
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financial rewards are effectively used, employees are motivated to perform high and that
ultimately results financial performance. Financial performance is improved if there is a
carefully crafted reward practice (Allen & Helms; 2001). It is difficult to relate financial
reward with organizational financial performance (Kerr, 1999). Reward must be positively
influence performance (Nelson, 1994). Regardless to ‘team-based reward’, individual reward
is still important as individuals could see that their activities are making difference to the
organization. A few businesses design their reward system for the optimization of company
performance. Basic salary and incentives matches competitive practice and emphasizes
performance results (Zingheim & Schuster, 2000). In a research, it is found that employees
stock ownership plans and profit sharing are widely used reward practice (Lawler et all,
1995). Hale (1998) and Lawler (1981, 1987) recognized rewards have critical importance as a
means of employee motivation. Organizations and manager acknowledge reward and
recognition consistently as a motivator of individual employees. Employees’ understandings
and satisfactions with reward system lead to specific behaviors and actions, finally results
operational and financial results (Cacioppe, 1999). According to Saxby (2007), it is an
avoidable mistake of management for not rewarding employees for a well done job. Tangible
rewards are nicer and more meaningful regarding employee motivation rather than intangible
praising and acknowledgement.
6.3 Contradiction to the Theory
According to LaBelle (2005) in some cases managers may practice rewards for some
behaviors which is unexpected or unproductive. Sometimes worker may misunderstand the
objective of getting reward. Some cases of mismatches are discussed below:
• Safety vs productivity: Sometimes, employees do not understand that whether he\she
is receiving reward for working safely or for the firm’s productivity or for the quality
of services rendered.
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• Long term vs short term: Every company usually have strategic goals for long term
or short term basis. To implement the strategy, managers implement timelines
according to the strategic term basis. If any employee does not know about for the
incentive plan, he\she will never consider incentive as a reward for motivation.
• Decrease of error rate: Sometimes employees get reward for the decrease of their
error in operations. If an employee corrects the errors after making it and gets
rewarded for that, it will not enhance the financial performance of any firm. Because
employees efforts gets double counted on working and re-working on a single task.
• True exposure vs compliance: Sometimes employees behave that they have high
commitment to their job responsibilities, eager to add value to company’s productivity
but actually they are not much productive for the company still getting rewards for this
sort of behaviors.
• Rewarding for incomplete tasks: Very often company gives reward to its employees
for incomplete tasks or closely completed task. Management thinks correcting
mistakes consume resources like time, energy and equipments. This sort of operational
trend does not leads financial performance as it rather compromises with the quality of
products and services.
• Treating rewards as a cost of operation: Management accountants sometimes treat
rewards as a cost driver. As a result, cost per unit goes higher. If the company focus on
cost reduction strategy then employees will be deprived from the rewards and
ultimately reward will not help financial performance.
• Budget constraints: If there is such budget where the fund for financial reward
become narrow or cut off then the employees could not receive their rewards or feel
discriminated about the amount of incentive they receive.
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• Improper use of budget: Although there is fund for financial reward in a budget, if
that not used properly, reward could not enhance financial performance.
6.4 General Assumption of the Study
Goode (1985) set some general assumption as a prerequisite where financial reward
influences financial performance. As his statement, financial rewards results in financial
performance if any company practice the following issues:
• There must be a “pay for performance” philosophy in the company policy. A company
must pay its employees for their performances.
• Incentive plan must start from the top level management. It is especially for those
workers whose performance has significant and measurable impact on the financial
results or on the quality of service.
• Incentives must be used to the extent where it generates revenue or saves costs. In
other words, there must be a benefit of costs for an incentive plan.
• Incentives must be given for both financial performance and quality of service. If
financial reward is only for the financial performance, then management might
overlook the quality of goods or services.
• Employees must be motivated by monetary rewards.
• Financial rewards must be substantial. There must not be unlimited amount of rewards
for a specific amount of performance.
• Incentive should not be any liability unless any performance is done. It must be clearly
outstanding, in excess of promised regular payment.
• The performance must be measurable in most times. Sometimes, non-measurable
performance might be considered in order to keep balance between organization’s long
term and short term objectives.
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• Any reward plan must be communicated and administered with trust. A trusted
employee can add value to organization if he\she is communicated and administered
with a well designed incentive plan.
7.0 Research Questions
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?
8.0 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.
The impact of financial rewards on financial performance: The case of Pioneer Insurance Company Limited.
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9.0 Development of Conceptual Framework
Independent Variable Dependent Variable
Financial Reward
• Basic Salary
• Performance
• Allowance
• Others
Financial Performance
Figure 1: Conceptual framework of independent and dependent variables
10.0 Operational Definition
Table 2
Operational definition of measured variables
Measured Variables Operational Definition
Financial performance Operationally defined by Richard S. Allen and
Marilyn M. Helms (2001)
Financial reward:
a) Basic Salary
b) Performance
c) Allowance
d) Others
Operationally defined by Zammit (2004)
11.0 Methodology
11.1 Research Design
According to the research questions, hypothesis and conceptual framework, this research
requires a co relational study. The researcher thus identified the relationships among the
variables. Any research that studies relationship among two or more variables is called co
relational study (Cooper & Schindler, 2003). In the research questions, the requirement of
relationship identification is implied. On the other hand, in conceptual framework there are
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four independent sub-variables defining independent variable and a single dependent variable
shown which directs the researcher to a relationship study. The four independent variables are
basic salary, pay for performance, allowance and other financial rewards. The only dependent
variable is financial performance.
11.2 Research Approach
In order to answer and test the research questions and hypothesis respectively, the
researcher conducted a survey to collect primary information. The researcher used structured
and previously used questionnaire with well established scales to collect and measure primary
data. The respondent of the survey was the employees of Pioneer Insurance Company
Limited, Head Office. There were two types of employees work there according to
classification of human resource management department of the company. One is desk
employees, the employees who work in the office for a specific period of time in a week.
