THE IMPACT OF COMPENSATION ON EMPLOYEES PERFORMANCE

(IN CASE OF
COMMERCIAL BANK OF ETHIOPIA JIMMA BRANCH)

BY
ANISA ASHENAFI
Advisor: DEMISE BEYENE. (MBA)

June, 2022

Jimma
 Presentation outline
 Introduction
 Statement of the problem
 Objectives
 Research questions
 Research Methodology
 1. Introduction

 As associations endeavor to accomplish at least one goals through comprehensive

use of human resources, so additionally the representative point toward
accomplishing individual purposes while working for the association (Ivancevich,
2001).
 Ejiofor & Anigho (1984) recognizes the fact that if there is a retrospective
dissatisfaction in workers’ pay, it makes workers relent in their effort which
result into low performance.
 Employee performance is outcome or contribution of the employees to make
them attain goal (Herbert, John and Lee 2000). Employee performance can be
manifested in improvement in production, easiness in using the new technology,
highly motivated worker.
 Mostly employees with good education and work experience are unsatisfied with
their job and salary packages as a result low performances are inevitable (Abebe,
2017).
 1.1 statement of the problem

 To make due in serious business, an association should redress and rouse

representatives in effective way. The explanation is workers are the fundamental
resource of the association. Remuneration frameworks are extremely urgent for
any association (Mondy, 2001).
 Caruth and Handlongthen, 2001 made sense of "workers are supported when they
are monetary compensated straightforwardly affix their exhibition". Be that as it
may, it is provoking undertaking for an association to full fill every one of the
necessities of the workers.
 In the event that the representatives are not repaid appropriately it will diminish
worker's disposition toward the work, this will diminish associations’ efficiency,
worker's exhibition and fulfillments and inspirations likewise decline.
 Statement of the problem….

 As a gap most of the employees have no clear information on the organization’s

compensation system in general compared to the above studies.
 In addition to that the organization has no periodic cost of living adjustment
even though they have the policy to make market assessment every year.
Research question
 This study attempted to answer the following research questions:-
 1 .What is the major compensation packages that have higher impact in
Commercial bank of Ethiopia in Jimma branch?
 2. What factors that affect the compensation systems of the organization?
 3. How does the compensation systems and performance are related?
 4. What are the different methods of compensation used to increase
employee’s satisfaction.
 1.2 Objectives

General objective
 The general objective of the study is to investigate the effects of compensation
on employee’s job performance in case of Commercial bank of Ethiopia in Jimma
branch.
Specific Objective
 To identify compensation packages which has higher impact on employees’
performance?
 To determine factors affecting compensation systems in the organization.
 To examine the relationship of compensation systems and employees’
performance.
 To investigate the various methods of compensation used by organization and how
it satisfies employees
 Significance of the study
 This study have the following significance from different beneficiaries view:
 The study will be important in providing information regarding the
compensation system of CBE in Jimma branch and it is useful insight to the
management of the bank to apply improved techniques to handle employee
compensation.
 And then, it gives the researcher the opportunity to gain deep knowledge in
modern practice of compensation.
 Finally it serves as a source of reference and a stepping stone for those
researchers who want to make further study on the area afterwards.
 Scope of the study

 Conceptually, the topic of compensation and its impact on employee

performance is vast in the area of the study which requires intensive
investigation. But the researcher assessed the impact of compensation on
employee performance and the types of compensation packages that leads
to increase employee performance.
 Geographical the study focused on commercial bank of Ethiopia in Jimma
branch.
 Methodologically, all literatures were not reviewed because of lack of
sufficient data like reference books in library and the time and budget
insufficient
Limitation of the study
 This study has some of its own impediments. Absence of mindfulness influences the exactness and
reliability of the data assembled from the respondents somewhat. Reluctance to fill and return polls
on time will be significant constraints of this review.
 2. Research methodology
Research Design
 A general plan or strategy for conducting the research study, this paper used descriptive
research design for the reason that it makes the entire survey more flexible, efficient and
economical and at same time describe the existing situation as it appears.
Research Approach
 Further Both qualitative and quantitative approach was designed to investigate the problem
under study.
 Employing mixed approach used to neutralize the biases of applying any of a single approach
(Creswell, 2008).
 Source of data & Target Population
 Data that was collected from Bank staffs, key informants and other secondary
sources were required data to its successful accomplishment of research.
 In order to get sufficient and relevant information for the study the researcher
used primary data which was collected from the employees of the institution
and management on the current situation of the institutions.
 Secondary data was collected from books, journals, organizational documents,
internet and different written materials which support this study.

