EFFECT OF FINANCIAL AND NON-FINANCIAL REWARDS ON

EMPLOYEE MOTIVATION: THE CASE OF DASHEN BANK S.C.

JUNE 2023

A THESIS SUBMITTED IN PARTIAL FULFILMENT OF THE

REQUIREMENTS FOR THE DEGREE OF BUSINESS
ADMINISTRATOR (MBA)
AT

JIGDAN
COLLAGUE

BY: - ANTENEH KINFE MULAT ID: - 57/14A

ADVICER: (PHD CANDIDATE) AMANUEL MEKONNIN
Contents
DECLARATION.......................................................................................................................................iv
STATEMENT OF CERTIFICATION.........................................................................................................v
Acknowledgments......................................................................................................................................vi
List of Abbreviations.................................................................................................................................vii
LIST OF TABLE.....................................................................................................................................viii
List of Figures............................................................................................................................................ix
Abstract.......................................................................................................................................................x
CHAPTER ONE..........................................................................................................................................1
1. INTRODUCTION...............................................................................................................................1
1.1. Background of the Study.............................................................................................................1
1.2. Brief History of Dashen Bank......................................................................................................2
1.3. Statement of the Problem.............................................................................................................3
1.4. Research Questions......................................................................................................................6
1.5. Objectives of the Research Paper.................................................................................................7
1.6. Significance of the Study.............................................................................................................7
1.7. Scope of the Study.......................................................................................................................7
1.8. Scope and Limitation of the Study...............................................................................................8
CHAPTER TWO.......................................................................................................................................10
2. REVIEW OF RELATED LITERATURE.....................................................................................10
2.1. The Concept of Motivation........................................................................................................10
2.2. Theories Related to Motivation..................................................................................................11
2.3. Theoretical Framework..............................................................................................................12
2.3.1. Hierarchy of Needs Theory.............................................................................................12
2.3.2. Expectancy Theory..........................................................................................................13
2.3.3. Goal-Setting Theory.........................................................................................................15
2.3.4. Reinforcement Theory.....................................................................................................15
2.3.5. Equity Theory..................................................................................................................16
2.3.6. Designing a Motivating Job.............................................................................................17
2.4. Reward Management...........................................................................................................18
2.4.1. Reward Strategy..............................................................................................................19
2.4.2. Total Reward....................................................................................................................19
2.4.3. Reward Objectives...........................................................................................................22
2.5. Empirical Framework.........................................................................................................22
2.6. Conceptual Framework of the Study..................................................................................25

i
CHAPTER THREE...................................................................................................................................26
3. REASEARCH DESIGN AND METHODOLOGY...........................................................................26
3.1. Description of the Study Area....................................................................................................26
3.2. Research Approach..............................................................................................................26
3.3. Research Design...................................................................................................................26
3.4. Population and Sampling...........................................................................................................28
3.4.1. Target Population............................................................................................................28
3.4.2. Sample Size.......................................................................................................................28
3.4.3. Sampling Techniques.......................................................................................................28
3.5. Types of Data and Tools/Instruments of Data Collection.................................................29
3.5.1. Interview...........................................................................................................................29
3.5.2. Questionnaire...................................................................................................................29
3.5.3. Secondary data source.....................................................................................................30
3.6. Data Collection Procedures.................................................................................................30
3.7. Data Analysis Methods........................................................................................................30
3.8. Ethical Considerations...........................................................................................................30
3.9. Validity Assurance.................................................................................................................31
3.9.1. Reliability Assurance.........................................................................................................31
CHAPTER FOUR.....................................................................................................................................32
4. DATA ANALYSIS AND INTERPRETATION................................................................................32
4.1. Demographic Information of Respondents................................................................................32
4.2. Regression Analysis on the Effects of Financial and Non-Financial Rewards on Employee
Motivation.............................................................................................................................................50
4.2.1. Assumptions of a Multiple Regression Model.......................................................................50
4.2.2. Results of Regression Analysis..................................................................................................54
CHAPTER FIVE.......................................................................................................................................58
5. CONCLUTION AND RECOMEMDATION................................................................................58
5.1. Summary of Findings.................................................................................................................58
5.2. Conclusion.....................................................................................................................................60
5.3. limitations and Suggestions for Further Research..........................................................................63
5.4. Recommendation...........................................................................................................................63
Reference...................................................................................................................................................65
Appendix 1: Interview Questions..............................................................................................................68
Appendix 1: Questions to be filled by Employee of Dashen Bank............................................................69
Questions Related to Motivation...............................................................................................................71

ii
EFFECT OF FINANCIAL AND NON-FINANCIAL REWARDS ON EMPLOYEE MOTIVATION:
THE CASE OF DASHEN BANK S.C.

BY ANTENEH KINFE MULAT

ADVISOR:

(Phd candidate) AMANUEL MEKONNEN

A THESIS SUBMITTED TO JIGDAN COLLAGUE SCHOOL OF GRADUATE STUDIES, IN

PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF MASTERS OF
BUSINESS ADMINISTRATION (MBA).

2023, Addis Ababa, Ethiopia

iii
 DECLARATION
The researcher here by certifies that I have partially satisfied the requirements for the award
of a Master's in Business Administration by preparing this thesis. Except for citations to other
authors' works, which the researcher has duly acknowledged, the researcher declares that this
work has never been presented in a university or other academic setting. Consequently, it is a
unique project that I completed under my advisor's close supervision.

Name Signature

Anteneh kinfe mulat_______

JIGDAN COLLAGUE,
ADDIS ABABA 2023

iv
 STATEMENT OF CERTIFICATION
The purpose of this is to certify that Anteneh Kinfe Mulat completed the research project
titled "Effect of Financial and Non-Financial Rewards on Employee Motivation: The Case of
Dashen Bank S.C.". The project is acceptable for application to receive a Master's degree in
business administration.

Advisor: PhD candidate Amanuel Mekonnen Signature:

Date:

v
 Acknowledgments
I want to thank God for making everything possible first and foremost. I also acknowledge
that without the help of many people in my community, I would not have been able to finish
this work. I must give special thanks and recognition to my Ph.D. candidate Research advisor,
Amanuel Mekonnen. D. Candidate), who oversaw me as I conducted this research and
provided me with his unreserved professional assistance as well as encouragement. I'm
incredibly appreciative of my family, especially my brother Mesfin Kasu, for their moral
support and encouragement throughout all of my academic successes. I'm also appreciative of
the bank's staff members who freely, thoughtfully, and kindly shared their experiences,
viewpoints, and moral principles. I also want to express my sincere gratitude to my mother,
who I find it difficult to adequately describe, and to all of my best friends who have helped
me during the study both directly and indirectly.

vi
 List of Abbreviations.

ANOVA_________________________________________Analysis of Variance
ATM __________________________________________Automatic Teller Machine
CLRM_________________________________________ Classical Linear Regression Model
CORE______________________________ CentralizedOn-lineRealTime Environment
NBE ___________________________________________National Bank of Ethiopia
NPP ___________________________________________Normal Probability Plot
SPSS ______________________________Statistical Package for Social Science
VIF ___________________________________________Variable Inflation Factor

vii
 LIST OF TABLE
NO title page No
1. Reliability test 31
2. Respondents’ Demographic profile 32-36
3. Respondents’ opinion on significance of current reward offered by the company 36-45
4. Statement 46-49

5. VIF values of predictors 49

6. Test of Independence of Residuals 50
7. ANOVA 51
8. Model Summary Regression Coefficient Result 51
9. Regression Result. 32

viii
 List of Figures.

Figure No. Title Page No.

1. Components for financial and non-financial reward package 21

2. Conceptual framework of the study 25
3. Graphical test of Normality Assumption 47
4. Scatterplot diagram 48

ix
 Abstract.
The aim of this study was to examine the effect of financial and non-financial rewards with
Respect to overall levels of employee motivation in Dashen Bank. Employee complain about
Reward schemes not tailored according to their need and company’s reluctance to identify
Which reward variable motivate employee most are few of the problems observed during
Preliminary survey and drive the researcher to conduct this research in more detailed
manner.
This research is descriptive in nature. Qualitative as well as quantitative research design has
Been adopted in this paper to achieve the objectives of this study. Financial and non-financial
rewards taken as independent variables and motivation as dependent variable for this study.
Structured questionnaire was used to gauge the responses on a five level scale. Questionnaire
was distributed to 379 sample respondents who work at different area banks in Addis Ababa.
Non-probability sampling was employed to select area banks and in order to select sample
respondents simple random sampling was used. Data was analyzed by using different
statistical
techniques like descriptive statistics techniques, and regression analysis by using SPSS. The
study confirmed financial rewards are important for employee motivation in the case
company
but the importance of non -financial rewards cannot be discriminated. It is also found out that
salary is most motivating factor and while retirement benefit is the least one from financial
reward. Job security and career advancement are also found to be highly motivating non-
financial factors. This research can be helpful for the banking sector specifically to Dashen
Bank. They can design effective compensation package to motivate their competent
employees.

x
 CHAPTER ONE

1. INTRODUCTION
This chapter deals with the background to the study, the statement of the problem, the basic
research questions, the objective of the study, the significance of the study, the scope of the
study, and the organization of the research report. The details are presented below.

1.1. Background of the Study

Every organization’s success mostly relies on the workforce it employs. Employees are the
main and unique resource organizations deploy in realizations of their objectives and goals. In
today’s highly competitive and rapidly changing working environment, organizations need to
acquire and retain the right number of competent employee to gain competitive advantage. In
order to acquire and retain qualified personnel, organizations must unfold Human resource
system and Human resource management practices that are capable enough to win the heart
and mind of employee over competitors. Human resources Management practices in place are
the key determinants of whether workers believe that they are fairly treated, because they
exert a major influence on work attitudes (Armstrong, 2009). Now a day one of the most
influential in organization are competitive advantage and core competence which is measured
by the quality of employee they have, and an organization with fair and consistence Human
resource policy, strategy and practices, then employee feels loyalty and trustful for
organization, which enables them to boost their commitment and motivation toward
organization goals. As result the organization source of success is coming from talent,
innovative and motivated employee. Reward management is an important tool that
management can use to channel employee motivation in desired ways. In other words, reward
systems seek to attract people to join the organization and motivate them to perform to high
levels. The reward system consists of all organization components including people processes
rules and decision making activities involved in the allocation of compensation and benefits to
employee in exchange for their contribution to the organization (Armstrong & Murlis ,2007).
In order to increase Human resource contribution to organizational effectiveness in the future,
organizations must rethink its basic value proposition, structure, services, and programs in
order to address how it can add value in its human resource (Lawyer, Boudreau &

1
Albers ,2006). The Effect of Reward Practices on Employee Motivation in Dashen Bank S.C.
AAU SCHOOL OF COMMERCE Page 2 Reward had been seen to be a vital instrument in
employee performance. A well rewarded employee feels that he/she is being valued by the
company that he/she is working for. The success of any organization in the long run depends
very much on the quality of its human resources. This is especially true in the service oriented
industry like banking needs continuously service improvements which is impossible without
motivated employee to meet the rising expectations of the customers. The factors that enhance
employee motivation are fair pay, incentives, special allowances, fringe benefits, leadership,
encouragement, trust, respect, joint decision making, quality of supervision, adequate working
relationships, appreciation, chances for growth, loyalty of organization, identification and
fulfillment of their needs, recognition, empowerment, inspiration, importance attached to their
job, safe working conditions, training and information availability and communication to
perform actions (Aguinis, 2009). Thus, the purpose of this research to assess the reward
practices of Dashen bank s.c and the effects it has on employee motivation

1.2. Brief History of Dashen Bank

Dashen Bank S.C. is a privately owned company established in 1995 as in accordance with
the “Licensing and Supervision of Banking Business” Proclamation No. 84/1994, now
suspended by Proclamation No. 592/2008, “A Proclamation to Provide for Banking Business”
to undertake commercial banking activities. The Bank obtained its license from the National
Bank of Ethiopia (NBE) on 20th September1995 and started normal business activities on the
1stJanuary 1996. The first foundation members were 11-business man and professionals that
agreed to combine their financial resources and expertise (Dashen Bank, 2014).
Headquartered is located in Addis Ababa around bekilo bet on deberziet road and the Bank is
one of the biggest private Banks in Ethiopia. It operates about a network of 235 branches, 10
dedicated For-ex bureaus, 220 ATMs (Automatic Tellers Machines) and 957 plus Point-of-
Sale (POS) terminals spread across the length and breadth of the nation. It has established
correspondent banking relationship with 462 banks covering 70 countries and 170 cities
across the world, (Dashen Bank 2015-2016 20th Annual Report). The Effect of Reward
Practices on Employee Motivation in Dashen Bank S.C. AAU SCHOOL OF COMMERCE
Page 3 Dashen Bank
S.C. is established with a vision of “In as much as mount Dashen excels all other mountains in

2
Ethiopia, Dashen Bank continues to prove unparalleled in the banking services.” Likewise it
has a mission of “Providing efficient and customer focused domestic and international
banking services, overcoming the continuous challenges for excellence the application of
appropriate technology” (Dashen Bank, 2016). Dashen Bank S.C. provides various banking
services in Ethiopia. The company offers deposit products, including current, savings, hybrid,
saving plus, youth, student, interest plus, and salary accounts; loan products, such as
overdraft, term loans, letter of credit facility, advance on import bills, revolving overdraft,
merchandise loans, trade bills discounted, export credit guarantee schemes, and letter of
guarantee, as well as agriculture, manufacturing, import/export, trade and services, building
and construction, and transport loans (Bloomberg business week, 2016).)

