Journal of Research in Business, Economics, and Education Volume 5

E-ISSN 2686-6056 Issue 3

DOI:10.55683/jrbee.v5i3.442 June Edition 2023

The Effect of the Implementation of Reward, Incentive, and

Punishment Methods on Employee Performance at PT.
Anugerah Alam Berastagi

Ice Monika Br Torus Pane1, Andre Fitriano1*, Theresia Monalisa Br Tarigan1, Sintia Perbinia
Br Ginting1, M. Tahir2
1
Universitas Prima Indonesia Medan
2
Universitas Islam Sumatera Utara
e-mail: [email protected]

Abstract

The purpose of this research is to find out whether the application of the reward, incentive, and
punishment methods affect the performance of employees at PT. Anugrah Alam Berastagi. This
research approach is based on a quantitative approach. The population in this sample in this study
consists of 53 employees. Data collection techniques used questionnaires, interviews, and
documentation studies. The use of data analysis will use multiple linear regression analysis. The
results of the partial hypothesis testing obtained a t-count > t-table or 4.380>2.009 and a significance
of 0.000 < 0.05, so partially the reward has a positive and significant effect on the performance of
PT. Anugrah Alam Berastagi employees. The results of the partial hypothesis testing obtained a t-
count > t-table or 2.226 > 2.009 and a significance of 0.000 < 0.05, so partially the incentive has a
positive and significant effect on the performance of PT. Anugrah Alam Berastagi employees. The
results of the partial hypothesis testing obtained a t-count > t-table or 4.478 > 2.009 and a significance
of 0.000 < 0.05, so partially it can be concluded that punishment has a positive and significant effect
on the performance of PT. Anugrah Alam Berastagi employees. The test results obtained an F-count
(28.486) > F-table (2.79) and a significance probability of 0.000 < 0.05 means that simultaneously
rewards, incentives, and punishment have a positive and significant effect on the performance of PT.
Anugrah Alam Berastagi employees.

Keywords: Reward, Incentive, Punishment, Employee Performance.

1. Introduction

Human resource management is a field of management that specifically studies the

relationship and role of humans in a company. The success of a company is largely determined by
the human resources within it (Prasetyo et al., 2022). With the increasing development of the business
world, the level of competition in business is also increasing, not least in the service sector. With
these developments, the problems faced by PT. Anugerah Alam Berastagi are becoming more
complex because the company is facing more competitors. Given the importance of human resources
which include roles, management, and utilization of employees to spur work spirit, employees must
meet several criteria through the application of concepts and techniques of human resource
management (Setyaningrum et al., 2023), one of which is through the provision of rewards,
incentives, and punishment. The existence of a reward, incentive, and sanction (punishment) system

© Authors. Terms and conditions of this job is licensed under a Creative Commons Attribution-
NonCommercial-NoDerivatives 4.0 International License apply. Correspondence: Andre
Fitriano, Universitas Prima Indonesia Medan. Email: [email protected]
Journal of Research in Business, Economics, and Education

becomes a trigger for low company performance (Ekhsan et al., 2020). According to Asmirin(2018),
a reward is a form of appreciation for an achievement that is given in the form of material or speech.

Table 1. Rewards Given by the Company to Employees at PT. Anugerah Alam Berastagi
No Types of Rewards Period
1. Annual Bonus Once a year
2 Incentives When there are high-performing employees

3 Recognition (salary increase, promotion) When achievements are made

Table 1 can be concluded that the reward given by the company to employees who have every
need, and it is explained in giving this reward the company's aim is to give encouragement to
employees to be able to improve their performance (Ekowati et al., 2023). According to
Mangkunegara (2009:89), an incentive is an award in the form of money given by the leader of the
organization to employees so that they work with high motivation and perform in achieving the goals
of the organization or in other words, work incentives are giving money outside of wages by the
organization's leader as recognition of work achievement and employee contribution to the
organization (Fahlevi et al., 2022). This incentive reward system is a way to increase enthusiasm for
work for employees, so that employees will have a persistent spirit in work because of the
motivational drive from the company with the provision of incentives. The company must pay
attention to the provision of incentives to employees. The enthusiasm of employees to work can also
be caused by the size of the incentives received. If the incentives received by employees are not
commensurate with the sacrifices given at work then the motivation possessed by employees
decreases in work. Punishment is an unpleasant or unwanted consequence given by a superior for a
certain behavior that has been done (Rizki 2019). In the provision of punishment or punishment is a
common activity, because punishment aims to discipline each employee. Punishments applied at PT.
Anugerah Alam Berastagi include reprimands from superiors to employees who have made mistakes,
through warning letters and wage deductions (Mushtaq et al., 2022). Based on the research process
that has been carried out, the author found a phenomenon that occurred in PT Anugrah Alam
Berastagi's employees, such as many employees who took leave beyond the limit set by PT Anugrah
Alam Berastagi. So this violation becomes one of the obstacles for employees to get Rewards as well
as Incentives.

