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EFFECT OF POLICY AND SERVICE QUALITY OF SOCSO ON CLIENT SATISFACTION, MODERATED BY CLIENT KNOWLEDGE.
By
DINESH KUMAR A/L SAUNDRA RAJAN (900766)
Thesis Submitted to School of Business Management
Universiti Utara Malaysia
in Fulfillment of the Requirement for the Degree of Doctor of Philosophy
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06010 UUM Sintok Kedah Darul Aman
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ABSTRACT
The number of complaints made by SOCSO’s clients towards SOCSO gradually increase.
Therefore, the annual goals of SOCSO are not consistently achieved. The policy makers and the service providers of SOCSO need to understand the client’s perception on the quality of service offered. Thus, this research attempted to study the effect of policy and the perceived service quality of SOCSO on client satisfaction. Besides, the study also examined the moderation effect of client knowledge on client satisfaction. This study was conducted all over Malaysia through the stratification of sampling in each state of the country. Five hundred and seven questionnaires were distributed but only 384 questionnaires were usable, yielding a response rate of 75.74%. The findings revealed that there are direct relationships between policy, perceived service quality and client satisfaction. The findings also showed that client knowledge moderated the relationships between policy, perceived service quality and client satisfaction. The theoretical implications of the study is the inclusion of client knowledge as the moderator in assimilation contrast theory. The practical implication of the study is assisting the organization to rework policy structure of SOCSO which consist of deductions and compensation coverage. The study concludes with limitations and suggestions for future work while some recommendations have been made to improve client satisfaction.
Keywords: Policy, perceived service quality, customer knowledge, client satisfaction.
ABSTRAK
Jumlah aduan yang dibuat oleh pelanggan PERKESO terhadap PERKESO semakin meningkat. Oleh itu, matlamat tahunan PERKESO tidak dapat dicapai secara konsisten.
Pembuat polisi dan penyedia perkhidmatan PERKESO perlu memahami tanggapan pelanggannya terhadap kualiti perkhidmatan yang ditawarkan. Oleh itu, kajian ini telah mengkaji kesan polisi dan tanggapan kualiti perkhidmatan PERKESO terhadap kepuasan pelanggan. Selain itu, kajian ini juga telah mengkaji kesan penyederhanaan pengetahuan pelanggan terhadap kepuasan pelanggan. Kajian ini telah dijalankan di seluruh Malaysia dengan menggunakan kaedah persampelan berstrata di setiap negeri yang terdapat di Malaysia. Sebanyak 507 borang soal selidik telah diedarkan dan hanya 384 daripadanya boleh digunakan,menghasilkan kadar maklum balas sebanyak 75.74%. Hasil kajian mendedahkan bahawa terdapat hubungan langsung antara polisi, tanggapan kualiti perkhidmatan dan kepuasan pelanggan. Dapatan kajian juga menunjukkan bahawa pengetahuan pelanggan menyederhanakan hubungan antara polisi, tanggapan kualiti perkhidmatan dan kepuasan pelanggan. Implikasi teoritis hasil daripada kajian ini ialah pengenalan pengetahuan pelanggan sebagai penyederhana dalam teori asimilasi kontraksi.
Implikasi praktikal hasil daripada kajian ini ialah membantu organisasi untuk mengubah suai struktur polisi PERKESO yang terdiri daripada potongan dan liputan pampasan.
Kajian ini disimpulkan dengan batasan kajian dan cadangan untuk kajian akan datang, di samping beberapa saranan untuk meningkatkan kepuasan pelanggan
Kata Kunci: Polisi, tanggapan kualiti perkhidmatan, pengetahuan pelanggan, kepuasan pelanggan.
ACKNOWLEDGEMENT
First and foremost, I would like to express my appreciation to our God, the most merciful and, the most compassionate who has granted me the ability, will and strength to complete this study successfully. I am grateful and thankful to be the son of my guardian (Santhi A/P Suppiah), as her never ending support towards me is mesmerizing and also my brother Sivakanthan A/L Oulaga Nathan, and my sister Dinithambigai A/P Nadahrajan who supported me morally for my success. A special appreciation to my wife Thamaraikanni A/P Rengasamy who never forget to pray for my success. Without their support it’s impossible for me to complete this study.
I would like to extend my gratitude to my humble and kind research supervisors Associate Professor Dr. Fadzli Shah Abd. Aziz and Associate Professor Dr. Norlida Abdul Manab whom have been very supportive and encouraging in guiding me to complete this research paper successfully. Their patience, time and faith in me encourage to made all these possible.
Throughout this journey in completion of research paper is joyous with the presence of dearest college mates who shown their assistance and support in the accomplishment of this educational endeavor. Also, to my external examiner Associate Professor Dr. Khairul Anuar Mohd Ali and to my internal examiner Dr. Zuraida Binti Hassan for giving me good suggestions to improve the quality of my thesis.
Last, but yet importantly, I would like to express my humble appreciation to SOCSO in charge person Dr. Azlan Bin Darus for helping me in completing data collection for the research besides giving me the statistical report of SOCSO. And finally would like to thank to all the researchers and academicians from Universiti Utara Malaysia who assisted me to fulfill the requirements of Philosophy of Doctorate. Once again thank you all.