1.3. Statement of the Problem

Currently, companies need to think and act globally aligning their strategy with the rapidly
changing environment and the stiff competition on the most valuable resource. Competitor
may easily imitate other resources except the human resources which is unique and source of
sustainable competitive advantage. For the organization, job satisfaction of its workers means
a workforce that is motivated and committed to high quality performance and this will have
an effect on increased productivity (Akinyi, 2013).
Many companies do have employee reward systems in place. But, employee sometimes may
not give their full effort because of lack of motivation due to poor or unsatisfying existing
reward systems exercised by their organizations. Consequently, the organization should plan a
suitable reward system to gain better results. Because of the correct reward system, the
employees work motivation can boost up and enhance their commitment to their company
(Akafo & Agyekum, 2015).
The importance of motivated employees cannot be emphasized enough in an organizational
context. Motivated employees are more productive, more efficient, and more willing to work
towards organizational goals than the employees who are experiencing low levels of
motivation. The central purpose of reward is to motivate and retain the current employee and
attract qualified employees (Derek T., Laura H., and Stephen T. 2008).
Motivating and rewarding employees is one of the most important and challenging activities
that managers perform. Successful managers understand that what motivates them personally
may have little or no effect on others. Just because one is motivated by being part of a

3
cohesive work team, don't assume everyone else is. Or just because an employee is motivated
by challenging work doesn't mean that everyone is. Effective managers who want their
employees to put forth maximum effort recognize that they need to know how and why
employees are motivated and tailor their motivational practices to satisfy the needs and wants
of those employees (Stephen, P.R., and Mary, C. 2012).

The banking industry exists in an intensely competitive market. In such environment,

capability to retain efficient and experienced workforce in an organization is very crucial for
the overall performance of the organizations. The highly motivated employee serves as the
competitive advantage for companies because their performance leads an organization to well
accomplishment of its goals. The loss of employee represents a loss of skills, knowledge and
experiences which can create a significant economic impact and cost to corporations as well
as impacting the needs of customers

According to the pilot survey undertaken by the researcher, discussion with different staffs of
Dashen Bank, issue relating to the reward practice of the bank like salary, benefit, promotion,
working condition, recognition, leadership and work content are major source of demotivation
for staffs. Consequently, the reason needs to conduct this study were, in many occasion I have
observed that many employees seems to be not committed to their work and they luck trust
and belongingness to the bank.

Moreover, the staffs have a number of problems associated with financial and non-financial
rewards provided by the bank. For instance; basic salary, transport allowance, housing and car
loan is said not to be enough and is not subject to adjustment with the increase in cost of
living. The medical benefits provided by the bank are not satisfactory and it does not have
quality services. In addition to this, there are lack of subsidiary benefits like café, restaurant,
gym and entertainment. There is also lack of convenient work place and office layout,
supervision, absence of freedom and absence of interesting jobs. Moreover, there is lack of
promotion opportunity; there is also lack of work commitment and lack of loyalty observed in
many of the current bank staff.

4
As the study conducted in Omiya Cooperative’s Bank by Tamene Hmariam (2015), he found
that there is positive and significant relationship between rewards (payment, recognition,
work content, working condition, supervision, personal feelings, general feelings and work
motivation except in the case of benefit as one of the reward element having insignificant
relationship. Similarly, the study conducted by Bhailu chala,(2012) in Awash International
Bank, The study’s result has showed that employees of the bank are not motivated by the
bank’s reward system (salary, bonus, housing loan, medical expense, conducive work
environment and career development opportunity).
However, the results vary when seen in terms of magnitude by which they affect employee
satisfaction and motivation. As the needs of human beings vary significantly, the extent by
which their motivation affected by one reward type to the other varies significantly.
Meanwhile, subsequent problems have been observed in the Bank, according to human
resource annual report issue related with reward practices the following demotivated
employee turnover have been recorded 55 in 2015 ,71 by 2016 & 45 up to January 2017, as
result it increase recruiting cost, increase training cost, decreased productivity, missing
talented and experienced employee is very costly to the organization,

Therefore; the stated problems initiated the researcher to further investigate the effects of
reward practice and employee motivation in Dashen Bank S.C. and fill the gaps and tried to
give recommendation and suggestion to the organization. Thus these issues hold the core of
what is to be studied and shades light on important areas on which the Bank can take
maintenance measures. Therefore; the stated problems initiated the researcher to further
investigate the effects of reward practice and employee motivation in Dashen Bank S.C. and
fill the gaps and tried to give recommendation and suggestion to the organization. Thus these
issues hold the core of what is to be studied and shades light on important areas on which the
Bank can take maintenance measures.
Productivity declined, and companies were unable to gain a competitive advantage over other
firms through a motivated workforce. In time, these problems greatly impacted organizational
effectiveness and excellence.
The researcher had a chance to observe the problems stated below while undertaking a
preliminary survey concerning the reward system of the case company:

5
There is no employee involvement in reward design; employees are not invited to discuss how
they feel about the scheme or what their attitude is toward it. The reward scheme is not
tailored to employee needs. As they mentioned, the company is not emphasizing the need to
motivate and retain employees through the implementation of a reward scheme that meets
employee needs.
The preliminary survey also showed that both financial and non-financial rewards are
implemented by the company. Yet, the significance and relevance of various reward schemes
on employee motivation levels are not well identified. These observations and results from the
preliminary survey prompted the researcher to conduct research in a wider range and in a
more detailed manner to determine the impact that financial and non-financial rewards have
on employee motivation at Dashen Bank.
The study also tried to address the issue of what possible relationship exists between
employee reward practice and employee motivation. Effective implementation of reward
practice not only helps the organization but also guarantee a positive relationship with the
employee, through attractive payment, good benefit package, opportunity for promotion &
recognition, quality of supervisor and on relatively variety and interesting work. Further it
enhances the employees’ commitment, motivation and engagement which can be a core
competency for the organization.

1.4. Research Questions

This study was designed to seek answers to the following basic research questions:

 What is the current reward system designed and adopted by the company?
 How are the rewards in use impacting employee motivation?
 Which reward scheme (financial or non-financial) has more impact on employee
motivation?
 What alteration should be made to the company’s reward system?

6
 1.5. Objectives of the Research Paper
The primary objective of this research is to examine which reward programs, financial or non-
financial, have more effect on employee motivation at Dashen Bank. The specific objectives
include:
1. To examine the reward scheme designed and adopted by the company,
2. To determine how the reward system in use is affecting employee motivation,
3. To determine which reward scheme (financial or non-financial) has more effect on
employee motivation, and
4. To find out what alterations should be made in the current reward system of the

1.6. Significance of the Study

This study attempts to examine which reward scheme has a financial or non-financial impact
on employee motivation and to assess the reward scheme currently practiced by the case
company. Therefore, the outcome would have the following importance:
1. The study would contribute to the banking industry in general and specifically to the
case study company by helping them realize how employee motivation is related to
reward schemes.
2. The study will certainly contribute to current literature in the field of employee
motivation and reward nexus, which may provide relevant information for
researchers who are interested in conducting research in a related area;
3. The study may also enable the researcher undertaking this study to obtain an in-depth
understanding of related issues through the reference of a massive amount of
literature in this field of study

1.7. Scope of the Study

This study is limited to employees of Dashen Bank. Even though it’s very important to cover
all the area banks across the country, due to the wide geographical dispersion of area banks as
well as time and money constraints, the outlined branches were not included; the study
included only area banks based in Addis Ababa. Undertaking an industry-wide study would
be very important on this matter, given its significance for organization performance and
excellence. The study only focused on the group of respondents from the clerical level up to
the managerial level. Hence, the data collection instrument supports inclusiveness. Lower-

7
level employees like security guards or messengers were not included. Other data collection
tools like focus group discussions would also give more insight into this matter, but due to
time and resource limitations, only a questionnaire and
Interview was used as data collection tools in the study. The analysis technique employed in
this study restricted the inclusiveness of detail items in the questionnaire and limited the
respondent’s ability to elaborate on their answers.

1.8. Scope and Limitation of the Study

Due to time and other constraints, the scope of the study was delimited in three categories
namely, geographically, conceptually, methodologically and time fame. The first one is
geographically, only employee of the bank located in Addis Ababa city. Secondly
conceptually, the study only focused on extrinsic reward like payment, benefits, promotion,
working condition, recognitions, supervision and intrinsic reward like work content and
employee work motivation. Thirdly methodologically, the study has followed quantitative
research approach, and finally the study has been considered permanent employees under job
categories of clerical, professional and line management, who have more than one year’s
work experience in the Dahen Bank. Due to the fact that, the company non-clerical positions
are outsourced and reward practices is not implemented for temporary workers. The Effect of
Reward Practices on Employee Motivation in Dashen Bank S.C. AAU SCHOOL OF
COMMERCE Page 7 1.8. Definition of Terms Reward: The compensation which an
employee receives from an organization for his or her service. It not simply contains direct
currencies and other forms which can convert to currencies, but also a comfortable office,
favorable interpersonal relationship inside the organization, having access to decision-making
involvement, the challenge and sense of achievement, preferable growth opportunities ( Jiang,
2009). Reward is the benefits that arise from performing a task, rendering a service or
discharging a responsibility (colin pitts 1995). Motivation: The willingness to exert high
levels of effort toward organizational goals, conditioned by the effort‟s ability to satisfy some
individual need (Robbins ,1998). Intrinsic Reward: An intrinsically motivated individual will
be committed to his work to the extent to which the job inherently contains tasks that are
rewarding to him or her
,(HaticeÖzutku 2012). Extrinsic Reward: An award that is tangible or physically given for
accomplishing the job. (HaticeÖzutku 2012). Payment: Pay one received from his or her

8
employer in exchange of service he or she gives. It is the amount of pay (fixed salary or wage)
that constitutes the rate for the job (Armstrong, 2006). Promotion: The move that an employee
moves to higher job category or income bracket (Gungor 2011). Recognition: is the
demonstration for appreciation for a level of performance, an achievement or contribution to
an objective (colin pitts ,1995). Employee Benefits: Financial and non-financial other than
base pay one receive for services rendered to employers. (Milkovich , Newman &
Ratnam ,2009). Work Content: The nature and variety of jobs one perform (Mottaz,1985).
Working Condition: Work environment in which an employee perform his/her work. (Gungor
2011), Supervision: The relationships an employee do have with his/her manager or
supervisor. It refers to the characteristics and quality of leadership. (Armstrong & mulris,
2004). The Effect of Reward Practices on Employee Motivation in Dashen Bank S.C. AAU
SCHOOL OF COMMERCE Page 8 Intrinsic motivation: is derived from the content of the
job. It can be described as the process of motivation by the work itself in so far as it satisfies
people’s needs (Herzberg ,1957). Extrinsic motivation: arises when management provides
such rewards as increased pay, praise, or promotion (Herzberg ,1957).

9
 CHAPTER TWO
2. REVIEW OF RELATED LITERATURE
In this chapter, different theories and concepts related to motivation and reward are reviewed.
In the theoretical framework section, various theories associated with motivation are
presented. Also, research undertaken by different researchers on related matters is treated in
the empirical framework segment. This chapter also covers some issues related to reward
management.

2.1. The Concept of Motivation

Different authors define motivation in different ways. Torrington et al., (2009), defined the
term as the desire to achieve beyond expectations, being driven by internal rather than
external factors, and to be involved in a continuous striving for improvement. Armstrong
(2010), describes motivation as the force that energizes, directs and sustains behavior.
Motivation theory explains how motivation works and the factors that determine its strength.
It deals with how money and other types of rewards affect the motivation to work and level of
performance. It therefore influences decision on how people should be valued, the choice and
design of financial rewards and the use of nonfinancial rewards. The most practical definition
proposed by different social scientists is that, motivation is a psychological process that origin
the stimulation, direction and persistence of behavior. Employee Motivation The direct effect
of rewards is on employees‟ motivation. Various definitions of motivation exist. For this
thesis, employees‟ motivation is seen as the employees’ desire to work and perform well in
order to contribute to organizational or project success. Two types of motivation exist:
Intrinsic and extrinsic motivation. Intrinsic motivation is “self-generated” and means
employees are motivated to work because of the work while extrinsic motivation is generated
by external stimulus such as rewards (Armstrong, 2002). Three perspectives were identified in
the literature about how rewards affect motivation and hence reward practice. First, extreme
opponents of rewards argue that rewards negatively affect employees‟ motivation under any
circumstances. Accordingly, the extreme reward opponents completely refuse the use of
rewards. In contrast the extreme proponents of rewards argue, rewards positively affect
employees‟ motivation under any circumstances.
Accordingly, they advocate the use of one universal reward style and propose a best practice

10
approach. Finally, modest reward proponents argue that the rewards effect on employees‟
motivation may be both, positive or negative. The effect depends on some variable factors
that lead to different good practices in rewarding but no universally best practice (Armstrong
& Murlis ,2004). Types of Motivation There are two types of motivation at work as originally
identified by Herzberg et al (1957). These are: - Intrinsic motivation– this is derived from the
content of the job. It can be described as the process of motivation by the work itself in so far
as it satisfies people’s needs. Intrinsic motivation can arise from the self-generated factors that
influence people’s behavior. It is not created by external incentives. It can take the form of
motivation by the work itself when individuals feel that their work is important, interesting
and challenging and provides them with a reasonable degree of autonomy (freedom to act),
opportunities to achieve and advance, and scope to use and develop their skills and abilities.
Extrinsic motivation– It arises when management provides such rewards as increased pay,
praise, or promotion. The extrinsic motivators can have an immediate and powerful effect, but
this will not necessarily last for long. Extrinsic motivation occurs when things are done to or
for people to motivate them. These include rewards, such as incentives, increased pay, praise,
or promotion; and punishments, such as disciplinary action, withholding pay, or criticism

2.2. Theories Related to Motivation

A central aspect for all organizations is to motivate their employees. From an organizational
perspective, the motivation is important due to the fact that it can empower high-performing
employees to stay within the organization. Additionally, the employees can through a higher
degree of motivation develop their overall skills in their specific job task and be more
engaged to perform at a higher level (Alvesson &Sveningson, 2008). The Effect of Reward
Practices on Employee Motivation in Dashen Bank S.C. AAU SCHOOL OF COMMERCE
Page 11 The most practical definition proposed by social scientist that, motivation is a
psychological process that origin the stimulation, direction, and persistence of behavior
(Luthans, 2005). Motivation theory examines the process of motivation. It explains why
people at work behave in the way they do in terms of their efforts and the directions they are
taking. (Armstrong, 2006). Thus motivation becomes those psychological procedures that
cause the arousal, direction, and persistence of voluntary actions that are goal directed. The
features such as incentives and rewards are the most favored factors for employee motivation

11
programs. However, the performance of employee job satisfaction is an imperative motivator
and an arrangement of psychological and environment circumstances (Spector 1985).
Motivation programs are the key component of incentives, rewards and recognition as
different organizations correlate success factor with employee performance. Employees are
completely motivated when they achieved their needs. Motivation theories can be classified as
content (need) or process (approach to motivation) theories. The content theories attempt to
identify the specific factors that motivates people and it helps us to understand what people
will or will not value as work rewards. Alternatively, process theories offer more dynamic
approach and are more interested in understanding the process of developing motives. Thus,
there is less emphasis on specific factors that cause behavior (Beardwell, et al, 2004).

