THE EFFECT OF APPRAISAL AND REWARD ON EMPLOYEE MOTIVATION IN THE SUGGESTION SYSTEM

Abstract

This study aimed to confirm whether appraisal and reward significantly affect motivation individually, and whether appraisal significantly affects rewards. X Inc., an automotive manufacturing company in Indonesia, has implemented a suggestion system since 2012. In 2019, the company encouraged employee motivation to participate in the suggestion system through a reward and appraisal programme. The company proposed selecting the Employee of the Month through an appraisal of the best ideas and provided financial rewards to the winner. A survey was conducted at X Inc. to verify the proposed hypotheses regarding appraisal, reward, and employee motivation to participate in the suggestion system. To achieve the aforementioned goal, the study gathered data through interviews and surveys based on the indicators developed based on previous studies’ findings. The data were processed using Structural Equation Modelling (SEM) and showed that appraisal did not significantly affect employee motivation and reward; however, reward significantly affected employee motivation. The practical significance of this study includes recommendations for big enterprises to increase the monthly financial reward for employees who provide the best ideas. Theoretical novelty is the introduction of new indicators of employee motivation and the utilization of the SEM approach for their analysis.

DOI: https://doi.org/10.62185/issn.3023-5448.2.2.3