Organizational Reward System PDF

Organizational Reward System: Case of Abyssinia Bank
BY
Yeshalem Abadi
Addis ababa university
SCHOOL OF GRADUATE STUDIES
Collage of management , information and economic
science
Department of Business Administration (MBA)
June 2011
i
BY
Yeshalem Abadi
A project SUBMITTED TO THE SCHOOL OF GRADUATE
STUDIES OF ADDIS ABABA UNIVERSITY IN PARTIAL
FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE
OF MASTERS OF
Business Administration (MBA)

(MBA)
June 2011
ii
Addis ababa university
SCHOOL OF GRADUATE STUDIES
Collage of management , information and economic
science
Department of Business Administration

Administration (MBA)
BY
Yeshalem Abadi
Approved By:
____________________ ________________
Advisor signature
____________________ _______________
Examiner Signature
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ACKNOWLEDGMENTS
I would like to express my gratitude to my advisor Dr. Tilahun Teklu for his constructive,
noticeable comments, general support and encouragement during the project runtime. Not
only this but also he is my role model to be a teacher.
I also wish to acknowledge my friends: Yirga Agedom, Andom Berhe, Guesh Dagnew and
Mengistu Desalegn who provides me material and, moral support to conduct this project.
My special thanks goes to my families who have always been behind my education.
Furthermore, my gratitude goes to W/t Zuriashwork Mulugeta, for her contribution in this
project by giving secretarial service.
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Table of Contents
Contents Page
Acknowledgements i
Table of Contents ii
Abbreviation vii
Abstract viii
CHAPTER ONE
Project Introduction 1
1.1. Introduction 1
1.2. Project Description 2
1.3. Background of the Study 2
1.4. Statement of the Problem 3
1.5. Purpose of the Study 5
CHAPTER TWO
Review of Literature 5
2.1. Organizational Reward System 5
2.2. Elements of Organizational Reward System 6
2.2.1. Organizational Financial Rewards 6
2.2.2. Non-financial Organizational Rewards 8
2.3. Designing Organizational Reward System 13
2.4. The Aims of Organizational Reward System 14
2.5. Pay Satisfaction 15
2.6. Performance Appraisal and Compensation 16
2.7. Alternative Pay Strategies 18
2.8. Determinant of Organizational Reward System 19
2.8.1. Labor Markets Influence on Organizational
Reward System 19
2.8.2. Job Influence on Organizational Reward System 19
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2.8.3. Employee Influence on Organizational Reward System 19
2.9. Employee Benefits 20
2.9.1 Objectives of Employee Benefits 20
2.10. Managerial Employees 21
2.11. Non managerial Employees 21
CHAPTER THREE
Organizational Background and Methodology of the Study 22
3.1 Organization Background 22
3.1.1. Vision of the Bank 22
3.1.2. Mission of the Bank 22
3.2. Organizational Structure of Abyssinia Bank 22
3.3. Organizational Reward Package in Abyssinia Bank 23
3.4. Methods or Procedures 25
3.4.1. Mixed Strategies 25
3.4.2. Characteristics of Mixed Method Research 25
3.4.3. Visual Model and Procedures of the Design 25
3.4.4. Data Collection Procedure 26
3.5. Sampling Strategy 26
3.6. Data Analysis and Validation Procedures 26
3.7. Report Presentation Structure 27
3.8. Roles of the Researcher 27
3.9. Potential Ethical Issues 27
3.9. Significance of the Study 28
3.10. Scope of the Study 28
3.11. Limitations of the study 28
3.12. Operational Definition of the Construct 28
3.13. Organization of the Study 29
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CHAPTER FOUR
Data Presentation, Analysis and Interpretation 30
4.1. Organizational Rewards 30
4.2. Background Information of the Sample 30
4.3. A Comparative Description of Financial and
Non Financial Organizational Rewards 49
4.5.2. Strategies of Organizational Reward System 54
4.5.3. Inclination of Suggestions and Criticisms 54
4.5.4. Labor Market and Organizational Reward System 55
4.5.5. The Job and Organizational Reward System 55
4.5.6. Employee and Organizational Reward System 55
CHAPTER FIVE
Summary, Conclusion and Recommendation 57
5.1. Summary 57
5.2. Conclusion 59
5.3. Recommendations 61
References
Appendices
Appendix 1 demographic characteristics of respondent
Appendix 2 Questionnaires
Appendix 3 Interview Questions
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List of Tables
Page
Table 1: Sample Size of respondents 26
Table 2: Background Information of the Sample 30
Table 3: Economic Status with Direct Financial Rewards 33
Table 4: The Indirect Financial Rewards 35
Table 5: Fringe Benefits 37
Table 6: The Work (Job Environment) 39
Table 7: The Job It Self (Job Context) 42
Table 8: Harmony of Relationship 45
Table 9: Behavior of the Administrative Mechanism (Strategy) 47
Table 10: Independent T- Test That Shows Satisfaction Mean Difference of
Economic Status with Direct Financial Rewards between Managerial
and Non Managerial Employees 50
Table 11: Independent T-Test That Shows Satisfaction Mean Difference of
Indirect Financial Rewards between Managerial and Non Managerial
Employees 51
Table 12: Independent T- Test That Shows Satisfaction
Mean Difference of Fringe benefit between Managerial and Non
Managerial Employees 51
Table 13: Independent T- Test That Shows Satisfaction Mean
Difference of the Work Environment between Managerial and
Non Managerial Employees 52
Difference of the Job Context between Managerial and Non
Managerial Employees 52
Difference of Harmony of Relationship between Managerial and
Non Managerial Employees 53
Difference of the Behavior of Administrative Mechanism between
Managerial and Non Managerial Employees 53
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List of Figure
Page
Fig. 1: Components of Organizational Rewards 13
Figure 2: Organizational Structure of Abyssinia Bank 23
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Abbreviation
AAU - Addis Ababa University
ORS - Organizational Reward System
Fig - Figure
HRM - Human Resource Management
PAS - Performance Appraisal systems
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Abstract
Organizations realizing that establishing an equitable balance between the employee’s

contribution to the organization and the organizations contribution to employees.
Maintaining this balance is one of the main reasons to design organizational reward
package for employees. The study was designed to assess the current practices of
organizational reward in Abyssinia Bank. Four branches of Abyssinia Bank in Addis Ababa
are randomly selected for the study. Questionnaires and interviews are used to collect data
about use of different categories of organizational rewards such as direct and indirect
financial rewards, fringe benefits, the work environment, harmony of relationship behavior
of the administrative mechanism and the job context. The result shows that employees
dissatisfaction with some categories and variables of the organizational reward system. An
independent T-test also used to describe satisfaction mean difference in all components of
organization rewards between managerial and non-managerial employees. The result also
revealed that significant differences on some categories of organizational rewards between
managerial and non-managerial employees. More over, the combined mean rate of the two
components reflects a state of satisfaction with organizational reward system of Abyssinia
Bank.
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CHAPTER ONE
PROJECT INTRODUCTION
1.1. Introduction
Organizational reward system has been practiced by numerous organizations since centuries. It is one
of the most important requirements for successful business and human resource policy of the
organization. As employees are one of the most important assets of the organization, the practice of
valuable organizational reward system is an inherent as well as inseparable part of the organizations
life.
In an organizational context, all attempts of administrators are supposed to increase the employees’
drive to perform at higher level. Performance of course results from interaction of physical, financial
and human resources. The first two are inanimate. They are translated in to productivity only when
the human element is introduced in to work place with certain qualities that lead for effective
organizational reward administration.
Thus, designing effective organizational reward system helps the company to obtain well capable,
skilled, competent as well as motivated employees. It also helps the organization to retain these
employees in attaining strategic as well as shorter term objectives. However, unfavorable
organizational reward system can bring many problems for the company including employee’s low
morale, decreased company as well as employee productivity, a lessening of employee enthusiasm
and less support for the organization (Neo, 1990).
In general, having satisfied work force leads for higher productivity, for instance it leads for:
(http://globajournal.orga/GJMBR_Volume11/9-Reward-System-And-Its-Imppact-On-Employee.pdf).
• maintaining high employee’s effort that initiate, motivate, as well as energize competent and
able individuals in using their potential to work better for the accomplishment of
organizational goals.
• delivering higher quality of goods and services with high performance as well as innovative
features that can bring a competitive advantage.
• creating higher customer satisfaction that makes them to feel pleasure resulting from
comparing perceived performance of goods or services with expectation.
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• more repeat business in which satisfied customers make purchase from the same company of
either the same or other products as well as announce the good will of the company through
word of mouse communication to others.
• higher growth and profits by developing new products as well as markets with increasing
earning capability of the organization.
• higher stock holder satisfaction by sustaining profitability or maintaining social welfare in
achieving organizational objectives.
• more investment by establishing different ventures in expanding the capacity of the
organization with utilizing the existing profitability.
1.2. Project Description
The major theme of the project is to look the over all practices of organizational reward system in
Abyssinia Bank. The focus is to view the satisfaction of employees with the practices of
organizational reward system (ORS) in the bank. It is also intended to identify the major components
of organizational reward system & the degree to which organizational reward system are reliable as
well as valid for employees in preparing for further responsibility with additional remunerations’.
This project will benefit the following: 1) Abyssinia Bank( the human resource management
department), first and for most the report provides the bank with the real unsatisfactory items
organizational reward system with forwarded recommendations , if implemented, it offers a good
insight to tackle the items of organizational reward system for employees. 2) The academic member
of the society (staff members, students of AAU and other local Universities). This report contributes
the existing knowledge in field of human resource management; as a result it can be used by the
academic members of the University to conduct bank wide research in the area of organizational
reward system. 3) The researcher personally obtained an experience that adds knowledge of tackling
practical research problem in my career life. This will be used as a stepping stone for my future
project works.
1.3. Background of the Study
People often join organizations in order to secure rewards as a result of their active
participation in achieving objectives under taken by the organization. Organizational reward
system consists of rewards ranging from direct and indirect financial rewards to complex non
financial including psychological (intrinsic) rewards enjoyed by employees as a result of
their involvement in the activities of a particular organization (Robbins, 1989). In this
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modern world, people often joined organizations in pursuit of rewards that satisfy their
needs. The organizational reward system is the most effective motivation related tool at the
organizations disposal. It has a significant impact on the job satisfaction and employee
motivation. Organizational reward system affects job satisfaction by making the employee
more comfortable. It influences employee motivation primary through the perceived value of
the organizational rewards including their contingency on performance.
Organizational reward cover both financial and non-financial rewards that are incorporated
with different categories such as direct and indirect organizational financial rewards, fringe
benefits, the work environment, job context, harmony of relationship as well as the behavior
of administrative strategy. Thus, in addition to direct organizational material incentives
human beings need to secure other organizational rewards that can not be tangibly expressed
in terms of pay or other material rewards. This may be why Armstrong (2007), argues that
organizational reward system must incorporate all rewards that range from simple extrinsic
to complex intrinsic rewards.
Therefore, proper recognition and selection of organizational rewards to be offered are

critical for the system to function effectively. Organizations must recognize what employees
perceive as meaningful organizational rewards. Since employees are stakeholders in the
organization, their needs should be addressed to meet the needs of both the organization and
its stakeholders. The over all objective is to reward people fairly, equitably, and consistently
in accordance with their value to the organization in order to further achievement of the
organizations strategic goals (Armstrong, 2007).
1.4. Statement of the Problem
Management is a problem solving process to achieve organizational objective through

efficient use of physical, financial and human resources in changing environment. In this
regard the organization needs to have employees who are competent and productive to the
organization they are working for. To retain a satisfied work force that is productive to its
organization the management needs to focus on maintaining a suitable working condition.
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Any organization whether it is profit or nonprofit define goals set to achieve and requires
resources to attain its goals. Resources may be composed of financial, material, human etc.
to achieve the desire goals; the human resource component is a primary and fundamental
resource to all organizations. Because employee’s of the organizations are a supreme factor
that critically involved in the operation of organizational activities. The other resources like
financial, material, information and time resources serve useful purposes only when
employees involved to the nobility of their profession and accompanying their
responsibilities. Successful and effective organization depends on the success and
effectiveness of those who work in it. Hence it should be noted here that the quality
performance on organizations operation are to be develop and maintained, careful attention
should also be given to effective personnel management of employees within the
organization (Armstrong, 2007). Studies that have been conducted on this topic indicates that
the most common problems in organizations today that they miss the important component
of organization reward system which is lack of employee benefits, subjectivity of employee
performance evaluation and inadequacy of employee opportunities for further education that
leads employees dissatisfied and limited the productivity of the organization (Global journal
of management and business research volume 11 issue 4 version 1.0 March 2011).
Consequently, in bringing well qualified employees to organizational operations, the need
for having an effective both financial and non organizational reward system for employees
are crucial factors.
The study attempts to the extent which the contemporary way of thinking on human resource
is not only employing staff, but also believes on serious considerations for employees
physical as well as psychological organizational rewarding system so that organizational
goals can be achieved. Accordingly, this study aimed at assessing the practices of both
financial and non financial organizational rewards in Abyssinia Bank. Attempts were made
to extract answers to some of the underlying set of research questions.
• What does the organizational financial reward system look like?

