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

Organizational Reward System: Case of Abyssinia Bank

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
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Addis ababa university SCHOOL OF GRADUATE STUDIES Collage of management , information and economic science Administration Department of Business Administration (MBA) Organizational Reward System: Case of Abyssinia Bank

BY Yeshalem Abadi Approved By: ____________________ Advisor ____________________ Examiner ________________ signature _______________ 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
Acknowledgements Table of Contents Abbreviation Abstract

Page
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CHAPTER ONE
Project Introduction 1.1. Introduction 1.2. Project Description 1.3. Background of the Study 1.4. Statement of the Problem 1.5. Purpose of the Study 1 1 2 2 3 5

CHAPTER TWO
Review of Literature 2.1. Organizational Reward System 2.2. Elements of Organizational Reward System 2.2.1. Organizational Financial Rewards 2.2.2. Non-financial Organizational Rewards 2.3. Designing Organizational Reward System 2.4. The Aims of Organizational Reward System 2.5. Pay Satisfaction 2.6. Performance Appraisal and Compensation 2.7. Alternative Pay Strategies 2.8. Determinant of Organizational Reward System 2.8.1. Labor Markets Influence on Organizational Reward System 2.8.2. Job Influence on Organizational Reward System
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5 5 6 6 8 13 14 15 16 18 19

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2.8.3. Employee Influence on Organizational Reward System 2.9. Employee Benefits 2.9.1 Objectives of Employee Benefits 2.10. Managerial Employees 2.11. Non managerial Employees

19 20 20 21 21

CHAPTER THREE
Organizational Background and Methodology of the Study 3.1 Organization Background 3.1.1. Vision of the Bank 3.1.2. Mission of the Bank 3.2. Organizational Structure of Abyssinia Bank 3.3. Organizational Reward Package in Abyssinia Bank 3.4. Methods or Procedures 3.4.1. Mixed Strategies 3.4.2. Characteristics of Mixed Method Research 3.4.3. Visual Model and Procedures of the Design 3.4.4. Data Collection Procedure 3.5. Sampling Strategy 3.6. Data Analysis and Validation Procedures 3.7. Report Presentation Structure 3.8. Roles of the Researcher 3.9. Potential Ethical Issues 3.9. Significance of the Study 3.10. Scope of the Study 3.11. Limitations of the study 3.12. Operational Definition of the Construct 3.13. Organization of the Study 22 22 22 22 22 23 25 25 25 25 26 26 26 27 27 27 28 28 28 28 29

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CHAPTER FOUR
Data Presentation, Analysis and Interpretation 4.1. Organizational Rewards 4.2. Background Information of the Sample 4.3. A Comparative Description of Financial and Non Financial Organizational Rewards 4.5.2. Strategies of Organizational Reward System 4.5.3. Inclination of Suggestions and Criticisms 4.5.4. Labor Market and Organizational Reward System 4.5.5. The Job and Organizational Reward System 4.5.6. Employee and Organizational Reward System 49 54 54 55 55 55 30 30 30

CHAPTER FIVE
Summary, Conclusion and Recommendation 5.1. Summary 5.2. Conclusion 5.3. Recommendations References Appendices Appendix 1 demographic characteristics of respondent Appendix 2 Questionnaires Appendix 3 Interview Questions 57 57 59 61

