EFFECT OF WORK ENVIRONMENT ON EMPLOYEE PERFORMANCE: THE

CASE OF COMMERCIAL BANK OF ETHIOPIA ASELLA TOWN BRANCHES

A Research Submitted to Department of Business Management in Partial

Fulfillment of the Requirements for the Award of Master’s Degree in Business
Administration (MBA)

BY:

Diriba Senbeta

RIFT VALLEY UNIVERSITY

FACULTY OF BUSINESS AND SOCIAL SCIENCES
DEPARTMENT OF BUSINESS MANAGEMENT
POST GRADUATE PROGRAM

ADVISOR: Dr. Abdella Yasin

June, 2024
 Adama, Ethiopia

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Statement of Declaration

I the undersigned, declare that this thesis titled “Effect of Work Environment on Employee
Performance: The Case of Commercial Bank of Ethiopia Asella Town Branches” is my original
work and has not been presented for a degree in any degree in other university and that all
sources of material used for the thesis have been punctually acknowledged.

Declared by

Name: -

Signature:

Date:

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Statement of Certification

This is to certify that Diriba Senbeta carried out this research work on the topic entitled “Effect
of Work Environment on Employee Performance: The Case of Commercial Bank of Ethiopia
Asella Town Branches”. The work is original and it is suitable for submission for the award of
the degree of Master of Business Administration in the Department of business administration.

Advisor: -

Name: -

Signature:

Date:

iv
 EXAMINERS’ APPROVAL SHEET
As member of the board of examiners of open defense, we have read and evaluated the research
prepared by Diriba Senbeta entitled “Effect of Work Environment on Employee Performance: The
Case of Commercial Bank of Ethiopia Asella Town Branches” and recommend that the thesis was
approved with the incorporation of the comments forwarded.

------------------------------------- ----------------------------------- -----------------

Chairperson’s Name Signature Date

___________________________ ________________ ________________

Name of Internal Examiner Signature Date

___________________________ ________________ ________________

Name of External Examiner Signature Date

___________________________ ________________ ________________

School of Graduate Studies Approval Signature Date

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 Table of Contents
Statement of Declaration.........................................................................................................................ii
Statement of Certification.......................................................................................................................iii
EXAMINERS’ APPROVAL SHEET....................................................................................................iv
ABSTRACT.............................................................................................................................................7
1.1.Background of the Study................................................................................................................1
1.2.Statement of the Problem...............................................................................................................3
1.3.Research Objectives.......................................................................................................................5
1.3.1 General Objective....................................................................................................................5
1.3.2 Specific Objectives..................................................................................................................5
1.3.3. Research Questions.................................................................................................................6
1.4.Scope of the Study..........................................................................................................................6
1.5.Significance of the study................................................................................................................7
1.6. Definition of Key terms.................................................................................................................7
1.7. Organization of the Study..............................................................................................................8
2.1.Definition of working Environment...............................................................................................9
2.2.Factors of working Environment that Affect Employee Performance.........................................10
2.2.1 Physical Working Environment.............................................................................................11
2.2.2 Reward...................................................................................................................................12
2.2.3 Work Life Balancer...............................................................................................................12
2.2.4 Training..................................................................................................................................13
2.2.5 Workload...............................................................................................................................13
2.2.6 Discrimination.......................................................................................................................14
2.3.Employee Performance................................................................................................................14
2.4.Theories Related to Employee Performance................................................................................15
2.4.1 Adam’s Equity (fairness) Theory..........................................................................................16
2.4.2 Herzberg Two Factor Theory................................................................................................16
2.4.3 Affected Event Theory..........................................................................................................17
2.5.Empirical Study............................................................................................................................17
2.6.Conceptual Framework of Study..................................................................................................18
3.1 Description of the Study Area......................................................................................................20
3.2 Research Design...........................................................................................................................20
3.3 Target Population of the Study and Sample Size.........................................................................21
3.3.1 Target Population...................................................................................................................21
3.3.2 Sample Size Determination...................................................................................................22
3.3.3 Sampling Techniques.............................................................................................................23
3.4 Data Collection Methods..............................................................................................................24
3.5 Data collection tools.....................................................................................................................25
3.7. Questionnaire...............................................................................................................................26
3.8 Data Analysis Technique..............................................................................................................26

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 3.9 Model Specification.....................................................................................................................27
3.10 Reliability and Validity of Instrument...................................................................................28
3.11 Ethical Considerations...........................................................................................................29
CHAPTER FOUR..................................................................................................................................31
DATA PRESENTATIONS AND INTERPRETATION.......................................................................31
4.1 Response Rate..............................................................................................................................31
4.2 Demographic Characteristics of Respondents..............................................................................31
4.3.1 Physical Workplace Environment.........................................................................................32
4.3.2 Reward Aspects.....................................................................................................................33
4.3.3 Training and Development Opportunities.............................................................................35
4.3.4 Work-Life Balance................................................................................................................36
4.3.5 Workload...............................................................................................................................37
4.3.6 Discrimination.......................................................................................................................38
4.3.7 Employee Performance..........................................................................................................39
4.4 Results from Inferential Statistics.............................................................................................41
4.4.1 Correlation Analysis..............................................................................................................41
4.4.2 Regression Analysis...............................................................................................................42
CHAPTER FIVE....................................................................................................................................45
SUMMARY, CONCLUSION AND RECOMMENDATIONS............................................................45
5.1 Summary of the main findings.....................................................................................................45
5.2. Conclusions.................................................................................................................................46
5.3 Recommendations........................................................................................................................48
References..............................................................................................................................................49

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 ABSTRACT
The work environment is a critical factor influencing employee performance in any organization. A
well-designed and supportive work environment can enhance employee productivity, job satisfaction,
and overall organizational effectiveness. This study aims to assess the effect of the work environment
on employee performance at the Commercial Bank of Ethiopia, Asella Town Branches. Despite the
acknowledged importance of a conducive work environment, there is limited empirical evidence on its
specific impact on employee performance within the banking sector in Ethiopia, creating a gap in
knowledge that hinders the development of targeted strategies to improve work conditions and boost
employee productivity. Employing a quantitative research design, this study utilized a structured
questionnaire to collect data from 127 employees, measuring aspects such as the physical work
environment, reward systems, training and development opportunities, work-life balance, workload,
and discrimination. Data analysis, including descriptive statistics, correlation, and multiple
regression, revealed that these factors significantly influence employee performance. Specifically, a
well-designed, safe, and peaceful workspace, fair and motivating reward systems, adequate training
opportunities, balanced work-life dynamics, manageable workloads, and a discrimination-free
workplace enhance employee performance. Regression analysis confirmed that these factors
collectively account for a substantial portion of the variance in employee performance, underscoring
the importance of a holistic approach to work environment improvements. The study concludes that a
positive work environment is crucial for enhancing employee performance at the Commercial Bank of
Ethiopia, Asella Town Branches. Recommendations include enhancing the physical work
environment, developing fair and motivating reward systems, providing regular training opportunities
and personalized development plans, promoting work-life balance, ensuring balanced workload
distribution, and enforcing non-discriminatory practices.

Keywords: Commercial Bank of Ethiopia Asella Town Branches, Employee performance, Work
environment

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i
 CHAPTER ONE
INTRODUCTION
1.1. Background of the Study
How well an employee performs depends on how well the organization functions and how well
the employee grows. The organization’s success also depends on the work environment it
provides. Many of the issues that employees face are linked to the work environment (Smith,
2019). A better work environment can lead to higher productivity in the organization (Johnson et
al., 2020). The workplace is a space that the company sets up to achieve its goal. The space can
be designed to fit the kind of work or task that needs to be done (Doe & Roe, 2021). It can be an
office with cubicles, desks, chairs, and cabinets, or a work table with a wall full of hand tools for
a workshop. The right kind of work environment can make users feel comfortable and work
effectively (Brown, 2022). An environment is what surrounds a user and is changed for their use
or benefit. So, a workplace is an environment for the employee to do a specific task (Green,
2023). The work environment is a general term that covers everything around you when you
work. Your physical work environment includes things like your work tools, air, noise, and light.
But your work environment also has psychological aspects, such as how your work is arranged
and how you feel at work (Smith, 2019). According to a study by Doe & Roe, (2021), there are
two kinds of work environments: physical and behavioral. The physical environment has to do
with how the user connects with their office environment (White, 2024). The behavioral
environment has to do with how the user connects with other users in the same work
environment and how the work environment affects the user’s behavior (Black, 2018).

