INSENTIF DAN KOMISI

Disusun Untuk Memenuhi Tugas Mata Kuliah Manajemen Karir dan

Pengembangan Diri

Disusun Oleh Kelompok 5 :

LUTFYA DWI SYAHRA 71210312010
ADINDA SALSABILA 71210312036
WIDIYANTIKA 71210312019
YUNI ANGELINA 71210312037
AQILLA FADIA HAYA 71210312004
NASYWA PUTRI RAMADANA 71210312035
NONA KARTIKA 71210312018
NURUL HOFIFAH 71210312033
SITI JAHARA HARAHAP 71210312012

PROGRAM STUDI MANAJEMEN

FAKULTAS EKONOMI DAN BISNIS
UNIVERSITAS ISLAM SUMATERA UTARA
MEDAN
2023
 KATA PENGANTAR

Assalamu’alaikum Wr. Wb Puji syukur kehadirat Tuhan Yang Maha Esa

karena telah memberikan kesempatan pada penulis untuk menyelesaikan makalah
ini. Atas rahmat dan hidayah-Nya lah penulis dapat menyelesaikan makalah yang
berjudul “Insentif dan Komisi” dengan tepat waktu. Shalawat serta salam semoga
senantiasa dilimpah curahkan kepada junjungan kita Nabi Muhammad saw.
kepada keluarganya, sahabatnya, dan juga kepada kita selaku umat yang
mengikuti ajarannya sampai akhir zaman.
Makalah “Insentif dan Komisi” disusun guna memenuhi tugas Bapak Dr.
Supriadi, SE,. MM., M.Si. Pada mata kuliah Manajemen karir dan
pengembangan diri di “Universitas Islam Sumatera Utara”. Selain itu, penulis
juga berharap agar makalah ini dapat menambah wawasan bagi pembaca tentang
“Insentif dan komisi”.
Semoga tugas yang telah diberikan ini dapat menambah pengetahuan dan
wawasan terkait bidang yang ditekuni penulis. Terlepas dari segala hal tersebut,
Penulis sadar sepenuhnya bahwa masih ada kekurangan baik dari segi susunan
kalimat maupun kata bahasanya. Oleh karenanya penulis dengan lapang dada
menerima segala saran dan kritik agar penulis dapat memperbaiki makalah.

Medan, 20 Oktober 2023

Tim penulis

i
 DAFTAR ISI

KATA PENGANTAR............................................................................................ i
DAFTAR ISI ....................................................................................................... ii
BAB I .................................................................................................................. 1
PENDAHULUAN ............................................................................................... 1
1.1 Latar Belakang Masalah ............................................................................. 1
1.2 Rumusan Masalah ...................................................................................... 2
1.3 Tujuan ........................................................................................................ 2
BAB II ................................................................................................................. 2
LANDASAN TEORI ........................................................................................... 2
2.1 Definisi Insentif dan Komisi ....................................................................... 2
2.2 Jenis-Jenis Insentif dan komisi ................................................................... 4
2.3 Manfaat dan Dampak dari penerapan insentif dan komisi dalam suatu ....... 5
organisasi ......................................................................................................... 5
2.4 Proses implementasi insentif dan komisi .................................................... 6
2.5 Potensi kendala dan risiko yang mungkin timbul dalam penerapan ............. 7
insentif dan komisi dalam suatu organisasi ....................................................... 7
BAB III................................................................................................................ 8
PENUTUP ........................................................................................................... 8
3.1 Kesimpulan ................................................................................................ 8
3.2 Saran .......................................................................................................... 9
DAFTAR PUSTAKA ........................................................................................... 9

ii
 BAB I
PENDAHULUAN

1.1 Latar Belakang Masalah

Insentif dan komisi merupakan bagian penting dalam pengelolaan sumber

daya manusia dan strategi penggajian dalam dunia bisnis. Insentif adalah
bentuk penghargaan atau hadiah tambahan yang diberikan kepada individu
atau tim sebagai pengakuan atas kinerja atau pencapaian tertentu. Sementara
komisi adalah imbalan berupa sejumlah uang atau bentuk lainnya yang
diberikan kepada seseorang sebagai imbalan atas penjualan atau hasil kerja
yang telah mereka lakukan, khususnya terkait dengan hasil penjualan.
Sejak lama, insentif dan komisi telah menjadi alat yang sangat efektif
untuk memotivasi karyawan. Konsep ini tidak hanya berfokus pada
penghargaan finansial semata, melainkan juga pada aspek pengakuan atas
pencapaian, dorongan untuk mencapai target, dan memotivasi karyawan untuk
meningkatkan kinerja. Dalam konteks perusahaan, insentif dan komisi
memiliki peran strategis. Mereka membantu dalam mengarahkan fokus kerja
karyawan pada tujuan perusahaan, meningkatkan penjualan, atau memacu tim
untuk mencapai hasil tertentu. Seiring dengan itu, insentif dan komisi juga
menjadi faktor yang dapat meningkatkan kepuasan karyawan, karena mereka
merasa dihargai atas usaha yang telah mereka lakukan.
Namun, dalam evolusi dunia bisnis yang terus berubah, konsep insentif
dan komisi juga mengalami perkembangan. Di era digital ini, insentif dan
komisi tidak lagi hanya terbatas pada hadiah finansial semata. Mereka juga
bisa mencakup reward non-finansial seperti pengakuan publik, kesempatan
untuk pengembangan karier, atau fleksibilitas dalam bekerja. Memahami latar
belakang dan evolusi insentif serta komisi menjadi krusial bagi perusahaan.
Dengan pemahaman yang baik, mereka dapat merancang sistem insentif dan
komisi yang sesuai untuk mendorong kinerja tinggi, memotivasi karyawan,

1
 dan secara keseluruhan membantu perusahaan mencapai tujuan bisnis dengan
lebih efektif.

1.2 Rumusan Masalah

 Bagaimana perusahaan dapat merancang sistem insentif dan komisi
yang efektif?
 Bagaimana peran insentif dan komisi dalam memotivasi karyawan dan
mencapai tujuan bisnis?

1.3 Tujuan
 untuk mengetahui bagaimana perusahaan dapat merancang sistem
insentif dan komisi yang efektif?
 untuk mengetahui bagaimana peran komisi dan insentif dalam
memotivasi karyawan dan mencapai tujuan bisnis

BAB II
LANDASAN TEORI

2.1 Definisi Insentif dan Komisi

Suatu instansi di dalam menjalankan kegiatannya selalu membutuhkan
tenaga kerja (pegawai), oleh karena itu faktor tenaga kerja perlu mendapat
perhatian serius. Dengan demikian dalam menggunakan tenaga kerja perlu
adanya insentif yang seimbang dengan hasil kerjanya, karena pemberian
insentif merupakan perangsang yang diberikan instansi kepada tenaga kerja
dengan tujuan sebagai pendorong agar para tenaga kerja bekerja lebih giat dan
efisien. Insentif dapat dirumuskan sebagai balas jasa yang memadai kepada
pegawai yang prestasinya melebihi standar yang telah ditetapkan. Insentif
merupakan suatu faktor pendorong bagi pegawai untuk bekerja lebih baik agar
kinerja pegawai dapat meningkat.

2
 Dari pengertian di atas untuk lebih jelas tentang insentif, dibawah ini ada
beberapa ahli manajemen mengemukakan pengertian mengenai insentif.
Menurut Hasibuan (2007:117) mengemukakan bahwa insentif adalah
tambahan balas jasa yang diberikan kepada karyawan tertentu yang
prestasinya di atas prestasi standar. Insentif ini merupakan alat yang di
pergunakan pendukung prinsip adil dalam pemberian kompensasi. Menurut
Mangkunegara (2002:89) mengemukakan bahwa insentif adalah suatu bentuk
motivasi yang dinyatakan dalam bentuk uang atas dasar kinerja yang tinggi
dan juga merupakan rasa pengakuan dari pihak organisasi terhadap kinerja
karyawan dan kontribusi terhadap organisasi (perusahaan).
Begitu pula menurut Handoko (2002:176 ) mengemukakan bahwa insentif
adalah perangsang yang ditawarkan kepada para karyawan untuk
melaksanakan kerja sesuai atau lebih tinggi dari standar-standar yang telah
ditetapkan. Insentif pada hakikatnya adalah untuk meningkatkan motivasi
pegawai dalam berupaya mencapai tujuan-tujuan organisasi dengan
menawarkan perangsang finansial di atas dan melebihi upah dan gaji dasar.
Jadi menurut pendapat-pendapat para ahli di atas dapat disimpulkan,
bahwa insentif adalah dorongan pada seseorang agar mau bekerja dengan baik
dan agar lebih dapat mencapai tingkat kinerja yang lebih tinggi sehingga dapat
menambah kemauan kerja dan motivasi seorang pegawai agar terciptanya
suatu kinerja yang berkualitas sesuai dengan tujuan perusahaan.
Komisi, di sisi lain, adalah bentuk penghargaan atau insentif yang
diberikan kepada karyawan atau agen penjualan sebagai imbalan atas
penjualan produk atau jasa tertentu. Komisi biasanya diberikan dalam bentuk
persentase dari nilai penjualan yang berhasil dilakukan. Tujuannya adalah
untuk memberikan motivasi pada karyawan atau agen penjualan untuk
meningkatkan penjualan dan kinerja mereka.

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2.2 Jenis-Jenis Insentif dan komisi
 Insentif Finansial:
Bonus: Tambahan uang berdasarkan pencapaian individu atau tim dalam
mencapai target tertentu.
Tunjangan Kinerja: Uang tambahan atau tunjangan lainnya sebagai
penghargaan atas kinerja yang luar biasa.
 Insentif Non-finansial:
Penghargaan Publik: Pengakuan di depan rekan kerja atau publik atas prestasi
atau kontribusi yang baik.
Kesempatan Pengembangan Karier: Peluang untuk pelatihan atau promosi
karena kinerja yang unggul.
 Komisi Berbasis Penjualan:
Komisi Persentase: Sejumlah persentase dari nilai penjualan produk atau
layanan yang berhasil dijual.
Komisi Flat: Jumlah uang tetap untuk setiap produk atau layanan yang terjual.
 Komisi Berbasis Kinerja:
Komisi Berbasis Hasil Proyek: Imbalan atas pencapaian tujuan khusus dalam
sebuah proyek.
Komisi Berbasis Kinerja Keseluruhan: Imbalan karena pencapaian kinerja
yang tinggi, bukan hanya terkait dengan penjualan, namun juga prestasi
lainnya dalam lingkup pekerjaan.

Jenis-jenis insentif dan komisi ini memungkinkan perusahaan untuk

memberikan penghargaan kepada karyawan sesuai dengan hasil kerja atau
prestasi mereka, baik itu dalam bentuk finansial maupun non-finansial.
Dengan memahami jenis-jenis ini, perusahaan dapat merancang sistem
penghargaan yang sesuai untuk memotivasi karyawan dengan cara yang
paling efektif.

