Abstract

The purpose of the proposed study is to examine the effect of Reward Management on Employee
Performance of Hibret Banks sc. To study the effect of Reward Management and Employee
Performance five dimensions of RM practices i.e. Base Pay, Contingent Pay, Employee Benefits,
Employee Recognition and Employee Developments are selected to be used as independent
variables and Employee Performance as a performance measures is selected to be used as
dependent variable and will intend to tests the respondents understanding perspectives on the
effect of Reward Management on Employee Performance. From the total target population a
sample of 184 employees or samples intended to be taken as a sample based on Yamane’s (1967)
sampling formula, using non probability sampling techniques. The data will be collected through
structured questionnaires with closed ended statements questions. The Collected data will be
analyzed through SPSS version 22 by running descriptive statistics, correlation and regression
to identify the characteristics of variables under study and to investigate the relationship
between the independent variable of Reward Management practices with Employees
Performance and their effect on the dependent variable Employees performance.

Key word: Reward Management, Reward Management Practices, Employees Performance

 1. INTRODUCTION

1.1. Background of the Study

In a globalized world characterized by competition, access to latest technology and
communication systems, and an unfettered access to financial markets around the word, the
ability to attract and retain qualitative workforce, as well as keep them highly motivated has
however become a great challenge. Employers now require their employees to do more with less,
while employees on their part, are asking for more incentives. This requires that organizations
should device a system that will strike a balance, if they want to continue to have increased
performance. Puwanenthiren (2011) noted that organizations are increasingly realizing that they
have to establish an equitable balance between the employee’s contribution to the organization
and the organization’s contribution to the employee. He went further to say that ‘establishing this
balance is one of the main reasons to reward employees. According to Stone, Cox & Gavin,
(2020) an employment contract defines the remuneration and benefits provided to an individual
in exchange for making available his or her capacity to work toward achieving firm goals. In
many firms, rewards are directly related to employee performance.

The employee's performance is very important in explaining the overall performance of an

organization. The organization cannot achieve its objectives without low employee performance
(Stuart, 2018). The increase in employee performance can result in an organization becoming
more efficient, thus minimizing the cost of production and maximizing revenue. An organization
can only compete and gain a competitive advantage by increasing employee performance (Wasiu
& Adebajo, 2014). Employee performance is defined as the effectiveness and efficiency with
which workers of a given firm conduct their day-to-day operations to meet the expectations of
management and customers (Ekot, 2021). It is also the extent to which workers use their skills,
knowledge, and attitudes to achieve desired results and meet particular goals. Murtagh, Owen
and Simpson (2021), employee performance is frequently measured indirectly through aspects of
worker behavior at work like speed, courtesy, etiquette, precision, time management,
consistency, and impact on other workers.

To get the best out of an employee, the place of a robust reward system by the organization
cannot be overemphasized. A reward system is essential to the organization as it has become
important in managing employee’s performance (Noorazem et al., 2021). Not only does reward
system benefit the employees alone, but it has also been observed likewise to be a potent tool to
enhance the performance of an organization. Barber and Bretz (2000) posit that in as much as
reward systems have a huge impact to retain and motivate the employees, it likewise aids
organizations in achieving high levels of performance. Thus, organizations must develop
programs such as reward systems to fulfill employees’ needs and motivate them to work. No
wonder Brewster, Mayrhofer, and Farndale (2018) maintained that a best-performing workforce
is a sine qua non for the realization of an organization's vision, mission and goals spelt out on its
strategic plan. Thus, the foundation stone of thriving organizations is workers that are rewarded.