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List of Tables
Page
Table 1: Sample Size of respondents Table 2: Background Information of the Sample Table 3: Economic Status with Direct Financial Rewards Table 4: The Indirect Financial Rewards Table 5: Fringe Benefits Table 6: The Work (Job Environment) Table 7: The Job It Self (Job Context) Table 8: Harmony of Relationship Table 9: Behavior of the Administrative Mechanism (Strategy) Table 10: Independent T- Test That Shows Satisfaction Mean Difference of Economic Status with Direct Financial Rewards between Managerial and Non Managerial Employees Table 11: Independent T-Test That Shows Satisfaction Mean Difference of Indirect Financial Rewards between Managerial and Non Managerial Employees Table 12: Independent T- Test That Shows Satisfaction Mean Difference of Fringe benefit between Managerial and Non Managerial Employees Table 13: Independent T- Test That Shows Satisfaction Mean Difference of the Work Environment between Managerial and Non Managerial Employees Table 14: Independent T- Test That Shows Satisfaction Mean Difference of the Job Context between Managerial and Non Managerial Employees Table 15: Independent T- Test That Shows Satisfaction Mean Difference of Harmony of Relationship between Managerial and Non Managerial Employees Table 16: Independent T- Test That Shows Satisfaction Mean Difference of the Behavior of Administrative Mechanism between Managerial and Non Managerial Employees 26 30 33 35 37 39 42 45 47

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List of Figure
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Fig. 1: Components of Organizational Rewards Figure 2: Organizational Structure of Abyssinia Bank 13 23

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Abbreviation
AAU
ORS Fig HRM PAS

- Addis Ababa University

- Organizational Reward System - Figure Human Resource Management

- Performance Appraisal systems

Abstract
Organizations realizing that establishing an equitable balance between the employees 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 employees 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 employees 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.

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.

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 employees 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 employees satisfied with organizational financial rewards? What does the organizational non-financial reward system look like? Do employees satisfied with companys non-financial rewards?

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 organizations financial reward system To find out employees satisfaction of companys financial reward system To describe the organizations non- financial reward system To find out employees satisfaction of companys 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

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).

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.

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 employees 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 Maslows hierarchy of needs (1954); self-fulfillment or selfactualization 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 employees 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 ones 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 employees 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 ones own idea, values and decisions in to ones work. Ownership in this case means belonging to, pertaining to or relating to ones 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 Wages Salaries Commissions Bonus Over time Allowances

Indirect Insurance plans: Life, Health, Social Assistance Benefits: Retirement Educational Assistant Employee Services Paid absences: Vacation

The job Interesting Duties or job load Challenging Responsibility Opportunity for Recognition Feeling of Achievement Opportunities for Advancement Opportunities Participation in decision making Opportunities for personal growth Satisfaction on profession or career.

Job Environment Sound Policies Competent Supervision Congenial CoWorkers Appropriate Status Symbols Comfortable Working Conditions Job Sharing

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 organizations 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 organizations human resources. Management and Organizational Reward: An organizations 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).
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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.

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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 resultdriven 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 organizations 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 employees 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 employees compensation.

19

2.8.1. Labor Markets Influence on Organizational Reward System

The number and types of employees indicated in the organizations 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 organizations 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.

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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 Strategic Planning International Banking Department

v/president Administration and Finance Finance Department

Branch Operations Department

Administration and HR 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 days 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 1 2 3 4 Branches/Head officer Head office Arada Branch Bole Branch Reguel Branch Total No of Employees 65 41 76 48 230 Sample Size 25 18 30 20 93

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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:

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Table 2: Background Information of the Sample

No 1 Items Sex of respondents a. Male b. Female Total Age of respondents a. 18-26 years b. 27-35 years c. 36-45 years d. Above 45 years Total Education level of respondents a. Certificate b. Diploma c. Degree d. Above degree Total Service year a. 2-5 years b. 6-10 years c. 11-20 years d. Above 20 years Total Current position of respondent a. Front marker and checker b. Back office checker c. Back office maker d. Customer relationship officer e. Junior HR officer f. Personnel clerk g. Senior Personnel clerk h. Internal auditor i. Public officer j. Information systems officer k. Legal Service officer Total Salary Scale a. 500-1060 b. 1061-1860 c. 1861-2400 d. Above 2401 Total Service of Year in current position e. Below 1 year f. 1-2 years g. 3-4 years h. 5-6 years i. Above 6 years Total Frequency 45 36 81 36 31 14 81 13 68 81 47 25 9 81 19 16 20 4 5 3 4 5 1 2 2 81 11 33 37 81 7 31 27 12 4 81 percentage 55.6 44.4 100 44.4 38.3 17.3 100 16 84 100 58 30.9 11.1 100 24 20 24.7 5 6 3.3 5 6 1.2 2.4 2.4 100 13.6 40.7 45.7 100 8.6 38.3 33.3 14.8 5 100