• Do employee’s satisfied with organizational financial rewards?
• What does the organizational non-financial reward system look like?
• Do employees satisfied with company’s non-financial rewards?
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• Is there any significant difference on organizational reward system between
managerial and non-managerial employees of the bank?
• Which components (financial and non-financial) of organizational rewards are more
satisfied to employees?
1.5. Purpose of the Study

The general objective of this study is to assess the state of organizational reward system in
Abyssinia Bank.
Specific Objectives:
More specifically this research has the following objectives:
To describe the organization’s financial reward system
To find out employees’ satisfaction of company’s financial reward system
To describe the organization’s non- financial reward system
To find out employees’ satisfaction of company’s non-financial reward system
To describe the differences between managerial and non-managerial employees on
satisfaction of organizational reward system
To compare financial and non-financial organizational rewards on satisfaction of
employees
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CHAPTER TWO
REVIEW OF LITERATURE
2.1. Organizational Reward System

People often join organizations in order to secure rewards as a result of their active
participation in the functions and objectives under taken by the organization. Organizational
reward system consists of the types of rewards both financial and non financial rewards
relating with extrinsic as well as intrinsic rewards that are received or benefited on accounts
of members involvement in the activities of an organization (Byars,1987). Managing
organizational reward aims to support the achievement of the organizations strategic and
shorter term objective by helping to ensure that competent, motivated and productive work
force (Armstrong and Muris, 2005).
Henderson (2006), in his book of compensation management in a knowledge-based world

indicated that, an organization is formed to accomplish a specific mission. To do this, it must
attract and hire people who have certain knowledge, skills, aptitudes, and attitudes. To attract
and retain such people, the organization provides rewards. An organization designs and
implements a reward system to focus worker attention on the specific behaviors the
organization considers necessary to achieve its desired objectives and goals. The behaviors
range from simply arriving at work at the scheduled time to meeting specified performance
standards and providing innovative contributions that lead to improved productivity. If
rewards are to be demands of the employees whose behaviors they are intended to influence.
2.2. Elements of Organizational Reward System

Armstrong (2000) stated that there are two major elements of organizational rewards, those
are; organizational financial rewards (direct financial organizational rewards, indirect
financial organizational rewards and fringe benefit) and organizational non financial rewards
(the work environment, job context, harmony of relationship and behavior of the
administrative mechanism).
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2.2.1. Organizational Financial Rewards
Direct Financial Rewards
Base Pay (or basic) pay - is the level of pay (the fixed salary or wage) that constitutes the
rate for the job. It may provide the platform for determining additional payments related
to performance, competence or skill. It may also govern pension entitlement and life
insurance. The basic levels of pay for jobs reflect both internal and external relativities.
The internal relativities may be measured by some form of job evaluation which places
jobs in a hierarchy (although the trend now is play down the notion of hierarchy in the
new process based organizations. External relativities are assessed by tracking market
rates. Alternatively, levels of pay may be agreed through negotiation: by collective
bargaining with trade unions or by reaching individual agreements. The base rate for a
job is some times regarded as the rate for a competent or skill-based or competence. In
many organizations pay levels evolved- they are not planned or maintained
systematically. Rates are fixed by managerial judgments of what is required to recruit
and retain people. They may be adjusted in response to individual or collective pressure
for increases or upgrading. This evolutionary and ad hoc process can result in chaotic
and illogical pay structure which is inequitable, leads to inconsistent and unfair decisions
and is difficult to understand, expensive to maintain and the cause of dissatisfaction and
de motivation. Base pay is expressed as an annual, weekly or hourly rate (Armstrong,
2000).
Contingent Pay- Additional financial rewards may be provided that is related to

performance, skill, responsibility, competence and/or experience. These are referred to as
‘contingent pay’. If such payments are not consolidated in to base pay, they can be
described as ‘variable pay’. According to Armstrong (2000), the main types of
contingent pay are:
Individual performance-related pay - in which increases in base pay or cash bonuses are
determined by performance assessment and ratings (also known as merit pay)
Bonuses - are rewards for successful performance which are paid as cash (lump) sums
related to the results obtained by individuals, teams or the organization.
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Incentives- are payments linked with the achievement of previously- set targets which
are designed to motivate people to achieve higher levels of performance; the targets are
usually quantified in such terms as output or sales.
Service-related pay - which increases by fixed increments on a scale or pay spine
depending on service in the job.
Competence-related pay - which varies according to the level of competence achieved by
the individual.
Contribution related pay - which relates pay to both outputs (performance) and inputs
(competence).
Skill-based pay (sometimes called knowledge-based pay) - which varies according to the
levels of skill the individual achieves.
Career development pay - which rewards people for taking additional responsibilities as
their career develops laterally within a broad grade (a broad- banded pay structure).
Allowances - are elements of pay in the form of a separate sum of money for such
aspects of employment as overtime, shift working, call-outs and living in large cities.
Total Earnings- are usually calculated as the sum of base pay and any additional
payments
Employee Benefits- also known as indirect pay, include pensions, sick pay, insurance
cover and company cars
Indirect Organizational Financial Rewards

An indirect organizational financial reward includes all financial rewards that are not
included in direct compensation. Its elements are employee’s further education; paying
employees for the time not worked for instance sick leave, vacation, holiday as well as
insurance facilities (Neo, 1990).
Fringe Benefit
Fringe benefits are forms of indirect financial rewards to protect employees from financial
risk. The demand for fringe benefits continue to grow in organizations that stimulated by the
fact that such benefits usually represent either tax free income to the employee or deferment
of tax until retirement. There are various forms of fringe benefits that can be made available
to employees of the organization. For instance housing, household facilities, medical
services, transportation and cafeteria services.
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Total Remuneration - is the value of all cash payments (total earnings) and benefits received
by employees
2.2.2. Non-financial Organizational Rewards- include the following:

Work Environment
The work environment relating with non financial rewards are:
Working conditions: the physical conditions of work such as the amount of work or the
facilities available, heat, light, space, tools, equipments and supplies.
Transfers: refers to reassignment of an employee from one job to another position with
similar status, equal pay and responsibility.
Sound organizational policies and administration: adequacy or in adequacy of company
rules and regulations including such elements as clarity of communication and other
personnel policies such as salary increment policies, promotion policies and fringe benefits.
Promotion opportunities: a promotion occurs when an employee is moved from a job to
another position that is high in pay, responsibility and organizational level (Davis, 1989), it
is a mechanism which organization recognizes employees past job performance and its effort
to aid the organization in furthering its objectives. It is usually based on merit and seniority.
Employment stability /job security: objective signs of the presence or absence of job
security such as tenure, company stability and assurance of threats t continued employment.
Supervision: competence or incompetence, fairness or unfairness efficiency of supervision
associating by supervisors.
Appropriate status: signs, symbols or appurtenances of position with in the organization
such as privileges, support staff, work space size and locations.
The Job Context

As Armstrong and Muris (2009), the job context of non-financial organizational rewards can
be focused on the needs most people have, although to different degrees, for achievement,
recognition, responsibility, influence and personal growth.
Achievement- Research carried out by McClelland (1975) of the needs of managerial staff
resulted in the identification of three major needs, those for achievement, power, and
affiliation. The need for achievement is defined as the need for competitive success
measured against a personal standard of excellence.
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According to Armstrong (2000), motivation can occur when people are given the opportunity
to achieve. This can involve empowerment: providing more scope for people to make
decisions and use their skills. High achievement motivation results in such behavior as
taking control of situations or relationship, directing the course or events, creating and
seizing opportunities, enjoying challenges, reacting swiftly and positively to new
circumstances and relationships, and generally ‘making things happen’. Achievement
motivation can be increased by organizations through process and systems such as job
design, performance management, and skill-based or competence-based pay schemes.
Recognition- According Armstrong and Muris (2005), recognition is one of the most
powerful motivators. People need to know not only how well they have achieved their
objectives or carried out their work but also that their achievements are appreciated. Praise,
however, should be given judiciously- it must be related to real achievements. And it is not
the only form of recognition. Financial rewards, especially achievement bonuses awarded
immediately after the event, are clearly symbols of recognition to which are attached
tangible benefits, and this is an important way in which mutually reinforcing processes of
financial and non-financial rewards can operate. There are other forms of recognition such as
long service award, status symbols of one kind or another, sabbaticals and work related trips
abroad all of which can be part of the total reward process. Other actions which provide
recognition include promotion, allocation to a high-profit project, enlargement of the job to
provide the scope for more interesting and rewarding work, and various forms of status or
esteem symbols.
Responsibility- People can be motivated by being given more responsibility for their own
work. This is essentially what empowerment is about and is in line with the concept of
intrinsic motivation based on the content of the job.
Influence- People can be motivated by the drive to exert influence or to exercise power. The
organization through its policies for involvement can provide motivation by putting people
into situations where their views can be expressed, listened to and acted upon.
Personal Growth- In Maslow’s hierarchy of needs (1954); self-fulfillment or self-

actualization is the highest need of all and is therefore the ultimate motivator. He defines
self-fulfillment as ‘the need to develop potentialities and skills, to become what one behaves
one is capable of becoming’.
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Ambitious and determined people will seek and find these opportunities for themselves,
although the organization needs to clarify the scope for growth and development it can
provide (if it does not, they will go away and grow elsewhere). Many people now regard
access to training as a key element in the overall reward package. The availability of learning
opportunities, the selection of individuals for high prestige training courses and programs
and the emphasis placed by the organization on the acquisition of new skills as well as the
enhancement of existing ones, can all act as powerful motivators (Armstrong and Muris,
2005).
Advancement: actual change in status with in the organization as a result of performance

and promotion.
Career: covers a sequence of positions, jobs or occupations that one person engaged during
his/her working life.
Work load: those organizational activities which are related to employee’s professional
duties, responsibilities and interests.
The Harmony of Relationships

Pleasant or unpleasant interpersonal interactions with co-workers (workers at the same level
in the organization), interpersonal relations can also with supervisors or subordinates
pleasant or unpleasant interactions with superiors that are or not directly relevant to task
accomplishment and pleasant or unpleasant interactions with persons at a lower level in the
organizational hierarchy respectively. Therefore, employees of an organization maintained a
harmony of relationships with people around them to develop positive interaction with those
stake holders hat provide employees in maintaining both social as well psychological
benefits. This leads for simplicity of life of employees in an organization
Administrative Strategies for Developing Employees Motivation

Gordon (1986), suggests that reward systems should offer a sufficient number and diversity
of rewards. Nevertheless, some organizations lack the resources to offer enough extrinsic
rewards to motivate employees to perform/to encourage their satisfaction; in these cases,
organizations must consider intrinsic rewards instead.
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Administrative motivations strategies therefore are those attempts to act on the human input
factors within the technological frame work and material constraints of an organization.
Essentially, these are attempts to increase the persons drive to perform at a higher level.
Administrators have various strategies for motivating organization members; and each
strategy is aimed at satisfying employees’’ needs through appropriate behavior. Major and
pertinent strategies are selected and briefly discus here under.
Managerial Communication
Communication is the means with which administrators coordinate efforts of individuals
with in organizations, establish and clarify purposes and deal with organizational problems
and decision making. Realizing the role of communication in a group effort Rush (1983), has
this to say, “Communication is to an organization what blood is to the human body”. It also
observed the role and described it as “the give that holds an organization together and
harmonize its parts”.
Therefore, the most basic motivation strategy at the disposal of administrators is simply to
communicate with organization members. The administrator-subordinate communication can
satisfy such basic needs as recognition, a sense of belonging and security.
Guarino, as cited by Gorton (1980) noted that, “in the area of leadership there is no talent
more essential than one’s ability to communicate”.
Wise administrators often try to utilize upward communication channels, in particular, as a

basis for problem solving and as a strategy for employee’s motivation. According to Drucker
(1974) communication should be facilitated to reach subordinates, to receive their initiative,
and to develop their motivation for higher performance.
Job Freedom and Discretion

Increasing the workers degree of control over their working world is a strategy at the
disposal of administrators to develop employee motivation. Drucker (1974), suggests that the
employee must be given responsibility, authority and increased control over the decision
making that affects their immediate environment. They must become self responsible and
self reliant in their work. Discretion also leads to responsibility and thoroughness, as the
blame for mistakes cannot easily be transferred elsewhere.
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Participative Decision Making
Closely associated with the granting to members of increased control over their work is the
strategy of participative decision making. According to Drucker (1974), several studies
suggest that participation indecision making increases members level of satisfaction, their
enthusiasm for their organization and their positive attitude towards their superior.
Basically, the motivating force of participative decision making is developed from the fact
that there is ownership in injections one’s own idea, values and decisions in to one’s work.
Ownership in this case means belonging to, pertaining to or relating to one’s self and
participation in the decisions of the work in which one is engaged.
Behavior Modifications
Another strategy that managers can use in motivating members is primarily based on a
concept known as behavior modification or reinforcement, a motivation theory developed by
skinner (Davis and News From, 1989).
Behavior modification focuses on encouraging appropriate behavior. In organizational

systems, reinforcement programs emphasize establishing work situations, such as reward and
recognition policies, that help members learn work habits that are satisfying to them and that
aid in the achievement of organizational goals (Certo and Appebaum, 1986).
Total Reward: total reward is the combination of financial and non-financial rewards
available to employees.
2.3. Designing Organizational Reward System