Beside these, an essential responsibility of Human Resource Management (HRM) within an

organization is to motivate employees by rewarding high performing individuals and
encouraging low performers through robust reward management system. However, most
organization have problems to decide the right reward systems and which reward system suit the
most for the employees (Noorazem et al., 2021). Similarly, the inability to decide the amount of
salary that aligns with the needs of the employees often result in low performance among the
employees (Kanzunnudin, 2007). More over inability of employees to meet up with expenditures
which their pays will not be able to offset often lead to their low performance (Eastman, 2009).
While several studies have been conducted to establish the level of ties between reward system
and employee performance in banking sector (Nkashi, 2014) globally, however it is observed
there is dearth in literature on the evaluation of reward management on employee performance in
banking industry in Ethiopia. Therefore, the main purpose of the proposed study is to examine
the effect of reward management on employee performance in the case of Hibret Banks
operating in central and east district branches.

1.2. Statement of the Problem

Commencing two decades, liberalization of the financial sector gives the opportunity for the
financial institutions in Ethiopia to grow and expand. Banks today are working in a competitive
and rapidly changing environment, with not only competing among each other but also with
other financial institutions (Aderaw G. and Manjit S, 2016). Thus, to cope up with this market
competitive Banks had shifted their focus on attraction, motivation and retention of well talented
employee. In this case, Reward management has become a source of concern for human resource
managers, emphasizing its impact on employee performance (Yong, Yusliza, Ramayah,
Chiappetta Jabbour, Sehnem & Mani, 2020). Human resource management theorists have thus
attempted to explore the relationship between reward management and worker performance in
different sectors of the economy. The reward is an important component of Human Resource
Management (Brauns, 2018).

Several literatures showed employee performance in an organization can be stimulated by

increasing the rewards (Hussain, Khaliq, Nisar, Kamboh & Ali, 2019; Murtagh, Owen &
Simpson, 2021; Yong, Yusliza, Ramayah, Chiappetta Jabbour, Sehnem & Mani, 2020). The
organization's reward philosophy serves as the foundation for reward management (Zeng, Gu,
Pan, Cai & Guo, 2019). Strategies and policies to elicit worker contribution and control the
framework contain processes, practices, structure, procedures types and levels of pay benefits,
and other terms of reward that are consistent with economic factors in pay. Reward management
entails evaluating and regulating employee pay (Coccia & Igor, 2018). The goal of reward
management is to develop and efficiently operate a reward structure for a firm. A reward
structure typically includes pay policy and practices, salary and payroll administration, total
reward, minimum wage, and team reward. The reward system includes financial rewards, worker
benefits that make up total remuneration, and salary, which is the base pay that is fixed and
consistent over time (Kollmann, Stöckmann, Kensbock & Peschl, 2020).

From empirical studies conducted in Ethiopia, Samuel G/kidan, (2017) studied ‘’the effect of
reward in employees’ job satisfaction on the case of lion international bank s.c.’’ The finding
shows that reward variables have effect on the employee job satisfaction. Temitime, (2016) also
conducted a study on the impact of incentive management on employee motivation in Ethio-
Telecom. The association between total incentive and employee motivation is reasonably strong
and statistically significant, according to findings from Pearson's product-moment correlation
coefficient. A study done by Kassahun, (2019) showed there is a strong and favorable correlation
between financial incentives and employee motivation. Merhawit Assefa (2017) also performed
her research on ‘'The effect of incentive on employee work satisfaction; on the case of Lion
International Bank". The research result shows that there is a statistically strong, significant and
positive relationship between extrinsic rewards and job satisfaction.

However, these studies covered job satisfaction and employee motivation in general and did not
concentrate on employee performance, creating a conceptual gap. The studies by Kassahun,
(2019) and Temitime, (2016) were also sector specific to the Ethio-Telecom and the findings
may not apply to the banking industry. This implies that very limited study has been done on
reward management and employee performance of banking sectors in Ethiopia. It is therefore
evident that knowledge gap exists on the specific relationship between reward management and

employee performance. Hence the proposed study will intend to examine effect of reward
management on employee performance with reference of Hibret Bank and will try to study
issues related to the following research questions.

1.3. Research Questions:

The following research questions will be answered in the proposed study:

1) What are the existing Reward Management practices in Hibret Banks?