2. Literature Review

Reward Theory

According to Rosabeth Moss Kanter (2001), a reward is a special return, a reward for those
who work beyond the minimum job description standard. Another definition suggests that an
employee's Reward (recognition) for their hard work is a crucial issue to maintain motivation so that
they continue to work as best as they can (Kenneth Blanchard). The role of rewards in the company
is very important because it can encourage employees to work better and increase enthusiasm and
motivate employees. According to Kadarisman (2012:43), there are five reward measurement
indicators: salary, recognition, praise, leave, and allowances.

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Journal of Research in Business, Economics, and Education

Incentive Theory

According to Martoyo (2000:135-136), an incentive is an additional wage (bonus) due to an

excess of achievement that distinguishes it from others intended to improve employee productivity
and retain high-performing employees in the organization (company). Based on the opinions of the
experts above, it can be concluded that incentives are an encouragement for someone to want to work
well and to achieve a higher level of work performance. According to Hasibuan (2013), the indicators
of incentives are: performance, length of service, needs, seniority, job evaluation.

Punishment Theory

According to Dian Rustandi (2020:4), Punishment is a sanction received by an employee due

to their inability to perform or carry out work as ordered. If used effectively it can suppress behavior
within the organization, in other words, punishment should be given after careful and objective
consideration of all aspects relevant to the situation that occurred. From the above opinion, it is
concluded that punishment is an unpleasant act in the form of punishment or sanction consciously
given to employees when a violation occurs so as not to repeat it. Some indicators of punishment are:
• Light punishment, with types: Verbal reprimand to the concerned employee, Written
reprimand, Expression of dissatisfaction informally
• Moderate punishment, with types: Postponement of a planned salary increase as for other
employees. Delay of promotion or promotion
• Severe punishment, with types: Dismissal from position. Termination of employment as an
employee in the company.

Employee Performance Theory

According to Mangkunegara (2009:67), the term performance comes from the word job
performance or actual performance. Performance is the result of work in terms of quality and quantity
achieved by an employee in carrying out their duties according to the responsibilities given to him.
Performance is a state that shows an employee's ability to perform tasks in accordance with the
standards set by the organization to employees in line with their job description. According to Wilson
(2012:233), employee performance can be assessed with several indicators, namely: Job quality,
punctuality, attendance, ability to work together.

Conceptual Framework

Based on the background and literature review, the researcher can create the following
conceptual framework:

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Journal of Research in Business, Economics, and Education

Figure 1. Conceptual Framework

Research Hypotheses

• H1: Rewards influence the performance of employees at PT. Anugerah Alam Berastagi.
• H2: Incentives influence the performance of employees at PT. Anugerah Alam Berastagi.
• H3: Punishment influences the performance of employees at PT. Anugerah Alam Berastagi.
• H4: Rewards, Incentives, and Punishment all influence the performance of employees at PT.
Anugerah Alam Berastagi.

3. Methodology

The research was conducted at PT. Anugerah Alam Berastagi, located at Jl.Tahura Dusun I
Desa Lau Gumba, Berastagi District, Karo Regency. The data collection was carried out in the form
of interviews and distribution of pre-prepared questionnaires. The research timeline was set from June
16, 2022, and was projected to be concluded in March 2023. The research approach employed was
quantitative. According to Sugiyono (2018), a quantitative approach is research based on the
philosophy of positivism for studying a specific population or sample, and data collection uses
instruments with a statistical analysis to test existing truths. The data was analyzed using a
quantitative description, focusing on problem-solving at the time of research or actual and meaningful
incidents. A quantitative study aims to provide solutions to a problem and obtain more comprehensive
information about a phenomenon using the stages of a quantitative approach (Paramita 2021). The
population, consisting of subjects with specific quantities and characteristics defined by the researcher
for study, included 53 employees. The sample, a portion of the total characteristics owned by the
population, was drawn based on considerations and used a formula of saturated sampling as the whole
population was taken.