2.3. Theoretical Framework

2.3.1. Hierarchy of Needs Theory
This theory is the most widely recognized motivational theory developed by psychologist
Abrham H. Maslow in the 1940s. Maslow stated that individuals have exceptionally strong
needs that can be arranged in a hierarchy.
This model states that a person has five types of needs: Physiological needs are those for food,
air, water, and shelter. They are called the lowest-order needs according to Maslow's need
hierarchy. Individuals focus on fulfilling these needs before jumping to the higher-order
needs, or the higher-order needs become primary motivators (Don, H., John, W., and Slocum,
2011). Security need: the need for safety, stability, and the absence of pain, threat, or illness
Unsatisfied security needs cause an individual to be preoccupied with satisfying them.
Individuals at this level of concern or value value their jobs to keep their lowest-order needs
safe or secured (Don H. and John W. Slocum, 2011). Affiliation Need: are the desires for
friendship, love, and a feeling of belonging? When physiological and security needs have
been satisfied, affiliation needs emerge. Individuals that pass the above two needs levels
(Don, H., John, W., and Slocum, 2011) This level of need is the primary source of motivation.
Individuals value their job and use it as an opportunity to satisfy their needs for friendship,
love, and a sense of belongingness. A supervisor whose employees are motivated to fulfill
these needs is likely to act supportively and organize activities that are outside of their regular
daily routines.
Esteem needs: the desires for feelings of achievement, self-worth, and recognition or respect

12
Individuals with esteem needs want others to accept them for who they are and perceive them
as competent and able. Leaders who focus on esteem needs try to motivate employees with
public rewards and recognition for achievements. And self-actualization needs: involve
individuals in realizing their full potential and becoming all that they can be. Individuals who
strive for self-actualization seek to increase their problem-solving abilities (Don, H., John,
W., & Slocum, 2011). An individual moves up the needs hierarchy from one level to the next.
In addition, Maslow separated the five needs into higher and lower levels. Physiological and
safety needs were considered lower-order needs; social, esteem, and self- actualization needs
were considered higher-order needs. Lower-order needs are predominantly satisfied
externally, while higher-order needs are satisfied internally (Stephen, P.R., and Mary, C.
2012). Physiological, security, and affiliation (social) needs are also known as deficiency
needs. According to Maslow, an individual’s appearance as a healthy person is both
physically and psychologically attained only through the satisfaction of those needs. In
contrast, esteem and self-actualization needs are known as growth needs (Don, H., John, W.,
& Slocum, 2011).
2.3.2. Expectancy Theory
The most comprehensive and widely accepted explanation of employee motivation to date.
Expectancy theory is developed by Victor Vroom (Stephen P. Robbins, 2002). This model is
not only explaining how employees are motivated but also it explains how those drives and
needs translated into specific effort and behavior (Steven, L., McShane., Mary Ann Von, G.
2008). The foundation of this model is the assumption that human beings are rational. The
model states that individuals are motivated to work when they believe that they can achieve
their goal through their job (Don, H., John, W., Slocum. 2011). An individual tends to
act/behave in a certain way based on the expectation that the act will be followed by a given
outcome and on the attractiveness of that outcome to the individual (Stephen, P.R. 2002). As
Steven, L., McShane., Mary Ann Von, G. (2008) the key variable of interest in these model is
effort— an individual’s actual exertion of energy. Individuals effort depends on three factors:
effort-to- performance (E-to-P) expectancy, performance-to-outcome (P-to-O) expectancy,
and outcome valences (V). Those factors are the three pillars of the expectancy model.
According to this model, an individual's motivation is influenced by those three factors, and if
any one of them is lost, motivation declines.

13
E-to-P Expectancy is the individual’s perception that exerting a given amount of effort will
lead to a certain level of performance (Stephen, P.R. 2002). For instance, studying hard will
lead the student to perform well in his or her exam, or employees will direct their efforts
toward developing friendly relationships.
P-to-O expectancy is the degree to which individuals believe that performing at a particular
level or behaving in a certain way will lead to the attainment of the desired goal or reward
(Stephen, P.R. 2002). The student believes in the role of studying hard, and the employee
believes in behaving to create a good, friendly environment for attaining their goals. If an
individual does not see a relationship between their effort and outcome, they will not be
motivated at all. Don, H., John, W., and Slocum (2011) describe the P-to-O expectancy as not
for every possible outcome but only for outcomes that interest or attract us at that time.
Outcome Valence (V): the amount of the reward the individual receives and how he or she
feels about it or what it means to the individual. Valence refers to the satisfaction or
dissatisfaction an individual expects from the outcome. How satisfied or dissatisfied the
student will feel by his or her grade or how satisfied the employee will feel by fully meeting
his or her affiliation needs Outcomes have a positive valence when they are consistent with
our values and fulfill our needs (when a student acquires a grade he/she valued or an
employee fulfills his/her need for love and friendship) or may have a negative valence when
they oppose our values and hinder our need fulfillment.
Stephen, P.R. (2002) generalization expectancy theory: the key to understanding an
individual's goal and the linkage between effort and performance, between performance and
rewards, and finally between rewards and individual goal satisfaction. It emphasizes payoffs
or rewards. As a result, we have to believe that the rewards an organization is offering align
with what the individual wants. The expectation theory recognizes that there is no universal
principle for explaining what motivates individuals and, thus, stresses that managers must
understand why employees view certain outcomes as attractive or unattractive.

14
 2.3.3. Goal-Setting Theory

As Don H., John W., and Slocum (2011) describe it, goal setting is the process of motivating
employees and clarifying their role perceptions by establishing performance objectives. It
potentially improves employee performance in two ways: (1) by stretching the intensity and
persistence of effort; and (2) by giving employees clearer role perceptions so that their effort
is channeled toward behaviors that will improve work performance.
Conditions that must be fulfilled for goal setting are: specific and challenging goals, both of
which serve as motivating forces. employees tend to put more effort into working toward
specific goals than general goals. It can be measured, with a specific time period for
accomplishment of a task and clear performance expectations. So an employee can direct their
effort more efficiently and reliably. Challenging goals are also used to fulfill a person’s self-
actualization and achievement needs. As well, challenging goals increase employee
commitment. If the employee thinks the goal can be achieved or is simpler, the commitment
(motivation) will be less (Don, H., John, W., and Slocum, 2011). Goals must also be relevant
to an individual’s job and should not be beyond his or her control. Some employees show
superior performance when they set their own goal. And sometimes employees perform best
when supervisors assign goals. Participation is probably preferable to assigning goals, which
may avoid resistance to accepting difficult challenges. Feedback is also another condition for
effective goal setting; people perform better when they are provided with information about
how well they are progressing toward their goals
2.3.4. Reinforcement Theory
In spite of other theories, reinforcement theory ignores goals, expectations, or needs; it is only
focused on what happens to a person when he or she acts in a particular way. It states that
behavior is a function of its consequence. Any consequence that immediately follows a
particular behavior and increases the probability that the behavior will be repeated is called a
reinforcer. People will most likely continue to engage in desired behaviors if they are
rewarded for doing so. These rewards are most effective if they are immediately provided
after desired behavior, and behavior that isn’t rewarded or is punished is less likely to be
repeated (Stephen, P.R., and Mary, C. 2012). According to
Stephen, P.R. (2002,): various research has shown that reinforcement is undoubtedly an
important influence on an individual’s work behavior.
15
 2.3.5. Equity Theory
Equity theory is one of the contemporary theories along with expectancy, goal-setting, and
reinforcement theory. It was developed by J. Stacy Adams. The term equity is related to the
concept of fairness and equitable treatment compared with others who behave in a similar
way. Evidence shows that employees compare themselves to others and that inequities
influence the extent of effort they put into their work (Stephen, P.R., and Mary, C. 2012).
This theory proposes that employees first compare what they get from a job (outcomes) in
relation to what they put into it (inputs), then compare their inputs-outcomes ratio with the
inputs-outcomes ratio of relevant others. If an employee perceives his or her ratio as fair or
equitable compared to relevant others, then there is no problem. If the ratio is unfair or
inequitable, he/she views herself as under or over rewarded, which may result in lower or
higher productivity, improved or reduced quality of work, increased absenteeism, or voluntary
resignation (Stephen, P.R., and Mary, C. 2012). As Don H., John W., and Slocum (2011)
described the theory, it is based on the belief that individuals are persistently motivated to
maintain a fair and equitable relationship between themselves and others and to avoid
relationships that are unfair and inequitable. It also has two major assumptions: the first is that
individuals evaluate their interpersonal relationships based on their contribution (input) and
their expectation of result (outcome). The second assumption is that individuals determine
fairness by comparing their situation with those of others in the organization, or that their
situation's importance is measured through comparison of themselves with relevant others.
According to Stephen, P.R., and Mary, C. (2012), the referent against which individuals
compare themselves in order to assess equity may be other individuals with similar jobs in the
same organizationor system, including organizational pay policies, procedures, and allocation,
or it may be their own input-output ratios that are unique to the individual. Equity exists
whenever the perceived ratio of a person’s outcome to their input equals that of relevant
others. Inequity exists when the perceived ratio of outcome to inputs is unequal. Inequity
creates tension, so individuals attempt to reduce this tension to a tolerable level. Individuals
may either increase or decrease their input to what they feel is an equitable level. They may
change their outcome to reinstate equity. They may shift to a new reference group to reduce
the source of the inequity, or they may start to believe that other people in a comparison group
work harder than they do and deserve greater reward so they can find an equitable balance

16
 2.3.6. Designing a Motivating Job

Job design refers to the way different tasks are combined to make a complete job. employees
should not perform by chance in organizations; there should be jobs designed deliberately and
thoughtfully by considering the organization's technology, the changing environment, and the
employees’ skills, abilities, and preferences. When jobs are designed in this manner,
employees are motivated to work hard. Job enlargement and job enrichment are only some
ways to design motivating jobs. Job enlargement is the horizontal expansion of a job. It is
increasing the number of tasks performed by employees. Research shows that expanding the
scope of knowledge used in the job leads to job satisfaction, enhanced customer service, and
fewer errors. In contrast, job enrichment is the vertical expansion of the job. It empowers the
employee by giving them planning and control over responsibility. Thus, employees are
enabled to do their job with increased freedom, independence, and responsibility. Job
enrichment may improve the quality of work, employee motivation, and employee satisfaction
(Stephen, P.R., and Mary, C. 2012).
Even though many organizations have implemented job expansion and job enrichment
programs and experienced mixed results, neither of these job design approaches provided a
conceptual framework for analyzing jobs or for guiding managers in designing motivating
jobs. The job characteristics model (JCM) offers such a framework (Stephen P. Robbins,
2002, 508). Don, H., John, W., and Slocum (2011) described the job characteristics model as
involving increasing the amounts of skill variety, task identity, task significance, autonomy,
and feedback in a job. The model proposes that the levels of these job characteristics affect
three critical psychological states: (1) experienced the meaningfulness of the tasks performed
through task identity, task significance, and skill variety. The more that job embraces these
characteristics, the greater the employees’ motivation performance, and satisfaction, and the
lower his or her absenteeism and likelihood of resigning. (2)
Experienced personal responsibility for task outcomes, through task
autonomy, and (3) knowledge of the results of task performance through feedback. If all three
psychological states are positive, a reinforcing cycle of strong work motivation based on self-
generated rewards is activated. A job without meaning, responsibility, and feedback is
incomplete and doesn’t strongly motivate an employee

17
 2.4. Reward Management
Rewards are clearly central to the employment relationship. The amount and the form of
reward is an issue that matters most for employees and is also central to human resource
management functions, since money spent on salary, benefits, and other forms of reward
typically accounts for well over half of an organization’s total cost (Derek T., Laura H., and
Stephen T. 2008). Today, organizations, with varying degrees of success, attempt to harness
the powerful forces of pay as a motivator to encourage employees to work in ways that lead to
the achievement of organizational objectives. There are many more forms of incentive
payments and many varieties of recognition awards, and the number of employee benefits has
greatly expanded. (John, S., 2005) Managing reward is largely about managing expectations:
what employees expect from their employers in return for their contribution and what
employers expect from their employees in return for their pay and the opportunity to work and
develop their skills. The tighter the labor market becomes, the harder it is to recruit and retain
the best-qualified people, and the more pressure there is placed on employers to develop
rewards packages that suit employees as much as they suit their own needs (Madhuri, K.
2014). The key aim of reward management is to design reward packages that serve to
motivate, attract, and retain staff. At the same time, ensuring the organization's commercial
and financial viability is not affected by the cost of the reward package The significance
employees put on their pay and their tendency to compare their pay with other relevant
employees make the task very difficult. Any mistake in the reward package has serious
negative consequences, such as employee resignation, less effort and an unhealthy employee
relationship climate, and a high level of absenteeism. In time, this will reduce the
organization’s effectiveness and damage its financial performance. (Derek T., Laura H., and
Stephen T., 2008) According to Stephen, P.R. (2002,) reward package design is influenced by
several factors: company profitability, size of the company, management philosophy, kind of
job, whether labor or capital incentive, employee performance, kind of job performed, if it
needs high skill or not, are only some factors. Flexibility in reward design is also a key
consideration. The traditional approach designs pay based on seniority and job level. The
contemporary approach to designing rewards is based on the skill of the employee to lead the
organization to its objectives. Yet the reward package must create a fair, equitable, motivating
reward system that enables the organization to recruit and retain a productive workforce.