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 v. poor No Item 1 The rate of your salary compared to individuals of about the same merit and seniority in another organizations 2 The amount of allowance (monetary incentives you receive on top of your basic salary) 3 The amount of payments received from overtime services (for-instance serving beyond normal working hours) 4 The amount of commissions that you receive 5 The amount of bonuses that received from your organization F % F poor % F Fair % F Good % v. good F % F Dont know %

21

25.6

48

58.5

12

14.6

15

18.3

26

31.7

35

42.7

6.1

27

32.9

10

13.4

44

53.7

37 -

45.1 -

14 -

17.1 -

7.3

11

13.4

65

78.8

30 -

36.6 -

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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 Dont v. poor No 1 Item Opportunity for education 2 Employee vacation policy of the organization 3 Holiday policy of the organization 4 Sick leave policy of the organization 5 Insurance plans of the organization 3 3.7 22 26.8 44 53.7 12 14.6 35 42.7 20 24.4 17 20.7 6 7.3 3 3.7 F 15 % 18.3 F 31 poor % 37.8 F 26 Fair % 31.7 F 8 Good % 9.8 F 1 v. good % 1.2 know F %

1.2

65

79.3

15

18.3

1.2

68

82.9

12

14.6

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 employees 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 employees 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 respondents 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.

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Table 5: Fringe Benefits

Response v. poor poor No 1 2 3 4 5 Housing House hold facilities Transportation services Cafeteria services Medical services Item F 19 39 50 51 8 % 23.2 47.6 61.0 62.2 9.8 F 40 32 11 7 % 48.8 39.0 13.4 8.5 F 22 7 7 21 8 Fair % 26.8 8.5 8.5 25.6 9.8 F 3 12 2 12 Good % 3.7 14.6 2.4 14.6 F 1 53 v. good % 1.2 64.6 Dont know F % -

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 employees 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 employees medical services deliver in an appropriate manner. Most of employees are satisfied with this.

39

Table 6: The Work (Job Environment)

Response Dont v. poor No 1 2 3 Item Conditions of offices Conditions of workshop Conduciveness of working hours 4 Effectiveness of rules and regulations (the existence of sound policies) governing your task 5 6 7 Transferring opportunities Promotion opportunities Security of tenure (employment stability) 8 Opportunities for preferred job assignments 9 The existence of competent supervision 10 The existence of appropriate status 12 14.6 59 20 17 72.0 24.4 20.7 6 19 21 7.3 23.2 25.6 4 42 43 4.9 51.2 52.4 2 2.4 26 31.7 37 45.1 16 19.5 F 1 17 % 1.2 20.7 F 51 12 poor % 62.2 14.6 F 39 13 17 Fair % 47.6 15.9 20.7 F 25 41 Good % 30.5 50.0 v. good F 16 11 % 19.5 13.4 know F % -

40

48.8

41

50.0

21

25.6

44

53.7

9.8

9.8

10

12.2

36

43.9

3.7

18

19.5

14

19.5

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 v. poor No Item 1 Satisfaction with job load 2 Satisfaction with other responsibilities assigned to you Participation indecision making concerning your task The degree of freedom of performing your task Opportunities for advancement Opportunities for personal growth Feeling of accomplishment in your career Satisfaction in your profession (career) F 1 % 1.2 F 14 10 poor % 17.1 12.2 F 10 34 Fair % 12.2 41.5 F 39 22 Good % 47.6 26.8 v. good F 17 15 % 20.7 18.3 Dont know F % -