Other is especially business developers. They have no restrictions to stay in the office. The
developers were not reachable directly by the researcher as they mostly work at outside. The
researcher surveyed at the office. The respondents voluntarily responded the survey. The
researcher has also oriented the survey to the HR staffs for assistance and to reach the
business developers as they are mostly works outside the office.
11.3 Sampling Method
Due to the research opportunity (internship program), the researcher had only scope to
make a survey in one office. Referring to the situation, the researcher applied a non-
provability convenience sampling. All respondents in the sample work in the head office. Size
of the population is 60 excluding incomplete response and non-participation.
11.4 Research Instruments
The researcher used questionnaire as the instrument of research. As already mentioned, the
questionnaires are previously practiced, well defined, scaled and structured. Questionnaire is a
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structured technique of data collection which contains series of questions to answer through
writing and speaking (Malhotra, 2004). The questionnaire used in this study was close ended
and written form. The reasons to use this sort of questionnaires are:
• It is easy to instruct the respondents.
• Personal communication builds trust in respondents.
• Ease of data analysis.
• Consumes less time to conduct.
The conceptual framework has been derived from Allen & Helm’s (2001) “Reward
Practices and Organizational Performance” where the conceptual framework was total
rewards influencing organizational performance. In their research, they included non-
monetary independent and dependent items. Questionnaires for independent variables they
used in their research were developed by Bellenger et al (1984); Churchill et al (1979); Ford
et al (1985); Ingram & Bellenger, (1983). They developed their own questionnaire for
organizational performance. In this study, the questions of non monetary items had been
omitted.
The questionnaire used in this study contains 22 questions. Among the questions, 15
questions were used to measure independent variables and 7 questions were used to measure
dependent variable. 4 questions were used to measure basic salary, 3 questions were used to
measure performance, 6 questions were used to measure allowances and 2 questions were
used to measure other financial rewards. The scale of all questions were five-point likert type
scale starting from 1= “strongly disagree” to 5= “strongly agree”.
11.5 Pilot Testing
As mentioned by Cooper & Schindler (2003), pilot tests are used to reduce errors in the
design of survey instruments and improper control of extraneous variables. Pilot test includes
re-ordering, re-wording, questionnaire layout, items deletions, item swapping among variables
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and scale re-engineering. The researcher had little or no efforts to perform pilot test. The
reason has been discussed in the limitation section. The researcher consulted with the top
management to make sure items used in the questionnaire either have practice in the
organization or not. Finally, the unpracticed item has been deleted and questionnaire was re-
prepared for data collection.
11.6 Data Collection
As there was no prior study done in the context of Pioneer Insurance Company Limited,
the researcher had collected primary data. Questionnaire surveys are mostly used to collect
primary data. A cover letter explaining the purpose of the survey was attached with each
questionnaire. The respondents were guaranteed to be anonymous. The data was collected at
the office mostly in person so that the respondents feel secure in stating their opinion. They
were given the questionnaire at lunch break during the working days. Some data were
collected through the HR staffs regarding the responses of business developers.
11.7 Data Analysis
This is a correlation study. After collection of primary data the researcher have used
statistical to illustrate the degree to which variable is related with another variable. The tool is
known as correlation analysis. First, researcher has measured some descriptive statistics such
as mean, standard deviation for consistency, Cronbach’s (1951) alpha for reliability of the
variables. Then, researcher also has calculated the Pearson’s product moment correlation
coefficient. This identified the direction of relationships between independent and dependent
variables.
Finally, the researcher has conducted regression analysis to assess the association of
independent variables correlated with the dependent variable. There are two types of
regression analysis has been done. First one is the ‘standard’ or ‘enter’ method of regression
where all the independent variables were put together and be assessed how they are explaining
The impact of financial rewards on financial performance: The case of Pioneer Insurance Company Limited.
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the dependent variable. Second one is forward stepwise method which will be used to identify
which independent variable(s) has the best linear model. In short, there has been a goodness of
fit to test if the variables together associated or not. For significance test in correlation
analysis, p-value has been define significance of correlation and ‘significance F’ has been
used to define the significance of regression analysis.
The researcher has used Microsoft Excel 2002 and XLSTAT 2008 for data analysis to meet
requirement of research.
12.0 Results
12.1 Descriptive Statistics and Reliability Coefficient
Table 3
Descriptive statistics and reliability coefficient
Variables No. of Items Alpha M SD
Basic Salary 4 0.091 2.9375 0.4133
Performance 3 0.138 3.0556 0.503
Allowance 6 0.017 3.0278 0.3392
Others 2 0.07 2.9667 0.5739
Financial Performance 7 -0.533 3.95 0.245
The above table shows the descriptive statistics and reliability coefficient of measured
variables. In the descriptive statistics researchers calculated means (M) and standard
deviations (SD). Mean illustrates summarized opinion of the respondents and standard
deviation shows the consistency of the opinions. Closer the value of standard deviation is near
to 0 more the opinions are consistent. As there are multi item variables, weighted average
method has been implemented to calculate the mean of variable.
There are five variables in the table. First four are independent variable and last one is the
dependent variable. Every variable contains multi item scales. Cornbach’s (1951) alpha
coefficient has been calculated to measure reliability of multi-item scale variables. According
to Gilem & Gilem (2003), value of Cronbach’s (1951) alpha ranges usually from 0 to 1, but
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there is no lower limit of this value, closer to 1 stronger the reliability. According to George
and Mallery (2003), alpha value more than 0.5 is sufficient and not more than 0.5 is
unacceptable.
