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Working Environment, Competence, Motivation and Organizational Citizenship

Behavior in Internal Auditor

ABSTRACT

In today's globalization, the development of business practices and consumer needs

increasingly complex, causing the intense competition in the business world. Companies are

trying implement policies and strategies to increased productivity, efficiency, effectiveness

and good internal control to meet the needs of consumers and provide the best service. In this

condition companies are faced with limitations ability to supervise and control operating

systems that rely on management internal auditor's role in addressing the limitations. Internal

Auditor is one of the functions in the organization whose job is to examine the management

of the organization and the fairness of the organization's financial statements. The importance

of their role required internal auditor to give their best performance to the needs of company.

The purpose of this study was to analyze the working environment competence, and

mitivation on Organizational Citizenship Behaviour (OCB) of internal auditor in the big three

telecommunication company in Indonesia. OCB is the attitude and behavior of employees

indicated that in excess of what is expected of the organization. The variables studied in this

study is the work environment, employee competence, and motivation to work.

The survey results revealed that the working environment and competence influence

directly on OCB and indirectly through motivation. With appropriate competence and work

environment that supports employees are motivated to get his hopes, goals, and awards for

his achievements . Work environment, competence, and motivation influence Organizational

Citizenship Behavior.

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INTRODUCTION

Work environment has important role in organization. The job will be easier to be

accomplished if the work environment support the job. Therefore, job, workplace, work

condition, work environment must be integrated so they bring the impact to company

performance. The employee who work in conducive work environment will be comfortable

and happy so that bring the work motivation.

The work environment has role in motivating the employee to work. Money and other

materials are not the only thing that motivated the employee to work. All employees (staff

and leader) need to feel the work comfortably about workplace and all attributes which are in

the organization so that the employee is motivated to work. Besides that, it is needed the

competency as with the purpose of organization as well.

Motivation is a process that illustrates perseverance, desire, intensity of effort to reach

the goal (Robbins and Judge, 2011). To reach such a goal, the employee is encourage to do

something more than the company hopes. Such a behavior is called the Organizational

Citizen Behavior (OCB). According to Organ (Huang and Liu, 2012) OCB is unconditional

behavior which is shown by an employee beyond from what is asked by organization and the

responsibility is given to organization. The behavior like that is not received the official

recognition as the organization demand to its employ although OCB can encourage the

efficiency. The OCB appears due to its employee has the motivation to do more than

Company’s hope to reach its goal. In another words, OCB encourage the efficiency of

company by motivation.

Work environment has relationship with OCB. OCB is one of response that is given

by employee to work environment. For example, when an employee feel that work

environment is not conducive, employee will indicate unhappy behavior, and not productive

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or tend to work with manimum effort. According to Huang and Liu (2012), the more

conducive work environment is, the stronger OCB positive behavior of employee is.

OCB becomes the important element for some executives in evaluating employees

performance. Its good to let the employee know thet OCB is part of performance evaluation,

so the employee keep holding the behavior. However, OCB like that is probably done due to

show the performance to the boss. It means that the behavior emerges on the individual

motivation to get the performance evaluation from manager. Therefore, OCB behavior on

individual motivation “ apple polishing” in front of manager can not encourage the efficiency

of company. Because, the behavior tends not to last very long. Another impact is to worsen

work environment because become the potential to cause the unfair competition.

Company Performance is extremely determined by its own input. One of an important

input from organization is Human Resource. Each organization will try to get the best Human

Resource, therefore, in fulfilling the needs of Human Resource, The company will seek the

candidate with the competency which is matched to the one that is needed by the company.

The competency is one of measurement on the employee’s skill in finishing the work. The

competent employee has greater career opportunity to have superior performance.

Competence will motivate employees to improve their performance, also get promotional

opportunities. Competence will also bring employees show OCB behavior.

Employee who has high competent tends to indicate the more stronger OCB behavior

among the other (Beardwell dan Holden,, 2001). Competency has positive significant affects

on OCB. If the potential of employee with high competency can be empowered by company,

so the employee will work better and increasingly show higher OCB.

