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Senior Essay On The Assessement Ofthe Role of Compensation System On Employees Motivation (In Case of Commercial Bank of Ethiopia Gendeqore Branch)
Senior Essay On The Assessement Ofthe Role of Compensation System On Employees Motivation (In Case of Commercial Bank of Ethiopia Gendeqore Branch)
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Content
Acknowledgment………………………………………………………….. V
Abstract……………………………………………………………………VI
Chapter one……………………………………………………………………….
1. Introduction………………………………………………………………….…1
Chapter two………………………………………………………………………………
2. REVIW OF LITRATURE ………………………………………………………….…6
Chapter three
3. Research methodology………………………………………………………………..….16
Chapter four……………………………………………………………………………………
4.2.2Types of benefit…………………………………………………………………………..21
4.5. Contribution of compensation system to both employee’s motivation and the bank……28
Analysis of interview…………………………………………………………………………..33
5.1 conclusion………………………………………………………………………………..34
5.2 recommendation…………………………………………………………………….…...35
Appendix…………………………………………………………………………………….
First and most our thanks goes to almighty god for everything he has done for us to accomplish
this research. And we would like to express our sincere gratitude to our advisor mister
…………………………………. for his technical and professional advice. Next we would like
to express our deeply heart thanks to those who have not been mentioned their name but
contribute a lot to this achievement.
Abstract
This research was conducted in commercial bank of Ethiopia at gendeqore branch on the role of
compensation system on employees’ motivation. The specific objectives for this study were to
1 .INTRODUCTION
As the business environment become increasingly complex and global, the challenge to create
and maintain effective compensation program ,given cost constraint , also require greater
professional expertise ,organizational understanding ,creative and vision .compensation practice
have important implication for organization ,individual, society as whole. Compensation is the
total of all reward provided to the employees in return for their service. Compensation consists of
pay that person receives in the form of wage; salary, commission, and bonus are called direct
financial compensation.
Organization motivates the high performers by providing financial and non-financial reward
systems which motivate the employees and enhance job satisfaction. All financial reward that are
not included in direct financial compensation like medical and hospital cost which is covered by
the organization. Financial and non-financial rewards have a strong influence over the employee
motivation and are directly related to performance. The significance of financial and non-
financial rewards varies with age. The non-financial rewards influence the motivation to a
greater extent after the pay exceeds a certain level.
1. Direct compensation is used to describe financial compensation usually cash and include
such as element basic salary, overtime pay, bonus and commission.
2. Indirect compensation includes the general category of employees benefit includes mandated
protection program health, life and other insurance, holyday vacation and sick lives.
1.2. The back ground of the organization
The Commercial Bank of Ethiopia (CBE) is the largest commercial bank in Ethiopia As of June
2015, it had about 303.6 billion Birr in assets and held approximately 67% of deposits and about
53% of all bank loans in the country. The bank has around 22,908 employees, who staff its
headquarters and its over 1000+ branches positioned in the main cities and regional towns.[1]
The latter includes 120 branches in the national capital Addis Ababa. With the opening of a
branch in the Gechi in the Illubabor Zone of the Oromia Region, CBE’s banking network has
reached online 783 branches. The bank has reached 1284 branches as of August 10, 2021. The
bank also operates two branches in South Sudan, and is contemplating opening re-opening a
branch in Djibouti, and opening branches in Dubai and Washington, DC, all to serve the
Ethiopian diaspora. CBE branch has reliable and long standing relationship with many
internationally acclaimed banks throughout the world.
The history of the Commercial Bank of Ethiopia (CBE) dates back to the establishment of the
State Bank of Ethiopia in 1942. CBE was legally established as a share company in 1963. In
1974, CBE merged with the privately owned Addis Ababa Bank. Since then, it has been playing
significant roles in the development of the country.
The bank is a pioneer to introduce modern banking to Ethiopia and credited for playing a
catalytic role in the economic progress and development of the country. It is also the first bank in
Ethiopia to introduce ATM service for local users. The commercial bank of Ethiopia was
established in 1942.