Various needs of people serve as driving force for their behavior. In an organization
managers try to govern the behavior of people by providing suitable incentives. Incentives
are the objects, which are supposed to satisfy needs and improve the work performance of
the employees. Thus, it covers both financial and non-financial organizational rewards.
Burak and Smith have designed incentive as follows:
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Organizational rewards
Financial Non-Financial
Direct Indirect The job Job

Wages Insurance plans: Interesting Environment
Salaries Life, Health, Duties or job load Sound Policies
Commissions Social Competent
Challenging
Bonus Assistance Supervision
Over time Responsibility Congenial Co-
Benefits:
Allowances Retirement Opportunity for Workers
Educational Recognition Appropriate
Assistant Status Symbols
Feeling of Achievement
Employee Comfortable
Opportunities for
Services
Advancement Working
Paid absences:
Conditions
Vacation Opportunities Participation in
decision making Job Sharing
Opportunities for personal growth
Satisfaction on profession or
career.
Fig. 1 Components of Organizational Rewards
2.4. The Aims of Organizational Reward System

As Armstrong (2000), the overall aim of organizational reward is to support the attainment
of the organization’s strategic and shorter-term objectives by helping to ensure that it has the
skilled, competent, committed and well motivated workforce it needs. This means providing
for the continuing improvement of individual, team and therefore organizational
performance, and taking steps that contribute to the creation of added value and the
achievement of competitive advantage.
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As Lawler (1990) has noted:
The challenge is to develop pay programs that support and reinforce

the business objectives of the organization and the kind of culture,
climate and behavior that are needed for the organization to be
effective.
He also made the important point that ‘pay practice are only as good as the impact they have
on organizational effectiveness.
It has been emphasized by Schuster and Zingheim (1992) that ‘people are the principal
variable in organizational successes’.
Besides of the overall aim, Armstrong (1999) specifies the following specific aims of
employees reward:
Contribution to add value: Added value is generated by people. It is people at various

levels who create visions, define values and mission, set goals, develop strategic plans, and
implement those plans in accordance with the underpinning values. Added value will be
enhanced by anything that is done to obtain and develop the right sort of people, to motivate
and manage them effectively, to maintain stable relationship with them based on mutual
trust. Employee reward contributes to the creation of added value by helping to ensure that
people with the required competences and level of motivation are available, and by playing a
part in creating a culture and environment that stimulate high-quality performance
(Armstrong, 1999).
Contribution to Competitive Advantage: Sustainable competitive advantage as formulated

by porter (1985) arises when a firm creates value for its customers selects markets in which
it can excel, and presents a moving target to its competitors by continually improving its
position. According to Porter, three of the most important factors are innovation, quality and
cost leadership, but he recognizes that all these depend on the quality of an organization’s
human resources.
Management and Organizational Reward: An organization’s performance depends

ultimately on the quality of its management and employees, and the reward system can help
to improve the quality. Therefore, reward systems, is an excellent means for good
management (Armstrong, 1999).
15
Organizational Reward System Aims from the Employees’ Point of View: According to
Armstrong (1999), from the employees’ point of view the reward system should:
Treat them as a stakeholder who has the right to be involved in the development of
the reward policies that affects them.
Meet their expectations that they will be treated equitably, fairly, and consistently.
2.5. Pay Satisfaction

Organizations with satisfied employees tend to be more effective than organizations with less
satisfied employees (Ostroff, 1992), and it has been argued that pay satisfaction is one
important measure of organizational effectiveness (Heneman et al., 1997). Greater pay
knowledge has been found to be related to higher pay satisfaction (Mulvey et al., 2002a).
Satisfaction with rewards can influence overall job satisfaction, as well as absenteeism,
recruitment and turnover (Lawler, 1981).
Miceli and Lane (1991) claim that even those employees who do not receive rewards are
more satisfied when they see strong linkages between pay and performance. They argue that
pay procedures are related to pay satisfaction (Miceli and Lane, 1991). We believe, like, for
example, Mulvey et al. (2002) that low awareness and poor understanding of the pay system
may lead to dissatisfaction.
Various behavioral scientists have put forth conflicting positions over the meaning of pay
satisfaction. On the one hand, researchers such as Herzberg (1966) classified pay as a
“hygiene factor” in the work environment and maintained that pay can only lead to feelings of
dissatisfaction, but not to satisfaction. On the other hand, discrepancy theorists such as Locke
(1969) and Porter (1961) posit that satisfaction is a function of the employee's comparison of
what exists on his or her job with what he or she seeks on the job. Pay satisfaction happens
when existing pay corresponds to, or is greater than desired pay while pay dissatisfaction
occurs when existing pay is less than the desired pay.
16
2.6 Performance Appraisal and Compensation
Performance appraisal is a management technique, which is used for making personnel
decisions (promotion, transfer and pay), but also deals with issues like employee
development (feedback and training). The appraisal activities are primarily based on the
appraisal of employees’ work results and activity (behavior). The main aim of performance
appraisal is to determine the work results of an employee in order to offer justified
compensation. In addition to that, it is necessary to be able to grant procedural justice,
accuracy and suitability of appraisal procedures and to continuously drive towards a result-
driven climate through the shaping and changing of organizational culture (Boyd and Ken,
2004; Grote, 2000; Weiss, 2001).
One antecedent to distributive and procedural justice of performance, appraisal is social

justice between groups and employees. When we do not compensate employees fairly, by
basing their compensation on work results, then the employees waste their time rather on
getting the desired levels of compensation and not on improving their work (Boyd and Ken,
2004).
Lawson (2000) believes that individual performance and pay have to be in accord as only
then is it possible to motivate people enough for them to improve their performance and
work quality. Pay-for-performance systems have enabled companies to leave aside fixed
remuneration packages and concentrate on much more flexible systems that reward and
appreciate individual efforts. Also, when working out a performance-appraisal system, it is
important to take into consideration both organizational and personal goals.
Performance-appraisal activities enable us to determine whether the employees’ performance

is in accordance with the established objectives. Three key functions of higher educational
institutions are teaching, research and advising. The challenge to the universities is to
produce employees who meet the requirements of employers. It is increasingly common for
companies to search for individuals that have received training in a particular academic field.
The quality of performance in teaching would include measures such as postgraduate
students and alumni feedback (Mergen et al., 2000).
As Deluca (1993) the performance appraisal process, also called the performance appraisal
system (PAS), is the term frequently used for an organization’s formal efforts to evaluate
17
individual performance. Developing a performance appraisal system-a most complicated
task-frequently falls under the responsibility of the wage and salary administration function.
Regardless of all the other purposes that may be expected of the performance appraisal
process, the one that it is almost universally used for is determining wages and salaries. The
most frequent use of performance appraisal is evaluating performance for merit pay
increases, granted of withheld.
Deluca also describes that even though to determine pay rates is usually the prime reason for
the performance appraisal system, however, is also used for providing a feedback
mechanism, professional management development, human resources planning, Encouraging
legal compliance on issues of discrimination, Enhancing communication with employees,
Basis for career path determination and determining effectiveness of selection procedures.
Providing a feedback mechanism- the performance appraisal is intended to provide a formal

feedback opportunity so that at least once every appraisal period every employee covered
under the program will have the opportunity to learn how well he/she did during the
appraisal period.
Professional /management development- the performance appraisal system offers managers

the opportunity to determine the future performance of individual employees by considering
their potential, as well as current and past performance.
Human Resources planning- the performance appraisal system can serve as the auditor of the
skill level of current staff members with consideration give to current and anticipated
organization needs for staff planning purpose.
Encouraging legal compliance on issues of discrimination-the performance appraisal system

undertakes a process that has federal and other governmental encouragement to provide a
framework for legal discrimination based on performance standards as implemented through
the performance appraisal program.
Enhancing Communication with employees- the very existence of the performance appraisal
system itself communicates signal about the organization to its employees. Each employee is
thus offered a mechanism for enhancing the communication process by being a participant in
the sessions.
18
Basis for career path determination- if the performance appraisal form measures past
performance, does it make sense for the form to also serve to determine the potential of the
employee?, there may be an argument for the past as an indicator of future performance, but
it is tenuous. To make matters worse, some organizations have a category on the
performance appraisal form for indicating the anticipated next promotion for the employee
and a time frame for the promotion.
Determining effectiveness of selection procedures-the performance appraisal program is

sometimes used to address the question of the effectiveness of the selection process. By
considering the on the job performance level of current employees it is quite simple to
consider whether there may be better ways to select “ideal” employees for a particular
organization.
2.7 Alternative Pay Strategies

High pay level strategy: in this alternative the organization chooses to pay higher than the
average pay level. The assumption is that paying a higher salary or wage enables
organizations to attract and retain competent employees and these interns enhance
employee’s productivity.
Low level strategy: in this strategy, the organization pays a minimum salary or wage to
employees. This may be because of poor financial condition or the work does not require
highly qualified personnel. The low reward policy does not save money rather it is quite
expensive in addition to being unproductive, low paid workers usually damage their work
instruments because of insufficient knowledge and skill on the other hand, organizations
using low pay strategy may also have high labor turnover rate.
The comparable-pay level strategy: This strategy requires organization to follow “Equal pay
equal work” here employees are paid based on comparable value of job they are performing.
2.8. Determinant of Organizational Reward System

Reward system is influenced by a series of internal and external factors. As Mondy and Noe
(1990) pointed out the organization, the labor market, the job and the employee have an
impact on the job pricing and the ultimate determination of employee’s compensation.
19
2.8.1. Labor Markets Influence on Organizational Reward System
The number and types of employees indicated in the organization’s human resource planning
is mainly drawn from the labor market. Since the market directly affects the pay-levels,
analysis of the demand for and supply of labor is imperative. The demand for human
resources largely depends on organization’s ability to pay. On the other hand, the supply
focuses on the number of persons of work age: the attractiveness of the job in pay, benefits,
and psychological rewards: the availability of training institutions, and so on (Glueck, 1978).
When the supply of employees exceeds the demand, the initial pay-levels tend to go down.
On the contrary, when demand for employees exceed the supply, the initial pay-levels to go
up.
2.8.2. Job Influence on Organizational Reward System

Organizations appear to attribute similar values for similar jobs and different values to
different jobs. In other words, jobs employees are assigned to perform are a major decisive
factor of the amount of pay they will in turn receive. Organizations pay for the value they
attach to certain duties, responsibilities, and other job-related factors (Monday and Noe,
1990). If this is the case, the question of what are the techniques used to determine the value
of jobs is an important one that requires an answer. Compensation techniques used by
organizations for determining the relative value of jobs are job analysis and job evaluation.
2.8.3. Employee Influence on Organizational Reward System

The major goals of compensation are to attract and retain qualified employees to the
organization. In most cases, employees are willing and cooperative to do their jobs to the
best of their abilities if they believe that pay is relatively equitable to performance. In other
words, compensation affects employee decision to stay or leave the organization, to work
effectively and to accept additional responsibilities. An effective compensation system is
designed to satisfy employee needs and reinforce job behavior consistent with organizational
objective (Bratton and Gold, 1995). Recall from the earlier discussion that organization,
labor market, and the job influence compensation system. Moreover, factors related to
employee like performance, seniority and experience also determine pay levels in an
organization.
20
2.9. Employee Benefits
According to Armstrong and Muris (2005), employee benefits are elements of remuneration
given in addition to the various forms of cash pay. They provide a quantifiable value for
individual employees, which may be deferred or contingent like a pension scheme, insurance
cover or sick pay, or may provide and immediate benefit like a company car. Employee
benefits also include elements which are not strictly remuneration, such as annul holidays.
Employee benefits that part of the total compensation package, other than pay for time
worked, provided to employees in whole or in part by employer payments. Example, life
insurance, pension, workers’ compensations and vacation (Milkovich Newman, 1987).
2.9.1. Objectives of Employee Benefits

As Armstrong and Muris (2005), the objectives of the employee benefits policies and
organization might be;
To increase the commitment of employees to the organization. Strongly committed
employees identify themselves with the organization, are involved in the organization
and enjoy their membership in the organization (Allen and Meyer, 1990).
To provide for the actual or perceived personal needs of employees, including those
concerning security, financial assistance and the provision of assets in addition to
pay, such as company cars and petrol.
To demonstrate that the company cares for the needs of its employees.
To ensure that an attractive and competitive total remuneration package is provided
which both attracts and retains high-quality staff.
To provide a tax-efficient method of remuneration which reduces tax liabilities
compared with those related to equivalent cash payments.
Benefits can, therefore, create more favorable attitudes toward the company leading to
increase long-term commitment.
According to Armstrong and Muris (2005), allowing choice is one of the benefits policies.
Benefits will be most effective in the process of attracting and retaining employees if they
satisfy individual needs. But individual needs vary so much that no benefits package or
single item within the package will satisfy all employees equally. Younger employees may
be more interested in housing assistance than a company pension plan. Some employees
21
have ethical or political objections to medical insurance schemes. Many people may prefer
cash to an automatic benefit which is not precisely what they want.
2.10. Managerial Employees