18
 2.4.1. Reward Strategy
Derek, T., Laura, H., and Stephen, T. (2008) defined reward strategy as a means of aligning
an organization’s payment arrangements and wider reward system with its objectives. In other
words, developing a system that leads the organization’s employees to actively contribute to
the achievement of its goals It is deliberately using the reward system as an integration
mechanism to direct various units and individual’s efforts toward the achievement of
organization objectives. Contemporary reward administration frequently embraces a strategic
approach were the mix and level of rewards are chosen to reinforce the organization's overall
strategic objectives.
A written reward strategy must consist of four key elements. The first is a statement of
intention: what the organization wants to achieve and what reward strategies have been taken
to achieve these core objectives. The second is ‘rationale, which presents and explains
objectives in a more detailed manner and shows how the various elements of the
organization's reward policy support the accomplishment of those objectives. The rationale
section must include the benefit that will accrue and indicate the means that will be used to
evaluate the success. The third element is an explanation of the guiding principles that have
been used in developing the strategy and that will be used to adapt them in the future. The
final element of the reward strategy document is the implementation plan, which sets out
exactly what the reward strategy entails and when it was introduced, as well as who was
responsible for it.
Also, a design of a consistent reward package is required to integrate policy decisions such as
comparing jobs within an organization's internal equity and setting pay levels relative to
competitors.
external equity, adjusting pay for each individual employee, like skill-based pay design, and
administering and communicating the reward function. (Madhuri, K. 2014)
2.4.2. Total Reward
Basically, reward may be defined as a stimulus or encouragement for greater action. The trend
towards viewing reward policies and practices as extending well beyond the dominant term of
payment has led to widespread interest in the concept of ‘total reward, which involves
managers viewing the way that they reward employees in the round, taking equal account of
both the tangible and intangible ingredients that together help to make work and jobs
‘rewarding’ in the widest sense of the word. The change in perspective away from a narrow
19
focus on payment towards a broader focus on ‘total reward’ has come about largely because
of developments in the commercial environment (Derek T., Laura H., and Stephen T. 2008).
According to John, S., 2005, reward is broadly categorized into two types: non-financial
(intrinsic or intangible) and financial (extrinsic or tangible) rewards. Non-financial rewards
are internal and related to the job perception of the employee. Also affected by the job design.
Such rewards are difficult to control and manage by the managers and to replicate by
competitors. As well, the intangible part of the total reward is harder to achieve and evaluate.
Such rewards are more intrinsically motivating or cannot be provided by a manager. Non-
financial rewards are divided into rewards from the job itself and from the job environment.
Financial rewards are external to workers and are given by organizations. Related to
employee prerequisites or benefits. It is unproblematic to control since the basic principles are
followed and the right technical decisions are made. This tangible part of total reward enables
the organization to secure a competitive advantage in the labor market, yet it is easily imitated
by competitors. Financial rewards are divided into direct rewards and indirect rewards.
Below, both the financial and non-financial forms of reward, along with the various
components they each include, are presented in graphical form.

20
 Total Reward

Rewards

Direct Indirect Job

Reward The job
rewards Environment

Bonus Insurance Interesting

Commission Sound
Plans Duties Policies

Transport Competent
Wage Responsibility
Allowance Supervision

Working
Salaries Paid Vacation Recognition
conditions

Home Training
allowance
Opportunit
y

Retirement Participatio
n in
Benefit/ Decision
Pension

Source: - www.repository.smuc.edu.et>handle
Fig. 1. Components for financial and non-financial reward package

21
 2.4.3. Reward Objectives
Rewards are among the major factors in the economic and social life of any community. In an
economic sense, reward represent payment of compensation in return for work done. In a
sociological sense, reward characterize stratification of occupational categories. In a
psychological sense, reward satisfy needs directly and indirectly in response to changing
employee aspirations. It constitutes one of several elements of job satisfaction and it is
instrumental for the satisfaction of some needs more than others. In a legal sense, the term
wages/salaries has acquired various connotations, depending on the context and has become a
subject of special law in many countries. The movement in the mix of reward signifies a shift
from viewing employee as a component in the cost will to viewing the employees as a group
of people who have come together to achieve some common goals (Madhuri, K. 2014).
Reward objectives can be seen from employer dimension and employee dimension. From
employer dimension reward objective is to; attract, to retain, to motivate staff and to initiate
change. Employee also have different objective as far as reward concerning some of them are;
fairness, Recognition, Purchasing power.
The significance of different objectives varies overtime, environment and among
organization. What is attractive in one labor market may not be attractive in another labor
market. Or what might look equitable/fair in a particular time may not be considered as same
way by workers in another time (Derek, T., Laura, H., Stephen, T. 2008).
2.5. Empirical Framework

Various related studies are conducted by different researchers in different parts of the world.
However, there are limited numbers of studies conducted in Ethiopia on the Impact of
financial and non-financial rewards on motivation.
Nebiat, N. (2010) conducted a research on ‘relationship between Reward and Nurse’s
motivation in Addis Ababa Hospitals’. The objective of this research was to examine the
relationship between rewards and nurse work motivation in hospitals administrated by Addis
Ababa Health Bureau. Self-administered questionnaire was used to collect data. The collected
data analyzed by using descriptive statistics. By 88% respondent rate the result revealed that
there is positive and significant relationship between reward and the nurse’s work motivation.
Payment is the most significant variable among financial reward and recognition is the least
significant from non- financial reward variable.
22
Another research conducted by Berhan, A. (2007), this study examines the impact of intrinsic,
extrinsic, and equity factors of work on employees’ organizational commitment a case study
in two selected
private colleges in Addis Ababa. Questionnaire was used to collect primary data and different
records of the institution reviewed for collection of secondary data. Random sampling method
used to select respondent. The collected data analyzed by using SPSS. The finding shows that
instructors in private colleges were satisfied with intrinsic factors of work such as opportunity
for achievement, challenging work, responsibility. On the other hand, instructors is generally
dissatisfied with extrinsic content of work such as salary, fringe benefits, incentives, job
security, and post-employment security. Moreover, there is also structural inequity.
Consequently, employees were not committed to their organization which implies the
availability of high turnover and lower performance.
Madhuri, K. (2014) conducted a research on impacts of financial and non-financial rewards
with respect to overall levels of employee motivation in private sector organizations. This
study collected primary data through questionnaire and secondary data from different journals
and books. Sampling method employed to select sample organization was random sampling
techniques. 30 private sector organization were selected and response rate was 53%.
According to these research finding there is strong relationship between level of reward and
motivation. The finding also reveals employee in private sector gave much importance to
financial rewards than non-financial rewards. Yet these may vary according to that status of
employee, lower level and middle level employee give much importance to financial rewards
and high level staffs like managers’ emphasis on non-financial rewards. Reward variables that
is given a high rank by the respondents are retirement benefit, salary and bonus from financial
reward and good interpersonal relationship and freedom of work from non-financial reward.
Saira, Y., Madiha, L., Sumaira, A., & Anam, S. (2014) studied on financial and non-financial
rewards that affect motivation of employee in organization. As well the paper discussed how
to
retain the motivated workforce in organization. The research conducted in private film
company in; Pakistan. Both qualitative and quantitative research methodology has been
adopted in the paper. Primary data collected through questionnaire and semi-structured
interview. Simple sampling method was use to select sample population. In-depth interview

23
conducted to increase the reliability of the research. The study found that financial reward
ranked top as an influential factor in in creating employee motivation. The authors also stress
the instrumentality of non- financial reward to improve employee morale. That is how the
organization can keep/retain its motivated workforce. Salary, bonus, from direct financial
reward and allowance are significant element of financial reward.
On the other hand, the study conducted by Martha, H.K. (2013) on effect of financial and
non- financial rewards with respect to lower level employee in retail industry. Cluster
sampling was used to select sample respondent. The sample represents 47.1% of the total
lower level employees from the selected retail shops. A structured questionnaire was
employed to collect data. The finding shows that there is no significant relationship between
financial reward and employee motivation. But there was a moderate significance relationship
between non-financial reward and motivation among lower level employee. Flexible working
hour and recognition considered significant non-financial rewards and pay for performance
considered important financial reward

24
 2.6. Conceptual Framework of the Study

The following diagram shows the variables included in the study and the conceptualization of
the relationship between the independent and dependent variables

Fig. 2 Conceptual framework of the study

25
 CHAPTER THREE

3. REASEARCH DESIGN AND METHODOLOGY

3.1. Description of the Study Area

Dashen bank S.C. head office is located in Addis Abeba around Bekilo bet. It is selected for
this specific study because it is one of the leading private financial institutions in the country.
It has more than twenty years of experience in the industry and it is well recognized in the
market. It has so many loyal customers and the bank has a history of introducing several
technological advancements to the banking market like ATM (Automatic Teller Machine),
WAN (Wide Area Network) currently introduced American express card (AMX) and the like.
/www.dashenbanksc.com/.
Moreover, Dashen Bank S.C. has a reputation of attracting new employee and has numerous
experienced employees as a result; it is workable to measure the employee’s work motivation
with regard to reward practices.
3.2. Research Approach
The strategies and the method all contribute to a research approach that tends to be more
quantitative, qualitative or mixed (Creswell, 2004). Quantitative research involves studies that
make use of statistical analyses to obtain their findings. Key features include formal and
systematic measurement and the use of statistics (Marczyk, Dematteo & Frestinger, 2005).
Therefore, the study used quantitative research approach because it used structural
questionnaire data collection method and statically data analysis techniques.
3.3. Research Design
Business and management research aims to provide solutions to practical managerial
problems. According to Zukmund (ND), the purpose of research may be interpreting,
understanding, criticizing, describing, or analyzing information in a knowledge-enhancing
manner. Research is divided into three broad categories as per its purpose: exploratory,
descriptive, and explanatory (Mark, S., Philip, L., & Adrian, T. 2009). An exploratory study is
a valuable means of finding out ‘what is happening; to seek new insights; to ask questions and
to assess phenomena in a new light’ (Robson 2002:59 in Mark, S., Philip, L., & Adrian, T.

26
2009). It is useful to clarify understanding of a specific problem. An exploratory study's great
advantage is that it is flexible and adaptable to change. The second category is descriptive
studies. The objective of such a study is ‘to portray an accurate profile of persons, events, or
situations’ (Robson 2002:59 in Mark, Philip, and Adrian, 2009). This may be an extension of,
or a forerunner to, a piece of exploratory research or, more often, a piece of explanatory
research. It is necessary to have a clear picture of the phenomena on which you wish to collect
data prior to the collection of the data. Finally, the research may be explanatory if it tries to
establish relationships that exist between variables
It aims at identifying how one variable affects the other; it seeks to provide an empirical
explanation of the causes and effects relationship between one or more variables (Mark, S.,
Philip, L., & Adrian, T. 2009). This research paper is explanatory in nature since its purpose is
to identify how financial and non-financial rewards impact motivation.
In order to achieve the objective of this study and answer the research questions, the researcher
has adopted a mixed-methods approach. The mixed research method includes both quantitative
and qualitative
and qualitative approaches are selected for this thesis as they are considered to be the best
option due to their suitability to collect data and to present the results with the help of diagrams
and statistics. In addition, employing this approach is used to neutralize or cancel the biases of
applying any single approach and is a means to offset the weaknesses inherent in a single
method with the strengths of the other method (John, W.C. 2009). A mixed-methods research
approach opens the door to multiple methods of data collection, helps generate the findings for
a population, and develops a detailed view of the meaning of a phenomenon or concept for
individuals (John, W.C. 2009).
Qualitative data is collected through interviews in order to identify the reward system adopted
by the company. Then, a structured questionnaire was used to collect explanatory data and
analyze the impact of a financial and non-financial reward scheme on employee motivation.
And concerning time horizon, this study was typically a cross-sectional study. The data was
collected from an employee of Dashen Bank at a particular time and not for different periods of
time.