Dinesh Kumar A/L Saundra Rajan School of Business Management (SBM) Universiti Utara Malaysia (UUM)
TABLE OF CONTENTS
PERMISSION TO USE……….і DISCLAIMER………. і і ABSTRACT……… і і і ABSTRAK……….іv
ACKNOWLEDGEMENT………...v
TABLE OF CONTENTS………... vі LIST OF TABLES……… x
LIST OF FIGURES………..xi
LIST OF ABBREVIATIONS……… xіi CHAPTER ONE: INTRODUCTION 1.1 Background of Study………1
1.2 Problem Statement………...7
1.3 Research Objectives………...13
1.4 Research Questions………13
1.5 Significant of Study………14
1.6 Scope of Study………16
1.7 Definitions of Key Terms………...17
1.7.1 Client Satisfaction……….……… 17
1.7.2 Client………..………18
1.7.3 Social Insurance……….18
1.7.4 Policy……….18
1.7.5 Deduction……….. 18
1.7.6 Compensation Coverage………18
1.7.7 Perceived Service Quality………. 19
1.7.8 Reliability……….. 19
1.7.9 Responsiveness………..19
1.7.10 Assurance……….. 19
1.7.11 Empathy……….19
1.7.12 Tangibles………... 20
1.7.13 Client Knowledge……….………...20
1.8 Organization of Study………20
CHAPTER TWO: LITERATURE REVIEW
2.0 Introduction………22
2.1 Client Satisfaction…….……… 22
2.2 Policy………. 26
2.2.1 Policy of Social Insurance………..29
2.3 Perceived Service Quality………..45
2.3.1 Service Quality Gap Model...53
2.3.2 Service Quality in Social Insurance Industry……….58
2.3.3 Client Satisfaction is an Antecedent to Service Quality…….………60
2.4 Client Knowledge………..……….61
2.5 Policy and Its Dimensions………. 68
2.6 Service Quality and Its Dimensions………...69
2.7 Underpinning Theory………. ……..……….72
2.7.1 Assimilation Contrast Theory……… 72
2.8 Previous Studies on Policy……….75
2.8.1 Summary of Previous Studies on Policy………84
2.9 Previous Studies on Perceived Service Quality…….……….85
2.9.1 Summary of Previous Studies on Perceived Service Quality…………. …96
2.10 Previous Studies on Client Knowledge…..……….97
2.10.1 Summary of Previous Studies on Client Knowledge…..………99
2.11 Hypotheses Development……….... 100
2.11.1 Policy and Client Satisfaction……..……… 100
2.11.2 Perceived Service Quality and Client Satisfaction………..……….101
2.11.3 Moderating Effects of Client Knowledge…..……….. 103
2.12 Research Framework………105
2.13 Conclusion……….. .109
CHAPTER THREE: METHODOLOGY 3.1 Introduction………...111
3.2 Research Design……….………..111
3.3 Population, Sample, and Sampling Technique……….113
3.3.1 Population………... 113
3.3.2 Sample Size………..115
3.3.3 Sampling Technique……….117
3.4 Unit of Analysis………... 118
3.5 Operationalisation and Measurement of Variables………..118
3.5.1 Client Satisfaction…….………...119
3.5.2 Policy………... 121
3.5.3 Perceived Service Quality………123
3.5.4 Client Knowledge…..……….. 126
3.6 Reliability and Validity of the Questionnaire………...128
3.7 Translation of Questionnaire………....129
3.8 Pilot Study………130
3.8.1 Reliability Test……….131
3.9 Data Collection Method………. ..132
3.9.1 Data Collection Process………132
3.10 Data Analysis………...133
3.11 Conclusion………...134
CHAPTER FOUR: ANALYSIS AND FINDINGS 4.0 Introduction………..………136
4.1 Response Rate………..136
4.2 Data Screening and Preliminary Analysis………... 138
4.2.1 Analysis of Missing Data……… 138
4.2.2 Test of Outliers……… 139
4.2.3 Test of Normality……… 140
4.2.4 Multicollinearity Test……….. 141
4.2.5 Common Method Variance (CMV)………. 142
4.3 Description of the Demographic Profile of Respondents……… 143
4.4 Descriptive Analysis of the Latent Construct……….. 146
4.5 Assessment of PLS SEM Path Model Finding……… 147
4.6 Assessment of Measurement Model……… 148
4.6.1 Examining Individual Item Reliability……….149
4.6.2 Ascertaining Internal Consistency Reliability………..149
4.6.3 Ascertaining Convergent Validity………150
4.6.4 Ascertaining Discriminant Validity………..152
4.7 Establishing the Second Order Construct……….156
4.7.1 Examining the Collinearity of Second Order Construct……….. 156
4.7.2 Empirical Evidence of Reflective-Reflective Second Order Construct....157
4.8 Assessment of Structural Model………...159
4.8.1 Structural Model Path Coefficient (Direct Effect)………160
4.9 Assessment of Variance in the Dependent Variable (R2)……… 161
4.10 Assessment of Effect Size (f2)………. 162
4.11 Assessment of Predictive Relevance (Q2)………162
4.12 Testing Moderation Effect………... 163
4.12.1 Determining the Strength of the Moderating Effects………166
4.13 Summary of Findings………...167
4.14 Conclusion………... 168
CHAPTER FIVE: DISCUSSION, CONCLUSION, AND RECOMMENDATION 5.1 Introduction……….……….170
5.2 Recapitulation of the Study Findings………170
5.3 Discussion………171
5.3.1 Relationship between Policy of SOCSO and Client Satisfaction………172
5.3.2 Relationship between Perceived Service Quality of SOCSO and Client Satisfaction…..………..174
5.3.3 Moderating Effect of Client Knowledge….……….176
5.4 Implications of Study………... 177
5.4.1 Practical Implications……….. 178
5.4.2 Theoretical Implications……….. 179
5.4.3 Methodological Contributions………. 181
5.5 Limitation and Suggestions for Future Research………. 182
5.6 Conclusions………..183
REFERENCES………...185 APPENDICES
List of Tables
Table 2.1 Knowledge Categorization Framework………..64
Table 3.1 Total Number of Population……… 114
Table 3.2 Sample………. 117
Table 3.3 Client Satisfaction Items……….. 120
Table 3.4 Policy Items………..…122
Table 3.5 Perceived Service Quality Items……….. 124
Table 3.6 Customer Knowledge Items……….126
Table 3.7 Construct, Sources and Number of Items……… ……127
Table 3.8 Reliability Test……….131
Table 4.1 Response Rate of the Questionnaires……….. 137
Table 4.2 Tolerance and Variance Inflation Factors (VIF)………..142
Table 4.3 Profile of the Respondents………143
Table 4.4 Descriptive Statistics for Constructs………....146
Table 4.5 The Evaluation of PLS-SEM Results………... 147
Table 4.6 Individual Item Reliability, Internal Consistent and Convergent Validity……….... 151
Table 4.7 Cross Loading……….. 153
Table 4.8 Latent Variable Correlations and Square Roots of AVE………. 155
Table 4.9 Collinearity of Second Order Construct………... 157
Table 4.10 Empirical Evidence of Reflective-Reflective Second Order Construct…158 Table 4.11 Structural Model Assessment………...160
Table 4.12 Variance Explained in the Endogenous Variable………. 161
Table 4.13 Effect Size of Exogenous Variables……….……162
Table 4.14 Construct Cross-Validated Redundancy……….. 163
Table 4.15 Structural Model Assessment (Moderating Effect)……….. 164
Table 4.16 Strength of the Moderating Effects……….. 167
Table 4.17 Summary of Hypotheses Testing………..167
List of Figures
Figure 1.1 Client’s Complaints on SOCSO……….………. 3
Figure 2.1 Gap Model of Parasuraman, Zeithaml, and Berry (1985)………...57
Figure 2.2 Research Framework………105
Figure 4.1 Measurement Model……….148
Figure 4.2 Structural Model with Moderating Effect……… 159
Figure 4.3 Moderating Effect of Client Knowledge (H3)…….……… 165
Figure 4.4 Moderating Effect of Client Knowledge (H4)….……… 166
List of Abbreviations
ATM Automated Teller Machine
AVE Average Variance Extracted
CBA Cost Benefit Analysis
CFA Confirmatory Factor Analysis
CMV Common Method Variance
CSQ Client Satisfaction Questionnaires
HRM Human Resource Management
ILO International Labor Organization
LISREL Linear Structural Relations
MVA Motor Vehicle Accidents
OSH Occupational Safety and Health
PERKESO Pertubuhan Keselamatan Sosial
PHD Philosophy of Doctoral
PLS Partial Least Square