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Journal of Research in Business, Economics, and Education

Data collection techniques were used to obtain required data. These techniques included
interviews, questionnaires, and documentation. The research utilized quantitative data, with
respondents asked to fill or respond to what was requested by the researcher. Data sources in research
are divided into two: primary data, which is collected directly by the researcher in the field, and
secondary data, obtained from pre-existing data. The variables, indicators, and measurement scales
are clearly defined and tabulated for easy understanding and operational use. Before hypothesis
testing was carried out, classic assumption tests were conducted to check for abnormalities.
According to Ghozali (2018), to determine the accuracy of the model, tests should be conducted for
normality, multicollinearity, and heteroskedasticity.
Normality tests aim to test whether in the regression model, the disturbance variables or
residuals have a normal distribution. A good regression model has a normal or near-normal data
distribution. Multicollinearity tests check for the presence of perfect or near-perfect correlation
between independent variables in the regression model. Heteroskedasticity tests are conducted to
check whether there is an error in the variance equality of residuals from one observation to another
in the regression model.
This research uses multiple regression analysis to determine the influence of reward,
incentive, and punishment methods on employee performance. A multiple regression equation is
formed from these variables. The equation, its symbols, and their explanations are presented clearly
for the reader's understanding.

4. Result and Discussion

Descriptive Analysis

Table 2. Descriptive Statistics

Variables N Minimum Maximum Mean Std. Deviation

Reward 53 23 33 29.34 2.710
Incentive 53 25 35 31.32 2.854
Punishment 53 20 33 27.77 3.092
Employee Performance 53 24 32 27.79 2.125

Based on Table 2, it can be discerned that the total number of research samples is 53 people.
The following is the descriptive statistical explanation. For the reward variable, the lowest score
(minimum) is 23, the highest is 33, with an average score of 29.34, and a standard deviation of 2.710.
The incentive variable has a minimum score of 25, a maximum of 35, an average score of 31.32, and
a standard deviation of 2.854. The punishment variable exhibits a minimum score of 20, a maximum
of 33, an average score of 27.77, and a standard deviation of 3.092. Finally, for the employee
performance variable, the minimum score is 24, the maximum is 32, the average score is 27.79, and
the standard deviation is 2.125.

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Normality Test

Figure 2. Histogram

Based on the results from Figure 2, it can be seen that the graph does not skew to the right
(skewness). Thus, these results indicate that the data distribution is normal.

Figure 3. P-Plot

Based on the results from Figure 3, it can be observed that the data is spread close to the
diagonal line. Thus, these results indicate that the data distribution is normal.

Multicollinearity Test

The tolerance value for each independent variable is >0.10, and the VIF (Variance Inflation
Factor) for each independent variable is <10. Thus, it can be concluded that there is no
multicollinearity.

Multiple Linier Regression

Based on Table 3, the following multiple linear regression equation for this study is obtained:

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Table 3. Coefficients

Unstandardized Coefficients Standardized Coefficients Collinearity Statistics

Model B Std. Error Beta t Sig. Tolerance VIF
1 (Constant) 3.321 3.365 .987 .329
Reward .355 .081 .452 4.380 .000 .697 1.434
Incentive .152 .068 .204 2.226 .031 .882 1.134
Punishment .335 .075 .487 4.478 .000 .628 1.593

The output from Table 3 Coefficients above is used to illustrate the following regression
equation:
Y = 3.321 + 0.355X1 + 0.152X2 + 0.335X3

The constant is 3.321, which means if the variables of reward, incentive, and punishment are
0, then the employee performance variable would be 3.321. The regression coefficient of reward is
0.355. This implies that if the reward increases by 1 unit, then employee performance would increase
by 0.355 units. The regression coefficient for incentive is 0.152, suggesting that if the incentive
increases by 1 unit, then employee performance would increase by 0.152 units. The regression
coefficient for punishment is 0.335. This suggests that if punishment increases by 1 unit, then the
performance of employees would increase by 0.335 units.