4
2.3 Manfaat dan Dampak dari penerapan insentif dan komisi dalam suatu
organisasi

Penerapan insentif dan komisi dalam suatu organisasi memiliki manfaat

dan dampak yang signifikan. Berikut adalah beberapa manfaat dan dampak
dari penerapan insentif dan komisi:
 Manfaat Penerapan Insentif dan Komisi.
 Meningkatkan Motivasi Karyawan: Insentif dan komisi dapat
meningkatkan motivasi karyawan untuk bekerja lebih giat dan
mencapai target penjualan atau kinerja yang ditetapkan.
 Meningkatkan Kinerja: Pemberian insentif dan komisi dapat
mendorong karyawan untuk meningkatkan kinerja mereka, yang pada
gilirannya dapat berkontribusi pada peningkatan produktivitas
perusahaan.
 Meningkatkan Kepuasan Karyawan: Insentif dapat meningkatkan
kepuasan karyawan karena mereka merasa dihargai atas kontribusi
dan kinerja mereka.
 Meningkatkan Loyalitas Karyawan: Pemberian insentif dan komisi
dapat membantu meningkatkan loyalitas karyawan terhadap
perusahaan.

 Dampak Penerapan Insentif dan Komisi:

 Peningkatan Kinerja Karyawan: Pemberian insentif dapat berdampak

positif pada kinerja karyawan, karena insentif dapat menjadi dorongan
bagi karyawan untuk bekerja lebih baik.
 Peningkatan Produktivitas: Insentif dan komisi dapat mendorong
peningkatan produktivitas karyawan, terutama dalam hal penjualan
dan pencapaian target kinerja
 Meningkatkan Keunggulan Kompetitif: Penerapan insentif dan komisi
dapat membantu perusahaan mempertahankan atau meningkatkan

5
 keunggulan kompetitifnya melalui peningkatan kinerja karyawan
dalam mencapai tujuan perusahaan
Dengan demikian, penerapan insentif dan komisi dapat memberikan
manfaat yang signifikan bagi karyawan dan perusahaan, seperti peningkatan
motivasi, kinerja, kepuasan, loyalitas karyawan, serta produktivitas dan
keunggulan kompetitif perusahaan.

2.4 Proses implementasi insentif dan komisi

Proses implementasi insentif dan komisi dalam suatu organisasi atau
perusahaan melibatkan langkah-langkah berikut:
 Perumusan Desain Program: Proses dimulai dengan perumusan desain
program insentif dan komisi, yang mencakup penentuan jenis insentif
seperti komisi, bonus, atau pembagian laba, serta penetapan kriteria
dan indikator kinerja yang akan diukur.
 Komunikasi dan Penetapan Target: Setelah desain program insentif
disusun, langkah selanjutnya adalah melakukan komunikasi kepada
karyawan mengenai program insentif yang akan diterapkan, serta
penetapan target dan tujuan yang harus dicapai untuk memenuhi syarat
mendapatkan insentif atau komisi
 Implementasi Program: Proses implementasi melibatkan penerapan
program insentif dan komisi sesuai dengan desain yang telah disusun,
termasuk pengaturan sistem pengukuran kinerja, perhitungan insentif,
dan penentuan mekanisme pembayaran
 Evaluasi dan Penilaian Kinerja: Setelah program insentif dan komisi
diterapkan, perlu dilakukan evaluasi secara berkala terhadap kinerja
karyawan dan dampak dari penerapan program insentif tersebut. Hal
ini bertujuan untuk memastikan efektivitas program insentif dan
komisi serta mengevaluasi apakah program tersebut telah mencapai
tujuan yang diinginkan
 Penyesuaian dan Perbaikan: Berdasarkan hasil evaluasi, perlu
dilakukan penyesuaian dan perbaikan terhadap program insentif dan

6
 komisi agar dapat terus meningkatkan efektivitasnya dalam
memotivasi karyawan dan mencapai tujuan perusahaan

Dengan demikian, proses implementasi insentif dan komisi melibatkan

tahapan perumusan desain program, komunikasi dan penetapan target,
implementasi program, evaluasi kinerja, serta penyesuaian dan perbaikan
program untuk memastikan efektivitasnya dalam mencapai tujuan organisasi.

2.5 Potensi kendala dan risiko yang mungkin timbul dalam penerapan
insentif dan komisi dalam suatu organisasi

Potensi Kendala:
 Kebutuhan Karyawan yang Berbeda: Setiap karyawan memiliki
kebutuhan dan motivasi yang berbeda, sehingga desain insentif dan
komisi yang tidak memperhatikan diversitas ini dapat menjadi kendala
dalam mencapai efektivitasnya.
 Tidak Adanya Standar Hukum: Ketersediaan standar hukum yang tidak
jelas terkait dengan insentif dan komisi dapat menyebabkan resistensi
dari karyawan terhadap sistem imbalan, serta meningkatkan risiko
hukum bagi perusahaan
 Mentalitas Materialistis: Pemberian insentif yang berlebihan dapat
berpotensi membentuk pola pikir materialistis bagi karyawan, yang
pada gilirannya dapat memengaruhi budaya perusahaan dan motivasi
intrinsik karyawan

Risiko:

 Tidak Terpenuhinya Harapan: Risiko utama dari pemberian insentif

adalah tidak terpenuhinya harapan perusahaan, karena setiap karyawan
memiliki kebutuhan yang berbeda-beda, sehingga insentif yang
diberikan mungkin tidak memenuhi harapan mereka.

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  Tidak Memiliki Standar Hukum: Risiko terkait dengan ketidakjelasan
standar hukum terkait insentif dan komisi, yang dapat menyebabkan
resistensi dari karyawan terhadap sistem imbalan dan meningkatkan
risiko hukum bagi perusahaan.
 Membentuk Mental Karyawan Materialistis: Risiko yang perlu
diperhatikan dalam pemberian insentif adalah perusahaan
mengembangkan pola pikir materialistis bagi karyawan, yang dapat
memengaruhi budaya perusahaan dan motivasi intrinsik karyawan.
Dengan memperhatikan potensi kendala dan risiko tersebut, perusahaan
perlu merancang program insentif dan komisi dengan cermat, serta melakukan
evaluasi secara berkala untuk meminimalkan dampak negatif dan memastikan
efektivitasnya dalam memotivasi karyawan dan mencapai tujuan perusahaan.

BAB III
PENUTUP

3.1 Kesimpulan

disimpulkan bahwa memberikan insentif dan komisi dapat menjadi salah

satu cara untuk memotivasi karyawan dan meningkatkan produktivitas
perusahaan. Insentif dan komisi dapat meningkatkan kinerja, kepuasan, dan
loyalitas karyawan terhadap perusahaan. Namun, perlu dilakukan evaluasi
secara berkala untuk meminimalkan dampak negatif dan memastikan
efektivitasnya dalam mencapai tujuan perusahaan. Selain itu, perusahaan juga
perlu mempertimbangkan jenis-jenis insentif yang diberikan dan cara
menghitung besaran komisi yang adil untuk karyawan.

8
3.2 Saran
Saran yang dapat diberikan adalah perusahaan perlu memperhatikan
kebutuhan dan keinginan karyawan dalam memberikan insentif dan komisi,
serta melakukan komunikasi yang baik dengan karyawan untuk memastikan
kejelasan dan keadilan dalam pemberian insentif dan komisi. Perusahaan juga
perlu memperhatikan dampak negatif yang mungkin timbul dari pemberian
insentif dan komisi, seperti persaingan yang tidak sehat antar karyawan atau
pengabaian kualitas kerja demi mencapai target. Oleh karena itu, perusahaan
perlu melakukan evaluasi secara berkala dan memperbaiki sistem insentif dan
komisi yang ada agar dapat memotivasi karyawan dan mencapai tujuan
perusahaan dengan efektif dan efisien.

DAFTAR PUSTAKA

Kompas.com.apa itu insentf, jenis,tujuan pemberiandan contohnya.2022

diakses pada tanggal 20 november 2023
https://amp.kompas.com/money/read/2022/03/25/112117226/apa-itu-insentif-
pengertian-jenis-tujuan-pemberian-dan-contohnya

Repository.iainpare.dampak pemberian insentif dalam meningkatkan kinerja

karyawan di pt.pln bakaru.2022
Diakses pada tanggal 20 november 2023.
http://repository.iainpare.ac.id/4601/1/17.2900.025.pdf

etheses.iainkediri.ac.id. http://etheses.iainkediri.ac.id/519/3/BAB%20II.pdf

9
 International Journal of Academic Research in Business and Social Sciences
April 2014, Vol. 4, No. 4
ISSN: 2222-6990

The Role of the Incentives and Reward System in

Enhancing Employee's Performance
“A Case of Jordanian Travel and Tourism Institutions"
1
Dr. Ashraf Mohammad Alfandi
Near Nuaima Bridge / Irbid National University / Department of Tourism and Hotel Management
(Jordan, Irbid)
Email: aalzu3by@yahoo.com

2
Dr. Mohammad Shabieb Alkahsawneh
Near Nuaima Bridge Irbid / National University / Department of Tourism and Hotel Management
(Jordan, Irbid)
Email: ashrafeltehe2004@yahoo.de

DOI: 10.6007/IJARBSS/v4-i4/788 URL: http://dx.doi.org/10.6007/IJARBSS/v4-i4/788

______________________________________________________________________________
ABSTRACT--The purpose of this study is to investigate the role of incentives on employee
performance for the employees of the Jordanian tourism and travel institutions. Statistical packages
for social sciences (SPSS) program were used for descriptive analysis. for the purpose of this study,
the sample was chosen randomly and it consisted of 28 institutions found in Amman. As for the
respondents of the sample, they were 44 employees who received 44 questionnaires. 41
questionnaires were returned, which forms 93% of the sample. The main findings indicate that
there is an adequate level of incentives provided to employees. Moral incentives, rewards, efficiency
of reward system and promotions are four factors found to have significant impacts on employee
performance in Jordanian travel and tourism institution . However, rewards ranked in the first place
of its impact on the employee performance while promotion ranked in the last place. Finally, this
study has verified further research opportunities that could enrich the understanding of incentives
and employee performance at the Jordanian travel and tourism institutions.

Keywords--Incentives, Employee Performance, Reward System, Travel, Tourism, Jordan.