PLS-SEM Partial Least Square-Structural Equation Modeling
PMR Penilaian Menengah Rendah
PSQ Pay Satisfaction Questionnaire
SBM School of Business Management
SEM Structural Equation Modeling
SERVQUAL Service Quality
SMS Short Message System
SOCSO Social Security Organisation
SPM Sijil Pelajaran Malaysia
SPSS Statistical Package for the Social Science
SRP Sijil Rendah Pelajaran
STPM Sijil Tinggi Pelajaran Malaysia
UK United Kingdom
VIF Variance Inflation Factor
CHAPTER ONE INTRODUCTION
1.1 Background of Study
Social Insurance is a part of the financial service industries and plays an important role in delivering best performance to the client (Witkowska, 2012). In general, insurance industry consists of economic and social insurance (Levy & Schady, 2013). Social security insurance includes: retirement plan, disability, sickness and accident coverage (Levy & Schady, 2013). However, business insurance can be divided into property and casualty (Saad, 2015). Social security ensures the social minimum for people who: have reached retirement age, have had an accident or become sick (Levy & Schady, 2013). In Malaysian context, Social Security Organization (SOCSO) found to be the legal and mandatory organization of social insurance (Laws of Malaysia, 2006). SOCSO was established in 1971 and it is similar as of the general roles play by the social insurance industries in worldwide (Rajan, Aziz & Manab, 2018).
In Malaysia, every employee whose wages below RM3000 are compulsory register under SOCSO protection plans. Those registered employees refer to the clients of SOCSO. Therefore, SOCSO does obligate to deliver a good performance towards its clients. The clients who had involved in occupational accidents are eligible to receive the benefits of SOCSO (Noor & Rahman, 2016).
The objective of social insurance is to protect social and economic security of property, and life and health of the insured person. It is important for the institutions offering insurance protection to take care of the quality of the services to produce satisfied clients. And so the strategy of client orientation in the social insurance industry seems to be the right course of action (Witkowska & Lakstutiene, 2014).
A further concern regarding this kind of welfare-based insurance is client’s satisfaction. Client’s satisfaction “It is analogous to ‘Customer Satisfaction” or patient satisfaction in social insurance system (Faezipour & Ferreira, 2013). Since there is limited number of studies on client’s satisfaction with social insurance, a vast majority of literature for this study would be drawn from customer satisfaction literature in the marketing field. Thus, the primary goal of this research is to study on client satisfaction in social insurance context.
In Malaysia, despite the best effort taken by SOCSO to improve the perception of client towards the services of SOCSO, the number of complaints made by the clients still increased in recent years (Azlan Darus, personal communication, December 19, 2017). As a result, the annual goals of SOCSO are not achieved consistently (Muthiah, 2004). Statistically, figure 1.1 shows that the number of clients’ complaints increased by 17% from year 2016 to 2017 based on the survey conducted by SOCSO towards the clients who visited SOCSO. Increasing in complaints tend to lower the level of client satisfaction (Rajan et al., 2018). As SOCSO’s primary role is to improve its clients’ satisfaction, the study on client satisfaction become the principal goal of this research.
Figure 1.1
Client’s Complaints on SOCSO SOCSO’s Statistical Report 2018
Client satisfaction is a well-known and established concept in several areas like marketing, consumer research, economic psychology, welfare-economics, and economics (Akbar & Parvez, 2009). Previously, studies on satisfaction in relation with financial service have been conducted in audit firms (Iskandar et al., 2010) and automotive insurance industry (Arokiasamy & Tat, 2014) in Malaysia. There is a recommendation to conduct further research in other financial service organization in Malaysia to gauge and enhance their client satisfaction level with improved services (Arokiasamy & Tat, 2014). As such, social insurance/SOCSO is a mainstream in delivering financial services in relation with occupational accidents. Thus, this study attempts to explore the study on client satisfaction in the area of social insurance from Malaysian perspective.
Based on the previous literature, fifteen factors found to be impacted satisfaction in insurance studies, and ten of it most significantly adopted in majority of the studies (Nebo & Okolo, 2016; Faullant et al., 2008; Anderson & Sullivan, 2003; LaBarbera
0 100 200 300 400 500
2016 2017 2018
Client's Complaints
Financial Non-Financial Total
& Mazursky, 1983). In recent literature, it has been stressed that prompt settlement of claims, quality products, fair premium, prompt attendance to clients’ complaint, use of easily understandable policy documents, timely and effective communication of renewal policies, and thorough explanations of policy documents become the major concerns (Nebo & Okolo, 2016). However, in the contexts of social insurance, few of the stated factors being omitted according to the needs of the study. In Malaysia, SOCSO is a mandatory organization and it is identified that the policy and perceived service quality of SOCSO become the major concern to improve client’s satisfaction.
Occupational safety and health is an area that has continued to remain outside the mainstream of management research (Barling, Loughlin, & Kelloway, 2002). In fact, less than 1% of organizational research focusses on issues concerning occupational safety and health (Barling & Zacharatos, 2000). This statistic very low considering the significant social and economic costs associated with occupational safety such as occupational fatalities, work related injuries, and loss of productivity (Smith, 2014). Similarly in Malaysia, SOCSO faces financial struggle and thus resulted imbalances in the perceived level of services among clients toward SOCSO (The Star Malaysia, 2012). Lately, SOCSO deems to perform inconsistently towards its clients, especially in the valuation of compensation (The Star Malaysia, 2012). In line with this, Ministry of Human Resource Management has stressed to gather and evaluate perception of the clients on the social insurance policy (deduction and compensation coverage) that being implemented under SOCSO (Saharan et al., 2018).
The implementation of an adequate policy in social insurance is important to improve clients’ perception towards the services obtained from the organization (Smith, 2014). Consequently, policies of social insurance need to be reworked to improve client satisfaction so that the clients can get equal treatment associated with the deduction and the severity of accidents, to enhance the true meaning of social insurance policy (Mogambi et al., 2014). Thus, it is important to conduct an empirical study in order to test the relationship between policy of social insurance and client satisfaction in Malaysian context.