In the research design, the researcher will study Organizational Citizenship Behavior

in an internal auditor, specifically in an internal auditor Telecommunication Company in

Indonesia. Internal Auditor is one of part which holds the important role in its supervision to

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investigate the management and ensure the fairness of company financial statement and in the

creation process of accountability and transparency company business processes.

Internal auditor must have the sustainable recruitment procedure, promoting,

developing and evaluation on the checking to help the organization in keeping the internal

auditor who has the adequate competency.

Because of the important role from internal auditor in doing the financial supervision,

so the performance of internal auditor to be the public highlight. The public hope the high

performance from internal auditor so the quality of financial supervision gets increased.

Besides the audit skill, an internal auditor also must have the independence in carrying out

the audit in order to give the opinion or conclusion in accordance with the fact without the

influence from interested parties. Audit competence and independence are the standard that

must be met by an auditor to be able to do the audit well. However, Auditor uncertainly

having both above will possess the commitment to audit well.

All of internal auditors are supposed to have the suitable competency with the task

and responsibility, also high work motivation so that giving the rise of behavior leading to

OCB. Motivation will encourage internal auditor to have the achievement, commitment to the

group, have initiative and high optimism, and then try to reach the appointed target included

if needed to extra work beyond their work time.

Based on the problem above, and underpinned the theories along with existed data

and fact, the research is carried out by taking the title of “Working Environment,

Competence, Motivation and Organizational Citizenship Behavior in Internal Auditor”

Research question

Based on the back ground above, to know the Organization Citizenship Behaviour in an

internal auditor, the problem is formulated as follows:

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1. How is the influence of internal auditor work environment to OCB through

motivation?

2. How is the influence of internal auditor work environment to OCB?

3. How is the influence of internal auditor employee competency to OCB through work

motivation?

4. How is the influence of internal auditor employee competency to OCB?

5. How is the relationship between work environment and competency?

Benefit of research

1. The research is hoped to give the benefit for knowledge development of human

resource management, specifically, related to working environment, competence,

motivation, and Organizational Citizenship Behavior (OCB).

2. The research is also hoped to give the contribution for corporate to apply the behavior

of Organizational Citizenship in planning and implementing some policies to support

OCB.

LITERATURE REVIEW

Working environment

Work environment has the potential to encourage innovation and creativity

(Woodman, et al, 1993). Woodman et al (1993) examined two work environment

characteristics in organization

i. group characteristics includes norms, consistency in group, problem solving

approaches used in the group;

ii. organizational characteristics including rewards, recognition, strategy, structure,

resources, organizational culture and technology.

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Workplace environment plays a vital role in motivating employees to perform their assigned

work. (Chandrasekar, 2010).

1) The working environment factors are:

2) Space and facilities required doing the job,

3) Relationship with superiors at the workplace,

4) Equality of treatment at the workplace,

5) Communication system at the workplace,

6) Environmental actors are conducive to work,

7) Procedures to identify and control hazards

While Wallgren (2011) stated the working environment factors are: variety in tasks,

job autonomy, praise for a job well done, the chance to acquire new skills, and the sense of

accomplishment.

Abbasi and Rana (2012) defined working environment as any situation, facilities, and

the conditions in the Organization. And working environment factors are: Equal employment

opportunity, Fairness in rewards and recognition method, Encourages crativity and

innovation.

The definition of the working environment in this research is any attribute in the

organization includes physical and nonphysical affecting employees in doing through

employment. Phssical factors such as space and facilitties. Nonphysical factors such as

fairness treatment at the workplace, relationship with coworker, relationship with supervisors,

rules and procedures at the workplace.

Competency

Competency is underlying characteristic of aperson that leads to superior

performance. Competencies are more likely to be the determinants of success than

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knowledge and skills (Spencer and Spencer 1993). According to Spencer competencies can

be placed into two broad categories:

1) essential competencie include knowledge and skills that everyone needs to be

effective in a given job,

2) differentiating competencies, include factors that distinguish superior performance

from average performance. In the iceberg model by spencer, competencies includes:

knowledge, skills, self-concepts, traits, motives.

McClelland defined competency as a basic personal characteristic that are

determining factors for acting successfully In a job or a situation (Tucker and Cofsky, 1994).