Organization is a group of two or more people brought together to achieve common stated
objectives. It is a collection of two or persons engaged in a systematic effort to produce
goods and services. Thus managerial employees are those employees that coordinate and
direct the activities of others. Managerial employees are also those employees in the position
of authority that make decisions to commit their resources and others towards the
achievement of organizational objectives (Banti et al, 2006).
2.11. Non managerial Employees

Are those employees that are not in a position to direct and coordinate the activities of others
rather to work on operating level? They do not have own subordinates. They assign tasks and
duties by others to perform and are accountable to their corresponding managers. They have
also little opportunities to participate indecision making and are not liable for the
organization other than their part of their job. Http://wiki.answers.com/q/explain, how
managers differ from non- managerial employees.
22
CHAPTER THREE
ORGANIZATIONAL BACKGROUND AND
METHODOLOGY OF THE STUDY
3.1 Organization Background

Abyssinia Bank was established on February 15, 1996 with subscribed capital of birr 25
million, an authorized capital of birr 50 million and paid capital of birr 25 million. The bank
has since registered tremendous growth. For instance, in june,2006 its total asset has reached
birr 3.0 billion, where as its subscribed, authorized and paid up capital has gone up to birr
265 million, 530 million, and 265 million respectively. The bank now boasts 51 branches
throughout the country, 28 of them are in Addis Ababa and around 1734 employees
throughout all branches.
3.1.1. Vision of the Bank
The vision of the bank is to be standard bearer with the banking industry in Ethiopia as well
as an international player capable of being compared favorably with the best institutions of
its kind anywhere in the world.
3.1.2. Mission of the Bank
The mission of the Bank of Abyssinia is to provide domestic and international banking
services through innovative and optimal utilization of state of the art technology as well as
and its human and other resources and be recognized as quality-focused, result-oriented,
financially sound and socially responsible bank.
3.2. Organizational Structure of Abyssinia Bank

The general assembly (share holders) appoints Board of Directors. The Board elects
president. The Bank is administered by the president and two vice presidents, i.e. vice
present operation and strategic planning and vice president, finance and administration.
23
General Assembly
Board of Directors
President
Risk Mgt. and Monitoring

Control Department
Legal Services Department
Information Systems Department

Public Relation Department
v/president Operation and v/president Administration and

Strategic Planning Finance
International Banking Finance Department

Department
Administration and HR
Branch Operations
Department
Department
Credit Department
Corporate Planning and

Business Development
Figure 2 Organizational Structure of Abyssinia Bank
3.3. Organizational Reward Package in Abyssinia Bank

Employees in Abyssinia Bank are classified as managerial, professional, clerical as well as
non-clerical employees of four major categories. Accordingly, the bank designed an
organizational reward package depending on the above categories of employees are the
following.
Organizational financial rewards

Salary –based on scale for each categories that are managerial, professional,
clerical and non-clerical employees regardless of their merits and seniority subject
to income tax and provident funds.
24
Allowance
House allowance for employees outside Addis Ababa.
Position allowance – for managerial employees depending on their hierarchy
Over time allowance –for extra service
Bonuses – whenever the organization exceedingly meet its objectives
Insurance – 24 hours of insurance
Pay for Time Not Worked
Sick leave- the employee should entitled the following sick leave during working
period.
The first one month with fully pay, but half pay beyond one month
Maternity leave
The employee (for female employee only) shall be entitled to pay maternity
leave of three months
Annual leave
20 day’s for managerial employees
16 days for others
Holiday –any holiday that formally known
Learning opportunities
• Continuing education with the field of economics, business administration,
accounting, banking and finance, management secretarial science and office
management
• Scholarship
• External training
• Short term training abroad
• Seminar and workshop
• Apprenticeship with experts
• On the job training
Criteria for providing employees learning opportunities
Relevance of their education to current job and its contribution to the bank
efficiency and effectiveness
25
Work experience (more than two years)
Age should not be more than 55 years
Clean lines of personal records
Performance evaluation
Advancement Opportunities
Promotion
Succession planning
3.4. Methods and Procedures

3.4.1. Mixed Strategies
The researcher uses sequential mixed method that is design to start with quantitative data
from the employees and workers of the company then followed by qualitative data
(interviews) with the human resource manager of the organization in exploring its detail
perception about the practices of reward system in Abyssinia bank.
3.4.2 Characteristics of Mixed Method Research

Mixed methods research is useful to convey basic definitions of description of the approach
in a proposal.
The challenges of the mixed approach pose for the inquirer. These include the need for
extensive data collection the time intensive nature analyzing both text and numerical data
and the requirement for the researcher to be familiar with both quantitative and qualitative
forms of research. The term like integrating, synthesis, quantitative and qualitative methods
multi method and mixed methodology are used for the mixed method approach (BSryam
2006, Tasakori and Teddlie, 2003).
Mixed method applies both closed and open ended questionnaires both emerging and
predetermined approach both quantitative and qualitative data and analysis and dealing with
pragmatic knowledge claims.
3.4.3. Visual Model and Procedures of the Design

The researcher uses sequential exploratory strategy that appeals by the collection analysis of
quantitative data in a first phase of research followed by the collection and analysis of
26
qualitative data in a second phase that builds on the results of the initial qualitative results.
The researcher also gives typical weight to the quantitative data that informs the qualitative
data collection.
3.4.4. Data Collection Procedure

The researcher collected the data by distributing closed-ended questionnaires to the
employees that are selecting by purposive random sampling and then followed by
conducting interview with human resource manager that are selected purposively.
Types of Data
I. Primary Data: to collect primary data from the samples, closed-ended questionnaire
were designed and distributed to the employees and workers and interviews were also
designed to selected management bodies of the bank.
II. Secondary Data: review of documents and records of the institution about its
employees, policies, procedures and performance were use to collect secondary data.
3.5. Sampling Strategy

The total population of the company are 230 among these 93 of them were selected to
conduct this research by purposive random sampling which approximately 41% of the total
population from all branches of Bank of Abyssinia. In addition the human resource managers
of the company were interviewed by selecting purposively.
Table 1: Sample Size of respondents

No Branches/Head officer No of Employees Sample Size
1 Head office 65 25
2 Arada Branch 41 18
3 Bole Branch 76 30
4 Reguel Branch 48 20
Total 230 93
27
3.6. Data Analysis and Validation Procedures
The researcher was analyzed according to the objectives of the study. The individual
analyses of each objective were presented in the following section.
Demographic characteristics were summarized using frequencies and percentage for all
variables including age, sex, years in the organization, years on the current job or position
and educational level.
Percentages were used in analyzing data regarding the reward system of the organization and
its major components. In this regard a powerful statistical tool and SPSS were used.
The researcher validated the study by making appropriate selection of samples and
appropriate designing of the sample size, making appropriate follow up on the procedures.
3.7. Report Presentation Structure

The researchers organized the report by collecting and analyzing the quantitative data
(closed-ended) questionnaires, followed by the collection and analysis of the qualitative data
(interview), then in the conclusion and interpretation phase of the study the researcher
commented on how the qualitative data results.
3.8 Roles of the Researcher

• Collects both quantitative and qualitative data
• Develop a rational for mixing
• Integrate the data at different stages of inquiry
• Presents visual pictures of the procedures in the study
• Employees the practices of both quantitative and qualitative research
• Investigating new idea by the research that is going to be study
3.9 Potential Ethical Issues

The researcher understands ethics as guiding researcher that is when conducting research we
are dealing with people, not with object. Thus, in this study the researcher were maintained
the following ethical guidelines.
28
Informed consent: informed consent to participate in this study were obtained form
respondents by giving them information about the aim of the study before they are
going to give consent to participate or not to participate.
Voluntary participation: respondents were made aware that participation is
voluntarily and hence they are free to decide whether to participate or not.
Confidentiality, violation of privacy and anonymity: in this study these aspects were
achieved through assuring respondents that the information obtained from them is
going to treat confidentially.
3.10. Significance of the Study

This study may have practical significance with in the domain of Abyssinia Bank in reward
alternative approaches to alleviate the draw backs experienced in its organizational reward
administration and the findings and recommendations of this study may serve as reference to
the management of the Bank. This report is also provides fresh reference on the subject that
others may use it in their research. It may also initiate others to carry out extensive studies in
organizational reward systems and reward administration of different organizations.
3.11. Scope of the Study

This report is limited to the data obtained by using questionnaires and interviews in
Abyssinia Bank. Regardless of the multifarious impacts of organizational reward system and
its various uses for under taking administrative decisions the report is limited to practices of
organizational reward system in four branches of the bank( namely. Bole, Head office,
Raguel and Arada branches). More over managers and professional employees were
participants of this study.
3.12. Limitations of the study

There were uncontrollable variables that hinder the smooth implementation of the project.
For instance lack of cooperation of respondents and their commitment to complete filling of
the questionnaires, lack of interviewees cooperation in devoting their time to provide a
relevant information to the researcher were seriously limited the out come of the research.
29
3.13. Operational Definition of the Construct
Reward: Employees in an organization need a return in exchange of their contribution to
their organization. The return can be material as well as psychological values relating with
financial and non-financial aspects that makes employees well committed in achieving both
short and long term objectives.
3.14. Organization of the Study

This research work is generally divided in to five chapters: chapter one presents an
introduction, chapter two incorporates review of related literature, chapter three
organizational backgrounds and methodology of the study, chapter four is concerned with
data presentation, analysis and interpretation of the finding. Finally chapter five refers to the
summary, conclusion and recommendations of the project work.
30
CHAPTER FOUR
DATA PRESENTATION, ANALYSIS AND INTERPRETATION
4.1. Organizational Rewards

This part of the analysis is based up on part two of the questionnaire which makes the most
important ingredient of this study. In this section of the questionnaire, respondents were
instructed to express their opinions about the items rewards provided in a closed form.
Accordingly they inserted a mark in the appropriate space to show the status of a particular
item which could be correlated to one of the five stage rating scales Very poor (VP), Poor
(P), Fair (F), Good (G), very good (VG). The researcher computed the weighted means
scores of the responses calculated against the items of organizational rewards. The items are
listed as per the subdivisions of the questionnaire. The minimum satisfactory point for each
item is (3), which is the expected mean of the five stage rating scales. The researcher also
used an independent T-test that discriminates the level of satisfaction between the
managerial and non-managerial employees of the bank.
4.2. Background Information of the Sample