27
 3.4. Population and Sampling
3.4.1. Target Population.
Target population means the total number of entities in which the researcher is interested; it
could be a collection of individuals, objects, or events about which the researcher wants to
make inferences. The target population of this study includes employees of Dashen Bank, a
bank in the S.C. Addis Ababa area. The population size is 7,150 based on the 2021/22 annual
report of the bank.
3.4.2. Sample Size
The total sample population taken was 379 from a population size of 7,150 The sample size is
calculated based on the formula developed by Israel (2009) at a +/- 5% level of precision.
n= N

n-sample population

1 + (N* e2) N-total population e2 -the desired level of precision

n= 7.150

(7,150/1+7,150*(0.05)2 n= 379

3.4.3. Sampling Techniques

Sampling is defined as the selection of some part of an aggregate or totality on the basis of
which a judgment or inference about the aggregate or totality is made. In other words, it is the
process of obtaining information about an entire population by examining only a part of it (C.
R. Kothari, 2004). Sampling is used for a variety of reasons, some of which are that sample
studies are usually less expensive than censuses and produce results at a relatively faster pace;
sampling remains the only option when the population contains a substantial number of
members (C. R. Kothari, 2004).
Non-probability sampling was employed to select area banks. To undertake this research, the
researcher deliberately selected area banks from a list of 79 area banks based in Addis Ababa

28
on the basis of their convenience and length of service. According to C. R. Kothari (2004),
under this technique, items for the sample are selected deliberately by the researcher; his
choices concerning the items remain supreme.
In this study, the researcher employed simple random sampling to select respondents. The
researcher used this sampling method because employees are available, and this sampling
technique gives all respondents an equal chance of being included in the sample. A total of
379 employees were randomly selected from area banks. The researcher randomly selected
managerial and clerical staffs working at selected area banks and distributed the questionnaire
to those staffs. The survey had been done on every employee, from clerical to managerial,
except lower level employees like cleaners, security guards, messengers, and employees
working at outlined branches were excluded.
3.5. Types of Data and Tools/Instruments of Data Collection

In order to collect sufficient data to answer the research questions, the researcher used both
primary and secondary data collection methods. Primary data were collected to obtain
firsthand information on the specific research questions. And secondary data were collected to
support the facts acquired through primary data. As for primary data, interviews and a
questionnaire were used.
3.5.1. Interview
The researcher conducted an interview with structured questions with HRM personnel of the
company to seek insight on the company’s reward practices and to support the data collected
through the questionnaire.
3.5.2. Questionnaire
A structured questionnaire was used in order to reach a wide range of respondents so that
information could be acquired to examine and explain the relationships between variables.
Different motivational theories that have been presented in the literature review were used to
develop the questionnaire. The questions were framed using Likert’s scale of measurement,
ranging from strongly agree to strongly disagree (strongly agree 5, agree 4, neutral 3, disagree
2, and strongly disagree 1).
The survey questionnaire had three sections: Section 1 was to capture basic demographic
information about the respondent. Section two is to capture information on employee opinion
on the current reward in use and its impact on their motivation. Section three, questions on

29
financial and non-financial reward schemes and motivation, helps identify which reward
schemes impact their motivation most.

3.5.3. Secondary data source

As far as secondary data is concerned, different theoretical and empirical literature relevant to
the study, the company website, and the annual newsletter were consulted for relevant
secondary data for the study to supplement the primary data. The company’s website,
www.dashenbank.com, was useful, especially for information relating to its background.
3.6. Data Collection Procedures
The semi-structured interview was administered to the respondents through personal contact
by the researcher. A notepad was used to gather the information. The structured questionnaire
was administered with the help of the company’s employees, who are found in different area
banks across Addis Ababa. The developed questionnaire was distributed to all 379 employees
working at purposefully sampled area banks.
3.7. Data Analysis Methods
The term analysis refers to the computation of certain measures along with searching for
patterns of relationships that exist among data groups (C. R. Kothari, 2004). The study has
used both qualitative and quantitative data analysis techniques. The data gathered through
interviews was analyzed in a descriptive manner. The data collected using a questionnaire was
analyzed using descriptive and inferential statistics. Here, the study used the Statistical
Package for Social Science (SPSS) version 20.0 and presented the information gathered in a
useful way, like a frequency distribution for the descriptive statistics and a multiple linear
regression model to understand and examine the causal relationship between the variables.
3.8. Ethical Considerations
Respondents were assured of the confidentiality and anonymity of their responses and
informed of the purpose and objectives of the study on the cover letter attached with each
questionnaire. Which makes the respondents feel secured and understand that responding to
the questionnaire won’t cause any harm or threat to their job. An appropriate time was
selected to distribute and collect the questionnaire as well as conduct the interview. In order to
increase respondents’ rate and accuracy of responses, busy office hours were not used.
Participants’ willingness was requested before delivering the questionnaire. All data have
been treated in a way that respects and protects the confidentiality and anonymity of

30
participants involved in the study. Materials used to collect data or as a data source have been
acknowledged in an appropriate manner. Language used in any part of the paper and to
disclose finding humble and conveyed in a way that won’t insult the participant or the reader
of an account
3.9. Validity Assurance
Validity is determining whether the findings are accurate from the standpoint of the
researcher, the participant, or the readers of an account (John, W.C. 2009). This study’s
validity was assured through conducting interviews with a few members of the sample
population to determine the accuracy of the findings drawn from the questionnaire. Also, the
opinions of the research advisor and experts ensure the validity of the content, whether the
items measure the area of interest or the concept they intend to measure, which will advance
its validity.

3.9.1. Reliability Assurance

Reliability is an indicator of a measure’s internal consistency. Consistency is the key to
understanding reliability. A measure is reliable when different attempts at measuring
something converge on the same result (John, W.C. 2009). Thus, reliability refers to the
consistency and dependability of a measuring instrument; using it repeatedly should give us
the same or similar results every time. The technique applied to assess the reliability of the
data collection instrument in this study is the Cronbach's alpha coefficient, which is the most
commonly used and can test reliability with various item formats. Cronbach’s alpha reflects
the extent to which the items in the questionnaire are related to each other Cronbach’s
coefficient alpha normally ranges between 0 and 1 values, which indicate that the higher the
values, the higher the degree of internal consistency. Although different authors accept
different values for this test to reach the internal reliability of the instrument, the most
commonly accepted value is equal to or greater than 0.70 to reach acceptable reliability
(NUNALLY, 1978).
Table 1 Reliability Statistics

Variables Cronbach's Alpha N of Items

Motivation 0.762 9

Financial reward 0.755 5

31
 Non-Financial reward 0.857 5

Overall 0.791 19

CHAPTER FOUR

4. DATA ANALYSIS AND INTERPRETATION

Data analysis is the process of inspecting, cleaning, transforming, and modeling data in order
to discover useful information and insights, draw conclusions, and support decision-making.
It involves using various techniques, such as statistical analysis, data mining, machine
learning, and visualizations, to extract meaningful patterns, trends, correlations, and
relationships from large datasets. The goal of data analysis is to help organizations or
individuals make informed decisions and solve problems efficiently and effectively.

4.1. Demographic Information of Respondents

The sample respondents received 379 questionnaires in total. The response rate was 97.6%.
Only 370 of the 349 returned questionnaires were actually usable. Different personal details
about the study participants are available. The respondents' demographic data were not
analyzed to determine how they related to the dependent variable, the employee's motivation
level. They are simply used to comprehend how the bank staff is currently organized. The
following is the demographic breakdown of the respondents who took part in this study.

Table 2 Gender

Frequency Percent Valid Percent Cumulative

Percent

fmale 166 43.8 43.8 43.8

Valid male 213 56.2 56.2 100.0

Total 379 100.0 100.0

Source; SPSS Results, 2015

It seems like the above table is displaying the distribution of responses on a gender question
with two options - "female" and "male". The table suggests that out of 379 total respondents,

32
 166 identified as "female" whereas 213 identified as "male".

Based on these numbers, "female" accounts for 43.8% of the valid responses while "male"
accounts for 56.2%. The "Cumulative Percent" column shows the running total percentage of
respondents as each response option is added from top to bottom.

It appears that there were no invalid or missing responses as the "Total" count matches with
the sum of "Valid" counts.

Table 3 Age

Frequency Percent Valid Percent Cumulative

Percent

Under 25 37 9.8 10.0 10.0

26-35 259 68.3 70.0 80.0

Valid 36-45 52 13.7 14.1 94.1

Above 46 22 5.8 5.9 100.0

Total 370 97.6 100.0

Missing System 9 2.4
Total 379 100.0
Source; SPSS Results, 2015

The table shows the distribution of respondents' ages in different categories. The categories
are "Under 25", "26-35", "36-45", and "Above 46".

There are a total of 379 respondents, out of which 37 (9.8%) are under 25 years old, 259
(68.3%) are between 26-35 years old, 52 (13.7%) are between 36-45 years old, and 22 (5.8%)
are above 46 years old.

The valid percent column tells us the percentage of respondents who fall within each
category, while the cumulative percent column shows the total percentage of respondents up
to and including each category.

There are also 9 respondents whose age information is missing from the dataset, constituting
2.4% of the total number of respondents.

33
 Table 4 Educational Level

Frequency Percent Valid Percent Cumulative

Percent

Diploma 33 8.7 8.9 8.9

Firs degree 300 79.2 81.1 90.0

Valid
Above first degree 37 9.8 10.0 100.0

Total 370 97.6 100.0

Missing System 9 2.4
Total 379 100.0
Source; SPSS Results, 2015

Table 4 shows the distribution of educational level for a sample of 379 individuals. The table
consists of four columns: Frequency, Percent, Valid Percent, and Cumulative Percent. The
rows show the different categories of educational level for the sample.

- "Valid" indicates the number of respondents who fall into each category.

- "Frequency" is the raw count of individuals in each category.

- "Percent" is the percentage of individuals in each category out of the total sample size (379).

- "Valid Percent" is the percentage of individuals in each category out of the non-missing
cases (370).

- "Cumulative Percent" is the cumulative percentage of individuals up to that row in the table.

According to the table, the majority of the sample (300 individuals) have a first degree, which
accounts for 79.2% of the total sample. 33 individuals have a Diploma, accounting for 8.7%
of the sample, while 37 individuals have a degree above first degree, which accounts for 9.8%
of the sample. The missing category is "System", which has 9 respondents, or 2.4% of the
total sample

34
 Table 5 Tenure (in years)

Frequency Percent Valid Percent Cumulative

Percent

Below 5 85 22.4 23.0 23.0

5-10 192 50.7 51.9 74.9

Valid 11-15 44 11.6 11.9 86.8

Above 15 49 12.9 13.2 100.0

Total 370 97.6 100.0

Missing System 9 2.4
Total 379 100.0
Source; SPSS Results, 2015

The provided data represents the distribution of tenure (in years) for a given population, based
on a sample size of 379 individuals.
There are four categories of tenure periods: below 5 years, 5-10 years, 11-15 years, and above
15 years. The frequency of individuals in each category are as follows:
- Below 5 years: 85 individuals
- 5-10 years: 192 individuals
- 11-15 years: 44 individuals
- Above 15 years: 49 individuals
The percent and valid percent columns refer to the proportion of individuals in each category
relative to the total sample size. For instance, 22.4% (or 85 individuals) had tenure below 5
years, while a cumulative 23.0% (or 87 individuals) had tenure up to 5 years.
Finally, there is a "Missing" row, which indicates that there were 9 individuals who did not
provide their tenure information (this accounts for the remaining 2.4% of the sample).

35
 Table 6 Status

Frequency Percent Valid Percent Cumulative

Percent

Non-Managerial 333 87.9 90.0 90.0

Valid Managerial 37 9.8 10.0 100.0

Total 370 97.6 100.0

Missing System 9 2.4
Total 379 100.0
Source; SPSS Results, 2015

This is a frequency table that presents the distribution of the variable "Status", i.e., whether
employees are "Managerial" or "Non-Managerial." The table shows that out of the 379
employees analyzed, the vast majority (333 or 87.9%) are Non-Managerial, while a much
smaller number (37 or 9.8%) are Managerial.
The "valid percent" column tells us what percentage of the total number of cases (370) each
category represents. In this case, the Non-Managerial category represents 90%, while the
Managerial category represents 10%. The "cumulative percent" column indicates the relative
proportion of cases up to that point, again for only the "valid" cases. For example, the
Cumulative Percent for the Non-Managerial category is 90%, which means that 90% of all
participants were Non-Managerial at this point. The final row of the table indicates that there
were 9 cases with missing data for this variable.

Table 7 Respondents’ opinion on communication of reward

Salaries. Frequency Percent Valid Percent Cumulative
Percent

Slightly significant 89 23.5 24.1 24.1

Valid Very significant 281 74.1 75.9 100.0

Total 370 97.6 100.0

Missing System 9 2.4
Total 379 100.0
Source; SPSS Results, 2015

The respondents' opinion on the communication of reward is represented in this table. The
scale used is salaries. There were 370 valid responses, out of which 89 respondents (24.1%)
rated the communication of rewards slightly significant, and 281 respondents (75.9%) rated it
as very significant. The cumulative percentage of valid responses for "Slightly significant" is
36
 24.1% and the cumulative percentage for "Very significant" is 100%. There were also nine
missing responses in the System category, accounting for 2.4% of total responses.

