Effect of Reward Practices on Employee Performance: The Case of Oromia International Bank

Abstract

The purpose of this research was to examine effect of reward practices on employee performance in the case of Oromia International Bank S.C. Currently; Oromia International bank has a reward system in place as a means of enhancing employee performance. But the problem was that the bank has not conducted a study to measure which type of reward scheme is appropriate and which is not. The study used both descriptive and inferential research analysis. The researcher used probability sampling method and employees were selected from each stratum with a random sampling technique. A quantitative research approach of data collection was used were 231 structured Likert scale questionnaire were distributed out of which 218 questionnaires were appropriately filled and returned. The data was analyzed using the Statistical Package for Social Sciences (SPSS) Version 20. The result of the study indicated that payment, promotions, work environment, responsibility and recognition have positive and statistically significant effect on employee performance. Furthermore, the model summary of regression revealed that recognition significantly influences employees’ motivation. Finally, the study recommends that the bank needs to carefully survey employees’ needs, before designing any reward policy, in order to address the most valued employees’ needs and implement accordingly.