A thorough review of quality management programs revealed that the ability of service providers to properly implement service quality in executing jobs may have a significant impact on individual attitude and behaviour, especially client satisfaction (Ismail et al., 2009a, 2009b; Osman & Sentosa, 2013; Ouyung, 2010;
Raza et al., 2012). In a quality management perspective, client satisfaction is often seen as a result of comparison between what one client expected about services provided by a service provider and what another client received in actual services rendered by a service provider (Osman & Sentosa, 2013; Ouyung, 2010;
Parasuraman et al., 1988; Raza et al., 2012; Walker et al., 2006). Within the workplace service quality program, many scholars view that tangibility, responsiveness, reliability, empathy, assurance, and client satisfaction, though different, were strongly interrelated constructs. For example, if the perceived level of service obtained from an organization did meet a client’s needs and expectations, it may lead to an enhanced level of client satisfaction (Raza et al., 2012; Osman &
Sentosa, 2013; Walker et al., 2006). Even though the nature of the relationship was
significant, little was known about the role of perceived service quality as an important predicting variable in the workplace quality research literature (Raza et al., 2012; Osman & Sentosa, 2013).
Past literature argued that the predicting variable of perceived service quality was given less attention in the previous studies because they had over emphasized on the internal properties of service quality system, employed a simple correlation method to evaluate general respondent attitudes toward particular service quality features, and ignored to measure the effect size of the relationship between perceived service quality and satisfaction (Mey, Akhbar & David Yong, 2008;
Ouyung, 2010; Raza et al., 2012; Osman & Sentosa, 2013). As a result, those studies may not provide adequate findings to be used as guidelines by practitioners in formulating strategic action plans for improving the implementation of service quality program in an organization which may enhance the level of client satisfaction (Raza et al., 2012; Osman & Sentosa, 2013). Thus, it motivated the researchers to further explore the nature of that relationship.
On the other hand, only a few operationalized factors are available throughout the studies in literature. In addition, researchers call for the investigation of perceived client knowledge associated with policy (Nidhi & Kumari, 2016; Gunn et al., 2014) and perceived service quality (Ruyter & Bloemer, 1997). Several studies reported on the impact of client knowledge in insurance studies. Prior studies such as (Nidhi
& Kumari, 2016; Saad, 2015; Ruyter & Bloemer, 1997) presented that knowledge may moderate the relationship between perceived services (policy and perceived
service quality) and client satisfaction. Client knowledge refers to the level of understandings among the clients on the services being offered by an organization which reflects the services of an organization to influence individual’s (client’s) ability to observe and modify expressive behavior and to generate self-awareness in relation to social signals (Soibel et al., 2012). A positive perception on client knowledge is important to create awareness among the clients about the policy and perceived service quality from an organization, and to influence client satisfaction.
Overall, the aim of this study is to recommend SOCSO to capitalize on the proper strategies/factors that influence client satisfaction to improve the seemingly battered image and performance of the organization while deemphasizing expenditures in money, time and human resources on the less important variables.
1.2 Problem Statement
In Malaysia, SOCSO is the mandatory social insurance organization that covers the welfare of the victims who committed in occupational accidents apart from providing welfare affairs to occupational diseases (Rohaizat et al., 2012).
Moreover, SOCSO is the only social insurance organization and do not have any competitors. As such the tendency of SOCSO to improve the strategies of client satisfaction may lower as compare to commercial insurance industries which came along with many competitors (Jamil & Wei, 2015). Thus, the client’s perception towards the perceived services of SOCSO, and client satisfaction bring the interest of this study.
SOCSO got many complaints from the clients in relation with the overall perceived services from the SOCSO (Rajan et al., 2018). The studies on complaint resolution found to be the best course of action to improve perceived services which will produce improved level of client satisfaction (Pandey, 2015). Little discussion has been published in relation with the overall perceived services of SOCSO and client satisfaction. Therefore, this study looking at this niche segment which was not previously studied from Malaysian perspective (Ismail et al., 2013).
Recently, SOCSO struggles financially that might affect perceived services of SOCSO for the convenience of the client (Nicholson & Amin, 2013). This is because the increasing number of occupational accidents led to huge costs to SOCSO to manage the social needs of the client (SOCSO Annual Report, 2014).
However, SOCSO does capitalize many strategies to deliver better services in order to achieve better level of client satisfaction (Nicholson & Amin, 2013) yet the issue on client satisfaction still remain unsolved. As a result, the study on perceived services of SOCSO is important to define the level of client satisfaction which has significant impact on the reputation/corporate image of SOCSO. Therefore, the social insurance industry, especially in Malaysia, needs to utilize strategic plans in order to improve client’s perception on the services of the industry to meet clients’
complex expectations (Jamil & Wei, 2015). Thus, this study attempts to study client’s perception on the services offered by SOCSO and its association with client satisfaction.
The issues of client satisfaction towards the social insurance needs to be tackled by both researchers and practitioners because it plays significant role in the way the services of social insurance is determined and dealt with inside social insurance (Nebo & Okolo, 2016). There are many factors which lead to the satisfaction or dissatisfaction of client towards the perceived services from social insurance.
Currently, little discussion has been published on the study of client satisfaction in Malaysian social security system (Rohaizat et al., 2012). Hence, this study intends to explore further to solve the issues of client satisfaction on Social Security Organization (SOCSO).
Previous studies focused on client satisfaction in order to improve clients’ loyalty towards the insurance companies (Abtin & Pouramiri, 2016; Hussen, 2015; Vildova et al., 2015). Despite serious implication towards the study of client satisfaction in economic insurance industries, the study of client satisfaction in social insurance industry becomes the focus of recent studies (Mogambi et al., 2014). A recent research had been conducted by undertaking strategies for client satisfaction in social insurance firms (Nebo & Okolo, 2016) and has recommended to conduct further studies on client satisfaction in the context of social insurance. This study has some limitations and thus further research need to be conducted to identify factors that influence client satisfaction on the services of social insurance industries. Furthermore, previous scholarly articles of client satisfaction are conducted in marketing settings and thus opens a gap to conduct further empirical research on client satisfaction in social welfare settings.
Many theories have been used to explain the client satisfaction, such as assimilation theory, negativity theory, contrast theory, disconfirmation theory, cognitive dissonance theory and dissonance theory. This study is different from previous works as it uses assimilation-contrast theory in its attempt to explain client satisfaction. According to this theory, there are two resources on individual wishes to expect and obtain to help them to improve level of acceptance. They are perceived services (Anderson, 1973; Sherif & Hovland’s 1961). In line with this theory, this study examines a number of variables within the stated resources which have not been widely considered yet. Within the perceived performance of services, perceived service quality, policy of social insurance and customer knowledge are investigated. Overall, customer knowledge and policy are the new variables considered in this study.