Table 8 Respondents’ opinion on communication of reward

Bonus. Frequency Percent Valid Percent Cumulative
Percent

Very insignificant 26 6.9 7.0 7.0

Slightly insignificant 48 12.7 13.0 20.0

Neutral 37 9.8 10.0 30.0

Valid
Slightly significant 122 32.2 33.0 63.0

Very significant 137 36.1 37.0 100.0

Total 370 97.6 100.0

Missing System 9 2.4
Total 379 100.0
Source; SPSS Results, 2015

This is a frequency table showing the interpretation of the "Scale Bonus" variable. The
variable has five categories ranging from "Very insignificant" to "Very significant" indicating
the significance of the scale's bonus. Out of 379 observations, "Very significant" (37%) is the
most common response with 26 (6.9%) responses being "Very insignificant." There are also 9
missing observations. The valid and cumulative percentages indicate the proportion of valid
data that falls into each category and the cumulative aggregation of valid percentages.

Table 9 Respondents’ opinion on communication of reward

Insurance plan Frequency Percent Valid Percent Cumulative Percent

Very insignificant 63 16.6 17.0 17.0

Slightly insignificant 111 29.3 30.0 47.0

Neutral 118 31.1 31.9 78.9

Valid
Slightly significant 52 13.7 14.1 93.0

Very significant 26 6.9 7.0 100.0

Total 370 97.6 100.0

Missing System 9 2.4
Total 379 100.0
The table presents the frequency and percentage distribution of responses to the question
related to the significance of the insurance plan. The variables are divided into five categories,

37
 Very insignificant, Slightly insignificant, Neutral, Slightly significant, and Very significant.
The valid percent indicates the percentage distribution of responses excluding the missing
values. Cumulative percent provides the percentage of respondents who chose a particular
option or lower category. There were a total of 370 valid responses, with 63 responses
(16.6%) indicating that the insurance plan is very insignificant, and 26 respondents (6.9%)
indicating that it is very significant. About one third of respondents (31.1%) answered neutral,
while 29.3% indicated that the insurance plan is slightly insignificant. Only 13.7% of
respondents indicated that the insurance plan is slightly significant. The missing values in the
system were identified in 2.4% of responses, and the number of total responses was 379.

Table 10 Respondents’ opinion on communication of reward

Transport allowance Frequency Percent Valid Percent Cumulative Percent

Very insignificant 69 18.2 18.6 18.6

Slightly insignificant 113 29.8 30.5 49.2

Neutral 55 14.5 14.9 64.1

Valid
Slightly significant 88 23.2 23.8 87.8

Very significant 45 11.9 12.2 100.0

Total 370 97.6 100.0

Missing System 9 2.4
Total 379 100.0
Source; SPSS Results, 2015
This appears to be the frequency distribution table for responses on a survey question about
the scale of transportation allowance, where participants were asked to rate their perception or
experience of the allowance on a scale from very insignificant to very significant.
The table shows that out of the total of 370 valid responses, the largest proportion (29.8%)
rated the allowance as "slightly insignificant", followed by "slightly significant" (23.2%),
"very insignificant" (18.2%), "neutral" (14.5%), and "very significant" (11.9%).
The cumulative percent column indicates the percentage of participants who rated the
allowance as at least the given level of significance or greater - for example, 49.2% rated it as
at least slightly insignificant.
There were also 9 missing responses out of a total of 379 participants.

Table 11 Respondents’ opinion on communication of reward

38
 Pension/ retirement benefit. Frequency Percent Valid Percent Cumulative
Percent

Very insignificant 78 20.6 21.1 21.1

Slightly insignificant 69 18.2 18.6 39.7

Neutral 85 22.4 23.0 62.7

Valid
Slightly significant 61 16.1 16.5 79.2

Very significant 77 20.3 20.8 100.0

Total 370 97.6 100.0

Missing System 9 2.4
Total 379 100.0
Source; SPSS Results, 2015

Table 11 is showing the interpretation of responses regarding the scale of the

pension/retirement benefit in a survey.
The table includes data on the frequency, percent, valid percent, and cumulative percent of
responses given to five different options. These options rate from highest to lowest, “Very
significant”, “Slightly significant”, “Neutral”, “Slightly insignificant”, and “Very
insignificant”.
Of the 379 respondents, 78 individuals (20.6%) responded that their pension/retirement plan
is "Very insignificant," while 77 individuals (20.3%) reported that it is "Very significant."
In contrast, approximately 62.7 % of the respondents expressed “Neutral” perception of their
pension/ retirement benefits. The majority of respondents either viewed their plan as slightly
insignificant or slightly significant, with 18.6% and 16.5% of participants responding to these
options, respectively.
Overall, the responses regarding the scale of pension/retirement plans are mixed, although a
substantial percentage of respondents leaned towards neutral. Nine respondents did not
provide any response, and hence, their responses are considered as missing data.

Table 12 Respondents’ opinion on communication of reward

39
 Responsibility and interesting Frequency Percent Valid Percent Cumulative
duties Percent

Very insignificant 68 17.9 18.4 18.4

Slightly insignificant 84 22.2 22.7 41.1

Neutral 83 21.9 22.4 63.5

Valid
Slightly significant 74 19.5 20.0 83.5

Very significant 61 16.1 16.5 100.0

Total 370 97.6 100.0

Missing System 9 2.4
Total 379 100.0
Source; SPSS Results, 2015

The table represents the frequency and percentage distribution of responses to a survey
question related to "Responsibilityandinteresting duties". There were 379 total responses
(including 9 missing responses) from participants who were asked to rate their level of
perception towards Responsibility and interesting duties on a scale ranging from very
insignificant to very significant.

Among the valid responses, 68 participants (17.9%) rated them as very insignificant, 84
participants (22.2%) rated them slightly insignificant, 83 participants (21.9%) rated it neutral,
74 participants (19.5%) rated it slightly significant and 61 participants (16.1%) rated it as very
significant. The cumulative percentage is also provided which shows the percentage of
participants who rated it at or below each rating value.

Overall, it can be concluded that a majority of the participants rated the responsibility and
interesting duties as slightly insignificant, neutral, or slightly significant.

Table 13 Respondents’ opinion on communication of reward

40
 Recognition and feedback from Frequency Percent Valid Percent Cumulative
supervisors Percent

Very insignificant 67 17.7 18.1 18.1

Slightly insignificant 82 21.6 22.2 40.3

Neutral 73 19.3 19.7 60.0

Valid
Slightly significant 83 21.9 22.4 82.4

Very significant 65 17.2 17.6 100.0

Total 370 97.6 100.0

Missing System 9 2.4
Total 379 100.0
Source; SPSS Results, 2015

Table 12 represents the results of a survey related to recognition and feedback from
supervisors. It includes data on the frequency, percentage, valid percentage, and cumulative
percentage of the responses.
There were 370 valid responses. The options that respondents could choose from were "Very
Insignificant," "Slightly insignificant," "Neutral," "Slightly Significant," and "Very
Significant".
The majority (22.4%) of responses were "Slightly Significant", followed closely by "Slightly
Insignificant" at 22.2%. "Neutral" responses made up 19.7%, while "Very Significant" and
"Very Insignificant" both had relatively smaller proportions at 17.6% and 18.1%,
respectively.
Overall, the cumulative percentages indicate that the majority (82.4%) of responses fell into
the categories of slightly significant or higher.

41
 Table 14 Respondents’ opinion on communication of reward
Job related training Frequency Percent Valid Percent Cumulative
Percent

Very insignificant 79 20.8 21.4 21.4

Slightly insignificant 56 14.8 15.1 36.5

Neutral 82 21.6 22.2 58.6

Valid
Slightly significant 64 16.9 17.3 75.9

Very significant 89 23.5 24.1 100.0

Total 370 97.6 100.0

Missing System 9 2.4
Total 379 100.0
Source; SPSS Results, 2015

Table 13 is displaying the results of a survey related to job-related training. The table has two
sections: Valid and Missing. In the Valid section, there are five categories: Very insignificant,
Slightly insignificant, Neutral, Slightly significant, and Very significant.

The frequency column in the valid section shows the number of responses for each category,
while the percent column displays the percentage of responses in each category out of the
total number of responses (370). The valid percent column shows the percentage of responses
in each category out of the total number of valid responses (which excludes missing
responses). The cumulative percent column shows the cumulative percentage of responses up
to each category.

In total, there were 370 valid responses, with 79 respondents (20.8%) rating job-related
training as very insignificant, 56 respondents (14.8%) rating it as slightly insignificant, 82
respondents (21.6%) being neutral, 64 respondents (16.9%) rating it as slightly significant,
and 89 respondents (23.5%) rating it as very significant.

The missing section indicates that there were 9 missing responses and that the total number of
responses to the survey was 379.

Table 15 Respondents’ opinion on communication of reward

42
 Job security Frequency Percent Valid Percent Cumulative
Percent

Very insignificant 78 20.6 21.1 21.1

Slightly insignificant 79 20.8 21.4 42.4

Neutral 47 12.4 12.7 55.1

Valid
Slightly significant 88 23.2 23.8 78.9

Very significant 78 20.6 21.1 100.0

Total 370 97.6 100.0

Missing System 9 2.4
Total 379 100.0
Source; SPSS Results, 2015

The table shows the results of a job security survey where participants were asked to rate their
level of perceived job security. The data is presented in the form of a frequency table with
five categories for rating job security: very insignificant, slightly insignificant, neutral,
slightly significant, and very significant.

A total of 370 participants responded to the survey, with 78 (20.6%) of them rating their job
security as very insignificant, 79 (20.8%) rating it as slightly insignificant, 47 (12.4%) rating
it as neutral, 88 (23.2%) rating it as slightly significant, and 78 (20.6%) rating it as very
significant.

The "valid percent" column shows the percentage of responses within each category out of the
total number of responses (370). The "cumulative percent" column shows the cumulative
percentage of responses up to and including each category.

In conclusion, the table provides insights into how people perceive their job security, with a
majority of respondents having slightly significant or very significant perceptions of their job
security.

Table16 Respondents’ opinion on communication of reward

43
 Employee participate in Frequency Percent Valid Percent Cumulative
decision making that concern Percent
them.

SD 79 20.8 21.4 21.4

D 26 6.9 7.0 28.4

N 84 22.2 22.7 51.1

Valid
A 59 15.6 15.9 67.0

SA 122 32.2 33.0 100.0

Total 370 97.6 100.0

Missing System 9 2.4
Total 379 100.0
Source; SPSS Results, 2015

The table provides results on the level of employee participation in decision making that
concern them. There were 379 participants in the study, with 9 missing data points.
Out of the 370 valid data points, the responses were divided into five categories, SD (Strongly
Disagree), D (Disagree), N (Neutral), A (Agree), and SA (Strongly Agree).
Approximately 21.4% of the participants answered SD, indicating that they strongly disagree
with employee participation in decision making that concern them. Around 7% answered D,
signifying disagreement.
The largest category of responses was SA (32.2%), which means that most participants
strongly agreed with employee participation in decision making concerning them. About
15.6% and 20.8% of the participants answered A (Agree) and N (Neutral), respectively.
Overall, 66.8% of participants agreed with employee participation in decision making, while
27.7% disagreed or were neutral on the subject.

Table17 Respondents’ opinion on communication of reward

44
 The company offers carrier Frequency Percent Valid Percent Cumulative
advancement opportunity. Percent

SD 79 20.8 21.4 21.4

D 26 6.9 7.0 28.4

N 84 22.2 22.7 51.1

Valid
A 59 15.6 15.9 67.0

SA 122 32.2 33.0 100.0

Total 370 97.6 100.0

Missing System 9 2.4
Total 379 100.0
Source; SPSS Results, 2015

In Table16, the data shows that 97.6% of the respondents (n=370) have answered this
question. Of those who did respond, 32.2% (n=122) strongly agree that the company offers
carrier advancement opportunities, 20.8% (n=79) answered that they somewhat disagree,
15.6% (n=59) answered that they agree, 22.2% (n=84) answered that they are neutral, and
6.9% (n=26) said that they somewhat disagree. There are also 9 missing responses. Therefore,
it can be interpreted that a significant number of respondents believe that the company
provides advancement opportunities for its employees.

Table18 Respondents’ opinion on communication of reward

.

The company guaranteed job Frequency Percent Valid Percent Cumulative Percent
security to its employee

SD 79 20.8 21.4 21.4

D 80 21.1 21.6 43.0

N 26 6.9 7.0 50.0

Valid
A 109 28.8 29.5 79.5

SA 76 20.1 20.5 100.0

Total 370 97.6 100.0

Missing System 9 2.4
Total 379 100.0
Source; SPSS Results, 2015

45
Table17 shows the results of a survey question regarding job security guarantee provided by a
company to its employees. The responses are measured on a Likert scale, ranging from Strongly
Disagree (SD), Disagree (D), Neutral (N), Agree (A), to Strongly Agree (SA).

Out of the total 379 participants in the survey, 79 or 20.8% responses indicated Strongly
Disagree, 80 or 21.1% responses were for Disagree, 26 or 6.9% participants' choice was Neutral,
109 or 28.8% answered Agree, and 76 or 20.1% selected Strongly Agree.

The Valid Percent column represents the percentage of respondents within each category,
calculated after omitting system missing values. The Cumulative Percent column shows the
percentage of respondents who chose that option or lower. Therefore, 21.4% of respondents
selected strongly disagree or a lower option, 43.0% selected disagree or lower, 50% selected
neutral or lower, 79.5% selected agree or lower, and 100% selected strongly agree or lower.

