THE EFFECT OF ORGANIZATIONAL CULTURE AND WORK MOTIVATION ON EMPLOYEE PERFORMANCE WITH ORGANIZATIONAL COMMITMENT AS A MEDIATING VARIABLE IN INSURANCE COMPANIES

Achmad Garjito¹, M. Yusuf ², Lukman Hadi³, Hasanah⁴

Universitas Muhammadiyah Jakarta, Jakarta, Indonesia

garjito77@gmail.com¹, m.yusuf@umj.ac.id², lukman.hadi@umj.ac.id³, Hasanah@umj.ac.id⁴

KEYWORDS	ABSTRACT
organizational culture, work motivation, employee performance, organizational commitment	The aim of this study is to investigate the following: 1) how organizational culture affects organizational commitment; 2) how work motivation affects organizational commitment; 3) how organizational culture affects employee performance; 4) how work motivation affects employee performance; 5) How organizational commitment affects employee performance; 6) How organizational culture affects employee performance with organizational commitment as a mediating variable; and 7) How work motivation affects employee performance with organizational commitment as a mediating variable. In this study, associative approaches were used to conduct descriptive research. PT. XYZ Insurance personnel in South Jakarta, numbering 96, comprised the study's population. In this study, saturation sampling is the sample method used. The PLS Structural Equation Model (SEM) was used as the analysis tool for this study. 2) Work motivation has a favorable and considerable effect on organizational commitment. These are the research's findings regarding the relationship between organizational culture and commitment. 3) Employee performance is significantly and favorably impacted by organizational culture. 4) Employee performance benefits greatly and favorably from work motivation. 5) Employee performance is significantly and favorably impacted by organizational commitment6) Through organizational commitment, organizational culture has a positive and significant influence on employee performance; 7) Through work motivation, organizational commitment has a positive significant impact on employee performance.
DOI: 10.58860/ijsh.v3i1.149

Corresponding Author: Achmad Garjito

Email: garjito77@gmail.com

INTRODUCTION

Regarding the obstacles presented by the COVID-19 pandemic, the insurance sector is thriving and developing, with more competition as firms compete to offer improved services, advantages, and benefits (Giunipero et al., 2022; Faas, 2023). In instance, the car insurance market is particularly fiercely competitive, with providers giving full coverage in an effort to draw in clients. Insurance businesses are engaged in intense competition that goes beyond their customer offers, as they provide a wider range of career options to their staff, which in turn encourages greater dedication (Makgalo & Ledimo, 2023). The importance of motor vehicle insurance premiums, which, in spite of the difficult times, outweigh claims, highlights the industry's tenacity and the ongoing need for insurance services.

Employee performance is the result of work that is satisfactory and in accordance with standards, both quality and quantity (Suharno & Despinur, 2017). Meanwhile, according to Mutholib (2019) and Simanullang (2021), performance is the result of a person or the whole during a certain period in carrying out tasks compared to various possibilities, such as standard work results, targets or objectives or criteria that have been determined in advance and have been mutually agreed upon.

Figure 1. Vehicle Insurance Premiums

Based on data obtained from PT. XYZ Insurance, Tbk in South Jakarta in the Company's Annual Performance Report, which can be seen in the following table:

Table 1. Average Performance Assessment of PT Employees. XYZ Insurance, Tbk in South Jakarta 2020 – 2022

Work Behavior	2020			2021			2022
	Weight (%)	Mark	Score (%)	Weight (%)	Mark	Score (%)	Weight (%)	Mark	Score (%)
1. Discipline	10	73	7.3	10	65	6.5	10	70	7
2. Responsibility	10	80	8	10	60	6	10	65	6.5
3. Cooperation	10	80	8	10	60	6	10	65	6.5
4. Leadership	10	80	8	10	55	5.5	10	60	6
Work result
1. Quality	20	85	8.5	20	65	6.5	20	70	7
2. Work Quantity	20	75	7.5	20	70	7	20	75	7.5
3. Job Skills	20	80	8	20	75	7.5	20	80	8
Total	100		55.3	100		45	100		48.5

Source: PT. XYZ Insurance, in South Jakarta, 2022

Average employee performance of PT. XYZ Insurance in South Jakarta experienced a decline from 55.3 (medium category) in 2020 to 45 (poor category) in 2021. The decline mainly occurred in indicators of discipline, responsibility, cooperation and work quality, indicating problems with employee performance.