The bank expresses its mission as “We are committed to best realize stakeholder needs
through enhanced financial intermediation globally and supporting national development
priorities, by developing highly motivated skill and disciplined employees as well as state of the
art technology .we strongly believe that winning the public confidence is the basis for our
success.”
It is very known that well administrated compensation system practice in an organization result
in reducing turn over in an organization, increasing job satisfaction and increasing moral of
employees. Compensation system contributes for the worth function of the organization in
significantly. But it is not common in our country due to the fact that employees have no choice
except to be employed in the organization, even though they know the problems. In this
Research we would like to focus on the problems that are common in the bank. Problem on
compensating employee based on performance, does not give flexible work time for employee,
Give more priority to compensate employees for only who have high performance.
The bank should give great deal of important and must be able to understand and manage its very
well. Otherwise there would be problem arise and lead to great deal of loss in the bank
performance. Compensation is the problem many organization, regardless to the nature of
activity, physical location and there size. based on these reason the bank manager need to
compensate the employees financial and none financial service. because the bank
compensation increase the effectiveness and efficiency of the bank by increasing productivity
and profit.
So the employees’ compensation is the central part of employment relationship from the
employees’ point of view and policy having the overall role on their relationship with the
organization
The general objective of this study is to assess the role of compensation system on employees
motivation in the commercial bank of Ethiopia at gendeqore branch.
1.4.2Specific objective
The study was focused on assessment on the role of compensation system on employee’s
motivation, in case of commercial bank of Ethiopia at gendeqore branch.
we faced as many challenges during conducting this research as well as in time of finishing the
research, however the most recognized and very challenging limitation of the study are; the
research was conducted without expertise person on the topic, since we all are students; we also
experienced some financial shortage during conducting the study.
chapter one contains introduction part that includes back ground of the study and
organization ,statement of the problem ,objective of the study, significance of the
study ,scope and limitation of the study.
Chapter two contains the review of literature
Chapter three contains Research methodology
Chapter four contains data analysis, presentation, and interpretation
Chapter five conclusions and recommend
CHAPTER TWO
LITRATURE REVIEW
The history of making level of paying someone her working is a long tradition which expressed
in employees relationship is the product of industrialization but management of pay is recent
phenomenon. The field was professionalized and highly standard during twenty century.
Especially the economic and social pressure of the 1980s and 1990s has forced in to accesses
formula more multi-disciplinary approach of compensation on management. Given the fact that
those labor cost are significant part of operating expert management and strategy. It is often
expressed as compensation administration when its consent and principle are applied to
particular organization. Manager of compensation are immersed in the one of the society great
challenge. As all ready noted compensation decision are many and vary. This includes how much
to pay people to perform both similar and different types of work (H. John Bernardino, 2003).
Employees’ compensation refers to the all form of payee or reward going to employee and
arising from their employment .reward includes direct compensation indirect compensation and
non-financial reward. Developing an effective and appropriate compensation system is an
important part of human resource process. An effective and appropriate compensation system
can help attract and retain competent and talented individual who can help the organization
accomplish its mission and goal (dessler2002).
Compensation is the total of all reward provided to employee in return for their service.
Compensation can be divided in to different forms. Such as direct financial compensation
consists of the pay that person receive in the form of wage, salary ,bonus ,and commission
.indirect financial compensation include all financial reward that are not included in the direct
financial compensation like payment for medical service and hospital cost .nonfinancial
compensation consists of the satisfaction that the person receives from the job itself or from the
psychological and the physical environment that in which the job is performed(mondy
R.woyne,1999).
Definition: of motivation as the wiling to exert high level of effort towards organizational goal
conditioned by the effort ability to satisfy some individual needs. While the general motivation is
concerned with the effort to wards and goal. Well narrow the focus to the organization goal in
order to reflect our sinecure interest in the work relates behavior. The effort of the element is
measure of intensity when someone is motivated ,but high level effort are unlikely to lead to
favorable job performance(stephon,p.Robbines,2001).
Internal equity: is payment of employees according to their relative value of their job within
organization.
External equity: payment of employee at comparable to worker who perform similar job in
other organization.