There were 9 system missing values, which are not included in the valid data calculation, making
the total number of respondents, including missing values, equal to 379.
Table 19 I am well communicated about the rewards offeredby the company.

statement Frequency Percent Valid Percent Cumulative

Percent

N 26 6.9 7.0 7.0

A 147 38.8 39.7 46.8

Valid
SA 197 52.0 53.2 100.0

Total 370 97.6 100.0

Missing System 9 2.4
Total 379 100.0
Source; SPSS Results, 2015

This appears to be a table displaying survey responses related to employees' perception of

their communication regarding rewards offered by their company.
- "N" represents the number of respondents who answered "No."
- "A" represents the number of respondents who answered "Average."
- "SA" represents the number of respondents who answered "Strongly Agree."

46
 In total, 370 valid responses were collected, with 26 people responding "No," 147 responding
"Average," and 197 responding "Strongly Agree" to the question. There were also 9 missing
system responses out of a total of 379 responses.

Table 20 The reward offered by the company shows its investment and care
foremployee.

statement Frequency Percent Valid Percent Cumulative

Percent

SD 89 23.5 24.1 24.1

D 133 35.1 35.9 60.0

N 74 19.5 20.0 80.0

Valid
A 26 6.9 7.0 87.0

SA 48 12.7 13.0 100.0

Total 370 97.6 100.0

Missing System 9 2.4
Total 379 100.0
Source; SPSS Results, 2015

The given information represents the results of a survey where respondents were asked to rate
their level of agreement with the statement "The reward offered by the company shows its
investment and care for employees."

Out of 379 respondents, 23.5% strongly disagreed (SD), 35.1% disagreed (D), 19.5% were
neutral (N), 6.9% agreed to some extent (A), and 12.7% strongly agreed (SA) with the given
statement.

Furthermore, the Cumulative Percent column shows the percentage of respondents who gave
ratings up to a particular category. For example, up to 24.1% of respondents strongly disagree
or disagree with the statement, while 60% of respondents rated either D or better.

In summary, most of the respondents have a positive impression of their employer's

investment and care for employees based on the rewards offered, with around 20% being
neutral, and the rest having varying levels of agreement or disagreement.

47
 Table 21 The reward offered by my company motivate me to work toward
theachievement of company’s goal

statement Frequency Percent Valid Percent Cumulative

Percent

SD 111 29.3 30.0 30.0

D 148 39.1 40.0 70.0

N 59 15.6 15.9 85.9

Valid
A 37 9.8 10.0 95.9

SA 15 4.0 4.1 100.0

Total 370 97.6 100.0

Missing System 9 2.4
Total 379 100.0
Source; SPSS Results, 2015

Based on the provided data, it can be interpreted that a significant portion of the employees
receive motivation from the reward offered by the company to achieve its goals. About 69.1%
of the participants (111 + 148) either somewhat or strongly agreed to this statement. 15.6% of
the participants were neutral about it while only 13.8% (37+15) disagreed.

Table 22 The reward practice employed by thecompany takes employees need

intoconsideration

statement Frequency Percent Valid Percent Cumulative

Percent

SD 111 29.3 30.0 30.0

D 159 42.0 43.0 73.0

N 37 9.8 10.0 83.0

Valid
A 37 9.8 10.0 93.0

SA 26 6.9 7.0 100.0

Total 370 97.6 100.0

Missing System 9 2.4
Total 379 100.0
Source; SPSS Results, 2015

Based on the provided table, it appears that the company's reward practices are taking into
consideration employees' needs with a majority of respondents (72%) indicating a rating of
"D" or "SD". "D" stands for "Disagree" and "SD" stands for "Strongly Disagree", which
48
 means that employees do not disagree with the statement that the reward practice takes their
needs into consideration. However, it should be noted that approximately 19% of respondents
indicated a neutral or positive response to this question.

Table 23 the company should focus onrewarding good performance morethan

status or seniority

statement Frequency Percent Valid Percent Cumulative

Percent

SD 37 9.8 10.0 10.0

D 63 16.6 17.0 27.0

N 37 9.8 10.0 37.0

Valid
A 104 27.4 28.1 65.1

SA 129 34.0 34.9 100.0

Total 370 97.6 100.0

Missing System 9 2.4
Total 379 100.0
Source; SPSS Results, 2015

The data presented is a result of a survey in which respondents were asked to interpret the
statement "the company should focus on rewarding good performance more than status or
seniority" on a scale of 1 to 5, where 1 represents strongly disagree and 5 represents strongly
agree.

The results show that out of the 370 valid responses received, 129 people (34.9%) strongly
agree with the statement, followed by 104 people (28.1%) who agree, 63 people (17.0%) who
slightly disagree, 37 people (10.0%) who neither agree nor disagree, and 37 (10.0%) who
slightly disagree.

Therefore, it can be understood from these results that a majority of the respondents believe
that the company should prioritize rewarding good performance over status or seniority.

49
 4.2. Regression Analysis on the Effects of Financial and Non-Financial
Rewards on Employee Motivation

The effects and magnitudes of the independent variables on the employees' motivation levels
were investigated using a multiple linear regression model. The researcher has verified the
necessary assumptions before analyzing the data obtained by the questionnaires. To conduct
analysis using multiple regression modeling, these presumptions must be true.

4.2.1. Assumptions of a Multiple Regression Model

Following are five tests for the five assumptions of the classical linear regression model
(CLRM), namely normality, linearity, homoscedasticity, multi collinearity, and independence
of residuals.:
Test for Normality
Finding out whether or not a normal distribution can accurately model the data is a test for
normality. By using graphical methods of testing (such as histograms and. Plots), this test of
normal distribution could be verified. When a study is dealing with data from a small sample
size, less than 100 observations, the normality assumption assumes a crucial role. 2004 D. In
Gujarati. The researcher tested the normality assumption using the normal probability plot
(NPP), despite the fact that it is not a treat because the observation or sample size of the study
is sufficient—more than 100 observations. As a general rule, one can assume that the
variables of interest are normally distributed if the fitted line in the NPP is roughly straight.
(2004) (Gujarati, Ddot).

50
Fig. 3. Graphical test of Normality Assumption
Source; SPSS result of Normality, 2015

Because the fitted line in the NPP is roughly a straight line, it is clear from the above figure
that the model's residuals are approximately normally distributed.
Check your data for homoscedasticity and linearity.
The assumption behind a multiple linear regression model is that there is a linear relationship
between the independent and dependent variables. According to the hypothesis of
homoscedasticity, the dependent variable's range of variance is constant across all values of
the independent variables. The scatterplot diagram shown below can be used to verify both
hypotheses

51
Fig. 4. Scatterplot diagram Source: SPSS results, 2015.
Since a straight line can be drawn to roughly approximating the observations for all independent
variables against the dependent variable, motivation, it can be seen from the above diagram that
neither assumption poses a significant threat to the study. The scatter plot diagram demonstrates
uniform variance for the dependent variable as well as reasonably similar variance for the upper and
lower cases of the observations
Verify for multiple collinearity.
The requirement of multi collinearity must also be satisfied in order to conduct a multiple linear
regression model. It shows that the independent variables have a linear relationship with one another.
(Gujarati, D., 2004).

A technique called the variable inflation factor (VIF) was employed. The VIF is a metric that
expresses the reciprocal of the complement of the intercorrelation among the predictors: /VIF=1/ (1-
r2)/.

The decision rule is a variable with a VIF value greater than 10, which suggests the possibility of a
multi collinearity issue. The formula for tolerance (TOL) is 1/VIF. The degree of collinearity is also
checked by many researchers using it. The tolerance decision rule states that a variable with a TOL
value less than 0.1 indicates the potential existence of a multi collinearity issue. 2004 D. In Gujarati.
52
 Table 24. VIF values of predictors

Variables Collinearity Statistics

Tolerance VIF
Financial Reward
C
a 0.959

s 1.043
Non-Financial reward
e
0.988 1.012
s
Source; SPSS Results, 2015

The table shows the collinearity statistics, specifically tolerance and VIF values, for two
predictor variables called "Financial Reward" and "Non-Financial Reward". The tolerance
value for Financial Reward is 0.959, which indicates that only 95.9% of the variance in this
variable is linearly independent from the other predictor(s) in the model. Meanwhile, the VIF
value for Financial Reward is 1.043, which is slightly above the ideal value of 1.0 but still
acceptable as it suggests low to moderate collinearity.

On the other hand, the tolerance value for Non-Financial Reward is 0.988, indicating that
98.8% of the variance in this variable is linearly independent from the other predictor(s) in the
model. The VIF value for Non-Financial Reward is 1.012, which is also slightly above 1.0 but
still acceptable.

In general, a tolerance value close to 0 or a VIF value above 1.0 indicates high collinearity
among predictor variables, which can lead to unstable and unreliable regression models.
However, in this case, both predictors have relatively low levels of collinearity based on their
VIF valu.
Table 25
Durbin-Watson
1.691

53
 Source; SPSS Results, 2015
The assumption of the residuals' independence is satisfied, as shown in the table above. The
study generally discussed five key presumptions that must be true in order to use a multiple
linear regression model to analyze data. Since none of the five assumptions were falsified, the
researcher used a multiple regression model to analyze the information gathered by the
questionnaires

4.2.2. Results of Regression Analysis

Table 26
ANOVAa

Model Sum of Squares df Mean Square F Sig.

Regression 571.477 5 114.295 183.518 .000b

1 Residual 226.699 364 .623

Total 798.176 369

a. Dependent Variable: The company recognition of good performance impacts my level of

motivation positively.?
b. Predictors: (Constant), The company guaranteed job security to its employee?, Employee
participates in decision making that concern them?, The company has good retirement benefit
package?, The transportation allowance given to employee every month is good enough?, The
company guaranteed job security to its employee?

Table 27. Model Summaryb

Model Summaryb

Model R R Square Adjusted R Std. Error of the Durbin-Watson

Square Estimate

1 .846a .716 .712 .789 1.691

a. Predictors: (Constant), The company guaranteed job security to its employee?,

Employee participates in decision making that concern them?, The company has good
retirement benefit package?, The transportation allowance given to employee every
month is good enough?, The company guaranteed job security to its employee?
b. Dependent Variable: The company recognition of good performance impacts my level
of motivation positively.?

The model summary provides statistical measures to evaluate the accuracy of a regression model
that aims to predict the dependent variable based on the provided predictor variables.

54
 The R squared value is a fairness measure that measures the proportion of variance in the
dependent variable explained by the model. In this case, the R-squared value is 0.716, indicating
that about 71.6% of the variation in the dependent variable is explained by the predictor
variables.

The adjusted R-squared value is a modified version of R-squared, which adjusts for the number
of predictors included in the model. The Adjusted R-squared value is 0.712, which is slightly
lower than R-squared since it takes the number of predictors into account.

The standard error of the estimate provides an estimate of the standard deviation of the residuals.
This value evaluates how close the predicted values are to the actual values. A lower value
indicates a better fit of the model. In this case, the standard error of the estimate is 0.789.

The Durbin-Watson statistic is helpful to identify whether there is any autocorrelation in the
residuals. It tests if there is a correlation between adjacent residuals, and in this case, Durbin-
Watson is 1.691, suggesting there is little or no significant autocorrelation.
Lastly, the model predictors and dependent variables are listed with their respective names.

Table 28 Regression Coefficient Result

Coefficientsa

Model Unstandardized Coefficients Standardized t Sig. Collinearity Statistics

Coefficients

B Std. Error Beta Tolerance VIF

1 (Constant) .828 .190 4.359 .000

The transportation allowance

given to employee every .824 .029 .820 28.636 .000 .952 1.051
month is good enough?

The company has good

-.062 .031 -.056 -1.994 .047 .994 1.006
retirement benefit package?

Employee participates in
decision making that concern .048 .064 .047 .754 .452 .202 4.945
them?

The company guaranteed job -.054 .060 -.055 -.890 .374 .202 4.958
security to its employee?

55
 The company guaranteed job
.083 .029 .083 2.902 .004 .948 1.055
security to its employee?

a. Dependent Variable: The company recognition of good performance impacts my level of motivation positively.?

The coefficients in this model are used to estimate the relationship between the dependent
variable and the independent variables.

- "Constant" refers to the intercept of the regression equation.

- "Unstandardized Coefficients (B)" shows the estimated effect of each independent variable
on the dependent variable.
- "Standardized Coefficients (Beta)" shows the estimated effect of each independent variable
on the dependent variable after standardizing (scaling) all variables in the model.
- "t" represents the t-value for the t-test for the independent variable.
- "Sig." refers to the p-value of the t-test. If the p-value is less than the significance level
(usually 0.05), then the independent variable is statistically significant in the model.
- "Collinearity Statistics" measures the degree of correlation between the independent
variables.
In this particular example, the transportation allowance given to employees every month has
the largest positive impact on the level of motivation of employees at the company, followed
by good job security, retirement benefit package, and employee participation in decision-
making. The company recognition of good performance was not included as an independent
variable, but instead, was used as the dependent variable in this model.

Mtv= 2.504 + 0.311Fr + 0.166NFr

4.3. Interpretation of Regression Analysis

The ANOVA table shows the results of a multiple linear regression analysis where the dependent
variable is "The company recognition of good performance impacts my level of motivation positively"
and the predictors are "The company guaranteed job security to its employee?", "Employee
participates in decision making that concern them?", "The company has good retirement benefit

56
package?", "The transportation allowance given to employee every month is good enough?", and "The
company guaranteed job security to its employee?".