Scarcity of empirical studies have been tested the nature of the relationship between policy of social insurance and client satisfaction in developing countries. Many conceptual papers have been published to link the importance of social insurance policies on client satisfaction (Anastasiou, 2015; Kim, Park & Jeong, 2004) but failed to provide empirical evidence on the relationship between policy of social insurance and client satisfaction. Thus, this study initiates to fill the gap by testing the relationship between policy and client satisfaction in the context of social security/insurance organization. Study on client satisfaction has revealed that the enhancement and development of comprehensive structure of policy is crucial to study the relationship between policy of an organization and client satisfaction (Nguyen, Nguyen, Nguyen & Phan, 2018). Besides, Bashir, Machali & Mwinyi
(2012) has also recommended that a proper setting of policy is important to evaluate client satisfaction, especially in the context of social security. Thus, this study intends to fill the knowledge gaps by developing a comprehensive structure of policy variable in the context of social insurance and thus conduct empirical study on the relationship between policy and client satisfaction.
In addition to that, a thorough review of past literature revealed that the relationship between perceived service quality and client satisfaction is inconsistent and thus cannot be generalized. Studies have affirmed that the relationship between perceived service quality and client satisfaction is inseparable and found to have a positive significant relationship between the variables (Roahizat et al., 2012;
Ndubusi et al., 2009; Saravana & Rao, 2007; Su et al., 2002; Lee et al., 2000).
However, in other research, the scholar argued that the exact nature of the relationship between perceived service quality and client satisfaction found to be inconsistence and remain unsolved (Subrahmanyam, 2017). In addition, little scholarly literature has been found to relate the association between perceived service quality and client satisfaction in the study of social insurance (Jamil & Wei, 2015). As such, this study attempts to fill these gaps.
As noted at the outset, besides examining the direct linkage between policy, perceived service quality and client satisfaction, the researcher also interested in exploring the causal mechanisms behind this relationship. The question is that: how might social insurance service characteristics be associated with clients’
satisfaction? One plausible answer to this research question lies in the domain of
client knowledge. Previous studies on client satisfaction with health insurance aimed at examining clients’ perceptions in relation to a number of antecedent factors or determinants and the way these determinants relate to their satisfaction (Velnamny & sivesan, 2012). However, limited research aimed at investigating the moderating variable underlying the relationship between the antecedent determinants and client satisfaction (Aldosari et al., 2016; Velnampy & Sivesan, 2012). Hence, this represents one of the theoretical gaps in the literature. Therefore, this study attempts to fill this void by examining the psychological mechanism of client knowledge between social insurance service characteristics and client satisfaction.
Client knowledge may be a moderator of certain relationships in insurance studies, including perceived services and client satisfaction (Saad, 2015). A moderating variable is a separate independent variable which influence the relationship between independent variable(s) and dependent variable (Baron & Kenny, 1986).
The effect of the moderating variable is known as interaction effect. Client knowledge was computed as a moderating variable in previous literature (Wang et al., 2016; Sivasta, 2015; Tuu et al., 2011). However, scarce of research works have been focused the moderating effect of client knowledge in client satisfaction literature, especially in the context of social insurance industry.
Various theoretical and empirical attempts have been devoted to understand the factors associated with customer satisfaction which include policy, perceived service quality, and customer knowledge. Thus, this study attempt to synthesize the
effect of policy and perceived service quality on client satisfaction, moderated by customer knowledge.
1.3 Research Objectives
The aim of this study is to recommend SOCSO to capitalize on the proper strategies/factors that influence clients’ satisfaction to improve the seemingly battered image and services of the organization while deemphasizing expenditures in money, time and human resources on the less important variables. These can be achieved through the developed understandings on the association between the perception of the client towards the perceived services of SOCSO, and client satisfaction. The specific objectives of this research stated as follows:
1. To examine the relationship between policy of SOCSO and client satisfaction.
2. To examine the relationship between perceived service quality of SOCSO and client satisfaction.
3. To examine the moderating effect of client knowledge on the relationship between independent variables (policy and perceived service quality) and dependent variable (client satisfaction).
1.4 Research Questions
Basically to generate enquiries for this research, few research questions were developed to grant a guidance for the effort of this study. The questions are as shown below:
1. What is the relationship between policy of SOCSO and client satisfaction?
2. What is the relationship between perceived service quality of SOCSO and client satisfaction?
3. Does client knowledge moderate the relationship between independent variables (policy and perceived service quality) and client satisfaction?
1.5 Significance of Study
The aim of the study is to discover the effect of policy and perceived service quality of SOCSO on client satisfaction, moderated by client knowledge. If the findings of this study will be true and valid, the study will contribute to both practice and theory.
One of the benefit of this study is to recommend SOCSO to capitalize on the proper strategies/factors that influence client satisfaction to improve seemingly battered image and performance of the social insurance organization in Malaysia while deemphasizing expenditures in money, time and human resources on the less important variables. As a result, in future, the level of client satisfaction may improve and less complaints will be made by the client towards SOCSO. Thus, SOCSO’s reputation can be improved besides the annual goals of SOCSO can be achieved consistently.
On the other hand, by conducting the research, the perceived services by the clients will be deduced which in turn will assist the Social Security Organization (SOCSO) to deliver a better level of services according to the needs of the clients or insured person. A better level of welfare care will deliver by SOCSO and thus it helps to
improve client satisfaction. Thus, SOCSO tends to obtain a good remark from its clients.
In terms of theory, the study contributes to the body of knowledge through examining the effect of policy and perceived service quality on the client satisfaction in social insurance from Malaysia perspective, and the influence of moderation effect of client knowledge on relation between independent variables (policy and perceived service quality) and client satisfaction. Specifically, the present study will be the first study that carries out an examination of the effects of policy and perceived service quality of SOCSO on client satisfaction moderated by client knowledge. The relationship between these variables never been tested in a single comprehensive study previously. Therefore, this study will be the first study to test these associations in one study.
Previous studies have tested the importance of satisfaction across various industries, yet all of the studies came along with the presence of competitors and thus achieving client satisfaction becoming a marketing strategic. In this study, the output might be different as SOCSO does not have any competitors while the previous literature which focused on social insurance studies have competitors.
Therefore, this is the initial study that going to test the level of client satisfaction associated with policy and perceived service quality of social insurance industry in Malaysia called SOCSO that exists without the presence of any competitors.