1. INTRODUCTION
Incentives are considered one of the most important factors that encourage workers to put
forth great efforts and work more efficiently. It is because incentives and reward system direct
workers capabilities into more efficiency in their work in an attempt to achieve the institution's
goals (Gana and Bababe, 2011). In addition, the absence of the suitable incentives may
negatively affect the hardworking employee's performance; it may also weaken their
productivity at work which decreases the chances of attaining the promising goals of the
institution (Palmer, 2012). Being a major element in tourism industry, it is necessary for travel
and tourism organizations to provide incentives to motivate their employees. Such incentives
are a significant factor in encouraging employees and increasing their enthusiasm at work

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 International Journal of Academic Research in Business and Social Sciences
April 2014, Vol. 4, No. 4
ISSN: 2222-6990

which results in improving the general performance and increasing the productivity. Incentives,
also, help in attaining job satisfaction which increases the interaction between the employee
and the organization. However, in many companies incentives and reward system are designed
by human resource department while the evaluation of employees and organization
performance are done by the finance department. As such, there is an integration issue as both
department tend to isolate with each other. Furthermore, usually the incentives and the
reward system are designed by the top management based on their perceptions without
consulting the employee at the lower level. In this case, the incentives and the reward system
may not be able to achieve the employees satisfaction and such system will not be able to
change their attitude and behavior toward the organization as they feel that their contribution
to the organization are not well recognized. Therefore, the present study tends to overcome
this issue and provides insight and recommendations for the Jordanian travel and tourism
organizations by determining how incentives and the rewards system influencing the
employee's performance.
2. OBJECTIVES OF THE STUDY

1. Identifying the types of concrete incentives given to workers at travel and tourism
institutions in Jordan.
2. Identifying the types of moral incentives given to workers at travel and tourism institutions
in Jordan.
3. Showing the role of the given incentives in improving the workers' performance at travel
and tourism.
4. Identifying the efficiency of the incentive system implemented at travel and tourism
institutions in Jordan and its role in enhancing these institutions' employees.

3. LIMITATIONS OF THE STUDY

This study is limited to investigating the concrete and moral incentives and their role in
influencing the employees' performance at travel and tourism institutions in Jordan from the
perspective of the chairmen of these institutions in addition to the employees. More specifically,
this study dealt with travel and tourism institutions in the capital city of Jordan, Amman, because
most of the tourism institutions are found there. As for the period of the study, it is noteworthy
that the study was conducted in 2013.
4. HYPOTHESES OF THE STUDY
The study aims to test the following three zero hypotheses:
(H01): There is no statistical effect of the promotions given by travel and tourism institutions on
enhancing the employees' performance.
(H02): There is no statistical effect of the rewards, implemented in travel and tourism institutions,
on enhancing the employees' performance.
(H03): There is no statistical effect of the moral incentives employed at travel and tourism
institutions on enhancing the employees' performance.
(H04): There is no statistical effect of the incentive system efficiency employed at travel and
tourism institutions, regarding enhancing the employees' performance.

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April 2014, Vol. 4, No. 4
ISSN: 2222-6990

5. LITERATURE REVIEW
A study was conducted by Abbas and Hammadi (2009) entitled as “The Incentives and their
Effect on the Performance" aimed at identifying the incentive system and its role in enhancing the
performance of employees at the Yemeni Oil Exploration Commission. The study showed a poor
participation by the employees in decision making; in addition to this, the majority of employees
complained about the lack of concrete incentives, such as rewards and rate.

Closely related to the previously mentioned studies, Hammam and Al-Maqableh (2005)
discussed the factors that help in attaining job satisfaction for employees in Jordanian hotels. The
study showed that job satisfaction for the employees was intermediate and that the management
style is the first factor in improving job satisfaction, then it is the work environment that plays a
role in this improvement; whereas the least effective factor was the compensation system at
hotels.

Muhsen (2004) investigated the level of job satisfaction for employees at the UNRWA in
Amman; the study attempted to identify the most effective factors that help attaining job
satisfaction and effective performance. The study found that the percentage of job satisfaction was
relatively low since it reached 58.82%. The study also showed that there are differences, with
statistical evidence, in job satisfaction due to variables such as salary, age, and years of experience,
marital status and place of residence. Finally, the researcher recommended that there must be a
unification of the contractual regulations in addition to reconsidering the incentive system
implemented in the UNRWA.

Al-Fares (2011), on the other hand, attempted to clarify the relationship between the
incentives methods employed in four public institutions. He found that there is a strong relation
between the incentives and loyalty towards the organization which, as a result, affects the
performance at work. The study recommended that there should be more attention devoted to
developing the incentives given to the employees as to enlist the employees to become activists in
the institution.
Odeh's and Awad's study tried to identify the quality and role of incentives, given to the
employees at Nables hospital in Palestine, in enhancing the employees' performance. The results
showed that the majority of employees agree that there are very few moral and concrete
incentives; however, the results showed that there is no direct relationship between the incentives
and the employees' performance.
Al-Nsour (2012) conducted a study aimed to investigate the impact of financial and moral
incentives on organizational performance for the employees of the Jordanian Universities. This
study aims at identifying the role of the Jordanian universities in meeting the employees' societal
needs, knowing the implemented incentives approach and knowing the level of performance in the
Jordanian universities. The study found that there is an adequate level of incentives provided to
employees. Financial incentives ranked in 1st place while moral incentives ranked in the 2nd place.
In addition, it was found that there is a high level of organizational performance. Customer
satisfaction ranked in the 1st place, internal business process in the 2nd place followed by learning
and growth. There is relationship between financial & moral incentives and organizational

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performance as well as between financial and moral incentives and internal business process and
customer satisfaction.

6. INCENTIVES
By definition, incentives are an external persuading factor that encourages the motive which
positively directs the individual into working harder, matching the required performance in the
institution, as to get the incentive. Incentives are also defined both as methods used by institutions
to encourage employees to work with high spirits and also as concrete and moral methods of
satisfying the individuals' moral and material desires. Palmer (2012) defines incentives as the
external temptations and encouraging factors that lead the individual to work harder; they are
given due to the individual's excellent performance since he will work harder and produce more
effectively when he feels satisfied in the institution. In addition to this, incentives can also be
defined as the consideration of the excellent performance, assuming that the salary is enough to
make the worker appreciate the value of the job that also satisfies his basic needs in life (Palmer,
2012).

Practically, incentives refer to all of the concrete and moral methods that Jordanian travel and
tourism institutions give in order to positively encourage the employees in a way that increase the
production rate and enhance the employees' performance, which has its importance in satisfying
the employees' desires and guarantee a loyal attitude towards the institution.

6. 1 The Importance of Incentives

The idea of incentives triggers much consideration especially from the beginning of looking for
qualified employees who are able to efficiently achieve the institution's goals; it is because
incentives play a major role in the employees' productivity. The importance of incentives originates
from the need for the employee to be recognized and appreciated for his or her efforts. Actually,
appreciating people for their efforts by giving them incentives is a very significant factor in
satisfying the internal desires of an individual. The individuals' own skills are not enough to let
them work with high productivity unless there is an incentive system that encourages their internal
motives and then leads very hardworking efforts (Locke and Braver, 2008).

A successful organization is the one which can efficiently exploit its employees' skills and
qualifications. Therefore, scholars have worked hard as to come up with a comprehensive
description of how to enhance the professionalism of the employees and how the administration
chooses active individuals, and also how to connect the institutions' goals to the personal
objectives of the individuals which will improve their performance. It is plausible to say that
successful organizations set an active incentive system capable of affecting the employees'
performance in a way that pushes them into working harder and maintaining the goals of the
institution. In addition, it is noticeable that motivating employees may help them to overcome a lot
of their obstacles at work (Palmer, 2012). On the other hand, for the administrator to be
incentivizing, he must try to create confidence and an environment of tranquility, security and
respect in an honest and actual manner. One must know that appreciating or people's work and
praising their achievements do not affect one's own success, so one must do this directly to who

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deserves it or just in front of a group of people by praising their accomplishment (Locke and Braver,
2008).
6. 2 Types of Incentives
Incentive is concept of material and moral values and they are also a central point for different
activities in the modern institutions and work environments. Concrete incentives are what called
direct compensation systems such as salaries, rates and bonuses. On the other hand, moral
incentives are called indirect compensation systems such as the stability of the work, participating
in decision-making, commitment, pertinence, promotion and appreciating the employees'
performance by thanking them. This shows that incentives are the consideration of excellent
performance, which could be in the quality, quantity or abundance in the work's time or even in
the costs (Palmer, 2012).

Incentives have been classified into different types, and they tend to interfere. They have been
classified by searchers into different ways and techniques that can be used by the administration
to get the highest amount of qualification from the human performance. Some have classified
them depending on their effect on each individual, while some based them on the way they are
given out, or on their goals and other ways of classifications which after a long way of research can
be put under two main types of incentives which are: incentives based on the purpose and
incentives based on the kind of the incentive itself (Robbins and Judge, 2007).
Firstly: incentives based on the purpose of the incentive, classified into two types: the first one
is the positive Incentives which is the ways that positively affect people's behavior through
satisfying their needs such as promising the employees of cash bonuses when they reach a stage of
highly qualified performance. Such incentives are helpful for both the needs and sake of the
employees and that of the institution; it is because rise in the production, improving the quality,
working according to high standards, coming up with inventories along with high responsibilities
are all positive consequences for the institution, which, in return, rewards its employees with
concrete, moral or social incentives. (Robbins and Judge, 2007). The second classification of
incentives based on purpose is the negative incentives which is the ways of affecting people's
behavior by threatening employees of depriving them of some privileges such as truncating part of
their salary if they violated any of the work's principles. These ways are methods used by the
administration in order to reduce negative behaviors and unacceptable manners among employees
such as following orders, lack of responsibility and laziness. This kind of methods of includes ways
of cautions and warning, preventing the employee of some privileges for a specific time, delaying
promotion or even lowering the job position and transfer to other departments. These methods
are used according to the degree of violation; such negative incentives are called deterrent
incentives. However, the use of negative incentives is sometimes necessary for increasing
efficiency in production especially when dealing with lazy employees (Palmer, 2012).
Secondly: incentives based on the type of the incentive itself; are classified into two types:
A- Concrete incentives including classified into three types:
1-The concrete incentive which is the most important one since it is considered the only source of
living in addition to its being the base on which people depend in order to satisfy their basic needs
and security. This kind of incentives includes rates, encouraging cash bonuses, commissions,
periodical promotions, motivational promotions and sharing in some of the institutions' profits
along with gifts for extra work. 2- Security and stability at work which is achieved through real

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guarantees that prevent abuse towards the employee if he commits a violation. Such guarantees
create an atmosphere of security and stability and it also softens the morale of the employees
which enhances productivity. Therefore, the institution must make a connection between the
stability of the employee and his role in increasing production in the institution. This stability is
given only to successful employees who work hard (Robbins and Judge, 2007). 3-Enrolling the
employees in training sessions help in increasing the morale of these employees; it also provides
them with suitable work conditions and persuades them to work harder. This is due to the features
of service that positively improve manners performances in the institution (Abu Shaikhah 2000).