The regression model explains 71.58% (R-squared = 0.716) of the total variance in the dependent
variable. The F-statistic of 183.518 with a p-value of .000 indicates that the overall regression model is
significant.

The individual predictor variables are also significant as their p-values are less than .05. The
regression coefficients and their confidence intervals for each variable can be used to determine the
strength and direction of the relationship between each predictor and the dependent variable.

Overall, the results suggest that the company's policies regarding employee job security, opportunities
for participation in decision-making, retirement benefits, and transportation allowances all influence
employees' perception of company recognition of good performance and can have a positive impact on
their motivation.

57
 CHAPTER FIVE
5. CONCLUTION AND RECOMEMDATION
This chapter includes a summary of the findings, a conclusion, and recommendations based
on those findings.

5.1. Summary of Findings

This study's goal was to determine which financial and non-financial incentive programs at
Dashen Bank had the greatest motivational effects. To find out what reward strategies the case
company used, the researcher conducted an interview. Then, using a multiple linear regression
model to identify and analyze which reward scheme has the greatest impact on motivation, we
used a structured questionnaire to collect explanatory data. The researcher first verified that
the presumptions required to conduct multiple linear regression analysis were satisfied before
directly analyzing the data collected by the questionnaires. Additionally, data was gathered
via a questionnaire to determine the extent to which the company's current reward system
affected employee motivation and to conduct a descriptive analysis of the data. The main
conclusions of this study are summarized below based on the data analysis and results
discussion.
The interview outcome demonstrates that the company provides monetary and non- monetary
rewards. However, it fails to specify which compensation factors, including monetary and
non-monetary rewards, are valued highly by employees.
Which can only be acknowledged if the employee takes part in the development of the
reward policy? However, the company neither makes an effort to ascertain what employees
value most nor conducts a survey about employee attitudes and feelings toward the
compensation package over a set period of time. Officials from the case company believe that
it is challenging to determine whether a reward achieves its goal because there are no
accepted measurement tools in place; they can only hope that it motivates employees to work
toward the achievement of the company's goals.
The information gathered to determine how employees feel about the current rewards in use
indicates that employee motivation has not been impacted by the company's rewards program.

58
Regarding the inquiries made to determine whether the incentives provided are encouraging
them to work toward the organizational goal.
Most of them disagree with this claim about their level of achievement. Employees confirm
that the rewards are not created with their needs in mind and suggest that it would be
preferable if the business thought about rewarding excellent performance. The business is
currently more concerned with status rewards. Additionally, it is learned from this section of
the survey that the most important financial and non-financial reward variables are thought to
be salary and job security, respectively. While job-related training and retirement benefits are
given the least weight,

ANOVA, R (coefficient of correlation), and Adjusted R-square (coefficient of determination)

were used to assess the overall fitness of the model using the data gathered to determine
which reward scheme—financial or non-financial—has the greatest impact on employee
motivation. It was discovered that the independent variables—financial and non-financial
rewards—have a statistically significant relationship with the dependent variable—
motivation. The dependent variable's variation can be explained by the linear relationship
with all of the independent variables in a way that accounts for more than 82 percent of it,
according to the R and adjusted R-square results.

Financial reward has the strongest positive relationship between the individual variables. A
1- unit increase in financial reward can result in an increase in motivation of about 31%.
According to the regression results, the second variable under study, non-financial reward, has
a positive relationship with motivation, increasing it by 1 unit will increase motivation by
about 16 points and 6 percent.

59
 5.2. Conclusion
The aim of the first research question was to identify the reward schemes in the case
company.
According to the interview result, the case company offered both financial and non-financial
rewards for its employee. But they don’t measure whether the rewards are serving its purpose
or
not. No survey was made to know employee feeling on current reward practice. And
employees
input was not considered during reward design. The case company does well on
communicating
the rewards offered by the company. Employees’ motivation is less likely if the
communication
of reward is insufficient or when employees are not aware of what is given for their effort.
For a company to be successful it must have employees, who are willing to put their
creativity,
abilities and know-how in favor of the company and it is the organization’s task to encourage
63
and nourish these positive employees’ input by putting effective reward practices in place.
According to the results obtained from the questionnaire, prepared to acquire employees
opinion
on how the reward in use impacting their motivation. It can be concluded that the rewards
offered by the case company are not influencing employees’ motivation well. This study
found
that the rewards offered by the company are not motivating employees to work toward
organizational goal accomplishment. The central focus of reward is developing a system that
leads the organization employee actively contribute to the achievement of its goals. It is
deliberately using reward system as integrating mechanism to direct various units and
individuals
effort to the achievement of organization objectives.
In spite of the reward scheme employed by the company the survey result shows that
employees’
60
attitude towards the company is mainly negative. As most of the respondents answered their
company did not show enough effort to make them think that they are an asset to the
company.
It is very important to identify what employees value most and design the reward scheme
accordingly for a compensation to be effective. However, in this case most employees agreed
that the reward practice is not tailored according to employee need. There is a gap between
what
employee perceive as most significant rewards and the reward practices which managers
consider to be the most motivating.
The survey result also indicated that employees are more interested in the acknowledgment
or
rewarding of good performance than other criteria. According to the interview result the
company follow more of the traditional approach. Rewards are designed based on seniority
and
job level. But in the contemporary approach rewards are designed based on the skill of
employee
to lead the organization to objective achievement.
When we look at which reward schemes (financial or non-financial) impacting employees
motivation most. According to regression analysis result it is possible to conclude that
financial
reward is impacting employee motivation most. On the basis of the findings salary is
influential
factor from financial reward in creating employee motivation because it satisfies the basic
necessities along with attainment of power and fulfills physiological and security need. As
the
interview reveals salary at the company is determined based on the existing salary policy, the
aim is not to pay everyone the same salary, but based on employee status there will be 64
Differentiation. Jobs are classified according to status and pay range will be determined by
the
status and responsibility of the job. Other financial rewards like bonuses, transport allowance
are

61
considered significant next to salary. While retirement benefit considered as the least
motivating
factor.
Even though, financial reward contributes a lot in motivating employees. Non-financial
rewards
are important in enhancing the employee motivation. Its impact is instrumental in improving
employee morale. Based on the finding, job, security, career advancement, and recognition
and
feedback from supervisors are motivating non-financial factors out of the six factor.

62
 5.3. limitations and Suggestions for Further Research

Due to the limited availability of resources, including money, data, and most importantly,
time, the investigation's primary focus was solely on the banking industry and specifically on
Dashen Bank. The study is therefore not representative of the banking industries. A study that
encompasses the entire industry and includes additional industries would be interesting.

The focus of this study was on determining how rewards, both monetary and non-monetary,
affect employee motivation. In order to determine how those rewards affected employees at
different levels, the researcher advised subsequent researchers to conduct a study. An
employee at a supervisory level or a lower level may not respond well to a motivating factor
that motivates an executive-level employee. Additionally, more research can be done to look
at how age and gender differences in the population can moderate the effects of financial and
non-financial rewards on employee motivation. By selecting just one specific reward scheme,
the impact of rewards on employees' motivation can also be improved.

5.4. Recommendation.

The case company is advised to implement the following changes to their rewards system in
order to meet their reward objective on the basis of the study.

The case company recommended placing a lot of emphasis on this reward because the
results of this study showed that financial reward is the most motivating factor for the
employees of this particular company.

Scheme. Specifically, for the monetary reward factors that company employees deemed to be
most crucial.

 The most important financial reward factor is therefore thought to be salary. Thus, rather than
solely relying on their salary policy, the researcher suggests that the company review the
market price when deciding on salaries, in particular the industry salary level for each job

63
 position and the duties of the job.
Designing rewards ought to involve employees. Without their participation, it is challenging
to customize rewards in accordance with employee needs. In order to design and implement

proper rewards systems, organizations must first recognize the hierarchy of needs that the
employees prefer.
 It's crucial to measure employee attitudes toward company rewards over a specific time period
in order to determine whether current reward practices are effective and produce the desired
results.
 It is crucial to give rewards based on employee performance because most employees agree
that good performance should be rewarded. When an employee feels that the company
recognizes his or her excellent performance, they are more likely to give it their all. This
creates the expectation that hard work will result in performance that is appreciated and
rewarded.
 The business should educate managers on how to provide feedback to their staff members.
Additionally, plans must be made to frequently provide official feedback.

 Since career advancement is regarded as the most significant non-financial reward, it is

recommended that the company offer vertical career advancement in a suitable way given its
size.
 To sum it up, creating a sound and appropriate reward system that is in line with employee
needs and takes employee input into consideration is essential for maximizing employee
motivation.
 The motivational effects of a combination of monetary and non-monetary rewards would be
greater than those of a single reward program alone. Companies, particularly the case
company, should decide which financial and non-financial factors to emphasize and then
adopt a rewards program that is suitable for all employee levels. Any error with the reward
package has serious consequences.
 Negative outcomes like a significant demotivational effect on an employee, a good employee
quitting, less effort, an unfavorable work environment, and a high absenteeism rate. This will
eventually lessen the organization's effectiveness and harm its financial performance.

64
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67
 JIGDAN COLLAGUE School of Graduates

Appendix 1: Interview Questions

1. What is your organization's vision and mission statement?

2. What is the objective of your reward? What do you value when you
are rewarding (commitment, tenure, individual or team performance,
seniority, status)?
3. Why is it important to have a motivated workforce?

4. What is the pitfall of having a demotivated workforce?

5. Kindly list all financial and non-financial rewards your company

currently makes available to the employee.
6. Have you considered employee participation during the design of the reward practice?

7. Have you conducted a survey with your organization's employees

about their feelings or attitudes toward reward practices and how
significant they are for them? If you do, how often?
8. Is each of the above-mentioned rewards practices available to each
employee in your organization? (If not, it may cause inequity.)
9. How does your company determine salary, benefits, and pay raises?

10. Are the employees aware of reward packages?

11. Do you think the overall reward offered by your company leads
employees to behave in a certain way as the company wants them to?
Are the rewards serving their purpose? measuring reward efficiency, if
yes, how? If there is a standard or common way to measure efficiency, If
not, why not?
12. Can you say that the reward assignment is fair or equitable?

13. Do you think the rewards encourage or inspire your employee to support
your organization's goal?
14. How is the reward system in your company affecting your employee motivation
levels?
15. Which factor do you think motivate employee most and if there is a possible
motivator?

68
 16. Does your company revise/ look back its reward policy? How often

Appendix 1: Questions to be filled by Employee of Dashen Bank

Section One: Demographic Profile Questions.

1.
Please specify your gender?
Male Female

2.
Please specify your age group?

Under 25 26 up to 35 36 up to 45 above 46

3.
Please specify your educational background?

Certificate Diploma First degree Above First degree

4.
Please specify your length of service in this company?

Below 5 5 up to 10 11 up to 15 above 15

5.
Please specify your status in the company?

Following are lists of claims about the influence of monetary and non-
monetary rewards on employee motivation. Please check the boxes next
to each statement to show your agreement or disagreement, with the
options ranging from "strongly agree" to "strongly disagree.".
Numbers from 1 to 5 were used to identify each option.

Note: 1- Strongly Disagree, 2- Disagree 3- Neutral,

4- Agree 5- Strongly Agree

69
 Section Two: Questions Related to Current Reward in Use
Scale the significance of the below Very Slightly Neutral Slightly Very
list reward for you; which are significan significan insignifican insignifican
currently offered by your t t t t
company
5 4 3 2 1
Salaries.

Bonus.

Insurance plan.

Transport allowance.

Pension/ retirement benefit.

Responsibility and interesting

duties.

Recognition and feedback from

supervisors.

Job related training.

Job security

Career advancement opportunity

1. I am well communicated about the rewards offered by the company.

1 2 3 4 5
2. The reward offered by the company shows its investment and care for employee.
1 2 3 4 5

3. The reward offered by my company motivates me to work toward

achievement of company’s goal.

70
 1 2 3 4 5

4. The reward practice employed by the company takes employees need in to

consideration.
1 2 3 4 5
5. The company should focus on rewarding good performance than status or seniority.
1 2 3 4 5

Questions Related to Motivation.

1. The reward allocation in my company is fair.
1 2 3 4 5
2. My input is equitable with my outcome.
1 2 3 4 5
3. My company acknowledges excellent performance.
1 2 3 4 5
4. Our company value good performance than tenure, seniority, status, loyalty
1 2 3 4 5
5. The company recognition of good performance impacts my level of motivation
positively.
1 2 3 4 5
6. My company treats its employee in equitable manner.
1 2 3 4 5
7. I am free to schedule my job.
1 2 3 4 5
8. My job has visible and recognizable outcome which I am aware of.
1 2 3 4 5
9. My job requires various skills.
1 2 3 4 5
Questions Related to Financial Reward.

1. I am satisfied by the bonus the company gives to its employee annually.

1 2 3 4 5
2. I am satisfied by the health insurance the company provided to employee.
1 2 3 4 5
3. I am satisfied by the education fee the company offer to its employee.
1 2 3 4 5
4. The transportation allowance given to employee every month is good enough.

71
 1 2 3 4 5
5. The company has good retirement benefit package.
1 2 3 4 5

Questions Related to Non-Financial Rewards.

1. I have challenging and interesting job.

1 2 3 4 5
2. The company offers carrier advancement opportunity.
1 2 3 4 5
3. The company provides job related training opportunity to its employee.
1 2 3 4 5
4. Employee participates in decision making that concern them.
1 2 3 4 5
5. The company guaranteed job security to its employee.
1 2 3 4 5

72
73