Individual equity: condition that exist when individual performing similar job for the same firm
are paid according to factors unique to the employee ,such as performance level or seniority.
Team equity: paying more productive team in an organization at higher rate than less productive
team (Mondy, R.woyne, 1999).
Objective of compensation are to create a system reward that is equitable to the employer and
employee like desire outcome. The all employees who is attracted to the work and motivated to
do-good job for employee compensation to be motivate in the work place. When employee to be
motivate by compensation the organization achieve the goal efficiently and effectively
Compensation is viewed as
3. It motivates employees, foster feeling of equity and provide direction to their effort
4. It communicates and rain forces an organization cultures, value and competitive advantage
5. Its cost structure reflects the organization ability to pay (H .john Bernardino 1998).
Refers to the monitory benefit offered and provided to the employee in return to their service
provided to the organization. Direct compensation is typically comprised of salary payment and
health benefit .monitory benefit includes, salary, house rent allowance, conveyance, leave travel
allowance, bonus, etc.
Basic salary
Salary is amount received by employees in view of work done by him/her for certain period like
day, week, and month. Many employees receive from his /her employer by rendering his/her
service.
Organization either provide accommodation to its employee who from different state or country
or they provide house rent allowance to the employees.
Conveyance
Organization provide for the cab facility to their employee, few organization provide vehicle and
petrol allowance to their employee to motivate them.
Provide to retain the best talent in an organization. The employees are given allowance to visit
any place which they wish with their family.
Bonus
It is extra payment or unexpected payment and welcome thing to the employee from the
organization. The organization will pay the bonus at the time of festival season to motivate them
and to provide them social security.
Special allowance
Such as over time, mobile allowance, meal commission and travel expense, reduced internet
loan, club membership, etc.
Refers the none monitory benefit offered and provided to employees in life of service provided
by them to the organization .common type of in direct compensation includes;
Leave policy
It is the wright of employee to get adequate number of leave while working with the
organization. Organization provides for paid leave such as medical leave .cause leave, family
illness leave, sick leave, etc.
Insurance
Organization also provides for accidental insurance and life insurance for employees, these gives
them emotional security and they feel themselves valued in the organization.
Organization provides for pension plan and other benefit for their employees which benefit them
after retire from the organization at the reached particular age.
Holiday home
Organization provides for holiday home and gust house for their employees at different
location .these holiday home are usually located in historical and other most wanted holiday spot.
Flexible timing
Organization provides timing to the employees who cannot work during normal shift due to their
Personal problem.
A well designed compensation and benefit plan to attract, motivate, and retain talent in the
organization .and it has its own role in the organization; such as
If there is an appropriate compensation system it will encourage normal worker to perform better
and achieve the goal of the firm.
A. cost of leaving: people leaving on fixed income are especially hard hit by inflation, most
employee also suffer financially.
B. economic condition: definitely affects financial compensation .it especially affects degree
competitiveness this affects the organizational ability to pay high wage. If the firm is very
productive it can be high.
C.government legislation: the federal and state government affects the amount of employee
receives. Government has enacted low to protect the interest of working class.no organization
can violet the low.
The technological progress in payment and settlement system and quality change in operation
system process that have been untaken by various payer in market forces of compensation have
enable to come in to pay to improve efficiencies in proved better service to user of the system
.the policy is based on principle of transparence and fairness in the treatment costumer.
The objective of this policy is to establish a system where organization compensate the costumer
or any financial loss he or she might incur due to deficiency in serves on part of organization or
any act mission or commission directly attribute to the bank.
There are many factor which also roles in the establishment of rational compensation policy
,some of them are
Scarcity supply of skill flightiness of laborer market laborer mobility and market activate
in response to pay differently.
recruitment and relation associated costing moving physical and psychological
Life style aspiration of current employees.
The individual employee market force has become most prominent as wage criteria in some firm.
However the job itself continues factor, especially in the firm that have internal pay equity as
primary consideration. Management techniques utilized for determining a job relative worth
includes
A. Job analysis: is the systematic process of determine the skill and knowledge required for
performing the job. Job description is the primary by product of job analysis, consisting written
document that describes essential job duties or function and responsibility.
