EFFECT OF REWARD SYSTEMS ON EMPLOYEE PERFORMANCE AT COMMERCIAL BANK OF ETHIOPIA, ADDIS ABABA

Abstract

Employees are the most valuable asset to organizations. Employee's performance is the main factor in determining the organization's performance and ensuring the organization runs smoothly and successfully. The purpose of this study was to examine the relationship between reward system and employee's performance in Commercial Bank of Ethiopia. To achieve this objective, Commercial Bank of Ethiopia East Addis district was selected as the targeted area of the study. The researcher analyzed what various authors have stated in relation to the stated objectives in the literature review section. The researcher used a descripto-explanatory research design, Commercial Bank of Ethiopia has currently 34,000 employees and the researcher selected a sample of 350 employees from East Addis Ababa district which has 2770 employees. The researcher administered questionnaires and interviews to the respondents. The data was collected, tabulated, processed and given statistical treatment and then presented in the form of tables and graphs. Correlation and regression analysis were conducted to determine variable relationships under the study. Correlation tests revealed a significant positive correlation between the reward system and employees performance in CBE with coefficients of 0.111, 0.524 and 0.317 respectively at P-value < 0.05 significance level. Regression analysis revealed that an increase in employees training and performance review by one unit would increase employee performance by 0.137 and 0.289 units respectively whereas job expectation has a negative effect on employee performance with regression coefficient at -0.007 and p-value>0.05. The independent variables are reward systems and the employee performance is the dependent variable. The study established that both monetary and non-monetary forms of rewards are not effectively appropriated and as such, this has impacted on the performance of the employees negatively consequently, quality of service delivery, meeting targets, customer satisfaction, adherence to company policy are among others which impacted negatively. Accordingly, the study recommended immediate improvement of monetary and non-monetary reward systems in terms of better recognition, compensation, and career advancement among others