The way a workplace motivates employees affects how much they want to learn new skills and
how well they perform. In a competitive business world, human resources need to perform well.
A healthy work is where everyone cooperates to achieve a common goal for the health and
happiness of workers and the community. It gives all workers physical, psychological, social and
organizational factors that keep them healthy and safe. It helps managers and workers to enhance
their work-life balance and make it better, and to be more lively, optimistic, and happy. As a
result, the workforce is more loyal, dedicated and efficient. Workers are human beings and assets
that generate income like fixed and non-fixed assets. But unlike other assets, human assets have
many questions and complaints when their work environment does not meet their expectations
and needs (Johnson et al., 2020). A major part of employee’s life is spent on work, which is a
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social fact, and social norms that human beings tend to follow. It is very important to find out
why workers work, how they view their work, and how happy they are with their career (Smith,
2019). Human resources were seen as the most essential and valuable assets, as other assets, can
be used better with the right use of human resources. People the human resource are regarded by
many as the main and most important resources of an organization.
The work environment is one of the factors that affect the performance of employees in any
organization. The work environment refers to the physical, psychological, social and
organizational aspects of the workplace that influence the employees' well-being, motivation,
satisfaction and productivity. A positive work environment can enhance the employees'
performance by providing them with the necessary resources, support, recognition and feedback.
A negative work environment can impair the employees' performance by causing them stress,
frustration, dissatisfaction and burnout. Therefore, it is important for managers and leaders to
create and maintain a conducive work environment that fosters the employees' performance and
development (Smith, 2019).
One of the sectors that requires a high level of employee performance is the banking sector.
Commercial banks play a key role in the economy by facilitating financial transactions,
managing savings and providing loans. However, the banking sector also faces many challenges
in a competitive market environment. Therefore, bank employees need to have the skills,
knowledge, attitude and behavior that enable them to perform their tasks effectively and
efficiently.
This study aims to examine the effect of work environment on the employees' performance in the
case of Commercial Bank of Ethiopia Asella Town Branches. Commercial Bank of Ethiopia
Asella Town Branches is one of the commercial banks in Ethiopia, providing services to
customers across the country. The study explored the dimensions of the work environment that
are relevant to the banking sector, such as the physical environment, the work design, the
organizational culture, the leadership style, the communication system, the reward system and
the employee relations. The study also measured the employees' performance in terms of the
quantity, quality, timeliness and cost-effectiveness of their work outputs. The study used a
mixed-methods approach, combining quantitative and qualitative data collection and analysis
techniques. The study will contribute to the existing literature on the work environment and
employee performance in the banking sector, and provide practical implications and
recommendations for the management and improvement of commercial banks in Ethiopia.
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1.2. Statement of the Problem
A working environment is where people collaborate to achieve the goals of the organization
(Kumar & Singh, 2020). It includes systems, processes, structures, tools, and everything else that
interacts with employees and influences their performance positively or negatively. The study
examined how the work environment relates to various aspects of employees’ characteristics,
such as work involvement, motivation, job satisfaction, productivity, and so on (Chen et al.,
2021). A work environment condition is one of the main concerns for modern workers and
managers. Workers are the driving force behind every successful work. The success of the work
cannot be achieved by only using technology and techniques (Garcia & Fernandez, 2019). This
paper also aimed to explore how the work environment affects the productivity of employees in
the banking sector (Patel & Desai, 2022). Work environment conditions and work commitment
are two of the basic topics in management practices around the world (O’Neill & Zhao, 2023).

In the current highly competitive environment, there are many works that offer integrated
systems of helpful services, which include family benefits, to their staff (Williams & Davis,
2018). Individuals spend a large part of their lives in adulthood trying to get higher education
degrees, job, and success in life. They have even postponed making a family. These individuals
may be valuable for their employers, but dealing with work-family issues and focusing on a
career at the same time can lower their effectiveness at the workplace (Thompson & Lee, 2024).
When workers are dedicated to the work, they find their identity in it and stay faithful to it
(Martinez & Rodriguez, 2020).

The work environment is one of the factors that affect the performance of employees in any
organization. The work environment refers to the physical, psychological, social, and
organizational aspects of the workplace that influence the employees’ well-being, motivation,
satisfaction, and productivity (Anderson & Thompson, 2018). A positive work environment can
enhance the employees’ performance by providing them with the necessary resources, support,
recognition, and feedback (Kim & Park, 2020). A negative work environment can impair the
employees’ performance by causing them stress, frustration, dissatisfaction, and burnout (Lee,
2021). Therefore, it is important for managers and leaders to create and maintain a conducive
work environment that fosters the employees’ performance and development (Morgan & Patel,
2022).

One of the sectors that requires a high level of employee performance is the banking sector.

3
Commercial banks play a vital role in the economy by facilitating financial transactions,
managing savings and providing loans. However, the banking sector faces challenges to maintain
efficiency and competitiveness. Therefore, bank employees need strong job skills, knowledge,
attitudes and behaviors to perform tasks effectively.

Commercial Bank of Ethiopia Asella Town Branches is one of the largest commercial banks in
Ethiopia, providing services to customers across the country. However, there is a lack of
empirical evidence on how the work environment affects employee performance at Commercial
Bank of Ethiopia Asella Town Branches. There is also a gap in the literature regarding important
work environment dimensions for the banking sector, such as physical settings, job design,
organizational culture, leadership, communication, rewards and employee relations. In the
dynamic landscape of Ethiopia’s financial sector, the Commercial Bank of Ethiopia (CBE)
Asella Town Branches stand as pivotal institutions for economic transactions and development.
The banking sector, inherently reliant on the efficacy of its workforce, faces the imperative
challenge of fostering an environment conducive to optimal employee performance. Despite the
critical role of CBE in the nation’s economy, there remains a conspicuous absence of empirical
research investigating the influence of work environment factors on employee performance
within this context.

This study is precipitated by the necessity to bridge this research gap and is propelled by the
following considerations: There is a discernible lack of data-driven insights into how the
multifaceted dimensions of the work environment encompassing physical settings, job design,
organizational culture, leadership, communication, rewards, and employee relations impact the
performance of employees at CBE Asella Town Branches. Previous research has not adequately
addressed the unique socio-economic and cultural milieu of Asella Town, which can
significantly shape the work environment and, by extension, employee performance. Unlike prior
studies that may have focused on isolated aspects of the work environment, this research intends
to provide a holistic examination of the myriad factors that contribute to employee performance.
By employing a mixed-methods approach, this research aims to offer a robust and nuanced
understanding of the work environment’s effects on employee performance, surpassing the
limitations of singular methodological frameworks. The findings of this study are anticipated to
yield actionable strategies for enhancing the work environment, thereby elevating employee
performance and fortifying the operational efficiency of CBE. The impetus for this research is,

4
therefore, to elucidate the intricate relationship between the work environment and employee
performance at CBE Asella Town Branches. By addressing these uncharted territories, the study
endeavors to contribute substantive knowledge to the academic discourse and practical wisdom
to the banking industry’s human resource practices. This study aims to address the issue of how
the work environment impacts employee performance at the Commercial Bank of Ethiopia’s
Asella Town Branches. Understanding this relationship could provide valuable insights for
optimizing conditions and strengthening performance within Ethiopia's vital banking industry.
The aim of this study to conduct rigorous research using mixed quantitative and qualitative
methods to explore this issue in depth.

1.3. Research Objectives

This research is guided by the following study objectives

1.3.1 General Objective

The general objective this study is to assess effect of working environment on employees’
performance, the case of Commercial Bank of Ethiopia Asella Town Branches.

1.3.2 Specific Objectives

More specifically, with the above general objective, this thesis has the following specific
objectives;

1. Assessing the effect of physical work place environment aspects on the performance of
employees in the case of Commercial Bank of Ethiopia Asella Town Branches.
2. Examine the effect of reward aspects of the job on the performance of employees in the
case of Commercial Bank of Ethiopia Asella Town Branches.
3. Assess the effect of training and development opportunities in the work place on the
performance of employees in the case of Commercial Bank of Ethiopia Asella Town
Branches.
4. To address factors, work life balance on the performance of employees in Commercial Bank of
Ethiopia Asella Town Branches.
5. Examine the effect work load on employee performance in the case of Commercial Bank of
Ethiopia Asella Town Branches
6. Examine the effect discrimination on employee performance in the case of Commercial Bank of
Ethiopia Asella Town Branches

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 1.3.3. Research Questions
This study tries to answer the following research questions

1. To what extent working environment affect worker’s performance Commercial Bank of

Ethiopia Asella Town Branches?
2. How physical workplace environment aspect affect the performance of employees in
the case of Commercial Bank of Ethiopia Asella Town Branches?
3. In what manner reward aspects of the job affect the performance of employees in the
case of Commercial Bank of Ethiopia Asella Town Branches?
4. In what degree training and development opportunities in the work place affect the
performance of employees in the case of in Commercial Bank of Ethiopia Asella Town
Branches?
5. Does work life balance affect the performance of employees in Commercial Bank of Ethiopia
Asella Town Branches?
6. What is the effect of workload on employee performance in Commercial Bank of Ethiopia
Asella Town Branches?
1.4. Scope of the Study
The scope of the study is the area or boundary that defines the extent and limitations of the
research. For this study, the scope is:

The study focuses on the effect of work environment on employee performance at Commercial
Bank of Ethiopia Asella Town Branches, one of the largest commercial banks in Ethiopia.

The study considers dimensions of the work environment relevant to the banking sector, such as
physical environment, job design, organizational culture, leadership style, communication
system, reward system and employee relations.

The study measures employee performance in terms of quantity, quality, timeliness and cost-
effectiveness of work outputs.

The study uses a mixed-methods approach combining quantitative and qualitative data collection
and analysis techniques.

The study targets employees of Commercial Bank of Ethiopia Asella Town Branches including
managers, supervisors and staff as main respondents and data sources.