Furthermore, this study attempts to utilize one of the important independent variable which is policy. This is the initial study that develops a comprehensive
structure for social insurance policy by including two important dimensions comprise deduction and compensation coverage after in-depth analysis of previous literature. Moreover, this study will test further on the relationship between policy and client satisfaction in the study of social insurance. On the other hand, the moderation effect of client knowledge on client satisfaction yet to be studied since scarcity of studies have been tested empirically this association based on previous scholarly literature. Thus, the moderation effect of knowledge will be one of the contribution of this study.
1.6 Scope of Study
The current research attempts to analyze the association between policy and perceived service quality of SOCSO, and client satisfaction as moderated by client knowledge. In Malaysian context, SOCSO has a significant role in the field of Occupational Safety and Health (OSH). Thus, the study on client satisfaction being extracted in the field of OSH as it has an important role in delivering welfare- economic towards its clients. SOCSO being the focal point of this study because it is the only organization in Malaysia take in charge of delivering social insurance services towards occupational accidents which consists of industrial accidents and commuting accidents (Laws of Malaysia, 2006). In general, SOCSO will provide the aids to the victims of occupational accidents and occupational diseases.
However, in this study, only the clients of SOCSO who involved in occupational accidents will be included because the proportion of occupational accidents is much higher as compared to occupational diseases (Hui-Nee, 2014). Moreover, in developing countries, risk of occupational accident is higher compare to
occupational disease (Yilmaz & Alp, 2016). As discussed with the field expert who hold position as manager of Social Security Organization (SOCSO) was found that this study is appropriate to focus on past two years (2016 and 2017) among the clients who involved in occupational accidents and being compensated by SOCSO.
This is because the respondents being targeted in recent two years would have the exact impact on their satisfaction level and their perception on the services of SOCSO and manage to give the exact response on the study of client satisfaction (Azlan Darus, personal communication, December 19, 2017).
1.7 Definition of Key Terms
This part explains key terms used in this study, which are mentioned and described as follows:
1.7.1 Client Satisfaction
Client Satisfaction refers to level of fulfilment to the services received by the individual or client from certain organization (Attkisson & Greenfield, 2004. It is a judgment of a service, provides a pleasurable amount of consumption-related fulfillment, including level of under or over fulfillment (Oliver, 1997). Clients in this study are asked to evaluate their satisfaction level by comparing their expectations against perceptions which would in turn lead to the state of mind which is the satisfaction level (Anton’s, 1996).
1.7.2 Client
An employee who is protected by Social Security Organization (SOCSO) from any injuries caused by accidents while on or off duty (Occupational Safety & Health Act 1994 and Regulations, 2007). This employee is registered with Social Security Organization (SOCSO).
1.7.3 Social Insurance
Social insurance refers to the social security that ensures the social minimum for people who: have had an accident in relation with occupation (Karto & Peng, 1986).
1.7.4 Policy
Policy refers to the financial product of insurance organization (Libman, 1999).
Policy consists of agreement between insurer and insured in which the principle is routinely transformed into role between the insurer and insured (Abraham, 1996).
1.7.5 Deduction
Deduction refers to the payment made to the insurer by insured. In general term, deduction often described as insurance premium (Mohamad Hasim, 2015).
1.7.6 Compensation Coverage
Monetary coverage or benefits being provided for the injuries suffered by the employees which relate to their employment or the injuries that results from the occupational accidents (Dreher et al., 2006).
1.7.7 Perceived Service Quality
Zeithaml (1988) defines perception about quality as the consumers‟ judgment about an entity’s overall quality or superiority. Parasuraman, Zeittheml and Berry (1988) regards perceived service quality as the degree and direction of the discrepancy between consumers’ perceptions and expectations.
1.7.8 Reliability
Refers to the timeliness and precision of service, staff’s ways of handling client issues and fulfilling their promises to the lients (He & Li, 2011).
1.7.9 Responsiveness
Company’s willingness to assist clients with the service that is characteristically fast, of high quality, and good (Parasuraman et al., 1988).
1.7.10 Assurance
Refers to the knowledge and courtesy of employees and their ability to inspire trust and confidence (Parasuraman et al., 1988).
1.7.11 Empathy
Refers to the caring and individualized attention that the organization provides its clients (Parasuraman et al., 1988).
1.7.12 Tangibles
Refers to the physical aspects of an environment which related to the environment, capacities, and also include the ways and the friendliness of staffs’ interaction with their clients (Raza et al., 2012).
1.7.13 Client Knowledge
Client knowledge is defined as perceived level of awareness, knowledge and understanding of health insurance policies, rules and regulations among clients (Ensign & Gittelsohn, 1998). Client knowledge also reflects the services of an organization in educating its client to improve the understandings (Aldosari et al., 2016).
1.8 Organization of Study
Basically, this study consists of five chapters. Chapter one has gave the clarification on the research plan through identifying the current gaps in the present literature.
Significant justification has also been defined in order to conduct this study. While emphasizing the research scope, this chapter has also identified research objectives and research questions. In chapter two, the literature review has been presented. By applying the technique of snowball, different search engines are employed. The primary aim of chapter two is to observe significant empirical studies which will support the researcher in developing research hypotheses. In similar chapter, the foundations of theoretical which will assists the current study are also deliberated and emphasized. The chapter also provide better understanding towards the underpinning theory applied in this study and also the theoretical framework being
developed. Chapter three, deals in practical point of view of the research as this chapter explains about research methodology. The content of methodology issues namely sampling, instrumentation and data collection are explained in detail in this chapter and also explored the proposed data analyses. Chapter four reports the quantitative data results and fifth chapter presents discuss the findings and implications of the study. Finally, the chapter provides limitations and suggestions for future research.
CHAPTER TWO LITERATURE REVIEW
2.0 Introduction
In this chapter, the concepts and related literature on policy, service quality, customer knowledge and client satisfaction will be discussed. The chapter also discusses the importance of policy, service quality and client knowledge on client satisfaction. Furthermore, the underpinning theory is identified and thus theoretical framework is structured. Finally, hypotheses being developed based on the theoretical framework which developed through the supports of past literature and underpinning theory.
2.1 Client Satisfaction
The term satisfaction is a significant one and as psychologists argued the achievement of satisfaction in terms of life, management, job and client (Sageer et al., 2012). According to Prakash (2012), satisfaction refers to the value maximization of an individual. The value of satisfaction being measured economically. Consequently, economists measure the value of satisfaction by using a unit of measurement which known as ‘utils’. Higher the number of utils higher the level of satisfaction which refer to as ‘bliss point’ (Prakash, 2012). The value of satisfaction can be expressed as wealth function. Intuitively, the wealth level directly related to the quantity and quality of consumption a person can achieve.