Organizational culture is the first factor that is thought to influence performance. It includes the norms, values, beliefs, and behaviors within an organization, reflecting its identity, goals, and ways of operating (Chatman & O’Reilly, 2016). According to Tamimi et al. (2022), the formation, development, strengthening, or change in organizational culture requires practices that unite members' cultural values with the organization's cultural values. The definition of organizational culture is norms, values, presumptions, beliefs, philosophy, organizational habits, and other things that are created over an extended period of time by the organization's founders, leaders, and members; these things are then instilled in new members and used in the production of goods, the provision of customer service, and the accomplishment of organizational objectives (Jamal et al., 2022; Firdaus & Idris, 2023).

Organizational culture problems at PT. XYZ Insurance, in South Jakarta, is related to less than optimal community services and obstacles in realizing programs. There is a miscommunication in conveying leadership programs to employees, which affects working time and work quality. Apart from that, there are still some employees who do not work professionally, such as being late, being absent, dressing untidily, and leaving the office before the end of working hours.

Employees who are not disciplined will result in decreased performance. An effective organizational culture will function if it is implemented consistently by employees. The following is the organizational culture at PT. XYZ Insurance :

Table 2. Measurement of Organizational Culture in 2022

Indicator	Information
Employee responsibilities at work	Employees have not been disciplined well
Innovative employees	Employees are quite innovative
Employee performance at work	Employee work performance tends to decline
There is clear communication	Stiff relationships between subordinates and superiors who are less communicative
There is direct supervision from the leadership	Supervision is still less effective
Job promotion	Not all employees have been promoted

Source: PT. XYZ Insurance, in South Jakarta, 2022

PT. In South Jakarta, XYZ Insurance is still experiencing organizational culture problems with incomplete employee formation during working hours. A rigid organizational culture and lack of interaction between leaders and subordinates due to the existence of a formal hierarchy also contribute to low organizational culture (Zeb et al., 2021). This indicates that a bad and rigid organizational culture can reduce employee performance, in accordance with research by Maliah (2016), Soepandi (2020), and Amanda et al. (2017), who concluded that organizational culture significantly influences employee performance.

Workplace motivation is the second component that is thought to affect performance. Workplace motivation, which is influenced by a variety of elements such as supervisors, physical workspaces, policies, regulations, monetary and non-monetary service awards, the nature of the work, and obstacles, is something that fosters encouragement or excitement for work (Lestari, 2018). Work motivation is a stimulus for employees to carry out their duties. Hasibuan (2018) explains that this involves attitudes. and values that influence individuals to achieve specific goals. However, the results of observations at PT. XYZ Insurance, Tbk in South Jakarta, shows a lack of motivation from employees to work

Table 3. Work Motivation Data PT. XYZ Insurance, 2019-2021 Period

Indicator	Description	Year
		2019	2020	2021
Physiological needs	Bonus	There is not any	There is not any	There is not any
	Incentive	There is	There is	There is not any
Safety and security needs	Insurance	There is	There is	There is
	BPJS	There is	There is	There is
Social needs	Gatherings	There is	There is not any	There is not any
Job Motivation Needs	Position Promotion	There is	There is	There is
	Rewards	There is	There is not any	There is
Self-actualization	Work training	There is	There is	There is
	Education/Training	There is not any	There is not any	There is not any

Source: PT. XYZ Insurance, in South Jakarta, 2022

From the table, several indicators at PT can be seen. XYZ Insurance in South Jakarta has not fulfilled itself well, especially in providing low bonuses to employees. Low bonuses can result in decreased employee motivation and performance. Bonuses can actually improve team performance and motivate employees to achieve company targets (Reddy, 2020). However, several indicators, such as work safety needs and self-actualization, have been well planned through annual allowances or facilities.