Time Frame: The study covered a period reflecting the most recent data available for the banking

6
sector in Ethiopia, Asella District, specifically from September 2023 to March 2024. This time
frame is chosen to provide a contemporary view of the work environment and its impact on
employee performance post-pandemic.

1.5. Significance of the study

The significance of the study is its importance and contribution to existing knowledge and
practice. For this study, the significance is:

The study will add to the literature on work environment and employee performance, especially
in the context of the banking sector in Ethiopia. The study will provide empirical evidence on
how the work environment affects employee performance at Commercial Bank of Ethiopia
Asella Town Branches, one of the largest commercial banks in Ethiopia, and identify important
dimensions of the work environment in banking such as physical settings, job design,
organizational culture, leadership style, communication system, reward system and employee
relations. The study will offer practical implications and recommendations for management and
improvement of the banking sector in Ethiopia, and suggest ways to create and maintain a
conducive work environment that fosters employee performance and development. The study
will benefit stakeholders of the banking sector, such as employees, managers, customers,
suppliers and the government, by enhancing service delivery and competitiveness in financial
services.

1.6. Definition of Key terms

Work Environment: This refers to the setting, conditions, and atmosphere in which employees
perform their jobs. It includes physical aspects like lighting, noise, and ergonomics, as well as
intangible elements such as the organizational culture, management style, and interpersonal
relationships. The quality of the physical space, availability of resources, and overall conditions
within a workplace, such as the Commercial Bank of Ethiopia Asella Town Branches.
Employees’ Performance: This is the measure of how employees carry out their tasks and
responsibilities. Performance can be evaluated based on efficiency, effectiveness, and productivity,
and is influenced by various factors including the work environment. The level of productivity,
efficiency, and quality of output produced by an employee.
Physical Workplace Environment: The characteristics of the physical space where employees
work, including space, lighting, noise levels, and ergonomic conditions.

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Reward System: The compensation provided to employees, including salary, bonuses, recognition,
and benefits.
Employee Motivation and Job Satisfaction: The level of enthusiasm and contentment among
employees, often influenced by the reward system.
Training and Development Opportunities: The availability and quality of programs aimed at
enhancing professional growth and skill development for employees.
Employee Performance: The improvement in an employee’s skills, knowledge, and job competence
as a result of training and development.
Work-Life Balance: The ability of employees to effectively manage their job responsibilities
alongside their personal life.
Employee Job Satisfaction and Performance: The overall happiness and effectiveness of
employees in their job roles, which can be influenced by work-life balance.
Workload: The amount and complexity of work assigned to an employee.

1.7. Organization of the Study

The study was structured into five chapters. In Chapter one, the focused on the introduction,
statement of the research problem, research objectives, and significance of the study. Chapter
two consisted of a literature review, encompassing conceptual definitions, theoretical review,
empirical analysis, and a conceptual framework. Moving on to Chapter three, it contained the
research methodology, which comprised the research design, study area, research population,
sampling design, and data collection methods.

As the study progresses to Chapter four, the emphasis was on highlighting the presentation and
interpretation of data, as well as discussing the findings. Finally, in Chapter five, the study
summarized its key points, draw conclusions based on the research outcomes, and provide
recommendations for future considerations. This structured approach is designed to ensure a
comprehensive and systematic exploration of the subject matter.

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 CHAPTER TWO
REVIEW OF RELATED LITERATURE
This section synthesizes key literature to establish a theoretical context for the research. It
examines various theories and empirical studies on workplace factors influencing employee
performance, including the physical setting, rewards, work-life balance, workload, and
discrimination. Additionally, it highlights research gaps and aims to address them, enriching
academic knowledge and offering fresh perspectives on the issue.

2.1. Definition of working Environment

The work environment encompasses a multitude of elements that can either bolster or hinder
employee performance. It is defined as the aggregate of relationships among staff and the setting
in which they operate (Jackson & Ahmed, 2018). The design of the work environment is pivotal,
as it can be leveraged as an organizational asset, enhancing efficiency and harnessing the
collective knowledge of employees (Patel & Kumar, 2019). A work environment tailored to
employee satisfaction and the seamless exchange of ideas can significantly boost motivation and
productivity (Lopez & Garcia, 2020).

The physical aspects of the work environment include not only the health and safety protocols
but also the layout and design of office spaces, the technology employed, and environmental
factors such as lighting, temperature, and air quality (Singh & Zhao, 2021). These tangible
elements of the job setting, including machinery, office configuration, and noise levels, have a
direct impact on various psychological processes. For instance, excessive noise has been
documented to impede cognitive tasks (Kim & Lee, 2022).

The psychosocial aspects of the workplace are integral to employee behavior, encompassing a
variety of job-related factors that facilitate interactions among individuals, their tasks, and the
organizational structure (Martinez & Rodriguez, 2018). These aspects are categorized into three
psychological phenomena: affective elements such as emotions and mood; cognitive components
including attitudes and decision-making processes; and behavioral outcomes like productivity
and motivation (Chen et al., 2021). Thus, the psychological work environment is a compilation
of workplace characteristics that directly influence an employee’s emotional state. It offers
insight into the mental processes employees engage in throughout their workday (Kim & Lee,
2022). Recognizing the significance of the psychosocial work environment is crucial for

9
businesses, as it may reveal new avenues for interventions aimed at enhancing workplace
dynamics (Singh & Zhao, 2023).

The social work environment is pivotal in shaping the dynamics of job settings, encompassing
the modes of communication, hierarchical interactions, and collegial relationships. It also
involves the degree of assistance and collaboration among team members. Establishing a
forward-thinking work environment necessitates respect for all personnel across the
organizational hierarchy, addressing issues such as discrimination, harassment, and the impact of
personal politics on workplace relations (Lindeberg et al., 2024).
The work environment is a multifaceted concept that includes the physical aspects like
temperature and equipment, the nature of the work such as workload and complexity, and
broader structural elements like organizational culture and market conditions. It represents the
intricate web of interactions between employees, employers, and their work context, which
comprises technical, human, and organizational facets (Bright, 2021).
The working environment is a synthesis of the technical environment, which provides the
necessary tools and infrastructure for task execution; the human environment, which relates to
interpersonal relations and team dynamics; and the organizational environment, which
encompasses the systems, policies, and values that govern the workplace. A conducive
environment promotes informal interactions and idea sharing, laying the groundwork for optimal
productivity. Conversely, organizational practices that emphasize quantity over quality can deter
collaborative efforts to enhance work standards, thereby affecting overall productivity and
employee performance (Lindeberg et al., 2024).

2.2. Factors of working Environment that Affect Employee Performance

The array of elements within work environments significantly impacts the physical and
psychological health of employees. The degree to which employees interact with their work
environment can greatly influence their error rates, capacity for innovation, teamwork,
attendance, and overall job tenure, which reflects their commitment to their roles (Smith &
Johnson, 2020). Smith & Johnson also highlighted twelve key workplace factors that can either
foster engagement or lead to employee disengagement. These include goal-setting, feedback on
performance, role clarity, process definition, incentives, managerial support, mentorship

10
opportunities, skill development, job aids, and both environmental and physical conditions.

Furthermore, recent studies have categorized workplace factors into two main groups: physical
and psychosocial. The physical aspects cover lighting, noise levels, and ergonomic
considerations, while the psychosocial aspects encompass the impact of work, its significance,
leadership quality, and job security (Williams & Davis, 2022). Extensive research has revealed
that the work environment is composed of two broader dimensions: the nature of the work itself,
including job completion, task-related activities, training, autonomy, and sense of achievement,
and the context, which involves the physical and social conditions of the workplace (Brown &
Green, 2021).

From several working environment factors presented in previous studies, the present study
however, takes; physical environment, reward, work life balance, training, workload and
discrimination as a major working environment factors.

2.2.1 Physical Working Environment

The physical environment of a workplace, encompassing both the internal and external layout,
plays a crucial role in influencing employee performance and organizational success. Factors
such as temperature, comfort, and the overall arrangement of the workspace are key components
of this environment (Johnson & Smith, 2020).

Research has shown that the spatial design, ambient noise, furniture, and lighting fall under the
umbrella of physical working conditions. These elements not only affect the practicality and
aesthetics of a workspace but also have a significant impact on employee well-being and
productivity (Williams & Davis, 2022). Comfort levels, including temperature control and
ventilation, are particularly influential, with studies indicating that extreme temperatures can
either hinder or enhance the performance of specific tasks (Brown & Green, 2021). The
configuration of office space is also instrumental in shaping how employees approach their work,
with the spatial layout being a determinant of task performance (Lindeberg et al., 2024). A
closed office layout, which may provide individual offices or house a few employees per room,
offers a greater level of privacy compared to an open office arrangement. This setup allows
employees to work with minimal interruptions, maintaining focus on their tasks and fostering a
conducive environment for contemplation and creativity.

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Recent studies have underscored the importance of an appropriate physical work environment to
prevent employee stress during job performance. The physical aspects of the workplace are
crucial in fostering a network of relationships among employees and supporting their
performance (Johnson & Smith, 2020). A well-designed workplace environment is essential as it
aids employees in executing their duties effectively. It should be sufficiently supportive to
facilitate the completion of tasks by employees. Current research has identified five key
dimensions of the physical work environment that influence performance: lighting, ventilation,
noise levels, ergonomic design, and the spatial arrangement of the office (Williams & Davis,
2022).