12.2 Correlation Analysis
Table 4
Levels of correlation among the studied variables
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
Performance -0.05528 -0.04256 -0.04127 -0.05509 1
Correlation study has been conducted to measure the relationship status among the
variables. In this above table show all the by-variant correlation. Pearson’s product moment
correlation (r) has been calculated. The value of r ranges from -1 to 1. Negative value of r
determines negative relation between the variables, positive value of r determines positive
relation between variables and 0 value of r determines no relation. Rowntree (1981) suggested
a benchmark to interpret the r values are in the following:
Table 5
Benchmark of measuring the strength of relationships among studied variables
Range Interpretation
0.0 to 0.2 Very weak, negligible
0.2 to 0.4 Weak, low
0.4 to 0.7 Moderate
0.7 to 0.9 Strong, high, marked
0.9 to 1.0 Very strong, very high
The impact of financial rewards on financial performance: The case of Pioneer Insurance Company Limited.
18
P-value has been considered to test proposed hypothesis significance. The range of p-value
is 0 to 1. If the value is less than 0.10, then the hypothesis is statistically significant. If p-value
is not less than 0.10 then the hypothesis is not significant. No sustainable management
decision can be made on the basis of any insignificant relationship.
12.3.0 Regression
12.3.1 Standardized regression
Table 6
Standardized regression
Variables Beta Coefficient R-Square Significance-F\P
0.008595935 0.975099598
Basic Salary -0.034964533 0.663817964
Performance -0.016254409 0.808522542
Allowance -0.020451512 0.836161263
Others -0.021310704
0.718067487
In this table above, R-square shows how these four variables explaining the dependent
variable. Beta coefficient shows the individual direction of relationships with the dependent
variable. Significance F in the first row shows the level of significance of total model and rest
of the values show individual p-values of independent variables contributing in the regression
model.
The impact of financial rewards on financial performance: The case of Pioneer Insurance Company Limited.
19
12.3.2 Forward stepwise regression
Table 7
Stepwise regression on financial performance
Model Beta Coefficient R-Square Significance F\P-Value Decision Step 1 BS-FP -0.032779624 0.0030557 0.67485265 Select
P-FP -0.020737327 0.0018112 0.746796181 Reject
A-FP -0.029818736 0.0017029 0.754240691 Reject
O-FP -0.023523646 0.0030344 0.675922389 Reject
Step 2 (BS+P)-FP 0.0050846 0.864779222 Reject
BS -0.033960427 0.666608422
P -0.021969762
0.734402823
(BS+A)-FP 0.0045506 0.878105305 Reject
BS -0.03168102 0.687861789
A -0.027971036
0.770908457
(BS+O)-FP 0.0065588 0.828995136 Select, Accept
BS -0.03529396 0.654645057
O -0.025339802
0.655618767
Step 3 (BS+O+P)-FP 0.0078177 0.931137714 Reject
BS -0.035977328 0.651297421
O -0.022714035 0.695991294
P -0.017562148
0.790789394
(BS+O+A)-FP 0.0075271 0.934639202 Reject, Stop
BS -0.034225773 0.667601136
O -0.023564295 0.683504312
A -0.02271113
0.816030763
Forward stepwise regression analysis has been done to find out the best model of
regression. Explaining the best model, stepwise regression technique sorts out the association
of independent variables best explains the dependent variable. In the best model, both
independent variables contribute optimum to the relationship with dependent variable.
In this table above, beta coefficient shows the partial correlation coefficient between
independent variables and dependent variable. R-square shows the strength of regression
The impact of financial rewards on financial performance: The case of Pioneer Insurance Company Limited.
20
model. Significance-F and p-value shows the significance level of regression model and the
correspondent independent variables respectively.
Choosing the best model, p-values of independent variables and significance-F values of
regression model has been considered. At first step byvariant regression has been done with
all independent variables individually. The model with a lowest p-value has been selected. In
the second step, another three variables has been added with the chosen model separately.
Again, significance-F and p-values had been observed and model with the lowest
significance-F value and p-values has been selected. At third step, the rest two independent
variables added separately and observation was repeated. Finally, the model with the lowest
significance-F value has been chosen and accepted.
13.0 Discussion
In this section, the researcher will interpret the findings of the data analysis. This helps the
users of the study to understand the results.
At the table of descriptive statistics and reliability coefficient shows every variable is
multi-item scale variable. Basic salary, performance, allowance, others and financial
performance has 4, 3, 6, 2 and 7 items respectively. All variables have unacceptable levels of
reliability. Among those, performance has the most (0.138) level of reliability and financial
performance is abnormally (-0.533) unreliable. Mean (M) illustrates the summarized opinions
of the respondents. Regarding basic salary (2.9375), performance (3.0556), allowance
(3.0278) and others (2.9667); respondents have showed ‘neutral’ attitudes but regarding
financial performance (3.95), the respondents showed ‘agree’ attitudes. Regarding standard
deviation (SD), financial performance (0.245) has the most consistency and other financial
reward (0.5739) has the least consistency.
The table of correlation shows the correlation matrix of studied variable. According to
Rowntree’s (1981) benchmark, all correlations found very weak, negligible. Among them
The impact of financial rewards on financial performance: The case of Pioneer Insurance Company Limited.
21
most strong relationship found between performance and other financial rewards (0.172886);
least strong relationship found between basic salary and other financial rewards (-0.07146).
There are 10 correlation found in the study. Among those 6 are positive and 4 are negative.
There are negative relationships found between independent variables and dependent
variables.
In the table of stepwise regression, at first stage basic salary (0.67485265) has been
selected according to its lower p-value compared to other independent variables. At second
stage basic salary and other financial rewards yields lower significance-F value
(0.828995136) compared to other models at the second stage. In this model, the p-values of
independent variables decrease as the sign of association together. At third stage, no variable
is associated with basic salary and other financial rewards as the significance-F value
increases in the regression model. So, no variable has been selected at third stage.