The utility theory well linked the satisfaction level to an individual’s level of wealth from economic point of view (Prakash, 2012).
On the other hand, satisfaction known as an evaluation which referred to the expectations fulfillment, though many differences being assumed in the dimensionality and structure of satisfaction (Williams, 1994). The presence of dissatisfaction can occur as the experience and expectations are inconsistent among the population (Zastowny, 1983). To be specified, experience no longer sustain with expectations which mean expectations become the key feature to define satisfaction (Zastowny, 1983). As referred to this definition, it is reasonable to assume that expectations differ from one person to another person which contribute to the outcomes of satisfaction.
Wan (2007) contended that clients constantly demand satisfaction and studies in this context attempt to comprehend and expound on it. Client satisfaction is defined as a multidimensional concept as it related to both interpersonal and technical aspects of care, and the care amenities such as convenient and attractive physical environment. The assessment of quality by the client that expressed as satisfaction or dissatisfaction could be detailed (Donabedian, 1980). Client satisfaction could be pertained for the amenities and setting of care, to technical management aspects, to interpersonal care’s features, and to the physical, physiological, psychological or social consequences of care.
Consequently, balancing between the above mentioned judgments would define overall satisfaction. On the other hand, Davis and Hobbs (1989), define client satisfaction as the extent to which a service fulfills client’s expectations. Moreover,
the Equity Theory defines client satisfaction as the cognitive state to be appropriately rewarded for the “sacrifice” committed by the clients in the purchase process (Howard & Sheth, 1969).
Two major streams of definition have been noted concerning client satisfaction in literature - they are satisfaction as an outcome and as a process. The former stream is described by Churchill and Suprenant (1982) as the conclusive state that originates from the consumption experience. They added that client satisfaction is
"an outcome of use resulting from the client’s comparison of the rewards and the costs of the purchase in relation to the anticipated consequences" (Churchill &
Suprenant, 1982). Alternatively, in the latter stream of definitions, satisfaction was postulated to stress on processes including perceptions, evaluations and psychological that add to satisfaction (Tse & Wilton, 1988). To this end, satisfaction was defined by Hung (1977) “an evaluation rendered that the experience was at least as good as it was supposed to be”.
In the context of social insurance, satisfaction on services rely upon the effect of financial management (consists of insurance coverage and reasonable costs of injury), interpersonal manner, accessibility and convenience (ease of progress, reduced delays) (Ware et al., 1983). Apart from that, it was mentioned that other influential factors have been examined, for example personal qualities, competencies and professional qualities of in charged person to influence satisfaction of the injured person (Hulka et al., 1975; Hulka et al., 1971).
Moderate satisfaction results whether or not the expectations of the client (negative or positive) was satisfied. Negative satisfaction originates from the confirmation or disconfirmation of the negative expectations whereas positive satisfaction originates from the confirmation of the positive expectations (Oliver, 1989). In this regard, disconfirmation is related to the fulfillment of the felt expectations, and in case the performance of the services are over the expectation, it is positive. On the other hand, in case the performance of the service is less than the expectation it is negative or zero in case performance is on the same level with expectations. When service exceeds expectations, client satisfaction is achieved. In particular, individual’s expectations are 1) confirmed when the services are just as expected, 2) negatively disconfirmed when a service is perceived below what is expected, and 3) positively disconfirmed when the service is better than expected. This premise is referred to as the confirmation/disconfirmation that results in a response known as satisfaction or dissatisfaction (Slatten, 2008; Oliver, 1989).
In the words of Anderson and Fornell (1994), “two quite different conceptualizations of the satisfaction construct can be distinguished: transaction specific and brand specific”. Added to this, Oliver (1980) and Anderson and Fornell (1994) claimed that satisfaction is confined to a certain purchase occasion by the transaction-brand-specific aspect. Contrastingly, satisfaction encompasses the complete evaluation based on recurring experiences of buying and consumption of the service for a period of time in cumulative satisfaction. It can be considered as the function of the entire prior transaction-specific satisfaction (Anderson &
Fornell, 1994; Aydin et al., 2005). Authors (Johnson et al., 2001; Aydin et al., 2005)
contended that complete satisfaction is a more basic indicator of the prior, present and future performance of the firm because client satisfaction or dissatisfaction is the will reflect to the performance of an industry. As such, it will assist the management of any industry to find out the best indicator that will results in client satisfaction.
A number of measures emerged in the literature for measuring the construct of client satisfaction. Some researchers used a single-item measure in which clients are asked to consider the overall service and judge on this overall service on a single-item measure ranging from 1 to 5. Other researchers used a multiple-item measure in which the construct of client satisfaction is measured on a number of items. For example, Eroglu and Mantel (2000), defined and measured satisfaction based on “cumulative satisfaction” (meaning that satisfaction that accrues through a sequence of business deal or service transactions) as it is a fundamental indicator of the firms’ previous, current and future performance (Rust & Oliver, 1994).
Eroglu, Machleit, and Barr (2005), and Larsen et al., (1972) used an eight-item measure for client satisfaction.
2.2 Policy
Policy is a law, regulation, procedure, administrative action, incentive or voluntary practice of governments and other institutions (Bingham et al., 2005). Policies generally operate at the systems level (Woolthuis et al., 2005) and can influence complex systems in ways that can improve the relationship with stakeholder (Riege
& Lindsay, 2006). A policy approach can be a cost-effective way to create positive
changes in the needs of large portion of the population. Basically, there are several types of policy, each of which can operate at different level (national, state, local, or organization) (Hartley et al., 2002). Legislative policies are laws or ordinances created by elected representatives (Tan & Weaver, 2009). Regulatory policies include rules, guidelines, principles, or methods created by government agencies with regulatory authority for products or services (Zhao & Sadler, 2006).
Organizational policies include rules or practices established within an agency or organization (Flynn, 2012).
The policy evaluation applies evaluation of principles and methods to examine the content, implementation or impact of a policy (Karjoth et al., 2012). Evaluation is the activity through which we can develop an understanding of the merit, worth, and utility of a policy (Vedung, 2017). Four categories of standards for conducting policy evaluation have been discussed (Husereau, 2013). The first standard of evaluation is utility which reflects who wants the evaluation results and for what purpose? Second standard is the feasibility which describes that the available procedures are practical, given the time, has sufficient time and available expertise.
The third standard of evaluation is propriety to ensure the evaluation being conducted in a fair and ethical way. The fourth standard of policy evaluation is accuracy which involves accurate evaluation of each step to direct the purpose of evaluation.