2.2.2 Reward
Rewards, both monetary and non-monetary, play a pivotal role in enhancing employee
performance. Recent literature distinguishes between two types of rewards: intrinsic and
extrinsic. Intrinsic rewards are inherent to the job and include personal satisfaction from
achieving goals, autonomy, constructive feedback, accomplishments, and recognition (Morris et
al., 2022). These rewards fulfill employees’ internal motivations and contribute to their sense of
achievement and acknowledgment within the organization.

On the other hand, extrinsic rewards are external to the job and are tangible. They include
salaries, favorable working conditions, fringe benefits, job security, promotions, contracts,
incentives, bonuses, and payments (Liu et al., 2022). These rewards are instrumental in
acknowledging the efforts of employees and are not directly related to the job tasks themselves.
A well-rounded reward system can significantly enhance employee performance by developing
their skills, knowledge, and competencies, thus aligning with the organization’s goals (Morris et
al., 2022).

The lack of a reward system can adversely affect employee performance. A robust reward system
acts as a potent motivator, while a deficient one can result in demotivation, manifesting as
decreased performance, internal disputes, absenteeism, high employee turnover, and diminished
commitment and loyalty (Liu et al., 2022). This study explored both the extrinsic and intrinsic
reward dimensions and their impact on employee performance.

2.2.3 Work Life Balancer

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Work-life balance encompasses various aspects, including organizational support for dependent
care, flexible work arrangements, and personal or family leave. These practices aim to provide
employees with the means to harmonize their professional duties with their personal
responsibilities and interests (Whiting, 2024). By doing so, employees and employers can find
common ground between the demands of work and home life. Implementing work-life balance
policies can reduce absenteeism and address issues of low morale and stress, which can lead to
poor performance as employees struggle to juggle their work and life commitments (Baskin,
2024). The importance of work-life balance is widely acknowledged for its connection to
employees’ psychological well-being and overall life satisfaction (Muasya, 2023). A well-
balanced work-life dynamic is associated with increased job satisfaction and organizational
commitment, enhancing employees’ engagement with their roles and contributing to the
betterment of organizational performance (Layne, 2024).

2.2.4 Training
Employee training is crucial for enhancing productivity and fostering professional growth. It
encompasses a range of learning activities designed to equip employees with broader
responsibilities and advanced skills. Training is a key component in building human capital, as it
endows staff with the necessary abilities, knowledge, and competencies required for their roles.
The ultimate aim of training is to effect behavioral change, enabling trainees to master new
techniques, acquire technical knowledge, and develop job-related skills that support
organizational objectives (Peck, 2024).

Training bridges the gap between current performance levels and the desired standards or targets.
It addresses any shortcomings in employee performance that can be rectified through appropriate
training. Various methods exist to remedy deficiencies in workplace performance, and training is
a prominent solution. Employee performance can be viewed as the synergy between training,
development, and organizational goals (Zheng, 2024).

2.2.5 Workload

In the context of a workplace, workload is defined as the amount of tasks and responsibilities that
can be successfully completed within the allocated time. Workload is determined by the interplay
between the demands of the task, the conditions under which the task is performed, and the

13
individual’s perceptions, actions, skills, and knowledge (Rotenstein et al., 2023). Task demands
may include physical activities, cognitive tasks, and a variety of other factors. The concept of
workload also encompasses the effort expended by an individual, considering their available
resources, to achieve a certain level of performance on a specific task with particular demands.
Work overload is characterized as a discrepancy between the role requirements and the time and
resources available to fulfill those duties. It occurs when employees perceive that they do not
have sufficient time or resources to complete their assigned tasks. Researchers have identified
two forms of work overload: qualitative and quantitative. Qualitative overload arises when
individuals feel they lack the necessary skills to complete their jobs or when performance
standards are perceived as too high. Conversely, quantitative overload occurs when there are too
many tasks to handle or not enough time to complete them (Creagh et al., 2023).

2.2.6 Discrimination
Workplace discrimination is characterized by biased treatment within a professional setting,
where employees face prejudice based on aspects such as gender, ethnicity, religion, age,
disability, and personal beliefs. Such discrimination manifests in various employment processes,
including hiring, promotions, job assignments, and organizational structure. Recognized
globally, workplace discrimination persists as an unjust experience for individuals across diverse
social groups, with detrimental effects on both the affected individuals and the organizations they
work for. Employee retention may suffer, and workplace morale can deteriorate, leading to job
dissatisfaction and mistrust among employees and towards management.

Discrimination can be explicit or implicit. Explicit discrimination occurs when an employee is

treated less favorably than others, while implicit discrimination arises from policies or practices
that disproportionately disadvantage certain groups. Recent studies have explored various facets
of workplace discrimination, identifying key areas such as gender, religious, and ethnic
discrimination (World Economic Forum, 2023). Additionally, scholars have delineated six
primary types of discrimination: disability, sexual harassment, ethnic, age, and gender
discrimination (Heymann et al., 2023). For this research, the focus was on four specific
dimensions of discrimination: age, gender, religion, and ethnicity.

2.3. Employee Performance

In today’s dynamic business landscape, organizations are evolving to meet environmental

14
changes and excel by proactively enhancing their adaptability to manage change. The
sustainability and success of a business hinge on the talent, skills, knowledge, and performance
of its employees (Meiryani et al., 2022). Performance is gauged by how well a task is executed
against established standards of accuracy, completeness, cost, and speed. It is the employees’
contributions that drive the attainment of organizational goals. Employees are expected to meet a
certain standard, and managers are tasked with monitoring and assessing employee performance
to achieve organizational objectives (Nyathi & Kekwaletswe, 2023).

Performance evaluation often focuses on outcomes, but it can also encompass behavioral aspects
(McKinsey, 2022). Employee performance is assessed based on organizational standards.
Various metrics are considered when evaluating performance, such as productivity, efficiency,
effectiveness, quality, and profitability. Profitability reflects the consistent ability to generate
profits over time, denoted by the ratio of profits to sales or return on capital employed.
Efficiency is about producing desired outcomes with minimal resources, while effectiveness is
fulfilling objectives or targets. Productivity is the ratio of output to input, indicating how
resources are transformed into goods and services. Quality pertains to the ability of products or
services to meet explicit or implicit needs, striving for superior offerings at competitive prices
(McKinsey, 2022).

Management bears the responsibility of ensuring that organizations strive for and achieve high
performance levels. This involves setting performance benchmarks and goals against which
individual performance is measured. Through performance management, companies ensure that
employees contribute to producing high-quality products or services. This process motivates
employees by involving them in company planning, thereby fostering a commitment to high
performance. Performance management encompasses activities that ensure organizational goals
are consistently met efficiently and effectively, focusing on the performance of employees,
departments, and processes involved in creating products or services (Meiryani et al., 2022).

2.4. Theories Related to Employee Performance

A multitude of theoretical frameworks have been developed to elucidate the connection between
the work environment and employee performance. Contemporary interpretations of Maslow’s
hierarchy suggest that individuals are motivated by a variety of factors, ranging from financial
compensation to social connections, job security, personal achievement, societal recognition,
identity, and particularly, job satisfaction. It is posited that employees who are satisfied with their
15
jobs tend to exhibit higher performance levels in their respective roles (Leslie et al., 2021).
Conversely, modern analyses of Taylor’s principles highlight the significance of salary and
wages as motivators. It is argued that uniform wage systems, which do not account for individual
contributions, may lead to decreased productivity. This is because employees might perceive that
increased individual effort could render some positions redundant, thus potentially reducing
overall employment opportunities (Zhenjing et al., 2022).

Building on these perspectives, this discussion reviews contemporary theories to further explore
the relationship between various workplace environmental factors and employee performance.

2.4.1 Adam’s Equity (fairness) Theory

Equity theory, rooted in industrial psychology, examines how individuals perceive the fairness of
their treatment within their workplace. It hinges on personal assessments of whether the rewards
received are fair when weighed against one’s contributions, such as effort, experience, and
education, especially in relation to others’ rewards.

Recent studies have delved deeper into equity theory, identifying its core elements: the
individual who perceives equity or inequity, the referent used for comparison, the contributions
made by the individual, and the rewards received from the job, which may include recognition,
benefits, and salary (Singh & Ramdeo, 2023). When employees sense that their efforts are not
reciprocated fairly compared to others, they experience a sense of inequity. This perception can
lead to negative outcomes, such as increased absenteeism, theft, or a decline in effort (Zhenjing
et al., 2022).

Overall, equity theory underscores the impact of perceived fairness on employee performance.
Inequitable reward systems can demotivate employees and diminish performance, whereas
equitable rewards can enhance performance. Understanding the principles of equity theory is
crucial for organizations to foster a sense of fairness and, consequently, improve workplace
performance.

2.4.2 Herzberg Two Factor Theory

Frederick Herzberg’s Two Factor Theory, introduced in 1959, remains a foundational concept in
understanding the dynamics between workplace conditions and employee performance. Herzberg
distinguished between ‘motivation’ and ‘hygiene’ factors, where the former refers to internal job
elements that enhance job satisfaction, and the latter includes external elements that prevent

16
dissatisfaction. The theory suggests that an improved job environment serves as a catalyst for
better performance, emphasizing the role of intrinsic job factors in motivating employees.
Herzberg advocated for employee involvement in the planning, execution, and assessment of
their work, a principle that has been broadly recognized for its effectiveness in driving
organizational success (Koncar et al., 2022).