The third factor that is thought to influence performance is organizational commitment, which reflects the level of employee involvement and loyalty to the organization. Employees that have a high level of organizational commitment typically perform well because they experience a strong sense of kinship with the organization's objectives and core principles to (Loan, 2020). According to Kaswan (2017), a worker's propensity to stick with a company in the future is gauged by their organizational commitment. Belief in the organization's mission and objectives, readiness to put in extra effort to finish tasks, and desire to stay on staff are all common indicators of commitment among employees. Inspiring staff to concentrate on reaching goals and contribute to the success of the organization can be achieved by strong organizational commitment (Paais & Pattiruhu, 2020).

Based on the background of the problems above, this research further examines the effect of organizational culture and work motivation on employee performance with organizational commitment as a mediating variable in insurance companies at the PT Insurance Company. XYZ Insurance, in South Jakarta.

METHOD

The method used in this study is associative, descriptive, and quantitative. It is referred to be a quantitative method since it makes use of measurement, calculation, formulae, and the certainty of numerical data in research suggestions, procedures, hypotheses, fieldwork, data analysis, and data conclusions up till writing. Because it seeks to produce images, paintings, or descriptions of the facts and features of a particular population or place in a methodical, factual, and comprehensive manner, this research is classified as descriptive research. However, because this study establishes a connection between two or more variables, it is referred to as associative research. PT employees make up the research population. XYZ Insurance, which employs 96 people in South Jakarta Insurance. Total sampling was the sample strategy employed in this study. Thus, 96 PT employees were selected as a sample. Located in South Jakarta, XYZ Insurance A Structural Equation Model (SEM) technique based on Partial Least Square (PLS) was used to assess research hypotheses. PLS is a Structural Equation Model (SEM) that is built on components or variants. A branch of statistics known as Structural Equation Model (SEM) allows researchers to evaluate a number of correlations at once that are not always easy to measure. The Structural Equation Model (SEM) was the analytical tool used in this study.

RESULTS AND DISCUSSION

Outer Model Evaluation

1. Validity test

Convergent and discriminant validity are calculated as part of the validity testing process. Factor loadings are used to determine convergent validity. If an instrument's loading factor is greater than0.6, it is said to have passed convergent validity testing. The following table displays the convergent validity test results:

Table 4. Cross-Loading Calculation Results

Variable	Statement	Outer Loading	Loading Factor	Information
Organizational culture	1	0.974	0 . 6	Valid
	2	0.942	0 . 6	Valid
	3	0.838	0 . 6	Valid
	4	0.744	0 . 6	Valid
	5	0.976	0 . 6	Valid
	6	0.915	0 . 6	Valid
Work motivation	1	0.967	0 . 6	Valid
	2	0.931	0 . 6	Valid
	3	0.957	0 . 6	Valid
	4	0.813	0 . 6	Valid
	5	0.973	0 . 6	Valid
	6	0.951	0 . 6	Valid
Employee performance	1	0.854	0 . 6	Valid
	2	0.857	0 . 6	Valid
	3	0.834	0 . 6	Valid
	4	0.761	0 . 6	Valid
	5	0.658	0 . 6	Valid
	6	0.710	0 . 6	Valid
	7	0.604	0 . 6	Valid
Organizational Commitment	1	0.875	0 . 6	Valid
	2	0.940	0 . 6	Valid
	3	0.880	0 . 6	Valid
	4	0.917	0 . 6	Valid
	5	0.889	0 . 6	Valid

As observed in the above table, every indicator that assesses the factors of organizational commitment, work motivation, organizational culture, and employee performance has a loading factor value higher than 0.6. The factors of organizational culture, work motivation, employee performance, and organizational commitment can thus be measured with this indicator, which is considered valid.