Heneman and Ledford (1998) defined competencies as demonstrable characteristics of the

person including knowledge, skills, and behaviors that enable performance. This means that

competencies are portable, since they are characteristic of individual employees rather than

the job. According to Heneman and Ledford (1998) type of competncies are : general

competence, basic competence, basic competence, specific and advance competence.

In the prevalent rationalistic approaches, worker competence a specific set of

attributes, such as the knowledge and skills used in performing particular work (Sandberg,

2000). Competences are the knowledge and skills that employees require to perform a job

satisfactorily Beardwell & Holden (2001). In this research competence defined as a

combination of knowledge, skills and attitudes which are demonstrated in behaviour and

influence employee’s performance.

Motivation

Motivation is the response of a person on challenge to in fulfilling his needs (Fertig, et

al, 2009). Motivation is a process which is influenced by the expectations of employees and

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employee goals (Ferari, 2010). Motivation is a process that illustrates perseverance, desire,

intensity of effort to reach the goal (Robbins and Judge, 2011).

Motivation refers to the desire to adopt high levels of personal effort justified by the

achievement of goals, and to the satisfaction individual need. A simple definition of

motivation is that which makes people put real effort and energy into what they do (Ghanbari

and Eskandari 2013).

Vroom defined motivation as a process, controlled by the individual, that governed choices

among alternative forms of voluntary activities (Ferari 2010). According to Vroom,

motivation theory is based upon the following beliefs:

1) expectancy: employees have different expectations and levels of confidence about

what they are capable of doing;

2) instrumentality: the perception of employees as to whether they will actually get what

they desire even if it has been promised by a manager;

3) valence refers to the emotional orientations people hold with respect to outcomes

(rewards).

According to McClelland (Robbins and Judge, 2011) motivation may include :

need for achievement : There is a strong need for feedback as to achievement and

progress, and a need for a sense of accomplishment.

need for power : a need to be influential, effective and to make an impact. There is

a strong need to lead and for their ideas to prevail. There is also motivation and

need towards increasing personal status and prestige.

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need for affiliation : a need for friendly relationships and is motivated towards

interaction with other people. They need harmonious relationships with other

people and need to feel accepted by other people.

McCelland claimed at least six characters as a measure of motivation of employees,

namely:

1) be responsible,

2) willing to take risks,

3) has a goal,

4) have a plan for the realization of the objectives,

5) harnessing the feedback from all the work done,

6 ) seek opportunities to realize planning.

Motivation is composed of: involvement, economic benefit, and self-development

(Wallgren, 2011). Motivation is one of the strengths of doing a job (Dessler, 2010).

According to Atkinson (Dessler, 2010) motivation consists of:

1) motive: inclination or urge individuals to satisfying its needs,

2) expectancy: subjective calculations of various possible specific actions that will

succeed in achieving the goals,

3) incentives: subjective calculations of hope of achievement a goal.

Motivation in this study is defined as any decision to act and do something because of

a boost in meeting the needs and desired goals. Motivation dimension in this study include

the fulfillment of hope, fulfillment purposes, and received an award.

Organizational Citizenship Behaviour (OCB)

OCB is a unconditional behavior shown employees outside of required and

responsibilities of the organization (Organ and Ryan, 1994). OCB as

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individual behavior that is discretionary, not directly or explicitly recognized by the formal

reward system, and that in the aggregate promotes the effective functioning of the

organization. OCB arise because employees have the urge to behave more than requested by

the organization to achieve its objective. Organ identified five major types (dimensions) of

OCB; Altruism, conscientiousness, sportsmanship, courtesy, civic virtue.

Vondey (2010) stated OCB is the attitude and actions taken by employees outside

their duty to achieve the goals of the organization on their own without expecting anything in

return. OCB include:

1) individual initiative,

2) interpersonal helping,

3) loyal boosterism,

4) personal industry.

According to Huang and Liu (2012) OCB is a behavior that indicated a person in

working out the demands of the job and achieving goals. In the study of Huang and Liu,

OCB measured by:

1) identification,

2) help colleagues.

3) accountability and Applied law,

4) harmonious interpersonal relationships,

5) protection of the organization's resources.