The best model found in the stepwise regression is basic salary and other financial rewards
as the independent variable and financial performance as the dependent variable. Basic salary
and other financial variable explain partially the financial performance by 2.5% and 3.5%
respectively. As there are negative signs in the beta coefficients, both independent variables
are negatively correlated with the dependent variable. R-square shows the strength of
regression (0.66%) model. This stepwise regression implies lower the significance-F and p-
values, higher the R-square values.
14.0 Assessment of Hypothesis
As per the data analysis results and discussion, the researcher has found the answers to the
research questions and hypothesis.
Hypothesis 1:
There is an insignificant (0.67485265) negative (-0.05528) relationship between basic
salary paid to the employees and company’s financial performance.
The impact of financial rewards on financial performance: The case of Pioneer Insurance Company Limited.
22
Hypothesis 2:
There is an insignificant (0.746796182) negative (-0.04256) relationship between paying
the employees for their performance and the company’s financial performance.
Hypothesis 3:
There is an insignificant (0.75424055) negative (-0.04127) relationship between receiving
various allowances by the employees and the company’s financial performance.
Hypothesis 4:
There is an insignificant (0.75424055) negative (-0.05509) relationship between other
financial reward received by the employees and company’s financial performance.
15.0 Significance of the Study
In this study, there is no significant result is found. In explaining the statement, limitations,
prerequisites, conditions must be considered for the clarity of the results. The career life stage
of employees acts vital role in this relational study. Involvement of this variable may help to
explain diversity of participants’ responses which has contributed the poor status of reliability
coefficients. The reliability of the measured variables could be improved through guided
procedure of pilot testing which was not somehow possible to perform. The honest and
enthusiastic response was not confirmed. According to the general assumptions has been
described in the literature review, the management might not have considered those
prerequisites before starting any rewards plan. The employees might not be oriented fully
about the rewards plan. As described in contradiction section, the employees might be
wrongly motivated by the reward system of the company which may result unfavorable
outcome of data analysis. It has been usually observed that due to company policy, there is
always trade-offs among different performance aspects. So, company policy plays an
important role in this study.
The impact of financial rewards on financial performance: The case of Pioneer Insurance Company Limited.
23
However, without any significant outcome from this research, no substantial management
decision can be made which is important for the company’s welfare. But regardless to the
difficulties discussed earlier, it is theoretically proven that financial reward has positive
impact on financial performance. This study may be treated as the actual picture of Pioneer
Insurance Company Limited which may be a representative of the whole scenario of general
insurance sector in Bangladesh. As per the data analysis, the relationships are negligible and
negative. Moreover basic salary and miscellaneous financial rewards are associated together,
also showing negligible and negative correlation with financial performance. Management
may either assume that there is little or no relationship exists between financial rewards
practiced in the organization and its financial performance based on the result of this research.
So, the company can try to motivate its employees through other non-monetary motivation
inputs. Otherwise it may intend to take initiatives in such a way that monetary rewards can be
treated as unique inputs for motivation which indirectly helps financial performance in the
company based on theoretical hypothesis. Between these two options, company can choose
one to minimize or eliminate management dilemma. The decision can be made through the
judgment of limitations described in this study.
16.0 Recommendation for Future Research
This research includes numbers of limitations which causing difficulties for the researcher
to generalize its findings. The researchers who have interest to conduct any research in the
same studied area should try to minimize the limitations as best as possible and should try
working in broader conceptual framework as well. If so, management dilemmas can be
resolved in effective, efficient and practical ways. Following steps can be taken to minimize
limitations and enrich the future research:
• The researcher must consult with the management and carefully define and develop
the problem statement as this is the foundation of any research.
The impact of financial rewards on financial performance: The case of Pioneer Insurance Company Limited.
24
• The researcher should consider all the relevant variables actively influence the
problem before developing the conceptual framework.
• The researcher must have the opportunity to complete research within a sufficient
amount of time.
• The sampling method should be bias free.
• Access to the secondary information should be allowed if those are necessary to
conduct the study.
• The company policy, direction of employees’ motivation to organizational
performance and their knowledge about company’s strategic and reward plan must
support the areas of research interest.
• The researcher should have acceptable authentication and guidelines in order to
conduct pilot testing.
17.0 Conclusion
Pioneer Insurance Company Limited is one of the leading general insurance companies in
Bangladesh. They have high customer demand for insurance policy as observed by the
researcher. In order to comply with the increasing customer demand, the efficiency of its
business process has no alternative. It can be improved through employee motivation for
working enthusiastically. The motivation of employees working can enhance the company’s
operational performance via smoothing of business process which can improve its financial
performance. Regarding motivation, money is the most effective motivator compared to other
alternatives. Finally, it can be concluded that effective motivation of employees can drive the
company to achieve its objectives, missions and visions if financial reward policies are
implemented in accurate manners.
The impact of financial rewards on financial performance: The case of Pioneer Insurance Company Limited.
25
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The impact of financial rewards on financial performance: The case of Pioneer Insurance Company Limited.
28
Appendices
The
impa
ct o
f fin
anc
ial r
ew
ard
s on
fin
anc
ial p
erf
orm
anc
e:
The
ca
se o
f P
ione
er
Insu
ranc
e C
ompa
ny
Lim
ited.
29
App
endi
x-1
Dea
r, A
que
stio
nnai
re s
urve
y w
ill b
e co
nduc
ted
to m
easu
re t
he e
mpl
oye
e\e
mpl
oye
rs’ p
erce
ptio
n re
gard
ing
finan
cial
rew
ard
prac
tices
influ
enci
ng th
e co
mpa
ny’
s fin
anci
al p
erfo
rman
ce.
You
r an
onym
ity w
ill b
e m
aint
aine
d.