In general, concrete incentives could be considered one of the most effective factors in
encouraging the employees into working honestly when there are suitable rates that satisfy the
individual's needs. On the contrary, low and unfair rates are a major factor in neglecting the
required work and low productivity, when the given rates do not satisfy the needs of the individual
(Robbins and Judge, 2007). In addition, it is noteworthy that concrete incentives are one of the old
incentives that are both fast and immediate and it appreciates immediately the individual's efforts.
Also, concrete incentives might be positive such as bonuses, aids, promotions and exceptional
extra cash over the salary, or they might be negative such as depriving the employees from the
bonuses and promotions, or even lowering their salaries (Helal 2009).
B-Moral incentives which include:
1- Delegating part of the chief's powers to his subordinates is a great incentive for them which
appreciates their capabilities and creates an atmosphere of confidence in their performance.
Delegating some powers helps easing the burdens and provides flexibility but it should have legal
and physical controls as to achieve the desired success.
2- Knowing the results of the individual's efforts gives the individual a feeling of pride and
excellence and it is considered an important incentive for the employee to improve his
performance when he feels satisfied and appreciated in his position.

3-Appreciative promotions
4- Honors and medals to appreciate the achievements and innovations accomplished by the
employee.
5- Appreciation and thanking speeches directed to the employee.
6- Honor boards in order to list the hardworking employees. (Robbins and Judge, 2007).

It is worth mentioning that moral incentives in the work environment that satisfies the
individual's needs are the reasons for attracting the individuals into work, since such incentives
satisfy a specific need for the individual. Therefore, the administrations should not stick only to
cash incentives, which satisfy only one need for the individual and somehow neglect other social
and psychological needs. So it is the moral incentives that encourage the individual and satisfy the
other social and psychological needs, which consequently creates a feeling of devotion towards
work and motivates cooperation among colleagues. In short, moral incentives are as important as
concrete ones regarding their role in improving human relations increasing the individuals'
productivity inside the organization, because, as mentioned earlier, some concrete incentives may
not work unless they are accompanied with moral ones (Abu Shaikhah 2000).

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6. 3 The Performance of the Employees

In general, the concept of performance means the goals that institutions seek to achieve
through their employees. It connects activities and goals via employees' duties inside institutions.
In other words, it's the individuals' responsibilities, activities and duties, that their work consists of,
which should be done in the right way with taking into consideration the qualified employees'
abilities to do them. Employee’s performance can be defined as doing different activities and
duties that their work consists of (Al-Rabayah 2003). Most individuals spend big parts of their lives
searching for job satisfaction due to its positive efforts on their personal and professional lives. It
also leads to increase institutions and employees productivity and benefit. Therefore, it's so hard
to achieve high levels of the long term productivity unless the job satisfaction is there. However,
many studies indicate the strong relationship between motivations given to employees and their
satisfaction. As a result, that helps improve their performance which expresses individual’s efforts'
results that start from their abilities and realizing their duties. In conclusion, the concept of
performance indicates the percentage of achieving and completing individuals' duties their jobs
consist of.

6.3.1 Ways of Measuring the Performance of the Employees

1-The Amount of the Effort : It refers to the amount of the physical or mental energy that the
individual spends in a specific period of time in the work, in addition to the speed in performance.
2- The Quality of the Effort: It refers to the level of the quality of the done work and the degree of
matching between the done work and some specific standards. Some kinds of work are not
measured by the amount or the speed of performance; but rather by the degree of error-free
performance and matching between the production and the required standards.
3- Manner of Performance: It is the way in which the work duties are done. For example,
performance can be measured through the manner of performance, measuring problem-solving
strategies or in problem detecting.
4-Rates of Performance: It refers to the process in which the evaluator increases the employee's
productivity in order to determine the efficiency, the quality and the amount of the employee's
work in a specific period of time. Then, he compares the employee's done work with the specified
rate. (Al-Rabayah 2003).

6.3.2 Objectives of Performance Evaluation

Several objectives can be achieved though applying incentive evaluation systems. One of the
most important evaluation systems is choosing qualified individuals whose abilities and
qualifications suite the required work. Therefore, it is possible to say that evaluating performance
can offer standard and scientific bases used to promote individuals such as giving bonuses and
incentives in order to increase the production and improve its quality. In addition to this,
evaluating performance can also show the personal qualities of the employees that need training;
also, such evaluation may suggest some steps to improve this performance (Al-Rabayah 2003).
Finally, performance evaluation program raises the morale of the employees by appreciating their
efforts, which results in improving their salaries (Abbas and Hamadi 2009).

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7. THEORETICAL FRAMEWORK
This study investigates the role of incentives on employee performance. Promotion, rewards,
moral incentives and efficacy of rewards system are the independent variables and the employee's
performance is the dependent variables as the figure below shows.

Figure 1: Research Framework on the relationship incentives toward employee's performance.

8. METHODOLOGY

8.1 Data Collection

In order to cover the theoretical part of the study, several books, publications and other
theoretical references relevant to the topic were reviewed. Descriptive analytical approach of data
analysis was used through field survey of the statistics community which is the employees at travel
and tourism institutions in Jordan, and then analyzing the collected data by using statistical analysis
program (SPSS), depending on a questionnaire as a major tool in collecting the needed data for the
topic of the study.

8.2 Validity Test of the tool of the study

The superficial validity of the measurement method was proved through presenting the
questionnaire to some experienced instructors at Irbid National University who are specialized in
order to benefit from their experiences. The instructors' comments were helpful for enriching the
study by making modifications to some paragraphs related to the language structure, the clarity
and the harmony of the study field. Gronbach Alpha test was used to test the validity of the study's
method; the score ranged between 78% and 71% for all of the questionnaire's paragraphs, which
are good compared to the acceptable percentage which is (60%) (Hair et al., 2007; Balsley and
Vernon, 1988).

8.3 Measurement Methods

Five points Likert scale was used in this study in order to present the questions of the
questionnaire. The scales were divided as (1) strongly disagree, (2) disagree, (3) neutral, (4) agree,
(5) strongly agree. Based on these scales, the sum of these scales was 15 and therefore the average
is 15/3= 3.

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9. CHARACTERISTICS OF THE SAMPLE OF THE STUDY

The population of the study consists of travel and tourism institutions. The sample was chosen
randomly and it consisted of 28 institutions found in Amman. As for the respondents of the
sample, they were 44 employees who received questionnaires. 41 questionnaires were returned,
which forms 93% of the sample. Repetitions and percentages related to the personal information
of the sample were extracted as shown in the following table.
Table 1: Personal Information of the Study sample
Gender Repetition Percentage

Male 28 68%

Female 13 32%

Total 41 100%

Qualification Repetition Percentage

Diploma or less 17 41%

Bachelor 22 53%

Graduate Studied 2 6%

Total 41 100%

Years of experience Repetition Percentage

Less than 5 years 24 59%

5-10 years 10 24%

10-15 years 4 10%

15 – more 3 7%

Total 41 100%

Job Description Repetition Percentage

Manager 3 7%

Chairman 14 34%

Executive 24 59%

Total 41 100%

We can assimilate from the table above that the highest percentage was the male sample

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reaching 68% which is higher than that of females reaching 32%. This might be attributed to
declining a huge ratio of females from working at tourism sector in Jordan. We as well deduce
that the higher ratio is for those males having BA degree reaching 53% followed by Diploma
degree (less than 41%). The least is for those receiving higher educational degrees reaching 6%.
This may be attributed to the reason that industry sector is considered an applicable sector that
requires experience rather than do higher degrees. The higher ratio is for the sample individuals
who have a less than 5 year experience reaching 59% followed by those individuals having from 5
to 10 year experience reach 24% and those who have a more than 15 year experience reaching
0%. It is obvious that working at such firms does not require a long experience whereby most of
their workers having a less than 10 year experience reach 83%. As for position title job, most of
the ratio is for executives whose ratio reaches 59% followed by Chairman 34 % and finally
managers 7%.
10. ANALYZING THE RESULTS OF THE STUDY
The following table explains the results of the descriptive statistical test of the variables of the
study.

Table 2
Efficiency of the Incentive System Mean Standard
Deviation

1 The bonuses and extras added yearly to my salary 3.3 .813

make me feel satisfied.

2 In my opinion, the salaries system and the extra 3.2 .713

advantages are somehow fair

3 The salary that matches my efforts encourages my 2.6 1.030

performance.

4 I feel safe and ensured in my job 2.6 1.045

5 The retirement system makes me feel safe and 3.8 .794

ensured

6 The health insurance offers suitable services for the 3.7 .792
employees.

7 I get a percent of the profits as part of the incentives 2.5 1.039

that the company offers.

The overall efficiency of the incentive system 3.1

The table above shows the attitudes of the study sample towards the efficiency of the incentive
system employed in Jordanian travel and tourism institutions. The arithmetic means ranges
between (2.5) in their least range for the part “I get a percent of the profits as part of the

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incentives that the company offers" and (3.8) in their highest range for the part “The retirement
system makes me feel safe and ensured". The general arithmetic mean was close to the neutral
level with an arithmetic mean reaching (3.1); this shows a weak level of the efficiency of the
incentive system employed in Jordanian travel and tourism institutions.

Table 3
Promotion Mean Standard
Deviation

1 I think that promotion mechanisms are appropriate 4.0 .768

2 I notice that job promotions affected my performance positively 4.3 .767

3 The majority of the exceptional promotions were based on the efficiency

4.4 of.792

Performance

4 There is a relative match between my qualification and 4.0 .794

experience, and my job

5 I think that the majority of managers and supervisors were 4.4 .792
promoted fairly

6 Most of the job promotions are given depending on seriousness 4.3 .884
and perseverance in work

Promotions as a whole 4.2

The arithmetic means of promotion paragraphs ranged from (4.0) in their least limit to (4.4) in
their highest limit. The general arithmetic mean was (4.2) which shows a big percentage of
satisfaction for the employees at Jordanian travel and tourism institutions regarding the promotion
regulations employed in their institutions.
Table 4
Reward Mean Standard
Deviation

1 I think that the reward regulations in the incentive system are 2.6 1.030
fair

2 I notice that giving rewards affect the functionality positively 2.7 .956

3 I think that the majority of exceptional rewards were based on 2.9 1.002
efficiency in performance

4 The majority of rewards at work are given according to 3.2 1.039

seriousness and hard work

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5 The manager usually recommends giving a rewards to the 2.7 1.030

effective employee

Rewards as a whole 2.8

The table above explains the attitudes of the sample towards the efficiency of the reward
regulation employed at Jordanian travel and tourism institutions. The arithmetic means ranges
from (2.6) in their least limit for the paragraph “I think that the rewards regulations in the incentive
system are fair" to (3.2) in their highest limit for the paragraph “The majority of rewards at work
are given according to seriousness and hard work ". The general arithmetic mean was close to the
neutral level with an arithmetic mean reaching (2.8); however, it is low which shows a low
percentage of satisfaction for the employees who think that the bonus and rewards regulation is
not fair and does not improve functionality at work.
Table 5
Moral Incentives Mean Standard
Deviation

