The Effect of Financial and Non-Financial Compensation on Employee Productivity at the Regional Disaster Management Agency (BPBD) of Indragiri Hilir Regency

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FORMOSA NEWS - Tembilahan Hulu - Financial Compensation Strongly Boosts Disaster Response Team Productivity, Indonesian Study Finds. Financial and non-financial compensation significantly influence the productivity of disaster response personnel at the Regional Disaster Management Agency (BPBD) of Indragiri Hilir Regency, according to research published in 2026 by Firdaus, Syafrinadina, and Widyawati from Universitas Islam Indragiri. The study highlights how fair compensation structures especially financial incentives play a crucial role in maintaining performance among Rapid Reaction Team (TRC) members working in high-risk emergency environments. The findings matter for local governments and disaster agencies seeking to strengthen response capacity through human resource policy improvements.

High-Risk Disaster Work Requires Strong Employee Support
Disaster management agencies operate under extreme conditions, particularly in regions prone to floods, fires, and extreme weather. In Indragiri Hilir Regency, the Rapid Reaction Team (TRC) of BPBD handles emergencies such as annual flooding, forest and land fires, settlement fires, and evacuation operations. These teams must remain on standby around the clock and coordinate with multiple agencies including health services, police, military, and social services. Such operational demands place heavy physical and psychological pressure on personnel. Compensation becomes a critical factor influencing morale, preparedness, and response effectiveness. In practice, TRC members receive activity-based compensation during disaster handling, but differences in employment status ASN, P3K, and non-ASN create variations in broader benefits such as salary, allowances, and job security. These disparities may affect perceptions of fairness and ultimately influence productivity.

Survey-Based Quantitative Study of Disaster Response Personnel
The researchers used a quantitative survey design involving all members of the Rapid Reaction Team at BPBD Indragiri Hilir. Because the population was relatively small, the study applied a census approach covering 52 respondents, including 19 ASN/P3K employees and 33 non-ASN personnel.
Participants completed structured questionnaires measuring three main variables:

• Financial compensation, including salary, incentives, and welfare benefits.
• Non-financial compensation, including recognition, leadership support, and job challenges.
• Employee productivity, including output, timeliness, quality, and efficiency.

Data were analyzed using Partial Least Squares Structural Equation Modeling (PLS-SEM), a statistical approach used to examine relationships between compensation and productivity variables simultaneously.

Financial Incentives Show Strongest Impact on Productivity

The results reveal that both financial and non-financial compensation significantly improve employee productivity. However, financial compensation has a substantially stronger effect.

Key findings include:

• Financial compensation coefficient: 0.779 (strong positive effect).
• Non-financial compensation coefficient: 0.208 (moderate positive effect).
• Model explanatory power (R²): 0.874.
• Both variables statistically significant.

These results indicate that nearly 87.4 percent of productivity variation among TRC members can be explained by compensation factors alone. The remainder is influenced by other variables such as motivation, work environment, or job satisfaction. The findings confirm that financial incentives play a central role in maintaining performance among employees operating in hazardous conditions. When compensation reflects workload and risk, employees demonstrate higher motivation and improved work outcomes.

Policy Implications for Disaster Management Agencies

The study offers practical recommendations for BPBD institutions and local governments. Increasing financial incentives aligned with job risk and workload can directly improve response readiness. At the same time, strengthening non-financial compensation such as recognition programs, leadership support, and career development can enhance long-term employee engagement. Improved compensation systems may also help reduce turnover, maintain operational readiness, and ensure faster disaster response. For policymakers, the research highlights human resource management as a critical component of disaster preparedness strategy. The findings are particularly relevant for public sector organizations that rely on field personnel in high-risk environments. Compensation structures that acknowledge risk and performance can significantly improve organizational outcomes.

Author Profiles
Firdaus, S.E., M.M. is a researcher in human resource management at Indragiri Islamic University. His work focuses on employee productivity and performance in public sector organizations, particularly emergency response institutions.
Syafrinadina, S.E., M.M. is a lecturer at Indragiri Islamic University specializing in human resource management, compensation systems, and organizational performance in government agencies.
Widyawati, S.E., M.M. is a lecturer at Indragiri Islamic University with expertise in employee performance, organizational behavior, and public sector human resource development.

Source

Firdaus, Syafrinadina, Widyawati. “The Effect of Financial and Non-Financial Compensation on Employee Productivity at the Regional Disaster Management Agency (BPBD) of Indragiri Hilir Regency.” Formosa Journal of Sustainable Research (FJSR), Vol. 5 No. 2, 2026.
DOI: https://doi.org/10.55927/fjsr.v5i2.14
URL: https://journalfjsr.my.id/index.php/fjsr