The researcher administered 93 questionnaires of which only 81 (87.9%) are collected and
use for analysis purpose and the analysis are presented as follows:
31
Table 2: Background Information of the Sample
No Items Frequency percentage
1 Sex of respondents
a. Male 45 55.6
b. Female 36 44.4
Total 81 100
2 Age of respondents
a. 18-26 years 36 44.4
b. 27-35 years 31 38.3
c. 36-45 years 14 17.3
d. Above 45 years - -
Total 81 100
3 Education level of respondents
a. Certificate - -
b. Diploma 13 16
c. Degree 68 84
d. Above degree - -
Total 81 100
4 Service year
a. 2-5 years 47 58
b. 6-10 years 25 30.9
c. 11-20 years 9 11.1
d. Above 20 years - -
Total 81 100
5 Current position of respondent
a. Front marker and checker 19 24
b. Back office checker 16 20
c. Back office maker 20 24.7
d. Customer relationship officer 4 5
e. Junior HR officer 5 6
f. Personnel clerk 3 3.3
g. Senior Personnel clerk 4 5
h. Internal auditor 5 6
i. Public officer 1 1.2
j. Information systems officer 2 2.4
k. Legal Service officer 2 2.4
Total 81 100
6 Salary Scale
a. 500-1060 - -
b. 1061-1860 11 13.6
c. 1861-2400 33 40.7
d. Above 2401 37 45.7
Total 81 100
7 Service of Year in current position
e. Below 1 year 7 8.6
f. 1-2 years 31 38.3
g. 3-4 years 27 33.3
h. 5-6 years 12 14.8
i. Above 6 years 4 5
Total 81 100
32
When we look the above Table 2 item number 1 sex characteristics of the sample, 36
(44.4%) of the total respondents are female, 45 (55.6%) of the respondents are male. This
revealed that the proportions of females are relatively lower than males in all the employees
of the bank.
As it can be seen from the above Table 2 item number 2, 36 (44.4%) of the respondents are
in the range of 18-26 years, 31 (38.3%) are in the range of 27-35 years, 14 (17.3%) are in the
range of 36-45 and nobody has in the age of above 45. From this; it is possible to wind up
that the data obtained from the respondents is dependable on all of the described age groups
with the exception of the age group of 45 and above.
According to the above Table 2 item number 3 that shows educational level of respondents
no body of the respondents are certificate holders, 13 (16%) of the respondents are diploma
holders, 68 (84%) of the respondents are degree holders, but no body of the respondents are
above degree holders. From this one can understand that most of the respondents are degree
holders, there fore, they would have the ability to fill the questionnaire by having a knowhow
about the practices of reward system in the bank.
As it can be observed from the above Table 2 item number 4 from all the respondents
47(58%) have served 2-5 years, 25 (30.9%) have served 6-10 years, 9 (11%) of the
respondents have served from 11-20 years and none of the respondents have served for more
than 20 years. This implies that the majority of the respondents have served for 2-5 years.
When we look the above Table 2 item number 5 that shows the salary scale, no body of the
respondents earns in the range of 500 – 1060, 11 (13.6%) of the respondents earns in the
range of 1061-1860, 33 (40.7%) of the respondents earns in the range of 1861 -2400 and 37
(45.7%) of the respondents earns above 2401. This revealed that since most of the employees
are degree holders, their salary is fair as compared to other educational level of the
employees of the bank.
From the above Table 2 item number 6 that shows the position of the respondents in the
bank, 19 (24%) of the participants are front maker and checker, 16(20%) of the respondents
are back office checker, 20 (24.7%) of the participants are back office maker, 4(5%) of the
respondents are customer relationship ship officer, 5(6%) of respondents are junior HR
33
officer, 3(3.3%) of the respondents are personnel clerk, 3(3.3%) of the respondents are
senior personnel clerk, 5(6%) of the respondents are internal auditor, 1(1.2%) of the
respondents are HR officer, 2(2.4%) of respondents are information system officer, 2(2.4%)
legal service officer. This indicates that the questionnaires were distributed to the employees
who perform detail activities of the bank. Therefore, the researcher believes that the
participants can provide relevant information about the practices of reward system in Bank
of Abyssinia.
As it can be seen from the above Table 2 item number 7 that indicates service of year in
current position, 7 (8.6%) of the respondents are served below 1 years, 31 (38.3%) of the
respondents are served for 1-2 years, 27(33.3%) of the respondents are served for 3-4 years
in current position, 12 (14.8%) of the respondents are served for 5-6 year and 4(5%) of the
respondents are served above 6 years in their current position. From this one can easily
understand that most of the respondents are served for 1-2 years.
Table 3: Economic Status with Direct Financial Rewards
Response
Don’t
v. poor poor Fair Good v. good know
%
No Item F % F % F % F % F % F
1 The rate of your salary
compared to individuals of
about the same merit and - - - - 21 25.6 48 58.5 12 14.6 - -
seniority in another
organizations
2 The amount of allowance
(monetary incentives you
- - 15 18.3 26 31.7 35 42.7 5 6.1 - -
receive on top of your basic
salary)
3 The amount of payments
received from overtime
- - - - 27 32.9 10 13.4 44 53.7 - -
services (for-instance serving
beyond normal working hours)
4 The amount of commissions
37 45.1 14 17.1 - - - - - - 30 36.6
that you receive
5 The amount of bonuses that
received from your - - - - 5 7.3 11 13.4 65 78.8 - -
organization
34
The first component of the financial rewards has been labeled as the direct financial rewards
relating with economic status. These variables are monetary payments which make the most
important ingredient of financial rewards. The above Table3 item number 1 indicates the rate
of employee salary of the bank. Accordingly, 21 (25.6%) of the respondents confirm that the
rate of employee salary is fair, 48 (58.5%) of respondents said that the rate of employee
salary is good, 12 (14.6%) of respondents confirm that the rate of employee salary is very
good. Therefore, majority of the respondents reported that the rate of employee salary is
good compare to individuals of the same merit and seniority in other organizations.
As we can observe from Table 3, item number 2 about 15 (18.3%) of respondents reported
that the amount of allowance is poor, 26 (31.7%) of respondents that the amount of
allowance is faire, 35 (42.7%) of respondents reported that the amount allowance is good,
lastly 5 (6.1%) of respondents reported that the amount of allowance is very good. Based on
this information even though majority respondents reported that the amount of allowance is
good, significant number of respondents reported that the amount of allowance is poor.
Hence, the organization should take measures so as to make balanced allowance among
employees in the organization.
In Table 3 item number 3, respondents were asked to respond their feeling about payments
of overtime services. Accordingly, 27 (32.9%) of respondents are confirmed that the
payments of overtime services are fair, 10 (15.4%) of respondents are reported that the
payments of overtime services are good, 44 (53.7%) of respondents said that the payments of
overtime services are very good. Based on the majority of respondents response the amount
of overtime services in Abyssinia Bank is very good.
Table 3 item 4 shows the amount of commissions that employees receive from the bank.
About 30(36.6%) of respondents do not know the amount of commissions, 37(45.1%) of
respondents said the amount of commissions are very poor, 14(17.1%) of respondents said
the amount of commissions are poor. Therefore, majority of the respondents reported that the
commission provided by Abyssinia Bank is very poor. A number of employees also do not
know the commission system of the bank.
As Table 3 item number 5 indicates the amount of bonuses provided by the bank.
Accordingly, 5(7.3%) of respondents said that the amount of bonuses are fair, 11(13.9) of the
respondents said good amount of bonuses in the bank, the rest 65 (78.8%) of the respondents
35
said Abyssinia Bank provides very good bonuses. Therefore, the amount of bonuses
provided by Abyssinia Bank is positively perceived by majority of respondents.
Table 4: The Indirect Financial Rewards
Response
Don’t
No Item F % F % F % F % F % F %
1 Opportunity for - -
15 18.3 31 37.8 26 31.7 8 9.8 1 1.2
education
2 Employee vacation - -
policy of the 35 42.7 20 24.4 17 20.7 6 7.3 3 3.7
organization
3 Holiday policy of the - - - -
3 3.7 22 26.8 44 53.7 12 14.6
organization
4 Sick leave policy of the - - - - - -
1 1.2 65 79.3 15 18.3
organization
5 Insurance plans of the - - - - - -
1 1.2 68 82.9 12 14.6
organization
Table 4 shows the second component of the financial rewards has been categorized as the
indirect financial rewards. As it has been indicated in item number 1 respondent were asked
to reflect their point of view on the opportunities for education in upgrading their careers.
About 15 (18.3%) of the respondents reported that employees opportunities for further
education in Abyssinia Bank is very poor, 31 (37.8%) of the respondents confirmed that
employees opportunities for further education in Abyssinia bank is poor, 26 (31.7%) of the
respondents said that employees opportunities for further education in Abyssinia Bank is
fair, 8 (9.8%) of the respondents confirmed that employees opportunities for further
education in Abyssinia Bank is good, 1 (1.2%) of the respondents reported that employees
opportunities for further education in Abyssinia Bank is very good. In short employee’s
opportunity for further education of mastering their career is almost poor in Abyssinia Bank.
However, according to the interviewee conducted with human resource officer employees
have more or less an opportunity for education through different ways through continuing
education, scholarship, external training, short term training abroad, as well as
36
correspondence education by considering the relevance of their education to the current staff
member and its contribution to bank efficiency and effectiveness. This can be awarded on
competitive bases and committees are responsible for selection, then approved by vice
president for of the bank for financial support.
Table 4 item number 2 concerned with employee vacation of the bank. Based on that 35
(42.7%) of respondents reported that employee vacation policy of Abyssinia Bank is very
poor, 20 (24.4%) of respondents said poor employee vacation policy with in Abyssinia Bank,
17 (20.7%) of respondents reported with a fair employee vacation policy in the bank, 6
(7.3%) of respondents said that there is good employee vacation policy with in Abyssinia
Bank, lastly 3 (3.7%) of respondents said very good employee vacation policy with in
Abyssinia Bank. From this we can understand that employee’s vacation policy in Abyssinia
Bank is very poor.
Table 4 item number 3 indicates the holiday policy of the organization 3 (37%) of
participants are responded with poor holiday policy, 22 (26.8%) of respondents are said fair
holiday policy, 44 (53.7%) of the respondents reported with good holiday policy, the last 12
(14.6%), of respondents confirm with very good holiday policy. Thus, majority respondent’s
holiday policy of Abyssinia Bank is good.
In response to item number 4, Table 4 about 1 (1.2%) of respondents reported that there is
fair sick leave policy, 65 (79.3%) of respondents reported with good sick leave policy in the
bank and 15 (18.3%) of the respondents said that there is very good sick leave policy for
employees in Abyssinia Bank. Hence, majority respondents Abyssinia Bank designed
employee sick leave in a good manner.
Table 4 item number 5 indicated the insurance plans of indirect financial rewards practiced
in Abyssinia Bank. Accordingly 1 (1.2%) of respondents said there is fair insurance facilities
with in the bank, 68 (82.9) of the respondents confirmed with good insurance facilities, 12
(14.6%) of respondents revealed with very good insurance facilities in Abyssinia Bank.
Therefore, majority of the respondents are satisfied with the insurance facilities of Abyssinia
Bank since it has 24 hours of insurance for its employees.
37
Table 5: Fringe Benefits
Response
v. poor
poor Fair Good v. good Don’t know
No Item F % F % F % F % F % F %
1 Housing
19 23.2 40 48.8 22 26.8 - - - - - -
2 House hold facilities 39 47.6 32 39.0 7 8.5 3 3.7 - - - -

3 Transportation services 50 61.0 11 13.4 7 8.5 12 14.6 1 1.2 - -
4 Cafeteria services 51 62.2 7 8.5 21 25.6 2 2.4 - - - -
5 Medical services 8 9.8 - - 8 9.8 12 14.6 53 64.6 - -
As we can observe from Table 5 above a part from payments, the employees should also be
rewarded with fringe benefits. These are mostly related with the benefits made available to
employee fringe benefits generally imply organizational facilities and services.
As it is indicated in Table 5 item number 1 about 19 (23.2%) of respondents confirm that

housing facility of Abyssinia Bank is very poor, 40 (48.8%) of respondents said poor
housing facilities, 22 (26.8%) of respondents said housing is fairly furnished in Abyssinia
Bank. Therefore, it is clearly understand that large number of participants reported that
housing services in Abyssinia Bank is poor. According to the interviewees housing can not
provide for those professional as well as clerical employees, in all branches of Addis Ababa,
but to some extent for those top-level managers and for all employees outside Addis Ababa.
Table 5 item number 2 shows the house hold facilities that can help the employees living condition
especially with the current scarcity of food items in the market as well as the financial crises of
(increasing) prices of those materials. Accordingly 39 (47.6%) of respondents said very poor
household facilities, 32 (39%) of respondents said poor household facilities, 7 (8.5%) of respondents
said house hold facilities are fairly furnished in the bank and 3 (3.7%) of respondents
confirm with good house hold facilities. This show majority of the participants confirmed
that employee house hold facilities in Abyssinia Bank are almost poor.
In the above Table 5 item number 3, the other concern of organizational reward relating with
fringe benefit is transportation services because several branches of the banks are in different
areas far from the employees settlements. In such cases employees would heavily depend up
on their organizations to get essential services that could have been easily enjoyed if the
organizations were situated near the employee’s settlements. Accordingly 50 (61%) of
38
respondents revealed on very poor transportation services, 11 (13.4%) said poor
transportation services in the bank, 7 (8.5%) of participants responded that transportation
services in Abyssinia Bank is fair 12 (14.6%) of participants responded that transportation
services is good, 1 (1.2%) of participants responded that transportation services in Abyssinia
Bank is very good. Therefore, the researcher conclude that based on the majority
respondents, employees in Abyssinia Bank are almost dissatisfied with transportation
services of the bank.
Table 5 item number 4 indicates the efficiency and effectiveness of cafeteria services in
Abyssinia Bank, about 51 (62.2%) of participants perceived with very poor cafeteria
services, 7 (8.5%) of the respondents said poor services, 21 (25.6%), of respondents
confirmed with fair cafeteria services in the bank 2 (2.4%) of respondents responded on good
delivery of cafeteria services in the bank. Hence, majority of the respondents are quiet
dissatisfied with the efficiency and effectiveness in delivering cafeteria services in Abyssinia
Bank.
In response for Table 5 item number 5 concerned with employee medical services in
Abyssinia Bank 8 (9.8%) of the respondents confirmed with fair medical services, 12
(14.6%) of respondents perceived with good medical services and 53 (64.6%) of participants
responded with very good employee medical services. In short, majority of respondents
confirmed that employee’s medical services deliver in an appropriate manner. Most of
employees are satisfied with this.
39
Table 6: The Work (Job Environment)
Response
Don’t
No Item F % F % F % F % F % F %
1 Conditions of offices 1 1.2 - - 39 47.6 25 30.5 16 19.5 - -
2 Conditions of workshop 17 20.7 51 62.2 13 15.9 - - - - - -