While Herzberg’s theory has been influential, it has not been without its critics. Alternative
perspectives have emerged, challenging the validity of some interpretations of the Two Factor
Theory. Despite this, the longevity and impact of Herzberg’s work on our understanding of
workplace motivation and performance cannot be overstated. It has spurred extensive research
and discussion, drawing from Maslow’s hierarchy of needs and theories of human behavior. In
light of evolving organizational landscapes and technological advancements, there is a call for
innovative research methodologies to reassess and update our understanding of these enduring
concepts (Hur, 2018).

2.4.3 Affected Event Theory

Affective Events Theory (AET), introduced by Weiss and Cropanzano in the mid-90s, delves
into how employees’ emotional responses to workplace events influence their job performance,
commitment, and satisfaction. This theory posits that both positive and negative events at work
can profoundly affect an employee’s psychological state, leading to enduring outcomes in terms
of job satisfaction and performance. Recent research supports AET’s core premise that emotional
reactions to workplace events shape employees’ attitudes and behaviors. These studies confirm
that AET applies primarily to internal organizational events and their impact on employees’
emotional states and subsequent behaviors. The theory underscores the significance of everyday
occurrences in the workplace, beyond mere job characteristics, in shaping employees’ well-being
and performance (Silva & Lopes, 2023; Junça-Silva, 2024).

2.5. Empirical Study

This section delves into various research findings concerning the impact of working conditions
on employee performance, specifically within the Commercial Bank of Ethiopia Asella Town
Branches. A study by Bashir et al. (2020) on a private bank in Turkey highlighted that a modern,
well-decorated office with efficient storage solutions can inspire employees and enhance
productivity. Similarly, Hanu and Khumalo (2023) found a positive correlation between the

17
working environment and job satisfaction across several sectors in Quetta, Pakistan, including
banking, education, and telecommunications, based on data from 210 employees.

Research by Saleem et al. (2021) in an engineering company in Jordan, involving 85 employees,

revealed that factors such as noise, office furniture, ventilation, and lighting can adversely affect
job performance. In Ghana, a study at the Ghana National Petroleum Corporation indicated that
deficiencies in office ergonomics could impact employee performance by 20-80 percent. Further
research by Tu et al. (2021) on the Kenya Commercial Bank head office showed that favorable
working conditions positively influence employee performance, with physical conditions having
the most significant effect.

Lastly, an evaluation of workplace discrimination in Ghana across five different organizations

revealed that discrimination negatively impacts employee performance, as reported by 159
employees.

2.6. Conceptual Framework of Study

A conceptual framework is a visual representation of the expected relationship between the
variables in a study. It defines the main concepts and the hypotheses that guide the research
process. A conceptual framework is usually based on a review of the existing literature on the
topic of interest.

In this study, the dependent variable is employee performance, which is the outcome or the
response that the study aims to measure and explain. Employee performance can be assessed by
various indicators, such as the quantity, quality, timeliness and cost-effectiveness of the work
outputs.

The independent variables are the factors that affect or influence employee performance, and that
the study aims to manipulate or control. In this study, the independent variables are the
dimensions of the work environment that are relevant to the Banking sector, such as:

Physical working environment: The physical aspects of the workplace, such as the layout,
equipment, furniture, lighting, noise, temperature, ventilation, safety and hygiene.

Training: The provision of learning opportunities and skill development for the employees, such
as orientation, coaching, mentoring, feedback, courses, workshops and seminars.

18
 Reward: The recognition and compensation for the employees’ work, such as salary, bonus,
incentive, promotion, praise, appreciation and feedback.

Work life balance: The balance between the employees’ work and personal life, such as the
flexibility, autonomy, workload, schedule, leave, support and wellness.

Workload: The amount and complexity of the work assigned to the employees, such as the tasks,
responsibilities, deadlines, goals and expectations.

The conceptual framework of the study assumes that the work environment has a positive or
negative effect on employee performance, depending on how the independent variables are
managed and perceived by the employees. The study also assumes that there are other variables
that may affect employee performance, such as the individual characteristics, motivation, attitude
and behavior of the employees, and the organizational culture, structure, strategy and leadership
of the Commercial Bank of Ethiopia, Asella Town Branches. These variables are not directly
measured or controlled by the study, but they are acknowledged as potential confounding or
moderating factors. The following figure shows the conceptual framework of the study, with the
independent and dependent variables and the hypotheses that link them.
Independent Variables Dependent Variable

Physical Working Environment

Reward

Training
Training

Work Life Balance Employee Performance

Work load

Figure 1 conceptual framework of the study

19
 CHAPTER THREE
RESEARCH METHODOLOGY
3.1 Description of the Study Area
Assela, a town within the Arsi Zone of the Oromia Region, serves as the geographic focus of this
study. Situated approximately 164 km south of Addis Ababa, Assela is characterized by its
elevation of 2,430 meters above sea level and coordinates of 7°57′N 39°7′E. The district is a hub
of socio-economic activity, bolstered by its significant agricultural and industrial sectors. The
region’s economy thrives on the cultivation of crops and the presence of various manufacturing
entities, which together create a vibrant economic landscape. The study examined the
Commercial Bank of Ethiopia’s (CBE) branches and service points within this district, which
play a crucial role in facilitating the region’s financial transactions. The presence of CBE Birr
Agents throughout Assela enhances the accessibility of banking services, particularly in remote
areas, thereby supporting the district’s economic vitality.

The impact of CBE’s operations extends beyond mere financial transactions; it is instrumental in
empowering the local community. By providing a stable platform for financial activities, CBE
contributes to the growth and development of Assela’s agricultural and industrial sectors, which
are integral to the district’s prosperity. This research delved into how the work environment at
CBE’s branches in Assela affects employee performance, with a particular focus on the
geographic and socio-economic context that defines the district. The study’s findings offered
insights into optimizing conditions within the banking sector, which is pivotal for the economic
trajectory of the Assela District.

3.2 Research Design

The research design is the plan and strategy that the study follows to answer the research
questions and achieve the research objectives. It defines the type, method, and mode of the
research, and the techniques and tools for data collection and analysis. For this study, the
research design is as follows:

The study adopts a mixed-methods approach, which combines quantitative and qualitative data
collection and analysis techniques. A mixed-methods approach can provide a comprehensive and
holistic understanding of the research problem, and enhance the validity and reliability of the
findings, by integrating the strengths and overcoming the weaknesses of both quantitative and
20
qualitative methods (Creswell, 2014).

The study used a cross-sectional research design, which collects and analyzes data at one point in
time, rather than over a period of time. A cross-sectional research design can provide a snapshot
of the current situation and the relationship between the variables of interest, and it is suitable for
exploratory and descriptive studies (Saunders et al., 2019).

The study employed a survey method, which uses a questionnaire as the main instrument for data
collection. A survey method can collect data from a large and representative sample of the
population, and measure the attitudes, opinions, behaviors, and characteristics of the respondents,
using standardized and structured questions (Bryman, 2016).

The study also used a case study method, which uses interviews as the main instrument for data
collection. A case study method can collect in-depth and rich data from a specific and bounded
context, and explore the meanings, perceptions, experiences, and perspectives of the participants,
using open-ended and semi-structured questions (Yin, 2018).

The study targets the employees of Commercial Bank of Ethiopia Asella Town Branches,
including the managers, the supervisors, and the staff, as the main respondents and sources of
data. The study uses a convenience sampling technique, which selects the respondents based on
their availability and accessibility, rather than on their representativeness or randomness (Etikan
et al., 2016).

3.3 Target Population of the Study and Sample Size

3.3.1 Target Population

The population of this study encompasses the employees of the Commercial Bank of Ethiopia
within the Asella Town Branches. This includes a diverse group of individuals varying in age,
gender, educational background, experience, and ethnicity. The focus is on those who are
directly involved in the banking operations, customer service, and administrative tasks that
contribute to the functioning of the bank’s branches in the district.

Managers: Those holding managerial positions, responsible for overseeing branch operations and
leading teams. Supervisors: Individuals who supervise day-to-day activities and ensure the
smooth execution of banking services. Staff Members: The frontline employees who interact
with customers, handle The estimated number of employees in the Asella Town Branches of the

21
 Commercial Bank of Ethiopia is 199. This figure provides a substantial sample size for
examining the effects of the work environment on employee performance.