Lian and Tui (2012) also stated the same thing that OCB is a behavior, voluntarily

activities undertaken from employees of the organization without asking in return. OCB

include:

1) a high responsibility on the job,

2) Willingness to do additional work,

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3) Willingness to work overtime.

The definition of OCB in this study is the behavior of employees who act and do

something out of his responsibility to the organization interest, and not expecting anything in

return. OCB factor in this research include:

1) employee initiative,

2) other-oriented,

3) organization-oriented.

Relationship Between Working Environment, Motivation and Organizational

Citizenship Behavior

Woodman et al (1993) examined infuence of work environment on organjzational

citizenshp behavior. The result indicated that wor environment play important role in

promoting citizenship behavior among employees.

According to Chandrasekar (2011) to increase the motivation to work, it needs a

supportive working environment. Incentives, salary, and promotion and other forms of

compensation are not always increase motivation dynamic working atmosphere as fair

treatment, relationships with co-workers and supervisors harmonious, good communication

effective climate creates a comfortable working environment, conducive. Besides physical

facilities such as space and comfortable facilities are also part of the working environment .

The results showed a positive work environment (both physical and non-physical) impact on

increasing employee motivation .

Wallgren (2011) confirm that working environment factors: variety in tasks, job

autonomy, praise for a job well done, the chance to acquire new skills, and the sense of

accomplishment affect IT consultants’ work motivation. One of the main results is that

managers have rather vague ideas about the motivation of their subordinates.

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Ghanbari and Eskandari (2013) analyze how the organizational climate affects

organizational citizenship behavior through motivation at Bu-Ali Sina University.These

results indicate that components of organizational climate affects employee motivation,

which have an impact on organizational citizenship behavior (OCB). Organizational climate

that also includes the work environment has a positive impact on OCB through job

motivation. Organizational climate that provides conducive working environment thereby

increasing the motivation and the willingness of employees to do extra role such an OCB.

Work environment becomes one of the factors that affect employee motivation. Employees

who have the emotional attachment to the environment will have a passion in work that

motivated to performance. Therefore the work environment becomes one of the factors that

affect employee motivation (Naharuddin and Sadegi, 2013).

Relationship Between Competence, Motivation, and Organizational Citizenship

Behavior

Jim et al (2013) examined the effects of leader exchange, empowerment, and

competence on organizational citizenship behavior (OCB). results showed that leader

member exchange, empowerment, and competency have positive and significant effect on

OCB . Employees with high competence tend to have high OCB. Competence encourage

employee to be more responsible on jobs and tasks that lead to OCB. Employees voluntarily

do something for the benefit of the organization even outside obligations .

Research Fertig et al (2009) proved that the competence has positive effect and

significant on work motivation. Competence motivated employee to achieve goals, and to get

promotion. Ferrari (2010) examined how competence affects the performance of employees

through motivation. Research results demonstrate competencies affect motivation and

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performance of employees. The more employee developed competence, the more motivation

and work performance increased.

Relationship Between Motivation and Organizational Citizenship Behavior

Motivation has affect on employee behavior. The higher the motivation , the visible

behavior of the employee OCB (Organ and Ryan, 1994). Employees will do a lot of positive

things even beyond their responsibility to complete the task and achieve the corporate goals .

Pandey et al (2007), conducted a study of motivation in serving the public effect on OCB in

public organizations . The results showed motivation has a positive influence on OCB. The

relationship with the co-workers of reward and promotion are the factor of motivation. The

factors that most influence the motivation is the relationship with coworkers .

Motivation affect employee to show OCB in serving the public and organization.

Good relationship with co-workers showed that a comfortable working atmosphere, mutual

help and support among employees excite employees to provide the OCB.

OCBs as the crucial element of performance evaluation, they will deliberately conduct

such behaviors. At the time, the citizenship behaviors conducted by personnel are probably

only a self-serving motivation for better performance in front of their superiors, so as to get

better grade from performance evaluation (Huang and Liu 2012). Huang and Liu study

prooved that motivation influence an individual’s decision on his or her engagement in OCB.