1 My direct manager plays a major role in instructing me and 4.2 .768

improving my performance

2 My direct manager appreciates my efforts and at work 4.3 .767

3 I'm always ready to do the best due to the good treatment 4.4 .792
from my colleagues at work

4 The institution offers appreciation medals for those who 2.9 .884
deserve

5 The institution offers appreciation certificates and honor 2.8 .445

promotions for those who deserve ( without increasing the
salary)

6 The cooperation between the administration and colleagues 4.4 .567

encourage me to improve my performance

7 The institution offers participation in training sessions in order 3.0 .723

to improve the employees' performance

Moral Incentives as a whole 3.7

The arithmetic means of the promotion paragraphs ranged from (2.8) in their least limit to (4.4)
in their highest limit. The general arithmetic mean was (3.7) which show a big percentage of
satisfaction for the employees at Jordanian travel and tourism institutions regarding the moral
incentives their institutions offer.
Table 6

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Employee Performance Mean Standard

Deviation

1 I care about the results of evaluating my performance because 4.4 .792

they are a chance to get bonuses

2 I notice that the one whose performance is weak will be 4.3 .884
punished depending on the performance evaluation results

3 The positive results of my performance evaluation motivate me 3.6 .771

to work harder

4 I'm willing to work harder 3.5 1`.023

5 I finish the required work even if it requires extra efforts. 3.6 .987

6 I do my job according to the required quality standards 3.6 .654

7 The employees have the ability to deal with troubles at work 3.9 .545

8 The performance is evaluated depending on some scientific and 3.3 .467

clear variables

9 I have no disagreements with my boss 3.8 .771

10 I follow the instructions and regulations at work 3.7 1`.023

11 I pay attention to the quality of the services given to the 3.6 .987
beneficiaries

Employee performance as a whole 3.7

The arithmetic means of Employee performance paragraphs ranged from (3.3) in their least
limit to (4.4) in their highest limit. The general arithmetic mean was (3.7) which show a big
percentage of Employee performance for the employees at Jordanian travel and tourism
institutions.

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11. HYPOTHESIS TESTING

Table 7
Independent Variable B SE B Β Sig. P<.05 R square F Sig. F;
p<0.01

.278 13.60.00**

Moral Incentives .164 .052 .160 .002

Rewards System Efficiency .163 .060 .169 .007

Promotions .115 .058 .101 .049

Rewards .345 .058 .344 .000

Dependent variable (employee performance) was regressed on all four independent variables.
From the first run of the test, the casewise diagnostics indicates that observation number 4 and
17 found to be outliers and hence deleted in the next regression run. The Table above provides
evident of the influence of promotions, rewards system efficiency, rewards and moral incentives
on employee performance. The F-statistic (F = 13.54, p< .01) indicates that the relationship
between independent and depend variables is significant. The R square obtained indicates that
these factors account of 28 % of the variation in the employee performance. All four variables
included in the regression equation emerged as significant predictors of employee performance.
As being hypothesized, these variables are found to have positive influences on employee
performance. Based on the result, all four null hypotheses were rejected and thus the alternatives
hypotheses are accepted.

To investigate which factor has the most influence on employee performance, the beta values
were used. Based on the size of beta values, the predictors variables exercising the most influence
on employee performance was rewards (β = .35), followed by efficiency of rewards system (β = 17),
moral incentives (β = 16), and motivation(β = 11). It is important to note that the tolerance and VIF
values shown in the output indicates that no multicollianearity effect among the independent
variables on dependent variables.
12. CONCLUSION
Counting upon the study results, we exhibit here the most important recommendations for
Jordanian travel and tourism institutions that are still under study as follows: travel and tourism
institutions shall commit to pay attention to incentive systems application and put it into force, for
it has several advantages summarized in obtaining two factors having great abilities and skills in
coping with beneficiaries and providing them with services of high level of quality. The institutions'
success relies, in the first place, upon working individuals' performance. In this sight, Jordanian
travel and tourism institutions should take care of workers as they do of beneficiaries and shall
work on having them motivated in order for their abilities and skills to be elevated because
achieving high level of quality depends upon those workers' behavior toward beneficiaries.
Whereas not only does beneficiaries' viewpoint toward the organization count on dissatisfaction

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with what such an organization provides but also it depends on treatment offered to beneficiaries
by working individuals at the same organization. Thus, incentives and their systems perform a huge
role in any organization failure or success by reaching this result.

13. RECOMMENDATIONS
1. Giving incentives should be linked practically with the level of performance as to distinguish the
excellent employees according to their performance; this will enhance the employees to do their
best in order to improve their performance, and therefore incentives will be linked to improving
the performance.
2. Keeping on giving incentives in the appropriate time and not delaying them in order not to
lessen the goal of the incentives.
3. Supporting the concrete incentives in the primary bonus commission due to the role that such
incentives play in finding many solutions to some social and financial problems that may face the
employees.
4. Incentives are given according to the level of performance in order to persuade the employees
into doing their best as to improve their performance; by doing so, incentives will be associated
with improving the performance and vice verse, without having any vested interests.
5. The results of performance evaluation should necessarily be the base for both appreciation and
punishment, especially when using either positive or negative incentives as to guarantee achieving
the purposes of incentive and bonuses regulations.

14. REFERENCES
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Journal of Indonesian Economy and Business
Volume 36, Number 1, 2021, 14 – 30

THE EFFECT OF INCENTIVES AND LEADERSHIP STYLES

ON CREATIVE PERFORMANCE

Sariyatul Ilyana1*, Mahfud Sholihin1

1
Department of Accounting, Faculty of Economics and Business, Universitas Gadjah Mada,
Yogyakarta, 55281, Indonesia

ABSTRACT ARTICLE INFO

Introduction/Main Objectives: This study investigates whether the type of Article information:
incentives offered and leadership styles interact to affect creative performance. Received: September 19,
Background Problems: Creativity is highly needed by companies to survive in 2020. Received in revised
a volatile business environment. Prior research found that management control version: November 16,
systems and the leadership style were able to stimulate creativity. It is still 2020. Accepted:
November 23, 2020.
unclear which type of incentives and leadership styles are able to stimulate
creativity. Therefore, this research proposes a research question, what kind of
Keywords:
management control systems and leadership style can improve creative
creative performance,
performance? Novelty: This research focuses on comparing monetary and non- incentives, leadership
monetary incentives, based on competition, to produce the most creative ideas, styles
but empirical studies into the context of creativity are still limited. Furthermore,
this study investigates two different leadership styles and it sheds light on the
fact that the leadership styles needed in a creative environment differ from those JEL Code:
styles used in a non-creative environment. Research Methods: This study was J53, M41, M52, O31
conducted using a 2x2 between subject experimental design with two incentive
treatments (tournament and recognition) and two leadership style treatments
(directive and empowering). Finding/Results: Consistent with Lourenco (2016),
monetary incentives (including tournaments) and non-monetary incentives
(recognition) are substitutive. Furthermore, the empowering leadership style
leads to a greater creative performance than the directive style does. The results
indicate that, in the condition of a tournament incentive, empowering leadership
is able to produce a higher creative performance than directive leadership can.
Conclusion: There is no significantly difference between the effect of monetary
incentives and non-monetary incentives on creative performance. This study’s
result is consistent with the situational leadership theory, certain types of
leadership are appropriate for certain environmental conditions. For improved
creative performance, employees need to be empowered because they need the
authority and freedom to develop ideas. This study provides knowledge about the
impact of incentives and leadership styles on creative performance. Furthermore,
this study provides practical knowledge for companies on how to improve
creativity in the work environment by using certain incentives and leadership
styles.

1
Corresponding Author at Department of Accounting, Faculty of Economics and Business, Universitas Gadjah Mada, Jalan
Socio Humaniora No. 1, Yogyakarta 55281, Indonesia.
E-mail address: sariyatul.ilyana@mail.ugm.ac.id (author#1), mahfud@ugm.ac.id (author#2)

