Recently, global economic challenge is getting more competitive and economic growth increases in many countries. However, such the economic growth phenomenon is not compensated with employee performance. Many corruption cases occur and employee competency is low, and lavish lifestyle is not comparable to the salary they receive. Financial management is an appropriate means to help the employees manage their finance according to their income. This article aimed to analyze the effect of financial management of civil servant’s performance. The method employed was literature study, using inter-theories comparative analysis and meta-analysis. Basically, financial management has three components: firstly, fund source, constituting any activities conducted aiming to get income. Secondly, fund use is any form of activities related to fund source use wisely. Thirdly, asset management is the activity of managing fund source invested or allocated in the form of asset. Those three basic components should be collaborated to create positive synergy. The result of research showed that poor financial management indirectly affected the performance of civil servant. A poor financial management is characterized with the servants’ debt not comparable to their salary. Many factors affected the decreased performance: lavish lifestyle, performance focusing on the promotion of position rather than on work productivity, and personal asset ownership. The implication of this article was that a civil servant should be able to manage their finance well so that their performance will be good. The higher compensation given by the state should motivate them to improve their work productivity. In addition, public institution should reform its institution, particularly in the term of payroll and reward system.
Salary should be no longer considered as merely the right received by the servants monthly but the size of salary should be dependent on the performance of servants. In addition, public institution should oversee tightly to prevent the civil servants from having debt beyond their solvency.
Keywords: Financial Management, Work Productivity, Civil Servant