3 Conduciveness of
- - 12 14.6 17 20.7 41 50.0 11 13.4 - -
working hours
4 Effectiveness of rules and
regulations (the existence
- - 2 2.4 26 31.7 37 45.1 16 19.5 - -
of sound policies)
governing your task
5 Transferring opportunities 12 14.6 59 72.0 6 7.3 4 4.9 - - - -
6 Promotion opportunities - - 20 24.4 19 23.2 42 51.2 - - - -
7 Security of tenure
- - 17 20.7 21 25.6 43 52.4 - - - -
(employment stability)
8 Opportunities for
- - 40 48.8 41 50.0 - - - - - -
preferred job assignments
9 The existence of
- - 21 25.6 44 53.7 8 9.8 8 9.8 - -
competent supervision
10 The existence of
10 12.2 36 43.9 3 3.7 18 19.5 14 19.5 - -
appropriate status
As it can be seen from Table 6 it provides some figures related with the components of
organizational rewards relating with non financial rewards that describes the work
environment. This has a number of variables, a part from their impact up on the life of
employees in maintaining conducive working atmosphere. Because failure to maintain a fair
state of the work environment, could spoil both jobs satisfaction as well as the main purpose
of the organization.
As Table 6 item number 1 indicates the conditions of offices 1 (1.2%) of participants said
very poor, 39 (47.6%) of respondents said fair, the rest 25 (50.5%) of participants perceived
that the conditions of offices are good 16 (19.5%) of participants responded that the
conditions of offices are very good. Briefly, based on the majority of respondents the
conditions of offices in Abyssinia Bank is comfortable.
40
As it can be indicated in Table 6 item number 2 participants were asked to reflect their
opinion about the conditions of workshop in Abyssinia Bank. 17 (20.7%) of respondents said
very poor conditions of workshop, 51 (62.2%) of respondents confirmed with poor work
shop, the rest 13 (125.9%) of respondents confirmed with fair workshop facilities in
Abyssinia Bank. Therefore, majority of the respondent reported that the condition of
workshop in Abyssinia Bank is poor.
As it can be seen in Table 6 item number 3 deals about employees conducive working hours
in the bank 12 (14.8%) of respondents rely with poor working hours, 17 (20.7%) of
respondents said fair employees working hours, 41 (50%) of responds perceived that the
conduciveness of working hours in the bank is good. In a nutshell, majority of respondents
revealed that, there is conducive working hours in Abyssinia Bank.
Table 6 item number 4 indicates the existence of sound polices in Abyssinia Bank.
Accordingly 2 (2.4%) of the participants said poor policies that guide employee activities in
the bank, 26 (31.7%) of the respondents perceived with fair organizational policies
concerning employees task, 37 (45.1%) of respondents reported that good organizational
policies, lastly 16 (19.5%) of participants reported with very good organizational policies. So
that, from the above information, Abyssinia Bank has effective rules and regulations that
govern employee task.
As the above Table 6 item number 5 reveal that the transferring opportunities of employees
12 (14.6%) of the respondents are confirmed with very poor transferring opportunities, 59
(72%) of the respondents are reported with poor transferring opportunities, 6 (7.3%) of the
respondents are revealed with fair transferring opportunities, 4 (4.9%) of the respondents are
perceived with good transferring opportunities. From this most of respondents said that
transferring opportunities of employees is almost poor.
Table 6 item number 6 indicates the opportunities of employees for promotion in Abyssinia
Bank. According to the participants 20 (24.4%) of respondents reported with poor promotion
opportunities, 19 (23.2) of participants perceived with fair promotion opportunities, 42
(51.2%) participants responded on good employee promotion in Abyssinia Bank. From this
it is possible to reported that, there is a good employee promotion opportunity in Abyssinia
Bank.
41
Table 6 item number 7 also concerned with the extent of employment stability in Abyssinia
Bank. About 17 (20%) of respondents reported on poor employment stability, 21 (25.6%) of
respondents said the employment stability in Abyssinia Bank is fair, 43 (52.4%) of
participants reported that there is good employment stability with in the bank. Therefore,
Based on the majority of participants employees in Abyssinia Banks are well stable on their
job with the bank.
The above Table 6 item number 8 deals with employees’ opportunities for preferred job
assignments. Accordingly, 40 (48.8%) of employees revealed with poor opportunities for
preferred job assignments, 41 (51.2%) of respondents confirmed with fair opportunities for
employees preferred job assignments in the bank. This shows respondents have got relatively
equal chance in reflecting their ideas with poor and fair preferred employee job assignments
in Abyssinia Bank.
As we can observe from the above Table 6, item number 9 about 21 (25.6%) of the
participants revealed with poor supervision, 44 (53.7%) of respondents perceived on fair
supervision in the bank, 8 (9.8%) of respondents confirmed on good supervision, 8 (9.8%) of
respondents confirmed on very good supervision in Abyssinia Bank. Therefore, based on
majority respondents, the existence of competent supervision in Abyssinia Bank is fair.
Table 6 item number 10 indicates the existence of appropriate employee status in the bank.
10 (12.2%) of respondents said very poor employee status, 36 (43.9%) of the participants
said poor status of employees in the bank, 3 (3.7%) of respondents confirmed that employee
status is fair, 18 (22.2%) of respondents reported with good employees status, 14 (18%) of
respondents confirmed, with very good employees status with in bank. From the above
information, most of the respondents reported that the existence of appropriate status in
Abyssinia Bank is poor.
42
Table 7: The Job It Self (Job Context)
Response
Don’t
No Item F % F % F % F % F % F %
1 Satisfaction with job load 1 1.2 14 17.1 10 12.2 39 47.6 17 20.7 - -
2 Satisfaction with other
responsibilities assigned - - 10 12.2 34 41.5 22 26.8 15 18.3 - -
to you
3 Participation indecision
making concerning your - - 15 18.3 33 40.2 20 24.4 13 15.9 - -
task
4 The degree of freedom of
- - 21 25.6 34 41.5 16 19.5 10 12.2 - -
performing your task
5 Opportunities for
- - 8 9.8 34 41.5 28 34.1 11 13.4 - -
advancement
6 Opportunities for personal
- - 3 3.7 45 54.9 32 39.0 1 1.2 - -
growth
7 Feeling of
accomplishment in your - - 14 17.1 29 35.4 38 46.3 - - - -
career
8 Satisfaction in your
- - 2 2.4 24 29.3 39 47.6 16 19.5 - -
profession (career)
The above Table 7, shows the other packet of organizational reward systems has been
explain by non-financial rewards mostly related with psychological rewards. This category
consists of organizational reward variables enumerated in the questionnaire under the title of
job context. The itemized variables of job context refer to the intangible aspect of
organizational reward system.
In case of the above Table 7 item number 1 about 1 (1.2%) of respondents with very poor
satisfaction on job load, 14 (18%) of respondents reported that employee satisfaction with
job load is poor, 10 (12.2%) of respondents confirmed that the satisfaction of employees
with job load is fair, 39 (47.6%) of respondents reported that the satisfaction of employees
with job load is good, 17 (20.7%) of respondents perceived that the satisfaction of employees
with job load is very good. Therefore, employees in Abyssinia Bank are reasonably satisfied
with the job load.
43
In Table 7 item number 2 10 (12.2%) of the participants said that the satisfaction of
employees with other responsibilities are poor, 34 (41.5%) of respondents reported that the
satisfaction of employees with other responsibilities are fair, 22 (26.8%) of respondents
reported that the satisfaction of employee with other responsibilities are good, 15 (18.3%) of
respondents perceived that the satisfaction of employee with other responsibilities are very
good. Generally, majority of respondents confirmed that, employees are satisfied with
assignment of other responsibilities. So that they can tackle any problem that can face since
they are responsible for the place they hold.
The above Table 7 item number 3 deals with employee participation in decision making in
their task. 15 (18.3%) of the respondents revealed that employees participation indecision
making governing their task is poor, 33 (40.2%) of the respondents reported that employees
participation indecision making governing their task is fair, 20 (24.4%) of the respondents
confirmed that employees participation indecision making governing their task is good, and
13(15.9%) of the respondents revealed that employees participation indecision making
governing their task is very good. Thus, majority of respondents reported that employees are
actively participated in the issue of decision making governing their task. This shows
relationship of administration and employee aspiration has tied up in Abyssinia Bank.
According to Table 7 item number 4, 21 (25.6%) of the participants reported that the degree
of employees freedom in performing their task is poor, 34 (41.5%) of respondents said that
fair degree of employees freedom, 16 (19.5%) of respondents revealed that the degree of
employees freedom in their task is good, 10 (12.2%) of respondents reported that the degree
of employees freedom in their task very good. From this most of the employees in Abyssinia
Bank are reasonably satisfied with the degree of freedom of governing their task with less
interference of others.
Table 7 item number 5 indicates the opportunities for employee’s advancement in Abyssinia
Bank. About 8 (9.8%) of participants said poor opportunities for employees advancement, 34
(41.5%) of participants reported that employees have fair opportunities for advancement, 28
(34.1%) of respondents revealed that employees have good opportunities for advancement,
lastly 11(13.4%) of respondents confirm that employees opportunity for advancement in
44
Abyssinia Bank is very good. From the above information most employees are satisfied by
the advancement opportunities in Abyssinia Bank.
Table 7, above item number 6 shows employees opportunities for personal growth. 3(3.7%)
of the participants reveal that employees have poor opportunities for personal growth,
45(54.9) of respondents reported that employees have fair opportunities for personal growth,
32(39%) of respondents perceived that employees have good opportunities for personal
growth, lastly 1(1.2%) of respondents reported that very good opportunities for personal
growth in Abyssinia Bank. Therefore, majority of respondents confirm that employees have
better opportunities for personal growth.
In response for Table 7 item number 7 that indicates employees feeling of accomplishment
on their career. About 14(18%) of the participants reported that the feeling of
accomplishment of employees are poor, 29(35.4%) of the respondents confirm that
employees feeling of accomplishment for their profession is fair, lastly 38(46.3) of
respondents perceived that employees of Abyssinia Bank are good feeling of
accomplishment for their career. Based on majority of respondents employees have good
feeling of accomplishment in their career.
Table 7 item number 8 above deals with employee satisfaction with their career. Accordingly
2(2.4%) of respondents said employees satisfaction with their career is poor, 24(29.3%) of
participants are fairly satisfied with their career, 39(47.6%) of respondents reported that
employees satisfaction with their career is good, lastly 16 (19.5%) of respondents reported
that employees satisfaction with their career is very good. From this we can understand that
majority of the respondents are satisfied with their career in the organization.
45
Table 8: Harmony of Relationship
Response
Don’t
No Item F % F % F % F % F % F %
1 Relationship
between you and
- - - - 22 26.8 46 56.1 13 15.9 - -
your peers
(coworkers)
2 Relationship
between you and - - 8 9.8 21 25.6 36 43.9 16 19.5 - -
your supervisors
3 Relationship
between you and - - 1 1.2 10 12.2 21 25.6 24 29.3 25 30.5
your subordinates
4 Relationship
between you and
- - - - 6 7.3 31 37.8 44 53.7 - -
other members of
the organization
The above Table 8 indicates harmony of relationships with people around them. In this case
item number 1 shows 22(26.8%) of respondents have a fair interaction with their co-workers,
46(56.1%) of respondents have good interaction with their co-workers, 13(15.9%) of the
participants have a very good interaction with their co-workers. Therefore, employees of the
organization have a smooth interaction with their co-workers. If this has consistency, it
enables employees to manage any problem of the organization among themselves without
supervisors.
As it is aforementioned in Table 8 item number 2 that describe the level of relationship