Discussion

The Influence of Reward on Employee Performance at PT. Anugerah Alam Berastagi

Reward partially influences the performance of employees at PT. Anugerah Alam Berastagi,
as evidenced by the t-calculated value of 4.380 > t-table 2.009 and the significance value of 0.000 <
0.05. This result aligns with Kenneth Blanchard's theory. Employee reward for hard work is essential
to sustain motivation so they continue to perform their best. An increase in reward leads to an
improvement in employee performance, as rewards motivate employees to earn more from the
company by enhancing their performance. Thus, it can be concluded that rewards can influence
employee performance. Rewarding employees is a form of appreciation from the organization or
company and aims to boost other employees' motivation to also succeed. A healthy competition
creates a more competitive and productive work environment.

The Influence of Incentives on Employee Performance at PT. Anugerah Alam Berastagi

Incentives partially influence the performance of employees at PT. Anugerah Alam Berastagi,
as indicated by the t-calculated value of 2.226 > t-table 2.009 and the significance value of 0.000 <
0.05. This result aligns with Martoyo's theory (2000:135-136). Incentives are extra wages (bonuses)
given for exceptional performance, aimed to boost employee productivity and retain high-performing
employees in the organization (company). Proper incentives make employees feel valued according
to their skills and performance. Incentives can also enhance employee work spirit, thus achieving
optimal performance. The purpose of incentives is to encourage employees to work harder, show

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more achievement, and reach set goals. Additionally, incentives can be a form of appreciation from
the company to the employees who have performed well.

The Influence of Punishment on Employee Performance at PT. Anugerah Alam Berastagi

Punishment partially influences the performance of employees at PT. Anugerah Alam

Berastagi, as indicated by the t-calculated value of 4.478 > t-table 2.009 and the significance value of
0.000 < 0.05. This aligns with Dian Rustandi's theory (2020:4). Punishment is a sanction received by
an employee due to his inability to carry out tasks as ordered. If used effectively, it can suppress
behavior within the organization. In other words, punishment should be given after careful and
objective consideration of all aspects relevant to the situation. If the punishment is fair and
proportionate to the offense committed, employee performance will improve. Employees will be able
to perform their jobs well in terms of quality, quantity, timeliness, effectiveness, and independence.
This happens because punishment is a threat intended to improve the performance of violating
employees, maintain existing rules, and provide lessons to offenders.

5. Conclusions

Based on the t-test results, the t-value and the significance value for the reward variable is
4.380 > t-table 2.009, and the significance value is 0.000 < 0.05. Therefore, it can be concluded that
H1 is accepted, which means that reward has a significant partial effect on employee performance.
Based on the t-test results, the t-value and the significance value for the incentive variable is 2.226 >
t-table 2.009, and the significance value is 0.000 < 0.05. Therefore, it can be concluded that H2 is
accepted, which means that incentives have a significant partial effect on employee performance.
Based on the t-test results, the t-value and the significance value for the punishment variable is 4.478
> t-table 2.009, and the significance value is 0.000 < 0.05. Therefore, it can be concluded that H3 is
accepted, which means that punishment has a significant partial effect on employee performance.
Based on the F-test results, the calculated F-value is greater than the table F-value, i.e., 28.486 > 2.79,
and the significance value is 0.000 < 0.05. Therefore, it can be concluded that H4 is accepted, which
means that the quality of reward, incentives, and punishment collectively has a significant effect on
employee performance.
Recommendations for PT. Anugerah Alam Berastagi a. Incentives given should be planned
carefully so that they can be utilized effectively by employees, thus truly being effective in achieving
company goals. b. Rewards given should be based on facts and in accordance with the employees'
achievements. c. Punishment given should be proportional to the employees' mistakes. Arbitrary
punishments are unacceptable. Recommendations for future researchers’ Future researchers studying
employee performance are advised to change the independent variable or combine it with one of the
independent variables in this study, such as training, work environment, and job satisfaction.

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