B. job evaluation: is that part of compensation system in which affirm determines that relative
value of one job in relation to another .the basic purpose of job evaluation is eliminating pay
inequalities.
Ranking method: is the simplest method of job evaluation rater examines the description of of
each job being evaluated and arranging the job in order according to their value of the company.
Classification method: Job evaluation method in which classes or grade are defined to describe
a group of job.
Factor comparison method: rater need not kept an entire job in mind as they evaluate and make
decision assumption.
Point method: rater assign numerical value to specific job component and the sum of these
values provided quantitative assessment of job relative worth (R.wayne, mondy, 1999).
performance measurement
eligibility
plan period
award size and frequency
Formal plan
Vesting schedule
As with merit of system incentive compensation system have some short coming weakness .one
measure short coming is there practical use of only when performance can be easily and
objectively measure(simple study for incentive compensation system)
CHAPTER THEREE
3. RESEARCH METHODOLOGY
Research design is the arrangement of condition for collection and analysis of data in manner
that aim to combine relevant to the research purpose with economy in procedure. In this study
descriptive research designed will be applied .because it tries to describe the nature of existing
problem and come up with appropriate solution.
This study used both primary and secondary source of data. Primary data was collected from the
employees and manager of the commercial bank of Ethiopia at gendeqore branch. The secondary
was collected from books, published journals, and document of the commercial bank of Ethiopia
at gendeqore branch.
To collect the required data questioner and interview was the most valuable tool through the data
collected from the participants. Questioner with close ended and open ended was used mostly in
the study and interview in the other hand is a data collection method in which this study was
conducted to interview the manager of the bank.
The target population of the researcher would be 20 permanent employees of commercial bank
of Ethiopia at gendeqore branch. The researcher was interested to focus only these permanent
employees to collect the research data.
we used census technique. Since the number of population in the commercial bank of Ethiopia at
gendeqore branch is 20, so we used census method because of the small number of population
(employee) in the bank.
3.5 data analysis and interpretation
This study analyzed the collected data by using descriptive method of data analysis tool such as
percentage, table, and averages. Finally we interpreted the analyzed data in communicable and
understandable manner for the reader.
CHAPTER FOUR
This part of research deals with the Analysis, Interpretation of data which is collected from both
the Employees of the bank and managers. The researcher distributed 20 questioners to the
Employees of the bank.
The background of personal information specifies details about the person i.e. sex, age,
educational level, work experience, and the level of salary.
In table 4.1 item one shows that 13(65%) of respondents are males. And 7(35%) of respondents
are females. This indicates that the majority(65%) respondents are males and the bank is
dominated by males.
As shown in table 4.1 item two shows that 16(80%) of the respondents are found in the age of
18-30 year and 4(20%) of the respondents are found in the age of 31-45 year. This means that
most of the respondents who are working in the bank are young and some of them are between
31 and 45 years.
As shown in table 4.1 item three shows that 18(85%) of the respondents are degree holders and
1(5%) of the respondents are with diploma. This shows that most of the Employees in the bank
are degree holders.
As shown in table 4.1 item four shows that 15(75%) of the respondents have an experience
between 1 and 5 year and 4(20%) of the respondents have an experience between 5 and 10 year,
plus 1(5%) of the respondents has an experience above 10 years. This shows that most of the
Employees have an experience between 1 and 5 years.
As shown in table 4.1 item five shows that 17(85%) of the respondents have a salary level above
4000, and 3(15%) of the respondents have a salary level between 2000 and 4000. This shows that
the salary level of the majority of the Employees is above 4000.
Compensation system is what an Employee receives in exchange of their contribution. There are
several types of compensation systems like basic salary, increasing salary, overtime payee,
bonus, house rent allowance, flexible time transport service, insurance, health protection…etc.
compensation can be incentive and benefit.(R.woyne 2003)
There are several types of incentives such as increase salary, over time payee, bonus flexible
time etc….(R.woyne 2003)
There are several types of incentives. The table below shows each type of incentive;
The table 4.2. shows that 11(55%) of respondents said that the bank uses incentive of increase
salary and 9(45%) of respondent said that the bank does not use the incentive of salary increase.