Ple
ase
read
the
que
stio
ns c
aref
ully
and
mar
k th
e ap
prop
riat
e an
swer
.
The
impa
ct o
f fin
anc
ial r
ew
ard
s on
fin
anc
ial p
erf
orm
anc
e:
The
ca
se o
f P
ione
er
Insu
ranc
e C
ompa
ny
Lim
ited.
30
Circ
le O
nly
One
Ans
we
r
SN
Q
uest
ions
S
tron
gly
Dis
agre
e (1
) D
isag
ree
(2)
Neu
tral
(3
) A
gree
(4
) S
tron
gly
Agr
ee
(5)
Y
our
basi
c sa
lary
is (
1-4)
:-
1
perf
ect
ly a
ligne
d ac
cord
ing
to d
iffe
rent
ma
nage
me
nt p
ositi
ons
1 2
3 4
5 2
eno
ugh
to c
ove
r yo
ur
sta
nda
rd o
f liv
ing
1 2
3 4
5 3
fair
eno
ugh
to ju
stify
the
job
ma
rke
t 1
2 3
4 5
4 a
ccor
ding
to
your
qua
lific
atio
n 1
2 3
4 5
5 B
onu
s fo
r yo
ur p
erf
orm
ance
mot
iva
tes
you
to w
ork
hard
1
2 3
4 5
6 C
omm
issi
on fo
r se
lling
impr
ove
s yo
ur
com
pani
es
perf
orm
anc
e
1 2
3 4
5 7
You
de
serv
e r
ew
ard
for
your
spe
cia
l ski
lls
1 2
3 4
5
The
com
pany
's fi
nanc
ial p
erfo
rman
ce is
influ
ence
d by
rece
ivin
g al
low
ance
for:
(8-
13)
8
Sub
stitu
ting
fello
w e
mpl
oye
es
resp
onsi
bili
ty(s
) 1
2
3 4
5 9
Em
plo
yee
tra
nsfe
r to
any
oth
er
wor
ksta
tion
(e.g
. br
anc
h, h
ea
d of
fice
etc
) 1
2 3
4 5
10
Usi
ng c
ompa
ny c
ars
for
any
pur
pose
1
2 3
4 5
11
any
fre
e in
sura
nce
for
em
ploy
ee
s’ b
ene
fits
1 2
3 4
5 12
a
ny b
onu
s fo
r cu
ltura
l or
relig
ious
pur
pose
1
2 3
4
5 13
te
leco
mm
unic
atio
n e
xpen
ditu
re
1 2
3 4
5 14
e
mpl
oye
es
owne
rsh
ip o
f sha
re c
an
conc
lude
fina
ncia
l s
tre
ngth
s of
the
org
ani
zatio
n 1
2 3
4 5
15
Pe
nsio
n sc
hem
es
for
em
ploy
ee
s co
ntrib
ute
s co
mpa
ny's
fina
ncia
l pe
rfor
ma
nce
1
2 3
4 5
A
bove
men
tione
d fin
anci
al r
ewar
ds c
an p
ositi
vely
influ
ence
you
r co
mpa
ny's
: (16
-22)
16
Re
turn
on
Ass
ets
(RO
A)
1 2
3 4
5 17
S
ale
s of
insu
ranc
es
1 2
3 4
5 18
N
et
Inco
me
1
2 3
4 5
19
Ca
sh F
low
1
2 3
4 5
20
Re
turn
on
Inve
stm
ent
(R
OI)
1
2 3
4 5
21
Sto
ck p
rice
ris
e
1 2
3 4
5 22
D
istr
ibut
ion
of d
ivid
end
\pro
fit s
hare
to
inve
stor
s 1
2 3
4 5
The impact of financial rewards on financial performance: The case of Pioneer Insurance Company Limited.
31
Appendix-2
Descriptive Statistics
Items Basic Salary Performance Allowance Others Financial Performance Mean 2.9375 3.055556 3.027778 2.966667 3.95
Standard Error 0.053357 0.064934 0.043786 0.074092 0.03164 Median 3 3 3 3 4 Mode 2.75 3 3.333333 3 4
Standard Deviation 0.413299 0.502973 0.339167 0.573915 0.245083 Sample Variance 0.170816 0.252982 0.115034 0.329379 0.060066
Kurtosis -0.97036 -0.35048 -1.09289 -0.78271 -0.30748 Skewness 0.088769 -0.01758 -0.0467 -0.00505 -0.13923
Range 1.5 2 1.333334 2 1.142857 Minimum 2.25 2 2.333333 2 3.428571 Maximum 3.75 4 3.666667 4 4.571429
Sum 176.25 183.3333 181.6667 178 237 Count 60 60 60 60 60
The impact of financial rewards on financial performance: The case of Pioneer Insurance Company Limited.
32
Appendix-3
Cronbach’s Alpha
Basic Salary
XLSTAT 2008.7.01 - Factor analysis - on 11/21/2008 at 12:31:26 PM Observations/variables table: Workbook = Cronbach's Alpha.xls / Sheet = Basic Salary / Range = a1:d61 / 60 rows and 4 columns Correlation: Pearson (n) Extraction method: Principal factor analysis Number of factors: Automatic Initial communalities: Squared multiple correlations Stop conditions: Convergence = 0.0001 / Iterations = 50 Cronbach's alpha: 0.091 Factor analysis: Maximum change in communality at each iteration:
Iteration Maximum change 40 0.0024 41 0.0023 42 0.0023 43 0.0022 44 0.0022 45 0.0021 46 0.0021 47 0.0020 48 0.0020 49 0.0019
Reproduced correlation matrix:
Q1 Q2 Q3 Q4 Q1 0.045 -0.053 0.108 -0.041 Q2 -0.053 0.417 0.182 0.043 Q3 0.108 0.182 0.534 -0.106 Q4 -0.041 0.043 -0.106 0.039
The impact of financial rewards on financial performance: The case of Pioneer Insurance Company Limited.