Hasnain et al ( 2013 ) compared the effect of motivation on OCB in government

banks and private bank . the result showed employees in private banks are more motivated to

work and more shows OCB compared with state banks. This is caused by the binding

hierarchy, the absence of freedom in making decisions, and different causes is the main

organizational culture that does not appreciate the work motivation and OCB in government

banks. Therefore banks need to change the culture of government organizations that provide

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freedom in decision-making and can increase employee motivation and OCB causing a strong

organizational commitment.

HYPOTHESES

H1: Work environment influence on Organizational citizenship behavior through motivation

to work.

H2: Work environment influence on Organizational citizenship behavior

H3: Competence influence on Motivation to work

H4: Competence influence on Organizational citizenship behavior

H5: There is relationship between Work environment and Competence

METHOD

Research Methodology

The method used in this research is descriptive quantitative method. The objective of

this study is to describe and illustrate the relationship of the work environment, competence,

resonant leader, motivation, and organizational citizenship behavior (OCB). In addition, this

study also tested the hypothesis, and relationship between the variables studied. The data

were processed using Path Analysis. Further analysis of the data include hypothesis testing

with t-test.

Data Sample

The sample is part of the population that is considered to represent the population.

The samples in this study using random sampling. Data for this study were collected using

questionnaire that were conducted in Jakarta. These study involved 162 internal auditors. All

of the internal auditors work in the big three telecommunication companies in Indonesia.

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Data Source

Sources of Primary data were collected by distributing questionnaires to internal

auditor in big three telecommunication companies in Indonesia

RESULTS

The estimation outputs are shown in tabel 1, tabel 2, tabel 3, tabel 4, tabel 5, tabel 6, tabel 7,

and figure 1.

Hypotheses analysist

H1: Working environment influence on Organizational citizenship behavior through

motivation.

Results of the study indicate that the working environment has significant influence on

organizational citizenship behavior (OCB) through motivation. The working environment can

affect the behavior and activities of employees in completing their work. Motivation explain

the behavior of employees in achieving its objectives. Motivation will drive employee to act

and do some extra role for the organization without expecting anything in return. In other

words, the motivation will encourage someone, including internal auditors, for achievement,

commitment to the group, have high initiative and optimism, and strive to achieve the targets,

including where necessary for extra work outside of their working hours.

In accordance with audit assignment, through motivation, internal auditors will be

encouraged to act and do something that is out of his responsibility to the interests of the

organization, without expecting anything in return. Working environment and motivation

influence OCB. A condusive working environment will motivated employees to work with

the best. Motivation can cause employees to show OCB that improve productivity. Overall

Working environment, motivation and OCB affect internal audit performance.

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H2: Working environment influence Organizational citizenship behavior

The working environment has a significant influence on OCB. Employees who work in

a conducive work environment will feel comfortable, happy so that employees are

encouraged to do something beyond what is expected of the company. Such behavior can be

called organizational citizenship behavior (OCB).

space and facilittie, fairness treatment at the workplace, relationship with other

employee, clear rules and procedures at the workplace supoort internal auditor to show OCB.

Working environment and organizational citizenship behavior will affect internal auditor

performance.

H3: Competence influence OCB through Motivation

Competence has significant influence on OCB through motivation. Employees who

have a level of knowledge, skill, and expertise appropriate to organization will have

confidence, feel able to carry out their duties. Competence influence attitudes and behavior of

people in completing their work. With high competence employees will be motivated to

continue to pursue a career or promotion. With this motivation, employees do not hesitate to

do things beyond that required to achieve the organization's goals and expectations.

Motivation explains organizational zitizenship behavior

For Internal Auditor, competency is an important factor of audit judgment motivation.

Overall working motivation and Individual aspects of internal audit are related with working

effectiveness. Thus the higher the level of a professional internal auditors will always try to

improve the performance, especially when an internal auditor get job satisfaction.

Hence, motivation at the workplace for Internal Auditor is very important to drive all

employees to be able to work and love their organization and work effectively to reach

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their goals. Motivation encourage internal auditor to do something such OCB.

H4: Competence influence on Organizational citizenship behavior

Competence has significant influence on Organizational Citizenship Behavior.