2) What is the relationship between Reward Management and Employee performance of
Hibret Banks?
3) What is the effect of Reward Management Practices on Employee Performance of Hibret
Banks?
1.4. Objectives of the Study
1.4.1. General objective

The general objective the study is to examine effect of Reward Management Practices on
Employee performance of Hibret Banks operating in central and east district branches.

1.4.2. Specific Objectives

 To determine existing Reward Management practices of Hibret Banks.
 To examine the relationship between Reward Management and Employee Performance.
 To evaluate effect of Reward Management on Employee Performance.
1.5. Significance of the Study
The proposed study will have significant importance in strengthening the existing knowledge and
understanding of reward management and employee performance by examining and empirically
testing the relationship between reward management and employee performance for the case of
Hibret Banks. The study will also provide some insight or recommendations to Hibret Banks to
evaluate and improve their reward management practices or system based on the study findings.
Finally, the proposed study can serve as an additional reference to others researchers who are
interested in the area of reward management and employee performance.

1.6. Scope of The Study

Human resource management encompasses vast areas of managerial practices. However, it is
difficult and unmanageable to conduct the proposed study in all areas that summarizes reward
management in terms of time, finance, and research manageability. Therefore, the scope of the
proposed study will be delimited to effect of reward management and employee performance. To
manage the research flow only Hibret Banks located in central and east district branches will be
subjects of the study. Moreover, the proposed study will intend to examine employee
performance as a performance measure.
1.7. Definition of Basic Terms
Reward: reward refers to all forms of financial returns and tangible services and benefits
employees receive as part of an employment relationship Bratton and Gold (2018).
Reward Management: Reward management refers to the strategies, policies and processes that
are required to ensure that the contribution of people in an organization is recognized by both
non-financial and financial means (Armstrong, 2007).
Employee Performance: According to (Dakhoul, 2018) employee Performance is the
cumulative outcome of the talents, actions and abilities of employees that have led to increased
organizational efficiency contributing to their target achievement.

1.8. Organization of the Study

The research paper will be organized into five chapters: 1 st Chapter will contain the introductory
part dealing with back ground of the study, the statement of the problem, objectives of the study,
scope of the study, significance of the study and definition of basic terms. The 2 nd chapter will
focuses on the theoretical review and empirical review taken from different sources. The 3 rd
chapter presents the research methodology of the study. The 4 th chapter will presents data
analysis, presentation and interpretation of the study and finally, the 5 th chapter presents the
summary of major findings, conclusion, recommendations and limitation & suggestion for future
researches.
 3. RESEARCH DESIGN AND METHODOLOGY

3.1. Research Approach

The research approach is quantitative research approach; it is a means for testing objective
theories by examining the relationship among variables. These variables, in turn, will be
measured, typically on instruments, so that numbered data will be analyzed using statistical
procedures.

3.2. Research Design

A research design influences the choice of analysis and sampling technique to use. It refers to the
overall strategy chosen to integrate the different components of the study in a coherent and
logical manner (Brown, 2006). Therefore, Explanatory studies and descriptive designs are
appropriate and will be intended to be used for the proposed study, which will allows the
researcher for the gathering of information, summarize, present and interpret it for the purpose of
clarification (Creswell, (2003). The design will also allow the researcher to draw conclusions on
the effect of reward management on employee job performance.

3.3. Data Type and Source

In the proposed study both primary and secondary sources of data will be utilized through
Questionnaires and literature reviews. The questionnaires will be distributed to employees of
Hibret Bank branches located in central and east district branches. As the secondary data; books,
articles, journals, are reviewed to develop conceptual framework of the study.