This data shows the bank increases salary to the Employee but does not equally increase to all of
the Employees.
In table 4.2. item two shows that 17(85%) of respondent said that the bank does not use over
time payee type of incentive and 3(15%) of respondent said that the bank can use over time
payee type of incentive to the Employees. This data analysis shows that the majority of
respondent said that the bank does not use over time payee type of incentive.
In table 4.2. item three shows that 20(100%) of respondent said that the bank can use bonus type
of incentive to the Employees. So, the bank can fully pay to the Employees.
In table 4.2. item four shows that 19(95%) of respondent said that the bank does not use flexible
type of incentive and 1(5%) of the respondent said that the bank uses flexible time type of
incentive. This data shows that as majority(95%) of respondent said that the bank does not pay
flexible time in which the Employees work.
- There are several types of benefit, House rent allowance, Transportation service ,
Insurance, Health protection , Holiday home etc….(R. woyne 2003).
Yes 13 65%
No 7 35%
Total 20 100%
Insurance
Yes 9 45%
No 11 55%
Total 20 100%
Health protection
Yes 20 100%
No 0 -
Total 20 100%
In table 4.3. shows that 18(90%) of respondents said that the bank provides house rent allowance
type of benefit and 2(10%) of respondents said that the bank cannot provide benefit type of
house rent allowance. So the data shows that as the majority of respondents said that the bank
can provide the house rent allowance to the Employee. 13(65%) of the respondents said that the
bank provides transport service to the Employee, and 7(35%) of respondents said that the bank
does not provide transport service to the Employee. This data shows that the bank provides
transport service but it does not provide to the whole Employees of the bank, and 11(55%) of
respondents said that the bank does not provide insurance benefit to the Employee and 9(45%) of
the respondents said that the bank provides insurance to Employees. This shows that in the bank
there is insurance benefit but partial Employees can get benefit of insurance. Which means the
bank does not provide an evenly distributed benefit of insurance to all Employees. 20(100%) of
respondents said that the bank provides benefit type of health protection. This shows that the
bank can provide heath protection for the whole Employees of the bank.
The bank provides benefit and incentive to the employees of the organization based on , if the
bank is profitable, when the bank is satisfied by worker, when employee finish his or her duties,
Table 4.4: methods in which the bank provides benefit and incentive
In table 4.4. 15(75%) of the respondents said that the bank provides incentive and benefit to the
employee when the bank is profitable and 5(25%) of the respondents said that the bank does not
provide incentive and benefit to the Employee on the basis of profit of the bank. 11(55%) of
respondents said that the bank does not provide incentive and benefit to the Employee based on
the satisfaction of the bank by its workers, and 9(45%) of the respondents said that the bank
provides incentive and benefit based on the satisfaction of the bank by its workers and the bank
provides incentive and benefit to the Employees when they finish their duties as 4(20%) of the
respondents said. Plus, 16(80%) of the respondents said the bank does not provide benefit and
incentive when Employees finish their duties. In addition 1(5%) respondents said that the bank
provides incentive and to the benefit Employees based on the location of the bank and 19(20%)
of respondents said that the bank does not provide incentive and benefit to the Employees based
on the location of the bank. So, the above listed data analysis shows that as the majority of
the(75%) respondents said the bank provides incentive and benefit to the Employees when the
bank is profitable and some of them said that the bank provides incentive and benefit to the
Employee when the bank gets satisfaction from its workers.
External equity is payment of employee at comparable to worker who perform similar job in
other similar organization Mondy, R woyne (1999).
Table 4.5: External equity compensation system with (incentive and benefit)
High 1 5%
14 70%
The same
5 25%
Low
20 100%
Total
Source Questioner 2016
As table 4.5 shows, 14(70%) of respondents said that the Employee get the benefit and incentive
from the bank compared with other same bank is the same. And 5(25%) of respondent said that
the benefit they get from the bank compared with other similar bank is low and 1(5%) of
respondents said that the benefit and incentive they get from the bank is relatively high in
contrast to other similar bank. As a result the data shows majority (70%)of respondent said that
that the bank provides benefit and incentive fairly to the Employees when compared with other
same banks.