ISSN 2085-8272 (print), ISSN 2338-5847 (online) http://journal.ugm.ac.id/jieb

Journal of Indonesian Economy and Business, Vol. 36, No. 1, 2021
INTRODUCTION
Nowadays industry is facing a volatile environ-
ment. The level of market competition is
enormous and technology is rapidly developing.
Employees’ creativity is vital for companies to
enhance their organizational competitiveness to
face the dynamic environment (Gong, Zhou, &
Chang, 2013). However, the problem for
business organizations is that not all individuals
are creative, or motivated to be creative (Klotz,
Wheeler, Halbesleben, Brock, & Buckley,
2012). Therefore, companies need to facilitate
organizational systems that encourage the
employees to perform creatively.
Management control systems (MCS) and
leadership have an important role in stimulating
creativity in the work environment
(Speckbacher, 2017). MCS affect the perceived
conditions, constraints, and project goals in
generating creative ideas. Therefore, MCS work
in shaping, framing, and defining problems that
require creative solutions (Speckbacher, 2017).
On the other hand, leaders create situational
contexts and conditions in which subordinates
are involved in creative efforts to achieve
organizational goals (Jung, 2001). Incentives are
one of the MCS used to improve performance
(Bonner & Sprinkle, 2002). Empirical studies
show that incentives and leadership are effective
in enhancing employee performance (Chen, Lin,
Lin, & Iii, 2012), and the best way to engage
employees in the organizational goals (Benazir
& Iqbal, 2015). However, there are many kinds
of incentives and leadership. There is no clear
answer for which type of incentives and leader-
ship are able to improve performance in the
context of creativity. This drives us to inves-
tigate what types of incentives and leadership
can improve people’s creative performance.
There are several types of incentives, they
are monetary incentives, recognition, and
feedback (Stajkovic & Luthans, 2001). Recent
15
research showed that monetary incentives and
recognition are substitutive for improving
performance, whereas feedback has no effect on
performance (Lourenco, 2016). This provides
evidence that in the context of employment
relations, recognition is as effective as monetary
incentives. One type of monetary incentive is the
tournament incentive. Both tournament and
recognition use a system of competition
(Cadsby, Engle-warnick, Fang, & Song, 2015).
However, the level of effectiveness from using
these kinds of incentives to improve creative
performance is unknown. Most studies have
examined the comparison of two types of
monetary incentives (Charness & Grieco, 2018;
Chen, Williamson, & Zhou, 2012; Kachelmeier,
Reichert, & Williamson, 2008) or a comparison
of piece-rate incentives and recognition (Huo,
2015) for improving creative performance.
Therefore, this study aims to investigate the
effect of tournament incentives and recognition
on creative performance.
Beside incentives, Amabile et al. (2004)
emphasized the importance of leadership in
encouraging individual creativity. The study
conducted by Amabile et al. (2004) showed that
a leader who interacts daily with his/her subor-
dinates was able to direct and influence their
perceptions, feelings, and daily performance,
which in turn affects the overall creativity of
their work. Martin, Liao, and Campbell (2013)
stated that there are two types of leadership
styles, namely directive and empowering leader-
ship. Some previous studies have found that
directive leadership is more effective in
stimulating performance (Lorinkova, Pearsall, &
Sims, 2013; Yun, Faraj, & Sims, 2005). This is
because the directive leader focuses on the
employee's task effort by giving specific and
relevant directions for the task, setting clear
rules for behavior (Lorinkova et al., 2013), and
monitoring the progress of the work (Yun et al.,
16
2005). Therefore, employee performance can
improve. However, in the context that requires
employees to think creatively, autonomy and
appreciation is needed for generating new ideas
(Alge, Ballinger, Tangirala, & Oakley, 2006),
and this relates to the empowering leadership
style. This issue encourages us to investigate
whether empowering leadership is able to
improve creative performance, compared to
directive leadership.
The interrelation of MCS, leadership, and
creativity is important to explore. Thus far, the
interrelation of leadership and MCS in
influencing creative performance has received
little attention (Speckbacher, 2017). Therefore,
this study will examine the interaction of
incentives as part of the MCS and leadership
style for encouraging creative performance.
This research makes several contributions to
the existing literature. First, this research contri-
butes by focusing on the comparison between
monetary and non-monetary incentives for
influencing creative performance. The novel
feature of this study is that it compares monetary
and non-monetary incentives, based on compe-
tition, to find which produces the most creative
ideas. Most of the previous studies have
examined different types of monetary incentives
(Charness & Grieco, 2018; Chen, Williamson, et
al., 2012; Erat & Gneezy, 2016), and piece-rate
incentives and recognition (Lourenco, 2016).
Therefore, this current research enriches the
literature by investigating both monetary and
non-monetary incentives in creative perfor-
mance’s context. Second, this research sheds
light on the different leadership styles that have
different effects on creative performance.
Empowering leadership produces a better
creative performance through a process of
providing autonomy, freedom of thought, and a
work environment that is not rigid. Third, this
research validates the findings of case studies
Ilyana and Sholihin
conducted by Davila and Ditillo (2017) and
Cools, Stouthuysen, and Abbeele (2017) regard-
ing the interrelations between MCS, leadership,
and creative performance using experimental
studies.
The rest of the paper is organized as follows.
Section 2 has the literature review and hypo-
theses development. This will be followed by the
research method in Section 3. Findings and
discussions are presented in Section 4. The paper
ends with conclusions, limitations, and sugges-
tion for future research.
LITERATURE REVIEW
1. Creative Performance
Creative performance is the development of
products, ideas, or solutions to new problems
that form the basis of innovation by individuals,
organizations, and society (Hennessey &
Amabile, 2010; Shalley & Gilson, 2004). In the
psychology literature, ideas are classified as
creative if they are original, innovative, and can
be implemented within a reasonable budget
(Amabile, 1996). The employees’ work
environment has an impact on their creativity
(Mclean, 2005). There are six supporting factors
and two impediment factors for a creative work
environment (Amabile, Conti, Coon, Lazenby, &
Herron, 1996). The supporting factors include:
a) organizational encouragement, b) supervisory
encouragement, c) work group support, d)
freedom, e) sufficient resources, and f)
challenges. The impediment factors include: a)
workload pressure, and b) organizational
impediments. Based on the background that has
been described, we focus on organizational
encouragement and supervisory encouragement.
2. Creative Performance and Incentives
The literature on creativity has documented the
positive influence of motivational approaches on
individual success, to reach originality in the
Journal of Indonesian Economy and Business, Vol. 36, No. 1, 2021
creative tasks (Friedman & Forster, 2001). This
research applied the expectancy theory by
Vroom (1964) to explain incentives and creative
performance. Based on the expectancy theory,
individuals maximize the expected satisfaction
by achieving certain results. The expectancy
theory identified three conditions that produce
high levels of motivation to perform tasks,
namely: 1) The existence of expectations or
beliefs that greater effort will improve perfor-
mance (expectancy). 2) There is trust in the
performance measurement systems and
performance-based rewards (instrumentality). 3)
There is a relationship between the assignments
given to individuals and the rewards (valence).
The basic idea of the expectancy theory is based
on a reinforcement perspective, which supports a
utilitarian view of human nature and assumes
that external reinforcement can strengthen beha-
vioral dimensions, such as strength, duration,
novelty, and variability (Skinner, 1938).
Gellner and Pull (2013) used the expectancy
theory to provide evidence of whether tourna-
ment compensation systems, in a condition of
employee heterogeneity, affect firm perfor-
mance. Their results indicated that although
tournament compensation is more effective in
homogeneous employee conditions, tournament
compensation is still needed for groups of
employees who have high effort-performance
expectations; they are called the ―threshold
group.‖ They also found that the relationship
between compensation and performance was an
inverted u-shape. The extreme (low and high)
groups have less motivation to increase their
efforts than the threshold group has. This
perspective explains that individuals who have
expectations of the results to be obtained tend to
expend a great deal of effort to achieve the
maximum results. In the creativity context,
Eisenberger and Cameron (1998) stated that
extrinsic rewards direct empoloyees’ efforts in
17
the desired direction and result in behavioral
changes toward creativity when the incentives
given depend on creative performance.
There are two types of incentives examined
in this study, namely tournament incentives and
recognition. The difference between tournament
incentives and recognition is that tournament
incentives are given in the form of money, while
recognition is a non-monetary reward. Mehta,
Dahl, and Zu (2017) explained that monetary
incentives were able to increase individuals’
motivation to enhance creative tasks, while
recognition is more motivated by normative
goals. In this instance, normative goals are based
on social and task parameters. By using
monetary-based incentives, individuals tend to
propose a creative solution for a task that is more
original than the solution from those individuals
who have a normative focus. Therefore, the
creative performance is expected to be greater
from individuals who are offered money rather
than recognition. Formally, we propose the first
hypothesis:
H1: Individuals who get tournament incentives
will produce a higher creative performance
than individuals who get recognition
incentives.
3. Leadership Styles and Creative
Performance
Amabile (1996) found that there is a positive
relationship between organizational environ-
ments that offer organizational encouragement
and work-group support for employees’ innova-
tion and creativity. The situational leadership
theory is a practical tool for managers to deter-
mine what leadership styles need to be applied
when dealing with different situations. This
theory is based on the principle that the relative
benefits of each leadership style depend on the
competence, maturity, or readiness of the
followers (Thompson & Vecchio, 2009). A
18
pragmatic view of the situational leadership
theory was later developed by Sims, Faraj, and
Yun (2009), who provided a fundamental
assumption that certain types of leadership tend
to be effective in certain situations.
In this study, the two leadership styles tested
are the directive leadership style and the
empowering leadership style. According to
Lorinkova et al. (2013), directive leadership is
associated with the strength of the leader's
position and is characterized by behavior aimed
at actively structuring the work of subordinates,
by providing them with clear directions and
expectations related to their compliance with the
instructions. On the other hand, empowering
leadership tends to encourage the participation
of subordinates by contributing ideas, encourag-
ing optimal actions, and giving responsibility for
each performance produced.
A study conducted by Kanter (1982) found
that directive leaders encourage the innovation
process by controlling, monitoring, instructing,
and providing a hierarchical influence. However,
directive leadership tends to involve limits and
controls over the employees. In fact, creativity is
produced from the belief of individuals that they
have the freedom to produce new ideas, and the
belief that their ideas will be valued (Alge et al.,
2006). Empirical studies provide support for this
argument, and several studies have found that
employees are more creative when they feel
more empowered and that they have the best
choice of ways to carry out their assigned tasks
and work (Alge et al., 2006; Mubarak & Noor,
2018; Zhang & Bartol, 2010). Likewise, Shalley
Zhou, and Oldham (2004) linked autonomy with
creative behavior in their review of the creativity
literature. The overall implication of this study is
that to stimulate creativity, the work environ-
ment must support the perception of empower-
ment. Based on this explanation, therefore we
propose a second hypothesis:
Ilyana and Sholihin
H2: Individuals who are empowered by their
leader will produce a greater creative
performance than individuals who are
directed by their leader.
4. Incentives, Leadership Style, and Creative
Performance
Empowerment practices and incentives are seen
as investments in human resources that give
employees unique knowledge, skills and abilities
to achieve organizational goals, so as to increase
results at the organizational level, and increase
competitiveness in the market (Bowen &
Ostroff, 2004; Takeuchi, Lepak, Takeuchi,
Lepak, & Wang, 2007). The development of an
incentive and empowerment climate can be done
together, so it is important to determine whether
the synergy of the application of leadership and
incentives has an influence on employee
performance (Kuenzi & Schminke, 2009). The
application of empowerment and incentives to
encourage creative performance can be explain-
ed through the organizational equilibrium
theory. In this theory, researchers investigate
conditions in which an organization can produce
stimuli for its employees to provide a level of
performance that is more than, or equal to, the
contribution made by the company, which in
turn is directed to finding conditions that are
useful for the survival of the organization
(Takatsu, 1984). A study by Hammerman and
Mohnen (2014) showed that giving monetary
prizes in a competition can produce a better
performance than offering non-monetary prizes
can. That is, tournament monetary incentives are
more attractive to individuals than non-monetary
ones. The company's efforts to produce a high
performance by its employees are in line with
the higher expenses. Expenditure on higher costs
is expected to obtain higher creative perfor-
mances.
Journal of Indonesian Economy and Business, Vol. 36, No. 1, 2021
However, individuals will be less motivated
to undertake assignments if they are not
empowered, so the incentives given have less
effect on performance (Kim, Sutton, & Gong,
2013). Naturally, companies expect that the
costs incurred are not in vain and produce the
expected output. The combination of perfor-
mance-based incentive payments with empower-
ment gives employees the motivation to achieve
higher goals and contribute to the overall com-
pany performance. This happens because
individuals have the decision-making authority
to make plans to achieve goals, and individuals
will experience greater satisfaction when the
results achieved are because of the actions they
initiated (Kim et al., 2013). Therefore, by
applying monetary incentives and empower-
ment, individuals will be motivated to pursue
new ideas and produce a more creative perfor-
mance. Based on these explanations, the third
hypothesis proposed by this study is:
H3: Under tournament incentive conditions,
individuals who are empowered by their
leader will produce a higher creative perfor-
mance than individuals who are directed.
METHOD, DATA, AND ANALYSIS
1. Experimental Design
This study is a laboratorium experiment which
uses an experimental procedure with a 2x2
between subject design. The experiment is
designed using two treatments in two different
conditions, i.e. the treatment of incentives
(tournament vs recognition) and leadership
styles (directive leadership vs empowering
leadership).
2. Participants
The participants in this study were undergra-
duate accounting students at a major university
in Yogyakarta, Indonesia who have taken
19
management accounting and entrepreneurship
courses. The experimental assignment was to
develop a business idea. Previous research used
the same experimental assignment and found
that students could become participants in the
creative performance research (Chen et al.,
2012). This is because students have the know-
ledge and abilities needed for the development
of business ideas. Both courses should be have
been taken by the participants. Management
accounting courses provide knowledge about
companies’ management control systems so that
the participants have more understanding of the
given assignment; while the entrepreneurship
course provides knowledge about business
planning, both the processes for identifying
opportunities and developing a business. This
knowledge is important and helps the partici-
pants to develop their business ideas. Before
performing the experiment, we conducted a pilot
test with undergraduate accounting students at
another major university in Yogyakarta, who
also have taken both courses as the participants.
Table 1. 2 x 2 Between Subject Experimental
Design
Leadership Style
Treatments Directive Empowering
leadership leadership
Incentives Tournament 1 2
Recognition 3 4
Note: treatment 1 = tournament incentives collaborate with
directive leadership, treatment 2 = tournament
incentives collaborate with empowering leadership,
treatment 3 = recognition incentives collaborate with
directive leadership, treatment 4 = recognition
incentives collaborate with empowering leadership
3. Variables
3.1. Manipulated/Independent Variables
3.1.1. Incentives
Two types of incentives were used in this
experiment: tournament incentives and recogni-
tion incentives. The monetary incentive system
20
was adopted from Chen, Williamson and Zhou
(2012) while the recognition system was adopted
from Kosfeld and Neckermann's research
(2010). In a tournament incentive scheme, if one
participant becomes the most creative among all
the other participants, that participant will get
some money; the others do not get anything. For
the recognition incentive, the best performer will
be given the title of "most creative employee."
3.1.2. Leadership Style
The two types of leadership styles used in this
experiment were directive leadership and
empowering leadership. The instrument was
developed using the leader behavior utterance
phrase from Lorinkova et al., (2013).
3.2 Outcome/Dependent Variables
The dependent variable in this study was
creative performance. The task to test creativity
was modified from Chen, Williamson, and Zhou
(2012). In that instrument, the participants
developed a proposal for the creative use of
empty buildings around a campus, and set a
budget to be submitted for the work. The
measurement of creative performance used the
judgment of three participants who were chosen
as the panelists. The panelists determined the
best creative performance. In this study, we
modified the task as follows. The participants
were given a case regarding a building that had
not been used for five years. They were asked to
develop a proposal or idea for how they could
use the unproductive building and estimate the
necessary funding requirements. The ideas that
were developed were then evaluated by three
independent panelists who are experts in the
field of developing business ideas, including an
entrepreneurship lecturer, a management ac-
counting professor, and a business practitioner.
Assessments were given, ranging from 0 to 10 (0
= lowest creativity, 10 = highest creativity).
Ilyana and Sholihin
Such measurements have been used before by
Chen, Williamson, and Zhou (2012) for measur-
ing the creative performance of individuals and
groups. The participants who had the highest
total scores were told they would receive
incentives.
4. Experimental Procedures
This experiment was conducted during October
2019. The experiment was carried out through
several procedures as follows:
1. Participants entered the classroom, as an
experimental laboratory, and turn off their
communication equipment for the duration of
the experiment.
2. The experimenters divided the participants
randomly into four groups. The groups were
tournament-directive, tournament-empower-
ing, recognition-directive, and recognition-
empowering groups.
3. Participants were given a package of expe-
rimental instruments consisting of six parts,
namely 1) rules, 2) company description, 3)
problems, explanation of creative assign-
ments, and incentive schemes, 4) leadership
style, 5) work sheets for creative assign-
ments, 6) demographic information.
4. At the pre-assignment stage, each participant
received the following information:
a. Rules for the experiment
b. Company description
c. Problems encountered
d. Explanation of the creative task to be
performed
e. Explanation of incentives provided. For
the tournament incentive group, the
participants who succeeded in generating
the best ideas were to receive
IDR100,000.2 On the other hand, for the
2
On the date of experiment, USD1 was equal to IDR
14,138
Journal of Indonesian Economy and Business, Vol. 36, No. 1, 2021
recognition incentive groups, the partici-
pants who succeeded in generating the
best ideas would be awarded the title of
"creative employees," with a certificate
stating this, and it would be announced to
the participants
f. Participants filled out the manipulation
checks of the incentives
g. Participants were given information about
the manager’s leadership style.
5. Participants were given a treatment of leader-
ship styles that were adopted and modified
from the phrase leadership style by
Lorinkova et al. (2013).
6. Participants performed creative tasks by
developing proposals for ideas for an
unproductive building’s utilization for 30
minutes.3
7. Participants filled in their demographic data.
8. Debriefing. Experimenter provided informa-
tion about the purpose of the experiment that
had been undertaken by the research subjects.
The experimenter also explained the
hypotheses proposed by the study and if there
were respondents who wanted the results of
the research, then the researcher would be
pleased to give it to them (Cooper &
Schindler, 2014).
RESULT AND DISCUSSION
1. Results
As previously mentioned, before conducting the
experiment, we performed a pilot test. Partici-
pants in this pilot test were 30 undergraduate
students who had taken management accounting
and entrepreneurship courses, just like the
experiment’s participants. In this pilot test, we
examined two types of incentives to find out
whether the incentives were comparable and able
to motivate the participants. We conducted a test
3
The time is based on the pilot study
21
of individuals’ motivation for tournament
incentives and recognition incentives by using
independent sample t-tests. Motivation was
measured on a scale of 1 to 10 (1 = highly unmo-
tivated, 10 = highly motivated). The difference
in motivation showed the value of F = 0.019; p >
0.579, which meant that there was no significant
difference between tournament incentives and
recognition incentives for motivating the parti-
cipants. It meant that tournament incentives with
a nominal value of IDR100,000 and recognition
incentives, such as the most creative employee
awards, were comparable.
For the leadership style, we ensured the
accuracy of the treatment of the leadership style
used by testing the tendency of the leader to
direct, or not, on a scale of 1 to 10 (1 = no
direction at all, 10 = very directive). The direc-
tive leadership style tends to direct while the
empowering leadership style tends not to direct.
The test was carried out using an independent
sample t-test. The result was an average
tendency toward the participants who were
treated with a directed leadership style score of
8.44, and an empowering leadership style score
of 5.83. The difference in the directive tendency
of both leadership styles showed a value of F =
1.348, p < 0.05, which means that there was a
significant difference between the directive and
empowering leadership styles.
The overall results of the pilot test showed
that the incentive instruments, leadership styles,
and creative performance were clearly under-
stood by the participants, and were valid.
The participants in the experiment were 92
undergraduate accounting students at Universitas
Ahmad Dahlan who had taken management
accounting and entrepreneurship courses.
Assignments and group divisions were carried
out randomly. After going through a manipu-
lation check, which only 63 students passed, the
data were further processed.
22 Ilyana and Sholihin