33
Residual correlation matrix:
Q1 Q2 Q3 Q4 Q1 0.955 -0.003 0.003 0.012 Q2 -0.003 0.583 0.002 0.003 Q3 0.003 0.002 0.466 -0.003 Q4 0.012 0.003 -0.003 0.961
Performance
XLSTAT 2008.7.01 - Factor analysis - on 11/21/2008 at 12:33:51 PM Observations/variables table: Workbook = Cronbach's Alpha.xls / Sheet = Performance / Range = a1:c61 / 60 rows and 3 columns Correlation: Pearson (n) Extraction method: Principal factor analysis Number of factors: Automatic Initial communalities: Squared multiple correlations Stop conditions: Convergence = 0.0001 / Iterations = 50 Cronbach's alpha: 0.138 Factor analysis: Maximum change in communality at each iteration:
Iteration Maximum change 9 0.0030
10 0.0020 11 0.0013 12 0.0009 13 0.0006 14 0.0004 15 0.0003 16 0.0002 17 0.0001 18 0.0001
Reproduced correlation matrix:
Q5 Q6 Q7 Q5 0.281 0.131 0.151 Q6 0.131 0.264 -0.130 Q7 0.151 -0.130 0.280
The impact of financial rewards on financial performance: The case of Pioneer Insurance Company Limited.
34
Residual correlation matrix:
Q5 Q6 Q7 Q5 0.719 0.000 0.000 Q6 0.000 0.736 0.000 Q7 0.000 0.000 0.720
Allowance
XLSTAT 2008.7.01 - Factor analysis - on 11/21/2008 at 12:34:36 PM Observations/variables table: Workbook = Cronbach's Alpha.xls / Sheet = Allowance / Range = a1:f61 / 60 rows and 6 columns Correlation: Pearson (n) Extraction method: Principal factor analysis Number of factors: Automatic Initial communalities: Squared multiple correlations Stop conditions: Convergence = 0.0001 / Iterations = 50 Cronbach's alpha: 0.017 Factor analysis: Maximum change in communality at each iteration:
Iteration Maximum change 40 0.0041 41 0.0040 42 0.0040 43 0.0039 44 0.0038 45 0.0038 46 0.0037 47 0.0037 48 0.0036 49 0.0035
Reproduced correlation matrix:
Q8 Q9 Q10 Q11 Q12 Q13 Q8 0.731 -0.138 -0.156 0.040 0.283 -0.158 Q9 -0.138 0.171 0.144 -0.001 0.072 0.049 Q10 -0.156 0.144 0.220 -0.141 0.070 0.055
The impact of financial rewards on financial performance: The case of Pioneer Insurance Company Limited.
35
Q11 0.040 -0.001 -0.141 0.199 -0.024 -0.016 Q12 0.283 0.072 0.070 -0.024 0.228 -0.043 Q13 -0.158 0.049 0.055 -0.016 -0.043 0.037 Residual correlation matrix:
Q8 Q9 Q10 Q11 Q12 Q13
Q8 0.269 -0.005 0.005 0.004 0.003 -0.011 Q9 -0.005 0.829 0.003 0.001 0.001 -0.025 Q10 0.005 0.003 0.780 -0.001 -0.006 0.010 Q11 0.004 0.001 -0.001 0.801 -0.003 0.012 Q12 0.003 0.001 -0.006 -0.003 0.772 0.019 Q13 -0.011 -0.025 0.010 0.012 0.019 0.963
Others
XLSTAT 2008.7.01 - Factor analysis - on 11/21/2008 at 12:35:26 PM Observations/variables table: Workbook = Cronbach's Alpha.xls / Sheet = Others / Range = a1:b61 / 60 rows and 2 columns Correlation: Pearson (n) Extraction method: Principal factor analysis Number of factors: Automatic Initial communalities: Squared multiple correlations Stop conditions: Convergence = 0.0001 / Iterations = 50 Cronbach's alpha: 0.07 Factor analysis: Maximum change in communality at each iteration:
Iteration Maximum change 1 0.0174 2 0.0087 3 0.0044 4 0.0022 5 0.0011 6 0.0005 7 0.0003 8 0.0001 9 0.0001 10 0.0000
Reproduced correlation matrix:
Q14 Q15
The impact of financial rewards on financial performance: The case of Pioneer Insurance Company Limited.
36
Q14 0.036 0.036 Q15 0.036 0.036 Residual correlation matrix:
Q14 Q15 Q14 0.964 0.000 Q15 0.000 0.964
Financial Performance
XLSTAT 2008.7.01 - Factor analysis - on 11/21/2008 at 12:38:30 PM Observations/variables table: Workbook = Cronbach's Alpha.xls / Sheet = Financial Performance / Range = a1:g61 / 60 rows and 7 columns Correlation: Pearson (n) Extraction method: Principal factor analysis Number of factors: 7 Initial communalities: Squared multiple correlations Stop conditions: Convergence = 0.0001 / Iterations = 50 Cronbach's alpha:
-0.533 Factor analysis: Maximum change in communality at each iteration: Iteration Maximum change
29 0.0004 30 0.0003 31 0.0003 32 0.0002 33 0.0002 34 0.0002 35 0.0001 36 0.0001 37 0.0001 38 0.0001
Reproduced correlation matrix:
Q16 Q17 Q18 Q19 Q20 Q21 Q22 Q16 0.554 -0.137 -0.042 -0.174 -0.399 -0.063 -0.053 Q17 -0.137 0.337 -0.193 -0.029 0.173 0.064 0.029 Q18 -0.042 -0.193 0.321 -0.067 0.090 0.013 0.128
The impact of financial rewards on financial performance: The case of Pioneer Insurance Company Limited.