In table 4.3.1 shows that 12(60%) of respondents said that the employees are moderately
satisfied with the benefit they get from the bank and 6(30%) of the respondents said that they are
satisfied with the benefit they get from the bank. Plus, 2(10%) of the respondents said that they
are dissatisfied with benefit they get from the bank. So, the above data analysis shows that the
majority(60%)Employees are equaly satisfied with the benefit they get from the bank.
External equity is payment of employee at comparable to worker who perform similar job in
other similar organization Mondy, R woyne (1999). is payment the salary fo the employee
compare with employees of other similar organization.
As table 4.7 shows that 10(50%) of the respondents said the salary rate of Employees in which
the bank provides to them in contrast to other similar bank is the same. And 8(40%) of
respondents said that the salary rate is low which compare with other similar bank. 1(5%) of the
respondent said that the salary rate is very low. As a result the analysis shows that the bank
provides the salary to the Employee which is compare with other similar bank is the same but the
bank does not provide the same salary for the whole Employees which compare with other
similar bank .
Table 4.8 shows that 9(45%) of respondents highly agree that the bank provides incentive and
benefit is fair and 7(35%) of respondent disagree, and 3(15%) of respondents said neutral they
get benefit and incentive from the bank. 1(5%) of respondent agree by the bank provide benefit
and incentive is fair. This indicates that the bank provides benefit and incentive as majority
of(45%) employee said fair but it does not satisfy the whole employees of the bank because of
the bank is unable to pay the in incentive and benefit to the whole employee
Internal equity is a payment of Employees according to their relative value of their job within
organization. Internal equity is payment of salary based on employees who perform similar job
in the organization Mondy, R woyne (1999).
Table 4.9: Internal Equity
High 2 10%
14 70%
The same
4 20%
Low
20 100%
Total
Source Questioner 2016
Table 4.9shows that 14(70%) of respondents said that the level of salary compare with the bank’s
Employee is the same. And 4(10%) of respondents said that the level of salary which is compare
with the banks employee is low, and 2(10%) the level of salary in which compare with the
Employees of the bank is high as the respondents said. This indicates that majority(70) the
respondent said bank provides the same salary to the whole Employees .
There are several challenges that hinder compensation system in the bank. Such as, government
rule and regulation, productivity of the organization competitiveness, culture of the organization,
location of the bank and the leadership style in the bank…etc.
What are the challenges that hinder compensation system of Frequency Percentage
the bank?
Government regulation
Yes 6 30%
14 70%
No
20 100%
Total
Productivity
Yes 2 10%
18 90%
No 20 100%
Total
Competitiveness
Yes 3 15%
17 85%
No
20 100%
Total
Location of the bank
Yes 3 15%
17 85%
No
20 100%
Total
Leadership style
Yes 13 65%
7 35%
No
20 100%
Total
Source Questioner 2016
Table 5.1. shows that 6(30%) of respondent said that the government rule and regulation is
challenges that affect the compensation system in the bank and 14(70%) of respondent said that
government rules and regulations do not challenge that hinders compensation system in the bank.
2(10) of respondent said that productivity is challenge that hinders compensation system in the
bank and 18(90%) of respondent said that productivity is not challenge that hinder compensation
in the bank, and 17(85%) of respondents said that productivity does not challenge that hinder
compensation system in the bank. 3(15%) of respondents said that the location of the bank is
challenge that affects compensation system in the bank and 17(85%) of respondents said that the
location of the bank does not affect compensation system in the bank. And 13(65%) of the
respondents said that the leadership is challenge that hinder compensation system in the bank.
And 7(35%) of the respondents said that the leadership style does not factor that affect (hinders)
compensation system in the bank. The above analysis indicates that as the majority (65%)of
respondents said leadership style is challenge that hinders compensation system in the bank.