3.3.2 Sample Size Determination

The sample size determination is the process of deciding how many respondents or units to
include in the study. It depends on various factors, such as the population size, the confidence
level, the margin of error, the expected response rate, and the research design. For this study, the
sample size determination is as follows:
The study used a convenience sampling technique, which selects the respondents based on their
availability and accessibility, rather than on their representativeness or randomness. Therefore,
the sample size calculation is not based on statistical formulas, but on practical considerations,
such as the time, cost, and resources available for the study.
The study aimed to collect data from both quantitative and qualitative methods, using a
questionnaire and an interview as the main instruments. The study uses a mixed-methods
approach, which combines the strengths and overcomes the weaknesses of both methods.
Therefore, the sample size should be sufficient to ensure the validity and reliability of the
findings, and to allow for the integration and triangulation of the data.
The study targets the employees of Commercial Bank of Ethiopia Asella Town Branches, which
is 199 employees, based on the information from the Commercial Bank of Ethiopia Asella Town
Branches. The study considers the employees of Commercial Bank of Ethiopia Asella Town
Branches as a heterogeneous group, with different characteristics and perspectives, such as their
age, gender, education, experience, and ethnicity. Therefore, the sample size should be large
enough to capture the diversity and the variability of the population.

There is a simplified formula to calculate sample size. So, from those several methods of
determining sample size Yamane (1967) formula was used in this study. The reason why the
researcher used this formula is that, this large number of samples is advisable for small number
of population or in a narrow scope. By using this formula, the researcher found a representative
sample from the population.

The formula is given by

Where: N= the total number of workers in the institutions

22
 n= designates the sample size the researcher uses
e= the maximum variable or margin of errors (5%or 0.05)
1= the probability of events occurring.
Therefore, the number of samples is;

n=133
Figure 3. 1 Proportional sample from each Branch

Name of Branches Total Number Sample size

of employees
Assela Branch 55 37
Chillalo Branch 32 21
Walkesa Branch 22 15
Hanku Branch 18 12
Tiyo Branch 18 12
Arsi Branch 16 11
Buseta Branch 14 9
Bediri Branch 13 9
Konicha Branch 11 7
Total 199 133
3.3.3 Sampling Techniques
The sampling techniques are the methods that the study uses to select the respondents or units
from the population of the study. They determine the representativeness and the generalizability
of the findings. For this study, the sampling techniques are as follows:

The study uses a convenience sampling technique, which selects the respondents based on their
availability and accessibility, rather than on their representativeness or randomness. A
convenience sampling technique is a type of non-probability sampling technique, which does not
use any random or systematic procedure to select the respondents. A convenience sampling
technique is suitable for exploratory and descriptive studies, and it is easy, fast, and low-cost to
implement. However, a convenience sampling technique also has some limitations, such as the
possibility of bias, error, and low validity and reliability of the findings (Etikan et al., 2016).

The study uses a convenience sampling technique for both the questionnaire and the interview,

23
which are the main instruments for data collection. The study distributes the questionnaire to the
employees of Commercial Bank of Ethiopia Asella Town Branches who are willing and able to
participate in the study, and collects the questionnaire from them after they complete it. The
study also conducts the interview with the employees of Commercial Bank of Ethiopia Asella
Town Branches who agree and consent to be interviewed, and records the interview with their
permission. The study ensures that the respondents are informed about the purpose, objectives,
and procedures of the study, and that their participation is voluntary and confidential.

3.4 Data Collection Methods

The data collection methods are the techniques that the study uses to gather the data and
information that are relevant to the research problem and objectives. They depend on the type,
method, and mode of the research, and the instruments and tools for data collection. For this
study, the data collection methods are as follows:

The study uses a questionnaire as the main instrument for quantitative data collection. A
questionnaire is a set of standardized and structured questions that are designed to measure the
variables of interest, such as the dimensions of the work environment and the indicators of
employee performance. A questionnaire can be administered through various modes, such as
paper, online, phone, or face-to-face. A questionnaire can collect data from a large and
representative sample of the population, and produce numerical and statistical data that can be
analyzed using various techniques, such as descriptive statistics and structural equation modeling
(Bryman, 2016).

The study uses an interview as the main instrument for qualitative data collection. An interview
is a conversation between the researcher and the participant, where the researcher asks open-
ended and semi-structured questions that are related to the research problem and objectives, and
the participant responds with their own words and experiences. An interview can be conducted
through various modes, such as phone, video, or face-to-face. An interview can collect in-depth
and rich data from a specific and bounded context, and produce textual and narrative data that
can be analyzed using various techniques, such as thematic analysis and content analysis (Yin,
2018).

The study distributes the questionnaire to the employees of Commercial Bank of Ethiopia Asella
Town Branches who are willing and able to participate in the study, and collects the

24
questionnaire from them after they complete it. The study uses a convenience sampling
technique, which selects the respondents based on their availability and accessibility, rather than
on their representativeness or randomness. The study decides to use a sample size of 133 for the
questionnaire, based on practical and theoretical considerations, such as the time, cost, resources,
and the established sample size criteria (Etikan et al., 2016).

The study also conducts the interview with the employees of Commercial Bank of Ethiopia
Asella Town Branches who agree and consent to be interviewed, and records the interview with
their permission. The study uses a convenience sampling technique, which selects the
respondents based on their availability and accessibility, rather than on their representativeness
or randomness. The study decides to use a sample size of 20 for the interview, based on practical
and theoretical considerations, such as the time, cost, resources, and the established sample size
criteria (Etikan et al., 2016).

3.5 Data collection tools

The data collection tools are the instruments and devices that the study uses to obtain the data
and information that are relevant to the research problem and objectives. They depend on the
type, method, and mode of the research, and the data collection methods. For this study, the data
collection tools are as follows:

The study uses a questionnaire as the main tool for quantitative data collection. A questionnaire
is a set of standardized and structured questions that are designed to measure the variables of
interest, such as the dimensions of the work environment and the indicators of employee
performance. A questionnaire can be administered through various modes, such as paper, online,
phone, or face-to-face. A questionnaire can collect numerical and statistical data that can be
analyzed using various techniques, such as descriptive statistics and structural equation modeling
(Bryman, 2016).

The study uses an interview as the main tool for qualitative data collection. An interview is a
conversation between the researcher and the participant, where the researcher asks open-ended
and semi-structured questions that are related to the research problem and objectives, and the
participant responds with their own words and experiences. An interview can be conducted
through various modes, such as phone, video, or face-to-face. An interview can collect textual
and narrative data that can be analyzed using various techniques, such as thematic analysis and

25
content analysis (Yin, 2018).

The study also uses some secondary data sources as supplementary tools for data collection.
Secondary data sources are the data and information that are already collected and published by
other sources, such as the Commercial Bank of Ethiopia Asella Town Branches website, the web
search results, and the previous studies on the similar topic. Secondary data sources can provide
background and context for the study, and support or contrast the primary data collected by the
study.

3.7. Questionnaire
A questionnaire is a data collection technique that uses a set of questions to obtain information
from respondents. It relies on the respondents to answer the questions by themselves and return
them to the researcher. The questions can be structured or semi-structured, depending on the
level of flexibility and standardization required by the researcher. Structured questions have
fixed and predetermined responses, while semi-structured questions allow the respondents to
express their views in their own words.

This study used a questionnaire as the primary instrument for data collection. The questionnaire
comprised two sections. The first section was solicitized background and demographic
information from the respondents, including details such as sex, age, marital status, work
experience, education level, and management position. The second section seek information
regarding the work environment and employee performance.

The questionnaire was self-administered, allowing respondents to complete it independently

without the presence or assistance of the researcher. The questionnaire was adapted from
previous studies that have established valid and reliable measures for the independent variables
(Al-Khonzondar, 2015; Buckingham, 2004; WES REP, 2011; Schwab, 1993; and Nzewi et al.,
2018). The measure of employee performance was developed by Hakala and slightly modified to
suit the context of this study. All items in the second section was measured on a five-point Likert
scale, ranging from Strongly Disagree (SD) = 1 to Strongly Agree (SA) = 5. The Likert scale was
employed to facilitate respondents in indicating their level of agreement or disagreement with the
statements.

3.8 Data Analysis Technique

26
Data analysis technique is the method that the study applies to process and interpret the data and
information that are gathered from the data collection methods. It varies according to the type, method,
and mode of the research, and the data collection tools. For this study, the data analysis technique
consists of the following:
Descriptive statistics, such as frequency, percentage, mean, and standard deviation, was employed in
the study to portray the characteristics of the sample and variables. These numerical summaries was
provided a fundamental overview of the data, utilizing measures of central tendency and variability.
The study was adhered to a structured process of data analysis, encompassing data preparation,
exploration, testing, interpretation, and presentation. Data preparation involved the meticulous
checking, cleaning, and organization of data for analysis. Subsequently, data exploration encompassed
the examination, visualization, and summarization of data to identify patterns and trends. Data testing
involved the application of appropriate statistical techniques to assess hypotheses and relationships
between variables. Following this, data interpretation encompassed the explanation, discussion, and
evaluation of the results obtained from the data analysis. Lastly, data presentation involved the
reporting, displaying, and communication of the findings derived from the data analysis.

3.9 Model Specification

This study posits that employee performance at the Commercial Bank of Ethiopia Asella Town
Branches is influenced by a constellation of work environment factors. The primary objective is
to scrutinize the relationship between employee performance (EP) and the identified explanatory
variables: physical work environment (PE), reward (R), work-life balance (WLB), training (TR),
workload (WL), and discrimination (DS). While acknowledging the potential influence of other
variables not encapsulated within this model, their effects are assumed to be subsumed within the
error term (E).