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Q19 -0.174 -0.029 -0.067 0.499 0.079 -0.288 -0.129 Q20 -0.399 0.173 0.090 0.079 0.549 -0.134 0.151 Q21 -0.063 0.064 0.013 -0.288 -0.134 0.548 -0.116 Q22 -0.053 0.029 0.128 -0.129 0.151 -0.116 0.313 Residual correlation matrix:
Q16 Q17 Q18 Q19 Q20 Q21 Q22 Q16 0.446 0.000 0.000 0.000 0.000 0.000 0.000 Q17 0.000 0.663 0.000 0.000 0.000 0.000 0.000 Q18 0.000 0.000 0.679 0.000 0.000 0.000 0.000 Q19 0.000 0.000 0.000 0.501 0.000 0.000 0.000 Q20 0.000 0.000 0.000 0.000 0.451 0.000 0.000 Q21 0.000 0.000 0.000 0.000 0.000 0.452 0.000 Q22 0.000 0.000 0.000 0.000 0.000 0.000 0.687
The impact of financial rewards on financial performance: The case of Pioneer Insurance Company Limited.
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Appendix-4
Regression
Bs-Fp
SUMMARY OUTPUT
Regression Statistics
Multiple R 0.055278274
R Square 0.003055688
Adjusted R Square -0.014133007
Standard Error 0.246808895
Observations 60
ANOVA
Df SS MS F Significance F
Regression 1 0.01082898 0.010828983 0.177773102 0.67485265
Residual 58 3.53304857 0.060914631
Total 59 3.54387755
Coefficients Standard Error t Stat P-value Lower 95% Upper 95%
Intercept 4.046290144 0.23058717 17.54776759 7.17043E-25 3.584720112 4.50786
Basic Salary -0.032779624 0.07774473 -0.421631476 0.67485265 -0.188402484 0.122843
p-Fp
SUMMARY OUTPUT
Regression Statistics
Multiple R 0.04255828
R Square 0.001811207
Adjusted R Square -0.015398944
Standard Error 0.246962892
Observations 60
ANOVA
Df SS MS F Significance F
Regression 1 0.0064187 0.006418697 0.10524063 0.746796181
Residual 58 3.53745886 0.06099067
The impact of financial rewards on financial performance: The case of Pioneer Insurance Company Limited.
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Total 59 3.54387755
Coefficients Standard Error t Stat P-value Lower 95% Upper 95%
Intercept 4.013364055 0.19790707 20.27903299 5.18761E-28 3.617210305 4.409518
Performance -0.020737327 0.06392358 -0.324408123 0.746796181 -0.148694171 0.10722
a-fp
SUMMARY OUTPUT
Regression Statistics
Multiple R 0.041265766
R Square 0.001702863
Adjusted R Square -0.015509156
Standard Error 0.246976294
Observations 60
ANOVA
Df SS MS F Significance F
Regression 1 0.00603474 0.00603474 0.098934554 0.754240691
Residual 58 3.53784282 0.06099729
Total 59 3.54387755
Coefficients Standard Error t Stat P-value Lower 95% Upper 95%
Intercept 4.040284505 0.28880334 13.98974303 3.06248E-20 3.462182244 4.618387
Allowance -0.029818736 0.0948015 -0.314538636 0.754240691 -0.219584423 0.159947
o-fp
SUMMARY OUTPUT
Regression Statistics
Multiple R 0.055085708
R Square 0.003034435
Adjusted R Square -0.014154626
Standard Error 0.246811525
Observations 60
ANOVA
Df SS MS F Significance F
Regression 1 0.01075367 0.010753667 0.17653292 0.675922389
Residual 58 3.53312389 0.060915929
The impact of financial rewards on financial performance: The case of Pioneer Insurance Company Limited.
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Total 59 3.54387755
Coefficients Standard Error t Stat P-value Lower 95% Upper 95%
Intercept 4.019786817 0.16912516 23.76811821 1.37925E-31 3.681246279 4.358327
Others -0.023523646 0.05598759 -0.420158209 0.675922389 -0.135594903 0.088548
Step 2
(bs+p)-fp
SUMMARY OUTPUT
Regression Statistics
Multiple R 0.071306449
R Square 0.00508461
Adjusted R Square -0.029824702
Standard Error 0.248711004
Observations 60
ANOVA
Df SS MS F Significance F
Regression 2 0.01801923 0.009009617 0.14565196 0.864779222
Residual 57 3.52585832 0.061857164
Total 59 3.54387755
Coefficients Standard Error t Stat P-value Lower 95% Upper 95%
Intercept 4.116888584 0.31124156 13.2273098 5.11724E-19 3.493637836 4.740139
Basic Salary -0.033960427 0.07842041 -0.433055999 0.666608422 -0.190994649 0.123074
Performance -0.021969762 0.06443893 -0.340939279 0.734402823 -0.151006548 0.107067
(bs+a)-fp
SUMMARY OUTPUT
Regression Statistics
Multiple R 0.067458308
R Square 0.004550623
Adjusted R Square -0.030377425
Standard Error 0.248777739
Observations 60
ANOVA
The impact of financial rewards on financial performance: The case of Pioneer Insurance Company Limited.