In addition to loading factors, Average Variance Extracted (AVE) can also be used to demonstrate convergent validity. If an instrument's Average Variance Extracted (AVE) is greater than 0.5, it is considered to pass the convergent validity test. The following table displays the convergent validity test results:

Table 5. Convergent Validity Test Results

Variabel Laten	Average Variance Extracted (AVE)
Organizational culture	0.813
Work motivation	0.872
Employee performance	0.577
Organizational Commitment	0.811

The Average Variance Extracted (AVE) values fo all variables are higher than o,5, indicating convergent validity of the factors organizational commitment , work motivation, organizational culture, and employee performance. Therefore, it is determined that the indicators assessing the following variables are valid: organizational commitment, work motivation, organizational culture, and employee performance.

2. Reliability Testing

Composite reliability and Cronbach alpha calculations can be used to assess build dependability. According to the test criteria, the construct is considered reliable if the Cronbach alpha is better than 0.6 and the composite reliability is more significant than 0.7.

Table 6. Cronbach's Alpha and Composite Reliability Calculation Results

Variable	Cronbach's Alpha	Composite Reliability
Organizational culture	0.952	0.963
Work motivation	0.970	0.976
Employee performance	0.875	0.904
Organizational Commitment	0.942	0.955

The composite dependability value for the variables organizational culture, work motivation, employee performance, and organizational commitment is more significant than 0.7, as can be seen in the above table. Therefore, all indicators evaluating the variables Organizational Culture, Work Motivation, Employee Performance, and Organizational Commitment are considered reliable based on composite reliability estimates. Moreover, the variables Organizational Commitment, Work Motivation, Employee Performance, and Organizational Culture have Cronbach Alpha values greater than 0.6. Therefore, all indicators assess the following variables: organizational commitment, work motivation, organizational culture, and employee performance, according to Cronbach Alpha calculations.

Structural Model Evaluation (Inner Model)

The inner model or structural model is a model used to test the relationship between exogenous variable constructs and endogenous variables that have been previously hypothesized. The structural model test is the R Square test or R2 test) if the R Square value is 0.75 (strong), 0.50 (moderate), and 0.25 (weak). R Square test results with the following results:

Table 7. Summarize the results Model Test (Inner Model)

Va r ia b e l	RS qu a r e
Organizational Commitment	0.461
Employee performance	0.981

Based on the table above, it is known that the R-square value of Employee Performance is 0.981 or 98.1%. This shows that employee performance can be explained or contributed to by organizational culture and work motivation, amounting to 98.1%, while the remaining 1.9% is a contribution from other factors not discussed in this research. Meanwhile, the R-square value of Organizational Commitment is 0.461 or 46.1%. This shows that organizational commitment can be explained or contributed to by organizational culture and motivation (46.1%). In comparison, the remaining 53.9% is contributed to by other factors not discussed in this research, such as work environment and compensation.

Hypothesis test

The purpose of hypothesis testing is to determine whether the independent variable directly affects the dependent variable. According to the test criteria, if the Original Sample value is positive, the t-statistic value is greater than the t-table value (1.96), and the p-value is less than the significance level (alpha = 5% or 0.05), then it can be concluded that the independent variable has a positive and significant influence. The following table displays the hypothesis testing findings:

Table 8. Summary of Hypothesis Testing Results

Hypothesis		Original Sample	T Statistics	P Values
Path Coefficients (Direct Influence)
H1	Organizational culture à Organizational Commitment	0.479	6,491	0,000
H2	Work motivation à Organizational Commitment	0.349	3,939	0,000
H3	Organizational culture à Employee performance	0.447	15,372	0,000
H4	Work motivation à Employee performance	0.672	13,101	0,000
H5	Organizational Commitmentà Employee performance	0.102	3,783	0,000
Path Coefficients (Indirect Influence)
H6	Organizational culture àOrganizational Commitment, à Employee performance	0.049	2,807	0.005
H7	Work motivation à Organizational Commitment à Employee performance	0.036	2,985	0.003