Organization should provide opportunities to develop worker compentence, so the employee

will work better and more shows Organizational Citizenship Behavior (OCB). If employees

are given the opportunity to argue, make decisions within certain limits, to develop

themselves and improve their competence then it can lead to a strong OCB.

Internal auditor with high level of competence tend to be high initiative, other

oriented, and organizational oriented. Competence and OCB will lead to superior

performance of internal auditor.

H5: There is relationship between Working environment and Competence

The working environment has a relationship with competence. The work environment

can have an impact on stress levels of employees. Conducive working environment will

minimize the stress levels of employees. Employees with low levels of stress can work with

productive, focused, and able to develop their competence. A condusive working

environment supports employee to develope his competence.

Internal auditors have a duty to determine whether policies and procedures set top by

management has been conduct and determining the efficiency and effectiveness of

procedures and activities of the organization. The function and role of the internal auditor

merely as a slogan if the work environment do not provide support that encourage the

implementation of the internal functions of the company's auditor. Organization have to

maintain a dynamic working atmosphere and complete facilities and amenities at work so that

employees can optimized their competence.

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CONCLUSION

This study utilizes work environment, competence, and motivation as the mediating

variable to internal auditor’s OCB in big three telecommunication industry. As already

mentioned in the study findings analysis OCB and sources of work motivation are present in

the internal auditor of big three telecommunication company in Indonesia. Previous studies

also found some relationships between OCB and either one or more sources of motivation.

This study utilizes working environment, competence, and motivation as the mediating

variable to internal auditor’s OCB in big three telecommunication industry. The study

findings is: OCB and sources of work motivation are present in the internal auditor of the big

three telecommunication company in Indonesia. Previous studies also found some

relationships between OCB and either one or more sources of motivation.

Working environment and competence affect OCB both directly and indirectly

through motivation . The working environment and competence can influence motivation and

behavior of employees in completing their work. With appropriate competence and condusive

working environment employees are motivated to get his expectations, goals, and rewards for

his achievements.

The survey results that there is relationship between working environment and

competence. A dynamic working atmosphere, complete facilities at work, and conducive

working environment make employees utilize and develop competence.

Working environment, competence, and motivation influence the behavior of OCB.

Organizations with a conducive work environment and have employees with competence in

accordance with the needs of the organization employees tend to have high motivation to

work so that employees will voulantary show behavior that is out of his responsibility to the

interests of the organization, without expecting anything in return.

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Table 1: Estimation output of OCB model

Scalar Estimates (Group number 1 - Default model)

Maximum Likelihood Estimates

Regression Weights: (Group number 1 - Default model)

Estimate S.E. C.R. P Label

Motivation <--- WorkEnv 0.038 0.067 0.568 0.05 par_1

Motivation <--- Competence 0.575 0.065 8.908 *** par_2

OCB <--- Motivation 0.196 0.067 2.914 0.004 par_3

OCB <--- WorkEnv 0.392 0.057 6.881 *** par_4

OCB <--- Competence 0.114 0.067 1.699 0.052 par_5

Table 2: Standardized Regression Weights: (Group number 1 - Default model)

Estimate

Motivation <--- WorkEnv 0.04

Motivation <--- Competence 0.623

OCB <--- Motivation 0.221

OCB <--- WorkEnv 0.463

OCB <--- Competence 0.139

Table 3: Covariance (Group number 1 - Default model)

Estimate S.E. C.R. P Label

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Estimate S.E. C.R. P Label

WorkEnv <--> Competence 8.178 1.426 5.736 *** par_6

Table 4: Correlations (Group number 1 - Default model)

Estimate

WorkEnv <--> Competence .507

Tabel 5: Squared Multiple Correlations: (Group number 1 - Default model)

Estimate

Motivation

.415

OCB

.460

Tabel 6:Standardized Direct Effects (Group number 1 - Default model)

Competence WorkEnv Motivation

Motivation .623 .040 .000

OCB .139 .463 .221

Tabel 7: Standardized Indirect Effects (Group number 1 - Default model)

Competence WorkEnv Motivation

Motivation .000 .000 .000

OCB .137 .009 .000

24

Figure 1 : The standardized estimate of OCB model