between supervisors and subordinates. 8(9.8%) of respondents perceived a poor relationship
between supervisors and subordinates, 21(25.6%) of respondents reported fair relationship
between supervisors and subordinates, 36(43.9%) of respondents confirmed with good
relationship between supervisors and subordinates, 16(19.5%) of respondents perceived with
very good relationship between supervisors and subordinates. Based on the above
information there is good interaction between supervisors and subordinates of the
46
organization. However, it will be a general feature of most people that few of them have one
self for unhealthy terms of relations with their supervisors.
As it is placed in the above Table 8 item number 3 1(1.2%) of respondents reported with
poor interaction between employees and their subordinates, 12(14.8%) of participants
confirmed with fair relationship between employees and their subordinates, 21(25.8%) of
respondents revealed with good interaction between employees and their subordinates,
24(29.3%) of respondents reported that the relationship between employees and their
subordinated is very good, however surprisingly 25(30.5%) of respondents do not know the
interaction with their subordinates. Therefore, relatively large numbers of employees do not
know what their relationship with their subordinate’s looks like since they didn’t be
supervisors in their life. The rest employees have smooth in interaction with their
subordinates in the bank. Based on the finding above supervisors have pleasant interactions
with employees at lower level in the organizational hierarchy.
As it is placed in the above Table item number 4 indicates 6 (7.3%) of respondents have fair
interaction with other members of the organization, 31 (37.8%) of respondents reported with
good interaction with other members of the bank, lastly 44 (53.7%) of respondents
confirmed with very good interaction with other members of Abyssinia Bank. From this it is
possible to say that employees of Abyssinia Bank do appreciate the harmony of relationship
with other members of the bank whatever their status is. In this case employees of the
company have pleasant interactions with every member of the organization.
47
Table 9: Behavior of the Administrative Mechanism (Strategy)
Response
Don’t
No Item F % F % F % F % F % F %
1 Competence in shouldering and
discharging the organizational - - 5 6.1 30 36.6 36 43.9 10 12.2 - -
responsibilities
2 Effort to delegate
2 2.4 26 31.7 28 34.1 16 19.5 9 11.0 - -
responsibilities
3 Inclination to admit suggestions 10 12.2 38 46.3 20 24.4 13 15.9 - - - -
4 Endeavour to cultivate a
cohesive (harmonious) work 11 13.4 34 41.5 23 28.0 8 9.8 5 6.1 - -
group
5 Fairness to recognize and
2 2.4 41 50.5 30 36.6 8 9.8 - - - -
evaluate employee competence
6 Willingness to encourage
research, change & innovation 15 18.3 31 37.8 13 15.9 20 24.4 2 2.4 - -
efforts
Table 9 shows the last component of the organizational non-financial rewards have been
termed as” the behavior of the administrative mechanism”. The variables incorporated under
this group aimed at evaluating efforts and competence of the administration in executing
both managerial and non managerial responsibilities.
As it can be seen from Table 9 above, item number 1 that deals with the competence of
administrative employees in shouldering and discharging organizational responsibilities.
Accordingly 5(6.1%) of respondents confirmed that the competence of the administration of
Abyssinia Bank in shouldering and discharging organizational responsibilities are poor,
30(36.6%) of respondents revealed that the competence of the administration of Abyssinia
Bank in shouldering and discharging organizational responsibilities are fair, 36(43.9%) of
respondents reported that the competence of the administration of Abyssinia Bank in
shouldering and discharging organizational responsibilities are good, 10(12.2%) of
respondents said that competence of the administration of Abyssinia Bank in shouldering
and discharging organizational responsibilities are very good. Therefore, it is possible to say
that the competence of the administration in Abyssinia Bank is good in shouldering, and
discharging the organizational responsibilities.
48
Table 9 item number 2 indicates effort of the administration employees in delegating
responsibility to their subordinates by clearly assigning all the responsibilities to be
delegated giving a formal authority to be delegated, assuring acceptance of responsibility and
creation of accountability. Based on that about 2(2.4%) of participants said very poor
delegation of responsibility, 26(31.7%) of respondents confirmed with poor effort in
delegating responsibilities, 28(34.1%) of respondents confirmed with fair delegation of
responsibility, 16(19.5%) of respondents confirmed with good delegation of responsibility,
9(11%) of respondents confirmed with very good effort of the administrative employees of
the bank in delegating responsibilities. To come up with conclusion most of the respondents
are satisfied with effort in delegating responsibilities in the bank. On the other hand a lot of
employees 28(34.1) are dissatisfied with effort in delegating responsibilities in the bank.
As it can be seen in Table 9 item number 3 10(12.2%) of participants confirmed with very
poor inclination of admitting suggestions and criticism, 38(46.3%) of respondents reported
with poor inclination of employees to admit suggestions and criticisms, 20(24.4%) of
respondents reported that a fair inclination of suggestions for employees of the bank, lastly
13(15.9%) of respondents Abyssinia Bank is very good. Therefore, employees of the bank
are dissatisfied with the inclination of the bank in admitting suggestion and criticisms.
Table 9 item number 4 indicates 11(13.4%) of participants respond that the endeavor of the
administration of the bank in cultivating a cohesive work group is very poor, 34(41.5%) of
respondents said that the bank administration system in cultivating integrated work group is
poor, 23 (28%) of respondents said that the bank administration system in cultivating
integrated work group is fair, 8 (9.8%) of respondents reported that the bank administration
system in cultivating integrated work group is good, 5 (6.1%) of respondents reported that
the bank administration system in cultivating integrated work group is very good. In short
employees of Abyssinia Bank are dissatisfied with the administration system of the bank in
cultivating harmonious work group that makes employees stick or work together.
In Table 9, item number 5, 2 (2.4%)) of respondents reported that very poor evaluation of
employee competence, 41(50.5%) of respondents confirmed that evaluation of employee
competence is poor, 30 (36.6%) of respondents said fair evaluation of employee competence,
lastly 8 (9.8%) of respondents confirm with good evaluation of employee competence in the
49
bank. Based on the above information, most of the respondents in Abyssinia Bank revealed
that unfair evaluation of employee competence.
Table 9 item number 6 indicates that, 15 (18.3%) of the respondents confirmed that
willingness to encourage research, change and innovation of efforts of the bank for
employees are very poor, 31(37.8%), of the respondents confirmed that willingness to
encourage research, change and innovation efforts the bank for employees are poor, 13
(15.9%) of the respondents confirmed that willingness to encourage research, change and
innovation efforts of the bank for employees are fair, 20 (24.4%) of the respondents
confirmed that willingness to encourage research, change and innovation efforts of the bank
for employees are good, 2 (2.4%) of the respondents confirmed that willingness to encourage
research, change and innovation efforts of the bank for employees are very good . Therefore,
most employees are dissatisfied in participating with research investigation as well as
innovation efforts in the bank. Of course there is a research and publication office work. The
bank will also employ another researchers rather than inviting the existing professional
employees of various disciplines in the bank. Hence, the company should encourage its
employees by introducing research based information that can satisfy them for attainment of
the intended goal of the company.
4.3. A Comparative Description of Financial and Non Financial

Organizational Rewards
Referring to the data presented in the above information, it has been observed that the
variables of financial and non financial organizational rewards have respective constructive
remarks in combining and comparing the two cases.
Majority of respondents are satisfied with almost all the items of direct financial rewards
with the exception of the amount of commissions; they are also satisfied with some variables
of indirect financial rewards such as holiday policy, sick leave policy as well as insurance
facilities of the organization, but dissatisfied with the opportunities for further education and
vacation policy of indirect organizational financial rewards.
Majority of respondents are dissatisfied with all items of fringe benefits except medical
services. Majority of them are also dissatisfied with most items of behavior of the
administrative mechanism of non financial rewards with the exception of competence in
50
shouldering and discharging the organizational responsibilities, Effort to delegate
responsibilities, but majority of respondents are satisfied with all items of harmony of
relationships as well as with the intangible and job related aspects of non-financial (intrinsic)
rewards of the organizational reward system.
In the final analysis, however, the overall degree of employee satisfaction should be
determined by the combined rate of both financial and non financial organizational rewards.
The percentage of respondents computed for most of organizational reward variables may
reveal satisfactory state of organizational rewards in the system of Abyssinia Bank.
“An employee satisfaction with both financial and non financial organizational rewards
received, affects over all job satisfaction” (Gordon 1986).
Table 10: Independent T- Test That Shows Satisfaction Mean Difference of

Economic Status with Direct Financial Rewards between Managerial and
Non Managerial Employees
Mean
Roles N Mean StD. df T Sig*. difference
Managerial 26 18.577 1.701 79 -3.716 0.303 -1.395
Non-Managerial 55 17.182 1.516 - - -
Total 81 35.759 3.217 - - -
*p>0.05
As it has been indicated in the above Table, the satisfaction relating with the direct
organizational financial reward system for managerial and non-managerial employees has no
significant difference. As we can see in the Table above the mean score of the managerial
employees relating with direct financial rewards system are 18.577 std 1.701 and the mean
score of the non-managerial employees are 17.182, std 1.516 and the mean difference
between the managerial and non-managerial employees are -1.395. This shows, as there is no
statistical difference at (0.05) level of significance, t= -3.716, df = 79, P>0.05 (0.303).
51
Table 11: Independent T-Test That Shows Satisfaction Mean Difference of Indirect
Financial Rewards between Managerial and Non Managerial Employees
Mean
Roles N Mean StD. df T Sig*. difference
Non-Managerial 55 16.091 2.093 79 -2.479 0.077 -1.332
Managerial 26 17.423 2.579 - - -
Total 81 33.514 4.672 - - -
*p>0.05
Table 11, shows the comparison of the mean scores between the managerial and non
managerial employees using the independent T-test statistical method. As it has been
indicated in the above table, the satisfaction relating with the indirect organizational reward
system for managerial and non-managerial employees has no statically significant difference.
The mean score of the managerial employees of the indirect rewards are 17.423 Std.2.579
and the mean value of the non managerial employees of indirect rewards are 16.091 Std.
2.093 and the mean difference between the two groups are -1.332. This shows as there is no
statistical significance difference at (0.05) level of significance, t=-2.479, df=79, P>0.05
(0.077).
Table 12: Independent T- Test That Shows Satisfaction Mean Difference of Fringe
benefit between Managerial and Non Managerial Employees
Role N Mean StD. df T Sig*. Mean d/ce

Non- Managerial 55 14.182 3.935 79 -2.375 0.146 -2.279
Managerial 26 16.462 4.235 - - -
Total 81 30.644 8.170 - - -
*p>0.05
The other concern of this study is to determine the mean difference on satisfaction between
the managerial and non managerial employees on organizational fringe benefits. In this case
there is no statistically significance difference. The mean of the managerial employees of the
fringe benefits are 16.462 std. 4.235 and the mean score of the non-managerial employees
are 14.182 std. 3.935 and the mean differences of these groups are -2.279. This indicates as
there is no statistical significance difference at 0.05 level of significance, t= -2.375, df= 79,
p>0.05 (0.142).
52
Table 13: Independent T- Test That Shows Satisfaction Mean Difference of the Work
Environment between Managerial and Non Managerial Employees

Non managerial 55 47.146 5.958 79 -2.747. 0.351 -3.855
Managerial 26 51 5.762 - - -
Total 81 98.145 11.72 - - -
*p>0.05
As the Table shown above, it indicates the mean difference on satisfaction between
managerial and non-managerial employees on the work environment had no statistical
significance difference. Managerial employees have a mean score of 51 std. 5.762 and non-
managerial employees have a mean score of 47.148 std. 5.958 with the mean difference of -
3.855. This shows as there is no significance difference at, t=-2.747, df=79, p>0.05 (0.351).
Table 14: Independent T- Test That Shows Satisfaction Mean Difference of the Job
Context between Managerial and Non Managerial Employees

Non managerial 55 29.491 2.57 79 -8.999 0.045 -6.739
Managerial 26 36.231 4.121 - - -
Total 81 65.722 6.691 - - -
*p<0.05
Table 14, describes the comparison of the mean scores between the managerial and non-
managerial employees using the independent T-test statistical method. As in the above Table
described, the satisfaction of the managerial and non-managerial employees relating with the
job context had statistically significance different. The mean score of the managerial
employees are 36.231 std. 4.121 and the mean score of the non-managerial employees
29.491 std. 2.57 and the mean difference is -6.739. This shows the difference was existed
between the two groups at 0.05 level of significance t= -8.999, df = 79, P< 0.05 (0.045).
Table 15: Independent T- Test That Shows Satisfaction Mean Difference of Harmony
of Relationship between Managerial and Non Managerial Employees
Role N Mean StD. Df T Sig*. Mean d/ce

Non managerial 55 15.527 1.245 79 -4.757 0.001 -5.857
Managerial 26 17.385 2.264 - - -
Total 81 32.912 3.509 - - -
*p<0.05
53
The above Table concerns with the mean difference of satisfaction between the managerial
and non-managerial employees on the harmony of relationships had a significant difference
with the mean score of 17.385 Std.2.264 and 15.527 std. 1.245 for the managerial and non-
managerial employees respectively with the mean difference of -5.857. This shows as there
is a statistically significant difference on harmony of relation ships between managerial and
non-managerial employees at 0.05 level of significance, t= -4.757, df 79, p<0.05 (0.001).
Table 16: Independent T- Test That Shows Satisfaction Mean Difference of the
Behavior of Administrative Mechanism between Managerial and Non
Managerial Employees
Role N Mean StD. Df T Sig*. Mean d/ce