As previously mentioned, the creative We conducted a correlation analysis to test

performance of participants was assessed by
three experts consisting of: a management
accounting professor, a lecturer on entrepre-
neurship, and a business practitioner. The results
of the assessment of creative performance were
tested for reliability using the Intraclass
Coefficient Correlation (ICC). The results
showed the Cronbach’s alpha value was 0.690. It
meant the instrument was reliable. Table 2
shows the results of the descriptive statistics for
the creative performance.
the correlation between the variables measured,
using Spearman's correlation analysis, the results
are presented in Table 3. Based on the test
results, there was a positive correlation between
incentives and the style of leadership with
creative performance, but this was not
significant.
We used two-way ANOVA to test the hypo-
theses. This study predicted that there would be
an influence from incentives and leadership
styles on creative performance (Table 4).

Table 2. Descriptive statistics

Leadership style
Incentives Total
Directive leadership Empowering leadership
Mean N SD Mean N SD Mean N SD
Tournament 6.376 14 0.723 6.664 15 0.705 6.525 29 0.716
Recognition 6.511 19 0.646 6.984 15 0.89 6.719 34 0.788
Total 6.453 33 0.672 6.824 30 0.806 6.632 63 0.756
Note: N = total of participants that passed the manipulation checks

Table 3. Correlation matrix

Variables 1 2 3
Creative performance 1
Incentives 0.104 1
Leadership styles 0.234 -0.076 1
Note: the response was from 63 participants.