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Df SS MS F Significance F
Regression 2 0.01612685 0.008063426 0.130285646 0.878105305
Residual 57 3.5277507 0.061890363
Total 59 3.54387755
Coefficients Standard Error t Stat P-value Lower 95% Upper 95%
Intercept 4.127753077 0.36269429 11.38080511 2.6588E-16 3.401469969 4.854036
Basic Salary -0.03168102 0.07845482 -0.40381228 0.687861789 -0.188784155 0.125422
Allowance -0.027971036 0.09560255 -0.292576269 0.770908457 -0.219411916 0.16347
(bs+o)-fp
SUMMARY OUTPUT
Regression Statistics
Multiple R 0.08098631
R Square 0.006558782
Adjusted R Square -0.028298804
Standard Error 0.248526677
Observations 60
ANOVA
Df SS MS F Significance F
Regression 2 0.02324352 0.011621761 0.188159393 0.828995136
Residual 57 3.52063403 0.061765509
Total 59 3.54387755
Coefficients Standard Error t Stat P-value Lower 95% Upper 95%
Intercept 4.128850755 0.29635412 13.9321526 5.27755E-20 3.535411621 4.72229
Basic Salary -0.03529396 0.07848646 -0.44968218 0.654645057 -0.192460444 0.121873
Others -0.025339802 0.05652114 -0.4483243 0.655618767 -0.138521488 0.087842
Step 3
(Bs+o+p)-fp
SUMMARY OUTPUT
Regression Statistics
Multiple R 0.088417531
R Square 0.00781766
Adjusted R Square -0.045334966
Standard Error 0.250576932
The impact of financial rewards on financial performance: The case of Pioneer Insurance Company Limited.
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Observations 60
ANOVA
Df SS MS F Significance F
Regression 3 0.02770483 0.009234943 0.147079467 0.931137714
Residual 56 3.51617273 0.062788799
Total 59 3.54387755
Coefficients Standard Error t Stat P-value Lower 95% Upper 95%
Intercept 4.17673049 0.34863332 11.98029639 4.40304E-17 3.478334494 4.875126
Basic Salary -0.035977328 0.07917546 -0.454400005 0.651297421 -0.194584722 0.12263
Others -0.022714035 0.05783254 -0.392755309 0.695991294 -0.138566448 0.093138
Performance -0.017562148 0.06588516 -0.266556944 0.790789394 -0.149545901 0.114422
(Bs+o+a)-fp
SUMMARY OUTPUT
Regression Statistics
Multiple R 0.086759111
R Square 0.007527143
Adjusted R Square -0.045641045
Standard Error 0.250613614
Observations 60
ANOVA
Df SS MS F Significance F
Regression 3 0.02667527 0.008891758 0.141572312 0.934639202
Residual 56 3.51720228 0.062807184
Total 59 3.54387755
Coefficients Standard Error t Stat P-value Lower 95% Upper 95%
Intercept 4.18920987 0.3949486 10.60697482 5.17451E-15 3.398033276 4.980386
Basic Salary -0.034225773 0.07927734 -0.431722008 0.667601136 -0.193037266 0.124586
Others -0.023564295 0.05749967 -0.40981618 0.683504312 -0.138749901 0.091621
Allowance -0.02271113 0.09715952 -0.233750935 0.816030763 -0.217344916 0.171923
SUMMARY OUTPUT
Regression Statistics
Multiple R 0.092714263
The impact of financial rewards on financial performance: The case of Pioneer Insurance Company Limited.
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R Square 0.008595935
Adjusted R Square -0.063506179
Standard Error 0.252745456
Observations 60
ANOVA
Df SS MS F Significance F
Regression 4 0.03046294 0.007615735 0.119218898 0.975099598
Residual 55 3.51341462 0.063880266
Total 59 3.54387755
Coefficients Standard Error t Stat P-value Lower 95% Upper 95%
Intercept 4.227518953 0.42825318 9.871541414 8.84985E-14 3.369280623 5.085757
Basic Salary -0.034964533 0.08000926 -0.437006099 0.663817964 -0.195306625 0.125378
Performance -0.016254409 0.06675269 -0.243501935 0.808522542 -0.150029757 0.117521
Allowance -0.020451512 0.09842444 -0.207788953 0.836161263 -0.217698451 0.176795
Others -0.021310704 0.05872268 -0.362904135 0.718067487 -0.138993561 0.096372
The impact of financial rewards on financial performance: The case of Pioneer Insurance Company Limited.
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Appendix-5
PRODUCT & SERVICES
The Company Underwrites following types of General Insurance Business Such as:
Fire:
Fire and Allied Perils Insurance
Consequential Loss Due to Fire Insurance
Household Insurance
Hotel Owners All Risks Insurance
Industrial All Risks Insurance
Marine:
Cargo Insurance
Hull Insurance
Motor:
Comprehensive Insurance Act Only Liability
Insurance Increased Liability Insurance
Engineering:
Contractors All Risks Insurance (CAR)
Contractors Plant & Machinery Insurance (CPM)
Erection All Risks Insurance (EAR)
The impact of financial rewards on financial performance: The case of Pioneer Insurance Company Limited.
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Machinery Insurance (MB)
Machinery Loss of profit Insurance (BI MB)
Electronic Equipment Insurance (EEI)
Deterioration of Stock Insurance (DOS)
Energy Risks Insurance (Offshore & Onshore)
Power Plant Insurance
Boiler and pressure Vessels Insurance
Lift, Escalator and Hoisting Equipment Insurance
Miscellaneous Insurance:
All Risks Insurance
Cash / Property in Premises
Money / cash in Transit Insurance
General/ Public Liability Insurance
Comprehensive General Liability Insurance
Employers Liability Insurance
Products Liability Insurance
Professional Indemnity Insurance
Directors and Officers Liability Insurance
Personal Accident Insurance
Peoples Personal Accident Insurance
Overseas Medical claim Insurance
Cellular Mobile Phone Insurance
Fidelity Guarantee Insurance
Hole in One Golf Tournament Insurance
The impact of financial rewards on financial performance: The case of Pioneer Insurance Company Limited.
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Neon Sign Insurance
Plate Glass Insurance
Rubber Plantation Insurance
Lockers Insurance
Aviation Insurance:
Hull Insurance Liability Insurance Deductible
WAR Insurance