4.5 Contribution of Compensation System for both Employees Motivation and Bank
Compensation leads better performance and keeps workers focus on their work or job according
to clacistaa (2009).
High 3 15%
12 60%
4 20%
equitable 20 100%
Low
Total
Source Questioner 2016
Table 5.2 shows that 12(60%) of respondent said that the compensation system improves
moderately quality of work life in the bank and 4(2%) of respondent said that compensation
system improve quality of work life lowly, and 3(15%) of respondent said that compensation
system improves quality of work life highly. 1(5%) of respondent said that compensation system
improves quality of work life in the bank very highly. This indicates that as majority of (60%)
respondents said compensation system improves quality of work life in the bank moderately.
Compensation system is leads to better performance and keep worker to focus on their work and
satisfy them on the job according to clacista (2009). The beter payment of benefit and incentive
to the employee increases job satisfaction
Highly satisfied 1 5
4 20
Satisfied
6 30
equally
9 45
Dissatisfied
20 100
Total
Source Questioner 2016
Table.5.3 indicates that 1(5%) of respondents said that Employees are highly satisfied by the job
when they get benefit and incentive from the bank, and 4(20%) of respondents said that they are
satisfied by the job by which they get benefit and incentive from the bank. 6(30%) of
respondents said that they can moderately satisfied by the job by which they get benefit and
incentive from the bank. 9(45%) of respondents said that the Employees are dissatisfied by the
job in which they get benefit and incentive from the bank. As a result majority of respondents
(45%) said that the Employees are dissatisfied by the job by which they get benefit and incentive
from the bank.
According to Jeniter (1996) well designed and functional compensation system is an efficient
way to increase Employees work motivation. According to Byers (1996) motivation is described
as an inner force that drives an individual to act towards something.
Total
Table 5.5 shows that 8(40%) of respondents said that the level of motivation in job is very high.
7(35%) of respondents said that the level of motivation in job is high. 4(20%) of respondents
said that Employee is motivated at the job fairly (moderately), and 1(5%) of respondents said
that the level of Employees motivation in the job is very low. So, as a result, the above analysis
in the bank Employee is highly motivated by the job as majority(40) of respondents said
No 20 100
Total
Source Questioner 2016
Table 5.6 states 17(85%) of respondents said that the bank does not provide bonus based on
Employees performance and 3(15%) of respondents said that the bank provides bonus based on
employees performance. So, this above analysis shows that the majority the (85%) respondent
said that bank does not provide bonus based on Employees performance
The providing of attractive compensation to the employee is important to the organization like
decrease turnover of employee, increase productivity, increase employee’s relationship, increase
motivation of employees on the job etc… (Google)
Table 5.7 shows that 14(70%) of respondents said that providing benefit and incentive to the
Employee contributes for organization to reduce turn of the employees, and 6(30%) of
respondents said that the providing of benefit and incentive to the Employee does not reduce turn
over in the bank. 16(80%) of the respondent said that providing benefit and incentive to
employee increases productivity in the bank, and 4(20%) of respondent said that providing
benefit and incentive to the Employee does not increase productivity in the bank.
10(50%) of respondents said that providing benefit and incentive employees relationship in the
bank. And 10(50%) of respondents said that providing benefit and incentive does not increase
Employees’ relationship in the bank. 20(100%) of respondents said that providing benefit and
incentive to the employees contributes for the bank increase motivation of Employees on the job.
So, this indicates that providing benefit and incentive to the Employee contributes for the bank
increase motivation of Employees on the job. So, this indicates that the provision of benefit and
incentive to the Employee contributes for the organization decrease turnover of the Employees,
increase productivity, fairly increase Employees’ relationship and highly increase motivation of
Employees on the job as most of the respondents said.
Analysis of Interview
Researcher asked the manager, saying “what are the major challenges that hinder compensation
not to be effective?” The manager said that the current productivity or profitability of the bank,
intervention of the government...etc.
Researcher asked the manager saying “what is the benefit of compensation for both employees’
motivation and the bank?” He replied that compensation is important to motivate Employees to
the job properly. When employees perform the job properly they can achieve the goal and
objective of the bank.