Non managerial 55 20.60 1.256 79 -13.172 0.000 -9.015
Managerial 26 29.615 4.767 - - -
Total 81 50.215 6.023 - - -
*p<0.05
The above Table deals with determining the mean difference on satisfaction, between
managerial and non-managerial employees had a statistically significant difference on
behavior of the administrative mechanism with mean score of 29.655 std. 4.767 and 20.60
std.1.256 respectively with the mean difference of -9.015. This indicates as there is a
statistically significant difference on satisfaction with the behavior of the administrative
mechanism between the two groups at 0.05 level of significance, t = -13.172, df 89, p<0.05
(0.000).
Interviews
4.5.2. Strategies of Organizational Reward System
According to the administrative employees the organization is more or less high level
strategy and some times we can consider comparative strategies relating with the
performance of our employees. In case of high level strategy the organization tries to
compensate employees higher than the average compensation level strategy and follow the
assumptions of providing a high organizational reward and other benefits for both financial
that includes salary bonuses, overtime, insurances, paid absence during vacation, holiday and
sick leave as well as non-financial, including participation in decision making, employees
54
advancement opportunities, safe conditions of office and as well as occupation and
promotion opportunities of employees would enable organization attract and retain
competent employees that enhance employees as well as organizational productivity. On the
other hand, our organization follows equal compensation for equal work based on
comparable value they are performing. For instance the organization considers the behavior
of employees and performance for promotion, participation for decision making as well as
employees recognition depends on their behavior and performance. So that we would give a
special attention for those well committed and performed employees and we discourage for
those who are not committed and frequent absents employees even if we are forced to
coercive (punish) them. Therefore, the organization can follow either of the two strategies of
employees over all compensation by considering the above conditions.
4.5.3. Inclination of Suggestions and Criticisms
One of the interviewees was asked as far as the inclination that admit suggestions from
employees he replied that in the following way: The bank has no news paper, bulleting as
well as suggestion boxes that reflect the employee’s opinion, suggestion as well as criticism.
This is because the procedure is already known, however, whenever there are new ideas,
suggestions and criticisms that reflect from employees, they can fill a form and disclose their
reflection by following the procedures. From the above information one can conclude that
the communication system regarding with providing suggestions as well as criticisms in
Bank of Abyssinia is poor and it has excessive procedures. This indicates that employees are
not well informed about how to reflect their feelings and this makes them dissatisfied.
4.5.4. Labor Market and Organizational Reward System
The number and types of employees indicate in the organization’ human resource planning is
mainly drawn from the labor market. The researcher was interested to know the relationship
between labor market and organizational reward system. One interviewee said that labor
market can not influence organizational reward system even if at the initial stage of
recruiting and selecting of new employees. Because the scales and other requirements of
employee benefits are already specified by the organization on rewarding and maintaining
employee benefits .Therefore, what ever the supply and demands of human resources , the
55
strategies of the organization for organizational reward have been never changed and do not
have any relationship between the two.
4.5.5. The Job and Organizational Reward System
According to the interviewee the job can influence organizational reward system by clearly
analyze and evaluate the description of the job that include the duties, responsibilities and
other job related factors as well as the specification of the job that include the qualifications,
skills, knowledge, experience and behavior of employees. Then, the organization tried to
determine the nature of the job to identify the similarities and differences of the jobs in the
organization. There fore, the bank tried to provide similar values for similar jobs and
different values for different jobs and the nature of the job is the major concern for
determining organizational reward system in Abyssinia Bank.
4.5.6. Employee and Organizational Reward System
The major purpose of organizational rewards is to attract and retain qualified employees to
the organization. The interviewee replied that employees can influence the organizational
reward system of the organization; in this case effective reward to equitable performance
makes employees willing and cooperative to do their jobs to the best of their abilities. Thus,
maintaining an effective organizational reward affects employee’s decision to stay or leave
the organization, to use its maximum potential on the companies operation and to accept
additional responsibilities. Thus, having an effective organizational reward system makes
employees satisfied and reinforces job behavior consistent with organizational objectives
where as, unless employees are satisfied with the company’s organizational reward system, it
leads to low performance, absenteeism, turnover, grievances and psychological
dissatisfaction. Therefore, based on the above information, employees are the major factor
that influences the organizational reward system of Abyssinia Bank.
56
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATION
So far the data assembled under seven parts of the questionnaire have been processed to
construct appropriate interpretations. The information produced in this way has been geared
to study (review and evaluate) the state of organizational reward system in Abyssinia Bank.
Winding up the task of presenting the analysis and interpretation of findings, the course of
this paper leads to the last chapter that refers to the summary, conclusion and
recommendations.
5.1. Summary
The general objective of this study is to assess the state of reward systems under the title of
“a study of organizational reward system (ORS) in Abyssinia Bank. The specific objectives
are directed to assist organizational effectiveness in cultivating opportunities for adequate
financial organizational rewards and satisfactory nonfinancial as well as psychological
rewards, identify the major unsatisfactory items associated with organizational reward
system of Abyssinia Bank. In satisfying these objectives, the following basic questions have
been raised:
• What does the state of organizational financial rewards in Abyssinia Bank?
• What is the degree of employee satisfaction of organizational financial rewards?
• What does the state of organizational non financial rewards in Abyssinia Bank?
• Do employees satisfied with non financial organizational rewards?
• What are the major unsatisfactory items of organizational reward system of
Abyssinia Bank?
A study was organized in order to seek answers for the questions specified above. Four
branches of Abyssinia Bank with 81 respondents were included in this study.
The basic instrument of data gathering was a questionnaire comprising of seven categories of
closed items pertinent to organizational rewards of Abyssinia Bank. Ultimately some
findings have been secured, the most important of which are summarized by the following
paragraphs:
57
The bio data characteristics of respondents revealed relatively proportional gender ratio
(55.6%) of male, (44.4%) female. About 44.4% of employees are below the age of 26 years
and 84% of the respondents are degree holders. 58% of respondents have been served from
2 -5 years, 68% of respondents are non managerial Employees and the rest, 32% of
respondents are managerial Employees. Furthermore, 8.6% of respondents have been served
in current position below 1 year and 38.3% of respondents have been served in current
position from 1-2 years.
In part two of the questionnaire, respondents were instructed to express their opinions about
the items of organizational rewards provided in a closed style with a five-stage rating scale
very poor (VP), poor (p), fair (f), good (g), very good (vg) and an independent t-test has been
applied to determine the statistically significance difference in all categories of
organizational reward system between managerial and non-managerial employees.
Among the observed categories of organizational reward system four of them also do not
have a statistically significance difference at 0.05 level of significance. It is also therefore,
accepted that a considerable part of the organizational reward categories have a statistically
significance different at 0.05 level of significance between managerial and non-managerial
employees.
Organizational financial rewards classified as economic status with direct financial rewards,
indirect organizational financial rewards and fringe benefits majority of respondents exhibit
satisfactory state organizational rewards with majority of the items, fringe benefits exhibit
unsatisfactory state of organizational rewards with the exception of medical services.
Organizational non financial rewards classified as the work environment, majority of

respondents exhibit satisfactory state of organizational rewards with the exception of
conditions of work shop, transferring opportunities, preferred job assignments as well as the
existence of appropriate status. The other packet of the organizational non financial reward
system has been explained by job context mostly associated with psychological rewards,
most of respondents exhibit satisfactory state of organizational rewards with all of the items.
Harmony of relationships also non financial rewards, majority of respondents exhibit
satisfactory state organizational rewards with all of the items. The last category of
nonfinancial reward is the behavior of the administrative mechanism that, large number of
58
respondents exhibit unsatisfactory state organizational rewards with majority of the items
except competence in shouldering and discharging organizational responsibilities as well as
effort in delegating appropriate responsibilities. Furthermore, the overall degree of employee
satisfaction should be determined by the combined rate of both total (financial and non
financial) organizational rewards.
5.2. Conclusion
Satisfactory organizational reward systems are perceived to have a sound combination of

financial and non financial rewards. The former refers mainly to “material” benefits relating
with economic status of direct organizational financial rewards, indirect organizational
financial rewards, fringe benefits. While the later denotes the work environment, the job
context (the intangible aspect of organizational reward system) and harmony of relationship
and behavior of the administrative mechanism. Rewards derived from the optimum mix of
these two components could:
• Ensure an effective degree of employee satisfaction

• Be a mark of organizational efficiency in integrating the two extreme interests: the
employees’, the organizations.
• Be a precursor of an ideal setting for the promotion of professional excellence.
These general assumptions may serve as a yards tic to appraise the conditions prevailing in
Abyssinia Bank. Hence, one could ask; what does the state of organizational rewards of
Abyssinia Bank look like?
In the first place, majority of respondents are dissatisfied with fringe benefits with the
exception of medical services and some items of direct as well as indirect organizational
financial rewards such as the amount of commissions, opportunities for education, vacation
policy of the organization relating with financial organizational rewards.
Therefore, Abyssinia Bank could not meet the needs of the above items for its organizational
members. However, in this regard employees may not for ward strong critics.
Furthermore, the above dissatisfaction does not suggest an absence of an administrative

weakness in the system of Abyssinia Bank. Despite the negative reaction to the distribution
of some financial organizational rewards, employees demonstrate a remarkable loyalty to the
59
profession. Most of them would like to keep up with their career in the bank. In this case,
dissatisfaction with some of the categories and items of financial organizational rewards
does not impose a critical influence to the extent that it may destroy employee’s intrinsic or
psychological feelings towards the profession. On the other hand majority of employees of
Abyssinia Bank are satisfied with the other categories and items of organizational financial
rewards.
In the second place majority employees are dissatisfied with majority items of behavior of
the administrative mechanisms of non financial organizational rewards with the exception of
organizational competencies in shouldering and discharging organizational responsibilities,
effort in delegating responsibilities. Majority of respondents are also dissatisfied with some
items of the work environment, such as transferring opportunities, the existence of
appropriate status, conditions of work shop of non financial organizational reward system. In
this regard some of unsatisfactory items are general and serious that need policy decisions at
the upper level, some of them are peculiar and less serious that need solutions at the
organizational management level, others are still routine that deal within day to day activities
of lower levels.
More over most of employees are reasonably satisfied with all items of the job context that
are essentially related to the contents of the employee profession, that is, the degree of
psychological satisfaction employees derive from their career as well as majority of
employees are satisfied with all items of harmony of relationships with their co-workers,
supervisors, subordinates and other members of the organization. Therefore, majority of
respondents in Abyssinia Bank are psychologically happy as well good social life in the
organization.
Ultimately, the status of organizational reward system is determined by a fair integration of

financial and nonfinancial organizational rewards. In this regard Abyssinia Bank prove
satisfactory state of organizational rewards with such circumstances of satisfaction,
employees would strive to maximum their capabilities for the cause organizational
advancement.
60
5.3. Recommendations
Drawing from the research finding some recommendations can be given to improve
organizational reward system that enhances employee job satisfaction and high level of
organizational performance.
• A fringe benefit has rated as the most important factor affecting employee satisfaction in
organizational rewarding system. Hence the management should review the current
benefits and improve the in appropriate ones to enhance employee satisfaction for
instance the management should enhance the annual budget that provide.
Housing
Household facilities
Transportation services
Cafeteria services
• The work environment was considered as one of the most important factors influencing
employee satisfaction. Consequently to retain talented employees, the management
should maintain them with conducive working environment as following instances;
Maintaining appropriate employee status
Providing opportunities for preferred job assignments
Maintain transferring opportunities
Facilitating workshop, seminars and symposiums
• Communication was considered as the main factor influencing employee satisfaction.
To improve communication with in the organization and to accept suggestions as well
as criticisms from employee, the management should emphasize on
Openness and honesty in communication
Discussion forums for all staffs
Discussion of corporate issues with in employee function.
• The motivational factors of the employee in the bank are to get educational opportunity.
The bank should give a chance for its employees for further education in order to
upgrade their careers.
• The Bank should provide adequate funding for scholarly activities such as research and
publication that participate both managerial and professional employees in the bank.
61
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Organizational Reward System: Case of Abyssinia Bank

Addis ababa university

SCHOOL OF GRADUATE STUDIES

Collage of management , information and economic

Department of Business Administration (MBA)

A project SUBMITTED TO THE SCHOOL OF GRADUATE

STUDIES OF ADDIS ABABA UNIVERSITY IN PARTIAL

FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE

Business Administration (MBA)

SCHOOL OF GRADUATE STUDIES

Collage of management , information and economic

Department of Business Administration

Organizational Reward System: Case of Abyssinia Bank

Organizations realizing that establishing an equitable balance between the employee’s

1.2. Project Description

1.3. Background of the Study

Therefore, proper recognition and selection of organizational rewards to be offered are

1.4. Statement of the Problem

Management is a problem solving process to achieve organizational objective through

• What does the organizational financial reward system look like?

1.5. Purpose of the Study

2.1. Organizational Reward System

Henderson (2006), in his book of compensation management in a knowledge-based world

2.2. Elements of Organizational Reward System

Contingent Pay- Additional financial rewards may be provided that is related to

Indirect Organizational Financial Rewards

2.2.2. Non-financial Organizational Rewards- include the following:

The Job Context

Personal Growth- In Maslow’s hierarchy of needs (1954); self-fulfillment or self-

Advancement: actual change in status with in the organization as a result of performance

The Harmony of Relationships

Administrative Strategies for Developing Employees Motivation

Wise administrators often try to utilize upward communication channels, in particular, as a

Job Freedom and Discretion

Behavior modification focuses on encouraging appropriate behavior. In organizational

2.3. Designing Organizational Reward System

Direct Indirect The job Job

Fig. 1 Components of Organizational Rewards

2.4. The Aims of Organizational Reward System

The challenge is to develop pay programs that support and reinforce

Contribution to add value: Added value is generated by people. It is people at various

Contribution to Competitive Advantage: Sustainable competitive advantage as formulated

Management and Organizational Reward: An organization’s performance depends

2.5. Pay Satisfaction

One antecedent to distributive and procedural justice of performance, appraisal is social

Performance-appraisal activities enable us to determine whether the employees’ performance

Providing a feedback mechanism- the performance appraisal is intended to provide a formal

Professional /management development- the performance appraisal system offers managers

Encouraging legal compliance on issues of discrimination-the performance appraisal system

Determining effectiveness of selection procedures-the performance appraisal program is

2.7 Alternative Pay Strategies

2.8. Determinant of Organizational Reward System

2.8.2. Job Influence on Organizational Reward System

2.8.3. Employee Influence on Organizational Reward System

2.9.1. Objectives of Employee Benefits

2.10. Managerial Employees

2.11. Non managerial Employees

3.1 Organization Background

3.2. Organizational Structure of Abyssinia Bank