The Impact of Financial Rewards on Financial Performance: The Case of Pioneer Insurance Company...

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





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

The impact of financial rewards on financial performance: The case of Pioneer Insurance Company Limited.

I

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


II

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.


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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


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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.


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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


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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


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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.


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


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


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.


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.


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.


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.


25

Reference

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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

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ard

s on

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ial p

erf

orm

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e:

The

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se o

f P

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er

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e C

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ited.

30

Circ

le O

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r

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uest

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gly

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e (1

) D

isag

ree

(2)

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tral

(3

) A

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(4

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our

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stify

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rke

t 1

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to

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lific

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n 1

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5 B

onu

s fo

r yo

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ance

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tes

you

to w

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1

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6 C

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on fo

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ove

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e

1 2

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You

de

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e r

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your

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The

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(8-

13)

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Sub

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w e

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resp

onsi

bili

ty(s

) 1

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ars

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11

any

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e in

sura

nce

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em

ploy

ee

s’ b

ene

fits

1 2

3 4

5 12

a

ny b

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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

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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

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ny's

fina

ncia

l pe

rfor

ma

nce

1

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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

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et

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me

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stm

ent

(R

OI)

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21

Sto

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rice

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D

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ivid

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to

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stor

s 1

2 3

4 5


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


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


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


Q5 Q6 Q7 Q5 0.281 0.131 0.151 Q6 0.131 0.264 -0.130 Q7 0.151 -0.130 0.280


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:



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


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:



Q14 Q15


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


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


37

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


38

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



R Square 0.001811207



Observations 60

ANOVA


Regression 1 0.0064187 0.006418697 0.10524063 0.746796181

Residual 58 3.53745886 0.06099067


39

Total 59 3.54387755


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



R Square 0.001702863



Observations 60

ANOVA


Regression 1 0.00603474 0.00603474 0.098934554 0.754240691

Residual 58 3.53784282 0.06099729

Total 59 3.54387755


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



R Square 0.003034435



Observations 60

ANOVA


Regression 1 0.01075367 0.010753667 0.17653292 0.675922389

Residual 58 3.53312389 0.060915929


40

Total 59 3.54387755


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



R Square 0.00508461



Observations 60

ANOVA


Regression 2 0.01801923 0.009009617 0.14565196 0.864779222

Residual 57 3.52585832 0.061857164

Total 59 3.54387755


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



R Square 0.004550623



Observations 60

ANOVA


41


Regression 2 0.01612685 0.008063426 0.130285646 0.878105305

Residual 57 3.5277507 0.061890363

Total 59 3.54387755


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



R Square 0.006558782



Observations 60

ANOVA


Regression 2 0.02324352 0.011621761 0.188159393 0.828995136

Residual 57 3.52063403 0.061765509

Total 59 3.54387755


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



R Square 0.00781766




42

Observations 60

ANOVA


Regression 3 0.02770483 0.009234943 0.147079467 0.931137714

Residual 56 3.51617273 0.062788799

Total 59 3.54387755


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



R Square 0.007527143



Observations 60

ANOVA


Regression 3 0.02667527 0.008891758 0.141572312 0.934639202

Residual 56 3.51720228 0.062807184

Total 59 3.54387755


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




43

R Square 0.008595935



Observations 60

ANOVA


Regression 4 0.03046294 0.007615735 0.119218898 0.975099598

Residual 55 3.51341462 0.063880266

Total 59 3.54387755


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


44

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)


45

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


46

Neon Sign Insurance

Plate Glass Insurance

Rubber Plantation Insurance

Lockers Insurance

Aviation Insurance:

Hull Insurance Liability Insurance Deductible

WAR Insurance

Date post:	11-Apr-2015
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