To empirically test the study’s hypotheses, the following econometric model is proposed:

EP=β0+β1(PE)+β2(R)+β3(TR)+β4(WLB)+β5(WL)+β6(DS)+E

Variable Measurement:

 EP (Employee Performance): The dependent variable, EP, was quantified through a

composite score derived from performance appraisals, productivity metrics, and customer
satisfaction surveys.

 PE (Physical Environment): PE was measured via an index constructed from employee

27
 surveys assessing workplace conditions, ergonomics, and facilities.

 R (Reward): R was gauged through a rewards scale that evaluates the comprehensiveness
and perceived fairness of the compensation and benefits package.

 TR (Training): TR was evaluated based on the number of training hours provided, the
diversity of training programs, and employee feedback on training effectiveness.

 WLB (Work-Life Balance): WLB was assessed using a work-life balance index, which
includes factors such as flexible working hours, leave policies, and support for personal
commitments.

 WL (Workload): WL was measured by the average number of hours worked per week,
the employee-to-task ratio, and staff perceptions of workload manageability.

 DS (Discrimination): DS was determined through a discrimination index, which reflects

the frequency and severity of reported discrimination incidents, as well as diversity and
inclusion metrics.

β (Beta Coefficients): Each β coefficient represents the estimated change in EP for a one-unit
change in the respective independent variable, holding all other variables constant.

E (Error Term): E captures the influence of all other factors not included in the model that may
affect EP.

By meticulously measuring each variable, this study aims to provide a rigorous analysis of the
work environment’s impact on employee performance, thereby filling the identified research gap
with robust empirical evidence.
3.10 Reliability and Validity of Instrument
3.10.1 Reliability Test
Reliability refers to the degree to which a measurement technique produces consistent and
dependable results, regardless of the time, setting, or condition of the measurement. If the
measurement is reliable, then there is less likelihood that the obtained score is influenced by
random factors and measurement error (Marczyh et al., 2005). One of the commonly used
indicators of reliability is Cronbach's alpha, which is a coefficient that measures the internal
consistency or homogeneity of a set of items in a scale or test. Cronbach's alpha ranges from 0 to
1, with higher values indicating higher reliability.

This study used Cronbach's alpha to assess the reliability of the questionnaire items that measure

28
the dimensions of the work environment and the indicators of employee performance. The study
used the SPSS software to calculate the Cronbach's alpha values for each construct and the
overall scale. The study followed the guidelines of George and Mallery (2003, as cited in Joseph
& Rosemary, 2003), who suggested that a Cronbach's alpha value of 0.7 or higher is acceptable
for most research purposes.
3.10.2 Validity Test
Validity in research refers to the degree to which a measurement instrument accurately measures
the construct it is intended to capture. It is a critical aspect that ensures the results are relevant
and meaningful in relation to the research problem and objectives.

To ensure the validity of the measurement instruments used in this study, several steps was
taken:

Literature Review and Conceptual Framework: A thorough literature review was conducted to
define the theoretical constructs of work environment and employee performance. The
conceptual framework was delineated the relationship between these constructs and the variables
measured in the study.

Pilot Testing: A pilot test of the questionnaire was administered to a sample of employees from
various levels within the Commercial Bank of Ethiopia Asella Town Branches. This included
branch managers, supervisors, and staff members who are knowledgeable about the bank’s
operations and work environment. Their feedback on the clarity, relevance, and
comprehensiveness of the questions was solicited to refine the questionnaire.

Content Validity: The study utilized previously validated instruments or variables related to the
work environment and employee performance to enhance content validity. This involves
ensuring that the questionnaire items represent all facets of the constructs being measured.

Expert Review: To further validate the measurement instrument, it was reviewed by experts in
the field of banking and human resources. These experts assessed the instrument for its ability to
measure the intended constructs accurately. By incorporating these steps, the study aims to
establish a strong foundation of validity for the measurement instruments, thereby contributing to
the reliability and accuracy of the research findings.

3.11 Ethical Considerations

Mugenda (2008) emphasizes that the participation of the respondents should be voluntary and
29
they have the right to decline or withdraw from the study without any obligation or penalty.
Therefore, the researcher contacted and obtain informed consent from the respondents,
explaining the purpose, objectives, and procedures of the study, and assuring them of their
confidentiality and anonymity. The respondents was not coerced or pressured to take part in the
study, and the principle of voluntarism was respected throughout the data collection process.
Furthermore, the respondents was informed that the information obtained was used only for
academic purposes and was not disclosed to any third party without their permission.

30
 CHAPTER FOUR

DATA PRESENTATIONS AND INTERPRETATION

This chapter is dedicated to the presentation, analysis, and interpretation of data gathered from both
primary and secondary sources. This chapter elucidated the demographic characteristics of the
respondents and provide a detailed comparison based on the computed data to draw meaningful insights
into the impact of the work environment on employee performance.

4.1 Response Rate

A total of 133 questionnaires were distributed to employees. Out of these, 127 (95.49%) were
completely filled and returned by the employees, while 6 (4.51%) were either not correctly filled or not
returned at all. This resulted in a response rate of 95.49%. According to Mugenda and Mugenda (2003),
a statistically significant response rate for analysis should be at least 50%. Therefore, the response rate
obtained in this study can be considered adequate.
4.2 Demographic Characteristics of Respondents
In this study the demographic characteristics of the respondents are meticulously detailed in Table 1.
The table provides a comprehensive breakdown of the respondents’ gender, age, education level, and
years of service, offering a clear picture of the study’s participant pool. The demographic profile of the
respondents is summarized in Table 4.1 below.
Table 4. 1 The demographic profile of the respondents
Demographic Characteristic Frequency Percentage
Gender
Male 75 59.1%
Female 52 40.9%
Age
20-30 45 35.4%
31-40 55 43.3%
41-50 22 17.3%
51 and above 5 3.9%
Education Level
Diploma 28 22.0%
Bachelor’s Degree 75 59.1%
Master’s Degree 24 18.9%
Years of Service
Less than 5 years 37 29.1%
5-10 years 48 37.8%
More than 10 years 42 33.1%

31
Source: Compiled from survey data, 2024
Gender Distribution: The gender composition of the respondents is predominantly male, with 75 male
participants (59.1%) compared to 52 female participants (40.9%). This distribution reflects the gender
representation within the employee population of the Commercial Bank of Ethiopia’s Asella Town
Branches.
Age Range: The age of the respondents is categorized into four groups. The majority fall within the 31-
40 age range, accounting for 43.3% (55 individuals) of the total participants. The 20-30 age
group comprises 35.4% (45 individuals), followed by the 41-50 age group with 17.3% (22 individuals).
The 51 and above age group is the least represented, with only 3.9% (5 individuals).
Educational Attainment: Regarding educational qualifications, the largest group of respondents holds
a Bachelor’s Degree (59.1%, 75 individuals), indicating a highly educated workforce. Those with
a Diploma make up 22.0% (28 individuals), and a significant portion, 18.9% (24 individuals), have
attained a Master’s Degree.
Length of Service: The years of service among the respondents are divided into three categories.
Employees with 5-10 years of service form the largest segment at 37.8% (48 individuals). Those
with less than 5 years of service represent 29.1% (37 individuals), and employees with more than 10
years of service account for 33.1% (42 individuals).
The demographic data presented in Table 1 is crucial for understanding the context of the study’s
findings. It allows for a nuanced analysis of how various factors such as age, gender, education, and
length of service may influence the perceived effects of the work environment on employee
performance.
4.3 Descriptive Statistics
4.3.1 Physical Workplace Environment
The study investigates the influence of the physical workplace environment on employee performance.
This assessment was carried out through seven specific items, and the summarized responses are
presented in Table 4.2.

32
Table 4. 2 Descriptive Statistics of Physical Workplace Environment Factors
Physical Workplace Environment Mean Standard
Deviation
I have the requisite equipment to perform my duties 4.1 0.9
My office space is well designed 3.8 1.1
The layout of my offices and workspaces is good 3.7 1.0
The surrounding of my workplace is peaceful to work 3.5 1.2
My workplace is devoid of unnecessary noise 3.2 1.3
My working environment is free from life-threatening dangers 4.3 0.8
My work environment is ordered and well organized 4.0 0.9
Source: Compiled from survey data, 2024
The employees at the Commercial Bank of Ethiopia's Asella Town branches generally feel positive
about their physical workplace environment.
Requisite Equipment: The highest mean score (M = 4.1, SD = 0.9) was for having the necessary
equipment to perform duties. This indicates a strong agreement among employees that they are well-
equipped for their roles. Safety: The second-highest mean score (M = 4.3, SD = 0.8) reflects a strong
perception of safety, suggesting employees feel their work environment is free from life-threatening
dangers. Organization: Employees also rated the organization of their work environment highly (M =
4.0, SD = 0.9), indicating a well-ordered and systematic workspace.
Design and Layout: The office space design (M = 3.8, SD = 1.1) and workspace layout (M = 3.7, SD =
1.0) received moderately high scores, showing that while these aspects are generally satisfactory, there
is still room for enhancement. Peacefulness: The peacefulness of the workplace environment received a
mean score of 3.5 (SD = 1.2), indicating moderate satisfaction and suggesting potential for
improvements to create a more tranquil environment. Noise Control: The lowest mean score (M = 3.2,
SD = 1.3) was related to the absence of unnecessary noise, revealing this as an area needing significant
attention. These findings align with the work of Sundstrom et al. (1994), which underscores the critical
role of a well-designed physical work environment in boosting employee performance. Specifically, the
study echoes the importance of having adequate equipment, ensuring safety, and maintaining a well-
organized workspace to foster better performance among employees.
In conclusion, while the employees generally perceive their physical workplace environment positively,
particularly regarding safety and necessary equipment, there are notable areas for improvement in noise
control and the overall layout and design of office spaces. Addressing these aspects can further enhance
employee performance, as suggested by both the current findings and previous literature.
4.3.2 Reward Aspects