3.4. Target Population

To collect data about the practices of Reward Management and Employees Job Performance the
researcher will intend to target all employees of Hibret Bank operating in East District branches.
Total number of employees of Hibret bank is 4,706 employees (according to annual report
2022/23 of the bank) and the total numbers of branches are 383, out of this, 52 branches are
located in Central & East District. From the total branches the researcher will intend to target 34
branches that are located in East District based on their convenience. Accordingly, the target
population of the proposed study will be 341 employees working in East District branches. (See
Appendix 1: total number of employees in each East District branches).
3.5. Sample Size Determination
Alreck & Settle (2005) noted that the choice of sample size is made after considering statistical
precision, practical issues and availability of resources. According to Malhotra & Peterson
(2006) there is no a single and precise way to determine the size of sample; hence there are a
number of inadequacy for deciding on sample size. The larger the sampling size of a research,
the more accurate the data generated. The researcher used Yamane’s (1967) formula to
determine the sample size for the proposed study based on a 95% desired confidence level and a
5% desired level of precision. Accordingly

N
n=
1+ N (e)²

Where n is the sample size, N is the population size, and e is the level of precision. By using this
formula at 95% confidence level and 5% level of precision the sample size were obtained as
follows:

341
n= =184.07 ≈184
1+341(0.05)²

From the total target population184 will be considered as sample size of the proposed study,
through considering the heterogeneity of sample respondents on the basis of different units/
organization.

3.6. Sampling Techniques

For the purpose of the proposed study, the researcher will intend to use non probability sampling
technique since the total population of the study is large and heterogeneous in type purposive
sampling technique will be preferred. Therefore, the information required for the proposed study
involves selection of respondents who have enough awareness about the Banks’ Reward
Management and Employee performance; purposive sampling technique will used to have the
right peoples from every concerned section in the bank. In this case respondents (sample
employees) will be selected from each branch based on their job title (clerical workers only) and
also the researcher will intend to use convenience sampling technique to select branches. Hibret
bank branch offices located at east distric area will be considered as sample size of the proposed
study.
3.7. Data Collection Instruments
The researcher intends to collect the data through structured questionnaires with closed Likert
type statement. The Likert type scale, commonly used in business research was applied because
it allows participants to provide their perceptions and opinions both in terms of direction
(positive or negative) and intensity (degree of agreement or disagreement). The questionnaire
will be utilized with a five point likert scale namely Strongly disagree (SD), Disagree (D),
Neutral (N), Agree (A) and Strongly Agree (SA) which will be assigned scores of between 1 and
5. The closed ended questions and Likert type statements enabled the researcher to collect
quantitative data.

3.8. Method of Data Analysis

After the data collection, both descriptive and inferential statistical techniques will be employed
to analyze the data. Descriptive analytical technique will be used with the aid of Statistical
Package for Social Sciences (SPSS) version 22. The proposed study will use tables, frequencies,
and percentages to analyze and present the collected data. And also, the collected data will be
analyzed by Regression analysis and correlation analysis because it helps to investigate the
relationship between the independent variable of reward management and employee job
performance and its effect on the dependent variables employee job performance. The reliability
of the variables will be measured by Cronbach alpha.

Base on the conceptual model of the proposed study expressed on Figure 2.1, mathematically the
relationship between reward management and employee job performance is expressed in the
multiple regression equation as:
Y = X0 +X1 (AD) +X2 (CO) +X3 (IN) +X4 (MS) + e
Where: Y= Employee Job Performance.
AD = Adaptability.
CO = Consistency.
IN = Involvement.
MS = Mission
e= Level of Precision
X0= the constant parameter.
X1= Coefficient of Adaptability.
 X2= Coefficient of Consistency.
X3= Coefficient of Involvement.
X4= Coefficient of Mission.
In accordance with the above mathematical model the constructed research questions will be
tested by considering significance level of each constant parameter in multiple regression
analysis.

3.9. Ethical Clearance

A formal letter will be written from Harambe University Adama campus, Department of
Business Administration to concerned authorities of Hibret Bank east district branches. The data
collection will start after getting consent from the parties mentioned above. In addition to this,
name of the employees (selected for the sample) will not be included to maintain confidentiality.