In past literature, few arguments have been raised to understand the key differences between policy evaluation and program evaluation (Heckman, 2010). Although
policy evaluation and program evaluation have many similarities, there are some important differences as well (Heckman, 2010; Vedung, 2017). The level of analysis for policy evaluation comprise system or community level, while for program evaluation is at program level. The degree of control and clear boundaries may be more challenging with policy evaluation. For policy evaluation, the evaluation, the ability to identify an equivalent comparison community may be more challenging. The scale and scope of data collection may be greater with policy evaluation. The policy evaluation may require increased emphasis on the use of surveillance and administrative data. Finally, the type and number of stakeholders involved may differ for policy evaluation and program evaluation (Heckman, 2010;
Vedung, 2017).
Developing and implementing policy strategies are important for every organization in order to structure a standardized policy at the population level (Garavan, 2007). Although policy has been used effectively in most of the organizations, policy strategies in some areas lack a sufficient evidence base (Head, 2008). Policy evaluation, like all evaluation, can serve important purposes along the entire chain of the policy process, including: documenting policy development, documenting and informing implementation, assessing support and compliance with existing policies, demonstrating impacts and value of a policy, informing an evidence base, informing future policies, and providing accountability for resources invested (Brownson et al., 2008).
Few scholars have discussed potential challenges on policy evaluation (Hanberger, 2001; Mossberger et al., 2003; Walt et al., 2008). The challenges postulate lack of resources or clear responsibility for evaluation, fear or evaluation and lack of familiarity with policy evaluation methods, lack of control over policy implementation, rapid pace of policy, political scrutiny and desire for quick production of results, lack of strong evidence base to support policy, external and contextual factors such as economic conditions or public awareness, access to appropriate data, lack of appropriate measures, and difficulty in identifying appropriate comparison communities.
2.2.1 Policy of Social Insurance
The study of policy is defined in many ways in the context of social studies such as social administration, social services, social welfare, social security and welfare states (Irani & Noruzi, 2011; Spicker, 2007). The study of social insurance policy in social context found to be an important element to identify social needs and problems. In general, the word ‘policy’ is used here in an action-oriented sense.
Some researchers mentioned that social insurance policy is concerned with the non- economic factors. Lately, it has been agreed that social insurance policy can be thought of in terms of psychological models. Previous literature proved that social insurance policy is simply part of the self-regulatory mechanism built into a natural social system (Rothstein, Huber, & Gaskell, 2006; Tyler, 2004).
Rahimi & Noruzi (2011), stated that policy of social insurance is necessarily beneficent or welfare oriented in the sense of providing more welfare and more
benefits for the so-called working-classes in the catalogue of social poverty.
Besides, policy is concerned on the principles which should govern the activities of individuals and groups as they effect the relationship between organizations and its clients (Heath & Palenchar, 2008). On the other hand, (Wallerstein & Duran, 2010), argued that policy may be said to be the desire to ensure every member of the community to be given certain standards. Therefore, in an overall, policy is directed to provide welfare for citizens, policy includes economic as well as non-economic objectives such as minimum standards for any social insurance organizations, and lastly policy involves some measure of progressive redistribution in command- over-resources to the needy people from social security perspective.
Besides, some scholars argued that the role of social policy is related to economic, social and political as well (Marmot, Friel, Bell, Houweling, Taylor & Commission on Social Determinants of Health, 2008). The search for coordination and coherence of policies should take into account the fact that ideas about social insurance policy and its role in development have changed over time, indicating the difficulty to find clarity on the approaches to social investment, poverty alleviation and equity (Marmot et al., 2008; Hall, 2006). The result of the implementation of social insurance policies that have gone through profound changes in its design is alarming in terms of deep social inequalities and the welfare of individuals in society (Fischer, Hout, Jankowski, Lucas, Swidler & Voss, 2018; Sen, 2017).
In the contexts of social insurance, policy primarily refers to guidelines and interventions for the changing, maintenance or creation of living conditions that are
conducive to human welfare (Vargas-Hernandez, Noruzi & Ali, 2011). Social insurance policy is part of public policy but public policy is more than that, it is economic policy, industrial policy, and also social policy, etc. Definitive answers to the supply, poverty and inequality are likely to remain elusive, and as such, it is important to sustain the opportunities for discussion, innovation and learning in social development approaches considered (Vargas-Hernandez, Noruzi & Ali, 2011). Finding ways to preserve these conditions and to encourage deeper appreciation for the contextual factors that shape development outcomes can be significant contributions, despite themselves be counterintuitive new forms of coherence and international cooperation (Grindle, 2010; Vargas-Hernandez, Noruzi & Ali, 2011).
Thus, the execution of proper policy in the context of social insurance being a part of public policy that has to do with social issues. The Malcolm Wiener Center for Social Insurance Policy at Harvard University describes it as "public policy and practice in the areas of health care, human services, criminal justice, inequality, and labor" (Rittel & Webber, 1973). Social insurance policy often deals with issues which Rittle & Webber (1973) called wicked problems. Generally, it is agreed that social insurance policy is the study of social services and the welfare state of employees. In general terms, it looks at the idea of social welfare, and its relationship to clients.
The study on social insurance policy closely related to the field of social welfare and social services (Karger & Stoesz, 2013). In social insurance context, every
individual is obligated to obtain welfare aid from the industry or organization which mainly concerned on minimum amount of wealth, income and financial security.
However, argument has raised between the scholars whereby some said it is difficult to fully satisfied the needy people and partial satisfaction tend to happen even if a comprehensive policy has been fixed up (van Steenbergen, Ellemers, &
Mooijaart, 2007). In contrary, many scholars agreed that by executing a good policy on the exact time would be the most important factor to improve people’s satisfaction.
The clients of social insurance organizations have the rights to overcome the absolute poverty (Scruggs & Allan, 2006). Absolute poverty describes a minimum standard needed to live or survive, such as minimum healthcare and minimum financial aid (Scruggs & Allan, 2006). In short, it focusses on what is needed by an individual instead of what is wanted. And, there is certainly a link between a person’s welfare and satisfaction of needs (Welsch, 2007). For welfare based organization, the execution of a proper policy that will justify minimum standard found to be reasonable and attainable.
To be more specific, social insurance organizations have the obligations to rely on Cost Benefit Analysis (CBA) while developing a policy towards its clients (Turner, 2007). CBA has become an important tool. CBA tries to measure all the costs of a policy against all the benefits which come out of it. The greatest advantage of CBA and the reasons for its increasing use is that it helps at least to make explicit the
