THE EFFECT OF COMPENSATION ON EMPLOYEE MOTIVATION: THE CASE OF HUAWEI TECHNOLOGIES ETHIOPIA PLC

Abstract

The general objective of the study was to assess the effect of direct and indirect financial compensation on employee motivation in the case of Huawei Technologies Ethiopia PLC. To undertake this general objective, five specific objectives with their underling research question were designed and assessed by quantitative research design. To respond the research question the theoretical, conceptual and other related literatures were reviewed and most of the literature finding implies that direct and indirect financial compensation has a significant and positive influence on employee’s motivation. The required data for conducting the research was obtained through structured questionnaires. The structured questionnaire was adopted from two prior related studies. To check the reliability of the adopted instruments, the Chronbach’s coefficient alpha test was carried out. HW Ethiopia has only 83 local employees and the research was conducted on the entire population by excluding those staffs who have less than one year service in the company. A total of 70 questionnaires were distributed to the targeted employees, among these 62 were returned, which means 8 responses were remained unreturned. Thus, 62 returned questionnaires (i.e. representing 88% of response rate) were analyzed using statistical package for social science (SPSS version 23). In this analysis, descriptive statistics, correlation, regression and multiple regressions analysis were performed. The descriptive finding of the study showed that HW local employees don’t have a positive feelings towards the existing method used to determine employees compensation in terms of its good balance of pays between the employees within and outside the company, adequacy of compensation for use of skills in the job, incentive for gaining new skills or knowledge, compensation decision making, and on salary survey practice. The correlation analysis result also indicates that direct and indirect financial payments have direct, positive and significant relationship with employee’s motivation Moreover, the finding of multiple regression analysis indicated that both direct and indirect financial compensations have significant factor on motivation of employees at Huawei Technologies Ethiopia. The overall analysis revealed that the positive acceptance of direct financial compensation are giving satisfactory results in improving employee motivation at HW. Therefore, it is recommended that, the company has to continue implementing direct financial compensation and give more emphasis on improving the indirect financial compensation.