The results can be described as follows using the summary table for hypothesis testing provided above:

a. Influence of Organizational Culture Towards Organizational Commitment

The first hypothesis (H1) is accepted based on the results of the hypothesis test for the relationship between organizational culture and organizational commitment, which showed a positive Original Sample value of 0.479 with a t-statistic value (6.491) > t-table value (1.96) and p-value (0.000) < level of significance (0.05). This demonstrates how organizational culture affects organizational commitment in a favorable and meaningful way.

b. Influence Work Motivation on Organizational Commitment

It can be concluded that hypothesis two (H2) is accepted based on the results of the work motivation on organizational commitment hypothesis test, which produced a positive Original Sample value of 0.349 with a t-statistic value (3.939) > t-table value (1.96) and p-value (0.000) < level of significance (0.05). This demonstrates that organizational commitment is positively and significantly impacted by work motivation.

c. Influence Organizational Culture on Employee Performance.

It can be concluded that hypothesis three (H3) is accepted based on the results of the Organizational Culture on Employee Performance hypothesis test, which produced a positive Original Sample value of 0.447 with a t-statistic value (15.372) > t-table value (1.96) and p-value (0.000) < level of significance (0.05). This demonstrates that employee performance is positively and significantly impacted by corporate culture.

d. Influence Work Motivation on Employee Performance

The results of the hypothesis test on Work Motivation on Employee Performance produced a positive Original Sample value of 0.672 with a t-statistic value (13.101) > t-table value (1.96) and p-value (0.000) < level of significance (0.05), so it can be concluded that hypothesis four (H4) is accepted. This shows that work motivation has a positive and significant effect on employee performance.

e. Influence Organizational Commitment to Employee Performance

The results of the hypothesis test on Organizational Commitment to Employee Performance produced a positive Original Sample value of 0.102 with a t-statistic value (3.783) > t-table value (1.96) and p-value (0.000) < level of significance (0.05), so it can be concluded that hypothesis five (H5) is accepted. This shows that organizational commitment has a positive and significant effect on employee performance.

f. Influence Organizational Culture on Employee Performance Mediated by Organizational Commitment.

It can be concluded that hypothesis six (H6) is accepted based on the results of the Organizational Culture on Employee Performance through Organizational Commitment hypothesis test, which produced a positive Original Sample value of 0.049 with a t-statistic value (2.807) > t-table value (1.96) and p-value (0.005) < level of significance (0, 05). This demonstrates how organizational commitment, which is a result of organizational culture, has a favorable and noteworthy impact on worker performance. According to the research's interpretation, organizational commitment acts as a mediator between employee performance and organizational culture.

g. The Effect of Work Motivation on Employee Performance Mediated by Organizational Commitment

It can be concluded that hypothesis seven (H7) is accepted based on the results of the hypothesis test on the impact of work motivation on employee performance through organizational commitment, which produced a positive Original Sample value of 0.036 with a t-statistic value (2.985) > t-table value (1.96) and p-value (0.003) < level of significance (0, 05). This demonstrates how organizational commitment, which is a result of work motivation, has a favorable and considerable impact on employee performance. Accordingly, work motivation and employee performance are mediated by organizational commitment, according to the interpretation of the research's findings.

CONCLUSION

The researcher draws conclusions from the research's findings based on the analysis and discussion outcomes in the chapter. The following are the conclusions drawn from this study's findings: Organizational commitment is influenced by organizational culture. 2) Organizational commitment is influenced by work incentive. 3) Employee performance is influenced by organizational culture. 4) Employee performance is influenced by work motivation. 5) Employee performance is influenced by organizational commitment. 6) corporate commitment acts as a mediating factor in the relationship between corporate culture and worker performance. 7) Organizational commitment functions as a mediating factor between work motivation and personnel performance.

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