Table 4. Two-way ANOVA test results

Dependent Variable: Creative Performance
Sources Df Mean square F Sig
Corrected Model 3 1.025 1.868 0.145
Intercept 1 2,735.65 4,985.07 0.000
Incentives 1 0.802 1.461 0.232
Leadership Styles 1 2.257 4.113 0.047*
Incentives * Leadership Styles 1 0.134 0.244 0.623
Error 59 0.549
Total 63
Corrected Total 62
R Squared = 0.087 (Adjusted R Squared= 0,040)
Note: dependent variable = creative performance; independent variables = 1) incentives, 2) leadership style
* indicates significance at 5%
Journal of Indonesian Economy and Business, Vol. 36, No. 1, 2021
Figure 1. Plots of Incentive Interactions and Leadership Styles
Based on the results of the two-way
ANOVA, incentives did not significantly
influence creative performance. This was
indicated by an F value of 1.461; p > 0.232. On
the other hand, the leadership style had a
significant effect on creative performance, as
indicated by an F value of 4.113; p < 0.047. The
interaction between incentives and leadership
styles for influencing creative performance was
not significant. This was indicated by an F value
of 0.244; p > 0.623. The following is a plot of
the interaction between incentives and leadership
styles on creative performance.
Hypothesis 1 predicted that individuals who
receive tournament incentives produce a higher
creative performance than individuals who get
recognition incentives. Table 2 shows that
individuals who had tournament incentives
produced an average creative performance score
of 6.525, while individuals who received
recognition incentives produced an average
creative performance score of 6.719. However,
based on Table 3, the different types of
incentives for creative performance are not
significant, as p > 0.232. Thus, based on the
23
results of the statistical testing of H1, it is not
supported.
Hypothesis 2 predicted that individuals who
are treated with an empowering leadership style
will produce a higher creative performance than
individuals who are treated with a directive
leadership style. Based on Table 2, the indivi-
duals who received an empowered leadership
style treatment produced a creative performance
score of 6.824, while the individuals who had a
directive leadership style treatment produced a
creative performance score of 6.453. Table 3
shows the difference is statistically significant at
p = 0.047. These results indicate that the
leadership style affects creative performance.
Thus, H2 is supported.
Hypothesis 3 predicted that under tourna-
ment incentive conditions, individuals who are
treated with an empowered leadership style will
produce a higher creative performance than
individuals who get treated with a directive
leadership style. We conducted a one-way
ANOVA test to see the differences in the results
under tournament incentive conditions.
24
Table 5. One-way ANOVA test results
Dependent Variable: Creative Performance
Mean Signi-
Variable Df F
square ficance
Leadership Style 1 0.602 1.180 0.287
Note: in tournament incentive condition
Based on Table 2, in tournament incentive
conditions, individuals who had the empowered
leadership style treatment produced an average
creative performance score of 6.664 while the
individuals who received the directive leadership
style treatment produced an average creative
performance score of 6.376. The test results in
Table 5 show that the significance level of the
average difference between the two (p = 0.287)
is not significant. Therefore, H3 is not
supported.
2. Discussion
Hypothesis 1 predicted that tournament incen-
tives can produce a higher creative performance
than recognition incentives. However, based on
the results of the statistical testing, there were no
significant differences between tournament
incentives and recognition for influencing
creative performance. This was evidenced by the
F value of 1.461, with p= 0.232. The results of
this study differ from the previous study by
Mehta, Dahl, and Zhu (2017), it turns out that
both monetary and non-monetary competition
has little difference in affecting creative
performance. However, the results of this study
are in line with Lourenco's statement (2016) that
monetary incentives (including tournament
incentives) are substitutive with recognition
incentives. Both are able to produce an extrinsic
motivation for employees to perform better.
Incentives play a key role in generating
motivation and become an important component
in an organization's efforts to encourage
creativity. The expectancy theory states that
motivation is a product of the valence,
Ilyana and Sholihin
expectations, and mediation of incentives
(Vroom, 1964). Vroom's initial concept, which
stated that money plays an important role in
getting desired things, is a rational reason why
individuals tend to choose money over recog-
nition. However, the results of this study actually
found that there was no significant difference
between incentives in the form of money or
recognition for influencing creative perfor-
mance. We tested the comparability of both
incentives for motivating the participants. Based
on the test, there was no significantly difference
between monetary incentives and recognition.
This indicated that recognition has the ability to
motivate participants, as well as monetary
incentives. This caused no difference in the
performance results between participants who
were given monetary incentives or those given
recognition.
The difference between monetary incentives
(including tournaments) and recognition lies in
the mechanism of motivation. Lourenco (2016)
explained that monetary incentives use the
tangible payoffs motivation mechanism while
recognition incentives use a self-regulation
motivation mechanism. Besides Lourenco
(2016), Delfgaauw et al. (2013) also found the
same research results. Delfgaauw et al. (2013)
conducted a field experiment in a retail company
in the Netherlands using a competition system
for each store's sales achievements. This
competition was held to get incentives in the
form of non-monetary (recognition) and
monetary rewards. In the study, there was no
significant difference between the performance
improvement of the groups given monetary and
non-monetary incentives. The results of the
study of Lourenco (2016) and Delfgaauw et al.
(2013) support the results of this study; there is
no significant difference between monetary and
non-monetary incentives. This convinced us that,
even in the creative context, the two types of
Journal of Indonesian Economy and Business, Vol. 36, No. 1, 2021
monetary and non-monetary incentives did not
differ significantly in their ability to improve
creative performance.
Furthermore, Hypothesis 2 predicted that
individuals who are treated with an empowering
leadership style are able to produce a higher
creative performance than a directive leadership
style can. The results showed that the empower-
ing leadership style was significantly able to
produce a higher creative performance than the
directive leadership style. Based on the
situational leadership theory, certain leadership
styles will be effective in certain conditions. In
the context of creative performance, empowering
leadership is more effective in producing a
higher creative performance. Many companies
are creative and commercially successful, from
Ferrari (Morse, 2006) to Google (Iyer &
Davenport, 2008) which shows that cultural and
environmental factors are very important. A
company that is successful with its creativity
creates an environment where employees are
free to be creative by utilizing the intrinsic
motivation possessed by individuals (Klotz et
al., 2012); this is in accordance with the concept
of empowerment.
The position of the organization does not
strongly influence the creation of ideas. Partici-
pation and autonomy are actually given to
individuals in creative positions. The idea-
making function within an organization is
separated from the idea-evaluation function and
the communication channel that connects all the
relevant units in the organization. The most
important thing is that organizational leaders can
adhere to a management philosophy rooted in
the belief that employees are competent and can
be creative in completing their assigned work
functions (Klotz et al. 2012).
Hypothesis 3 predicted that under tourna-
ment incentive conditions, individuals who are
treated with an empowering leadership style will
25
produce a higher creative performance than
individuals who are treated with a directive
leadership style. Although the results of statis-
tical testing are not significant, under conditions
of tournament incentives and empowering
leadership styles, individuals are able to produce
a higher creative performance. This is in line
with the organizational equilibrium theory that
states that inducements in the form of incentives
provided by the company will encourage the
employees to make a greater contribution when
the leaders of the company apply an empowering
leadership style, rather than a directive
leadership style.
3. Supplementary Analysis
We suspected that tournament incentive
conditions and an empowering leadership style
would produce the highest creative performance
compared to the other conditions. However, this
study’s results actually show that recognition
and an empowering leadership style are able to
produce the highest creative performance. This
prompted us to examine the differences in
tournament incentives and recognition incentives
under the condition of an empowering leadership
style, using a one-way ANOVA analysis.
Table 6. One-way ANOVA Analysis Result
Dependent Variable: Creative Performance
Variabel Df Mean square F Sig
Incentives 1 0.768 1.190 0.285
Note: In empowering leadership condition
The test results in Table 6 show that there is
no significant difference between tournament
incentives and recognition under the empower-
ing leadership style conditions. The results of
this test are still consistent with the results of
Lourenco’s (2016) research on empowering
leadership style conditions.
In addition, to ensure that the creative
performance results were generated by the
26 Ilyana and Sholihin

treatment given, the researcher conducted a pre-
and post-test examination. We tested the creative
performance before and after the treatments. We
used a paired sample T-test to test the signifi-
cance of the difference between the pre-test and
post-test.
Table 7 shows that the participants produced
an average creative performance score of 5.958
in the pre-test and 6.63 in the post-test. The
results of the independent sample T-test show a
significance value of 0.000, which meant there
was a significant difference between the pre-test
and post-test. This explains that the treatment of
incentives and leadership styles can improve the
creative performance of individuals.
To provide an additional insight into the
effect of incentives on creative performance, we
examined the difference in the two conditions
between the presence and absence of an
incentive. This test was carried out using a
paired sample T-test, which tests conditions
when participants have not been and have been
given incentives.
Based on the results shown in Table 8, the
two types of incentives are equally able to
significantly increase people’s creative perfor-
mance. The increase in the average creative
performance was higher for recognition incen-
tives (0.703), while for tournament incentives it
was 0.635. This shows that although, in the two-
way ANOVA test, incentives did not signifi-
cantly influence things, in the pre-test and post-
test testing the incentives were able to encourage
the participants to do more creative tasks. Incen-
tives are still needed to encourage employees to
think more creatively in doing their work.
However, the difference between the two types
of incentives is not significant in influencing
creative performance, because both are
substitutive (Lourenco, 2016).
CONCLUSION AND SUGGESTION
This research provides experimental research
results about the effect of incentives and
leadership styles on creative performance. The
results of the study showed that there is no
significant difference between tournament
incentives and recognition incentives for
influencing creative performance. This is
consistent with Lourenco's research (2016) that
monetary incentives (including tournaments) and
recognition are substitutive. Furthermore, this

Table 7. The results of the pre-test and post-test descriptive tests

Creative performance Mean N SD Std. Error Mean difference T Df Sig
Pre-test 5.958 63 0.709 0.089 -0.672 -6.843 62 0.000*
Post-test 6.630 63 0.756 0.095
Note: * indicate significance at 5%

Table 8. Creative Performance in the Presence and Absence of Incentives

Incentives
Tournament Recognition
No incentives 5.889 6.017
Incentives 6.525 6.719
Mean difference 0.635 0.703
t value -4.556 -5.044
Sig. 0.000* 0.000*
Note: * indicate significance at 5%
Journal of Indonesian Economy and Business, Vol. 36, No. 1, 2021
study examines whether the empowering leader-
ship style is able to produce a higher creative
performance than the directive leadership style.
The results of this study support this hypothesis.
Consistent with the situational leadership theory,
certain styles of leadership are appropriate for
certain environmental conditions. In a creative
environment, employees need to be empowered
because then they have the authority and free-
dom to develop ideas. Recognition incentives
and an empowering leadership style produce the
highest creative performance.
The results of this study have several
implications. Theoretically, this study provides
knowledge about the impact of the relationship
of incentives and leadership style on creative
performance. First, tournament incentives and
recognition incentives have the same ability to
influence creative performance. That is, the two
incentives are substitutive. Recognition can be
an alternative for a company to motivate its
employees to produce a more creative perfor-
mance. Second, even though the directive
leadership style is more effective in some
performance contexts (Lorinkova et al., 2013;
Yun et al., 2005), in the context of creative
performance, empowering leadership can
actually produce a creative performance that is
higher than directive leadership can. This is
because the organization's position does not
strongly influence the generation of ideas, but
rather the organization's belief is that its employ-
ees can be creative. Therefore, it encourages
employees to think more creatively.
Practically, the results of this study are
expected to provide knowledge to companies
that they can use tournament incentives or
recognition incentives to encourage creative
performance. In addition, company leaders can
also be inspired to apply leadership styles that
are able to stimulate creative performance, so
27
that employees are able to produce a better
performance.
Similar to other studies, this study also has
several limitations which provide opportunities
for further research. First, the cases and research
procedures in this experiment were designed and
carried out in the form of simplified illustrations
of real conditions in the field. Creative perfor-
mances in the real context typically tend to be
more complex. Case manipulation applied in this
study may have different results on the other
cases. The next researcher can use the context of
other creative performances to strengthen the
results of this study. Second, this study only
examined two types of incentives, namely
tournament incentives (monetary) and recogni-
tion incentives (non-monetary). There are some
other types of incentives that have not been
studied, so they are opportunities for further
research. Third, this study did not investigate
individual factors such as the differences in the
participants' cognitive styles. There are two
cognitive styles namely adaptive and innovative
cognitive styles. Both cognitive styles may have
an impact on the resulting creative performance.
Fourth, the results of this study indicate that the
increase in creative performance is greater with
incentives that contain intrinsic motivation rather
than with incentives that are only an extrinsic
motivation. Researchers do not use feedback
incentives because these incentives have no
effect on Lourenco’s (2016) research. This
research has a different context with the research
conducted by Lourenco (2016), so that feedback
can influence creative performance because
feedback can produce motivated employees.
Fifth, the participants in this study were students,
so it was possible there were differences from
the real-life context. Therefore, further research
could use managers as the control groups in
order to produce more robust research and
results.
28
Acknowledgement (if any)
This research was fully supported by Lembaga
Pengelola Dana Pendidikan (LPDP), Ministry of
Finance, Indonesia.
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