15 21 8 3 14 2

18.3 25.6 9.8 3.7 17.1 2.4

33 34 34 45 29 24

40.2 41.5 41.5 54.9 35.4 29.3

20 16 28 32 38 39

24.4 19.5 34.1 39.0 46.3 47.6

13 10 11 1 16

15.9 12.2 13.4 1.2 19.5

4 5 6 7

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 employees 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 v. poor Item No 1 Relationship between you and your peers (coworkers) 2 Relationship between you and your supervisors 3 Relationship between you and your subordinates 4 Relationship between you and other members of the organization F % F poor % F 22 Fair % 26.8 F 46 Good % 56.1 F 13 v. good % 15.9 Dont know F % -

9.8

21

25.6

36

43.9

16

19.5

1.2

10

12.2

21

25.6

24

29.3

25

30.5

7.3

31

37.8

44

53.7

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 subordinates looks like since they didnt 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 v. poor No Item 1 Competence in shouldering and discharging the organizational responsibilities 2 Effort to delegate responsibilities 3 Inclination to admit suggestions 4 Endeavour to cultivate a cohesive (harmonious) work group 5 Fairness to recognize and evaluate employee competence 6 Willingness to encourage research, change & innovation efforts F 2 10 11 2 15 % 2.4 12.2 13.4 2.4 18.3 F 5 26 38 34 41 31 poor % 6.1 31.7 46.3 41.5 50.5 37.8 F 30 28 20 23 30 13 Fair % 36.6 34.1 24.4 28.0 36.6 15.9 F 36 16 13 8 8 20 Good % 43.9 19.5 15.9 9.8 9.8 24.4 v. good F 10 9 5 2 % 12.2 11.0 6.1 2.4 Dont know F % -

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 Organizational Rewards

Non Financial

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 difference -1.395

Roles Managerial Non-Managerial Total *p>0.05

N 26 55 81

Mean 18.577 17.182 35.759

StD. 1.701 1.516 3.217

df 79 -

T -3.716 -

Sig*. 0.303 -

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 difference -1.332

Roles Non-Managerial Managerial Total *p>0.05

N 55 26 81

Mean 16.091 17.423 33.514

StD. 2.093 2.579 4.672

df 79 -

T -2.479 -

Sig*. 0.077 -

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 Non- Managerial Managerial Total *p>0.05

N 55 26 81

Mean 14.182 16.462 30.644

StD. 3.935 4.235 8.170

df 79 -

T -2.375 -

Sig*. 0.146 -

Mean d/ce -2.279

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 Role Non managerial Managerial Total *p>0.05 N 55 26 81 Mean 47.146 51 98.145 StD. 5.958 5.762 11.72 df 79 T -2.747. Sig*. 0.351 Mean d/ce -3.855

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 nonmanagerial 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 N 55 26 81 Mean 29.491 36.231 65.722 StD. 2.57 4.121 6.691 df 79 T -8.999 Sig*. 0.045 Mean d/ce -6.739

Role Non managerial Managerial Total *p<0.05

Table 14, describes the comparison of the mean scores between the managerial and nonmanagerial 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 Non managerial Managerial Total *p<0.05 N 55 26 81 Mean 15.527 17.385 32.912 StD. 1.245 2.264 3.509
53

Df 79 -

T -4.757 -

Sig*. 0.001 -

Mean d/ce -5.857

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 nonmanagerial 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 N 55 26 81 Mean 20.60 29.615 50.215 StD. 1.256 4.767 6.023 Df 79 T -13.172 Sig*. 0.000 Mean d/ce -9.015

Role Non managerial Managerial Total *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 employees 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 employees 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 companys 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:

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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
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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
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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 employees 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.

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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.

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http://globajournal.orga/GJMBR_Volume11/9-Reward-System-And-Its-Imppact-On-Employee.pdf.

Http://wiki.answers.com/q/explain , how managers differ from non managerial employees.

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