Researcher asked the manager saying “how do you assess the compensation policy?” The
manager said that compensation policy is assessed by success for organizational (banks)
objective based on principles of transparency and fairness treatment of customer.
CHAPTER FIVE
5.1 Summary
As the researcher cited before the major objective of the study is to dig out the role of
compensation system on Employees motivation at Commercial Bank of Ethiopia at Ayder
branch. To do this, the researcher stated the following objectives;
To achieve the above objectives the researcher used questioner and interview to collect necessary
data from 20 Employees of the bank. The researcher collected 20 respondents and manager of
the bank. After collecting the distributed questioner and interview, the researcher made an
organization of the data and interpreted it using tabular contents with their output.
5.2 Conclusion
This chapter presents conclusion and recommendation of analysis interpreted and presentation
based on the finding of the following conclusion are analyzed
The study found that most of operational work forces founded by respondent of age 18-
30 years old and most of them are males
Based on the analysis made the majority of respondents of the Commercial Bank of
Ethiopia at Ayder branch are degree holders. They contribute knowledge which could
help to add value to the bank profitability and sustainability.
Regarding work experience most Employees exits of job satisfaction and presents
compensation practice.
Based on analysis made most employees job satisfaction rate compare with they get from
organization are not equally satisfied.
The analysis shows that the bank provides benefit and incentives compare with other
similar banks is the same.
The salary rate of compensation in the bank compare with employees within the bank is
the same.
Based on analysis made the bank can use incentive types of bones fully but doesn’t
provide increase salary equally for the whole employees of the bank.
Based on analysis made the bank can provide incentive and benefit based on when the
bank is profitable.
Based on analysis leadership style is challenge that hinders compensation system to be
effective in the bank.
Based on analysis the bank provides benefit fairly.
Based on analysis the bank doesn’t provide bonus based on employees performance.
Based on analysis providing benefit and incentive contributes for the bank highly
increases the employees motivation at the job.
5.3. Recommendation
To administer well practiced compensation program in the bank the bank should better
adding the right people at the right position.
The bank is better to provide benefit fairly for employees in order to satisfy and motivate
employees to perform properly and to achieve the goal of the bank.
The bank is better to provide health protection service to the employee and provide
insurance.
To increase more the satisfaction of employee on the job the bank should pay overtime
pay and pay incentive and benefit fairly.
To increase more the relationship of employees in the bank the bank should provide the
incentive and benefit equally for the whole employees of the bank.
To make the compensation system in the bank the bank must be pay bonus and other
incentives based on employees performance.
REFERANCE
Stephen p. Robbins (2001), organizational behavior, six edition, p205, published prentice hall
company, printed USA
H.john, Bernardino,(2003) human resource management ,third edition,p216, published at mc
Graw-hill company ,printed in USA
H.John, Bernardino,(1998),human resource management, second edition p.273-293 ,published at
mc Graw-Hill companies, printed in USA
Mondy R. woyne (1999), human resource management, seventh edition, p382-389, published at
prentice hall (UK) London
www.ofpcs/compensationpolicy/Html.
Simple study for incentive compensation.com Google search
Unpublished research (2015)
Calista L(2009) human resource management 5 th edition published at times mirror higher
education group Inc. company.
Robbins (2003) organizational behavior 7th edition, published at prentice hall company
APPENDIX
MEKELLE UNIVERSITY
DEPARTMENT OF MANAGEMENT
DIRECTION: please use (√) mark in the box or write the answer on the space please
Issues related with challenge that hinders compensation system of the bank
14. what are challenges that hinder compensation system of the bank?(you can chose more than
two).
Government regulation productivity competitiveness culture of the bank location
of the bank leadership style
Issue related with contribution of compensation system on employees motivation and bank
15. How do you rate the compensation system improves quality of work life in the bank?
Very low low moderate high very high
16. How do you rate level of job satisfaction compare with the benefit you get from your bank?
2. What is the benefit of compensation for both employees motivation and the bank?