 A population is the entire group of individuals, events or objects having common

evident features.
 In this study, the total populations were employees of the selected branch i.e 64
employees. (Source: CBE Jimma branch HR department).
 Sampling technique

 Since the number of employee in the organization is 64, the census method was used to collect
data from them through questionnaire because this method avoids bias and allow the researcher
to get real information for each and every employee within the bank.
Sample size

Sr_No Branch No of employees Sample size

1 Line 26 26

2 Supportive 38 38

  SUM TOTAL 64 64
 data collection method & data analysis

 In order to get sufficient and relevant information for the study the researcher used both primary and
secondary data. The primary data was collected from employees of the institution and management on
the current situation of the institutions and secondary data was collected from books, manuals and other
related literature.

Data collection method

 Questionnaire
 The researcher used questionnaire as an important method for collecting data. This questionnaire
contains both open ended and close ended types of questionnaire to gather information from the
respondents.
 Interview
 The researcher also used interview to collect data from bank manager and HR. The interview provided to
the Manager and Human resource management officer who have special knowledge about the organization

Methods of data analysis and Interpretation

 The collected data was sorted using Microsoft excel and tested for accuracy and it is checked for
correctness of the data. The collected data was analyzed through the use of quantitative (numerical)
method of data analysis through table, frequency, variable and percentage. And also, the qualitative
(non-numerical) data were presented through description and explanation.
 WORKING COMPENSATION

Working Compensation Frequency Percent

Salaries paid for service provided 17 27.3%

Salaries and fringe benefits for 20 30.3%

service provided
Fringe benefits and other rewards for 27 42.4%
service provided
Total 64 100.0%
TYPES OF COMPENSATION

Types of Compensation Frequency Percent

Risk allowance 24 37.50%

Overtime allowance 28 43.80%

Shift allowance 4 6.20%

Responsibility allowance 8 12.50%

Total 64 100.00%
ACCESS TO BENEFITS

Access to Benefits Frequency Percent

Promotion 26 40.4%

Annual Increment 8 12.3%

Provident fund 27 42.1%

In-service Training 3 5.3%

Total 64 100.0%
Attitudes of employees toward reward they receive

No Question Responses No %

1 Does the reward you Yes 26 40%

receives are satisfactory for
No 38 60%
the amount of effort you
put in to the job

Total 64 100%

2 Does the amount you Yes 24 38%

receives is fair when
No 40 62%
compared to other
organization for the same
types or work?

Total 64 100%

3 In your organization is Yes 24 38%

there consistent payment
No 40 62
for equal work?

Total 64 100%
 CONCLUSION

 By the findings from the study, it can be concluded that from the responses,
before compensating the workers their performance had to be assessed to
determine deserving ones.
 However, on the contrary, it was found that the bank was not evaluating the
performances of their Workers regularly.
 With regards to compensations of Workers, it was seen that the bank did not
usually compensate their workers for good work done but, however, provided them
with social security and healthcare as incentives for motivation
 RECOMMENDATION

 New employees of CBE Jimma branch be given the condition of service and
made them aware of compensation and motivation strategies available in the
bank. The condition of service should be put on the website of the bank for
workers to have easy access to it and read.
 Management of CBE Jimma branch should liaise with Government to use the
GET-FUND to build accommodation facilities or look for a subsidised
accommodation to house the employees.
 Management of the bank should compensate the best-performing worker for
others to emulate and also create another form of compensation package
alongside with the one in the condition of service to encourage workers to put
up their best.
 Further research is conducted on the standard HRM practices such as
recruitment and selection, health and safety, training and development and it
effect on employee performance in the bank.
Thank You
FOR
YOUR ATTENTION

17/06/2022 Asenat Nazif

Jimma