The Effect of Rewards and Sanctions on Employee Performance: The Mediating Role of Work Motivation in BKD Purwokerto Micro Finance

Muhail Muhail () and Grace Tianna Solovida ()
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Muhail Muhail: BPD University
Grace Tianna Solovida: BPD University

A chapter in Proceedings of the 2nd International Conference on Business, Accounting, Banking, and Economics (ICBABE 2025), 2025, pp 306-320 from Springer

Abstract: Abstract This study aims to examine the effect of rewards and sanctions on employee performance, with work motivation serving as a mediating variable. The research was conducted at BKD Purwokerto Microfinance in Banyumas District, Central Java, Indonesia, using a quantitative approach and the Partial Least Squares Structural Equation Modeling (PLS-SEM) method. The sample consisted of 85 employees, representing the entire population at the institution. The results reveal that rewards significantly and positively influence both work motivation and employee performance. While sanctions do not significantly affect work motivation, they do exhibit a positive effect on employee performance. Moreover, work motivation significantly influences employee performance and partially mediates the relationship between rewards and performance. The findings imply that BKD Purwokerto Microfinance should prioritize developing fair and transparent reward systems and motivation-enhancing strategies, while carefully reviewing the role of sanctions to avoid counterproductive effects on morale.

Keywords: Rewards; Sanctions; Work Motivation; Employee Performance; PLS-SEM (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:spr:advbcp:978-94-6463-862-2_27

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DOI: 10.2991/978-94-6463-862-2_27

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