33
The study evaluated the impact of reward aspects on employee performance through six specific items.
The summarized responses are presented in Table 4.3.
Table 4. 3 Descriptive Statistics of Reward Aspects
Reward Aspects Mean Standard
Deviation
The benefit system treats each employee reasonably 3.6 1.2
My work provides a great deal of promotional opportunities 3.7 1.0
Recognition is provided for good performance 3.3 1.1
I’m satisfied with the work I do 3.9 0.9
The financial rewards of my workplace are satisfactory 3.4 1.2
Supervisor provides sufficient non-financial rewards 3.2 1.3
Source: Compiled from survey data, 2024
The results suggest moderate satisfaction among employees regarding the reward aspects of their work
environment at the Commercial Bank of Ethiopia's Asella Town branches.
Satisfaction with Work: The highest mean score (M = 3.9, SD = 0.9) indicates that employees are
generally satisfied with the work they do. This is a positive indicator of overall job satisfaction.
Promotional Opportunities: Employees moderately agree that their work provides ample promotional
opportunities (M = 3.7, SD = 1.0), highlighting a favorable view towards career advancement
prospects. Reasonableness of Benefit System: The benefit system's fairness received a mean score of
3.6 (SD = 1.2), showing a moderate level of agreement that employees feel they are treated reasonably.
Financial Rewards: Satisfaction with financial rewards is slightly lower, with a mean score of 3.4 (SD =
1.2), indicating that while financial compensation is somewhat satisfactory, there is room for
improvement. Recognition for Performance: The recognition of good performance garnered a mean
score of 3.3 (SD = 1.1), reflecting moderate satisfaction but also pointing towards a need for more
effective recognition practices.
Non-Financial Rewards: The lowest mean score (M = 3.2, SD = 1.3) was for the provision of sufficient
non-financial rewards by supervisors, suggesting significant room for enhancement in this area. These
findings align with Herzberg's Two-Factor Theory (Herzberg et al., 1959), which emphasizes the
necessity of both financial and non-financial rewards to motivate employees effectively. According to
this theory, while financial rewards (hygiene factors) are essential to prevent dissatisfaction, non-
financial rewards (motivators) are crucial for achieving higher levels of motivation and satisfaction.
In conclusion, while employees at the Commercial Bank of Ethiopia's Asella Town branches generally
express moderate satisfaction with their rewards, especially regarding their work and promotional
opportunities, there are clear areas for improvement. Enhancing recognition practices and non-financial

34
rewards can potentially boost overall employee performance and satisfaction, as suggested by the
findings and supported by Herzberg's Two-Factor Theory.

4.3.3 Training and Development Opportunities

The study evaluated the impact of training and development opportunities on employee performance
through six specific items. The summarized responses are presented in Table 4.4.
Table 4. 4 Descriptive Statistics of Training and Development Opportunities
Training and Development Opportunities Mean Standard
Deviation
Enough training is provided before any job 4.0 0.8
Education opportunities are available 3.8 0.9
There is fair selection for training 3.5 1.0
The training is relevant to the job 3.9 0.9
Organization helps identify training needs through performance 3.7 1.1
appraisals
Training and development plans are developed and monitored 3.6 1.0
Source: Compiled from survey data, 2024
The responses indicate a generally positive perception of training and development opportunities
among employees at the Commercial Bank of Ethiopia's Asella Town branches.
Adequacy of Training: The highest mean score (M = 4.0, SD = 0.8) indicates that employees strongly
agree that adequate training is provided before they undertake any job. This underscores the
organization’s commitment to preparing employees adequately for their roles. Relevance of Training:
Training relevance to the job received a high mean score (M = 3.9, SD = 0.9), suggesting that
employees find the training programs closely aligned with their job requirements, enhancing their
performance. Availability of Educational Opportunities: The mean score for educational opportunities
(M = 3.8, SD = 0.9) shows a generally positive perception, indicating that employees feel they have
access to further education and learning opportunities. Identification of Training Needs: Employees
moderately agree that the organization helps identify their training needs through performance
appraisals (M = 3.7, SD = 1.1), reflecting a positive, though not overwhelming, view of the
performance appraisal system’s role in training needs assessment. Development and Monitoring of
Training Plans: The score for the development and monitoring of training plans (M = 3.6, SD = 1.0)
suggests moderate satisfaction, indicating room for improvement in how training plans are developed
and monitored. Fairness in Training Selection: The lowest mean score (M = 3.5, SD = 1.0) indicates a

35
need for improvement in the fairness of training selection, pointing to potential issues in how
employees are chosen for training opportunities.
These findings are in line with Noe et al. (2014), who emphasized the importance of equitable and
transparent training policies to enhance employee development and performance. Noe et al. argue that
fair and relevant training programs are crucial for employee motivation and effectiveness.
In conclusion, while employees at the Commercial Bank of Ethiopia's Asella Town branches generally
perceive their training and development opportunities positively, especially in terms of training
adequacy and relevance, there are areas requiring attention. Specifically, improving fairness in training
selection and the systematic development and monitoring of training plans can further enhance
employee performance. These improvements align with the recommendations of Noe et al. (2014),
suggesting that more transparent and equitable training policies are essential for optimizing employee
development and performance.

4.3.4 Work-Life Balance

The study examined the impact of work-life balance on employee performance using four specific
items. The summarized responses are presented in Table 4.5.
Table 4. 5 Descriptive Statistics of Work-Life Balance
Work-Life Balance Mean Standard
Deviation
There is congruence between work expectations and family life 3.4 1.2
Work demands do not interfere with home and family life 3.3 1.3
Job does not produce strain that affects family duties 3.2 1.2
Amount of time job takes up does not affect family responsibilities 3.1 1.3
Source: Compiled from survey data, 2024
The responses indicate a moderate level of satisfaction with work-life balance among employees at the
Commercial Bank of Ethiopia's Asella Town branches.
Congruence Between Work and Family Life: The highest mean score (M = 3.4, SD = 1.2) indicates that
employees somewhat agree that there is congruence between their work expectations and family life.
This suggests that while some balance exists, it is not optimal. Interference of Work Demands: The
mean score of 3.3 (SD = 1.3) for the non-interference of work demands with home and family life
shows that employees moderately agree with this statement, indicating that work demands still pose a
challenge to maintaining a healthy work-life balance. Job-Induced Strain: The mean score of 3.2 (SD =

36
1.2) for the job not producing strain that affects family duties reflects a moderate agreement, suggesting
that job-induced stress affecting family responsibilities is a concern for employees.
Impact of Job Time on Family Responsibilities: The lowest mean score (M = 3.1, SD = 1.3) indicates
that employees feel that the amount of time their job takes up does affect their family responsibilities,
highlighting a significant area for improvement. These findings suggest that work-life balance is a
critical area needing attention to enhance employee performance and well-being. This aligns with
Greenhaus and Allen (2011), who emphasized the importance of work-life balance in improving
employee satisfaction and performance. According to their research, achieving a better work-life
balance can lead to increased job satisfaction, reduced stress, and overall improved well-being.
In conclusion, while employees at the Commercial Bank of Ethiopia's Asella Town branches
experience a moderate level of satisfaction with their work-life balance, there are significant areas for
improvement. Specifically, addressing the interference of work demands with family life and reducing
job-induced strain can enhance employee performance and well-being. These improvements are crucial
for fostering a supportive work environment, as highlighted by the findings and supported by
Greenhaus and Allen (2011).

4.3.5 Workload

The study evaluated the impact of workload on employee performance through five specific items. The
summarized responses are presented in Table 4.6.
Table 4. 6 Descriptive Statistics of Workload
Workload Mean Standard Deviation
I didn’t work long and difficult hours 3.5 1.1
I am able to meet deadlines 4.0 0.9
I didn’t feel overworked 3.3 1.2
I didn’t feel tired by the demand placed on me 3.2 1.3
I am able to take sufficient breaks 3.6 1.0
Source: Compiled from survey data, 2024
The responses indicate mixed feelings among employees regarding their workload at the Commercial
Bank of Ethiopia's Asella Town branches.
Ability to Meet Deadlines: The highest mean score (M = 4.0, SD = 0.9) reflects that employees strongly
agree they can meet deadlines. This is a positive indicator of effective time management and capability
to handle work demands. Sufficient Breaks: The ability to take sufficient breaks received a mean score
of 3.6 (SD = 1.0), suggesting that employees generally feel they can rest adequately during their

37
workday. Long and Difficult Hours: Employees moderately agree that they do not work long and
difficult hours (M = 3.5, SD = 1.1), indicating a reasonable balance in their working hours but still
highlighting some concerns. Feeling Overworked: The mean score for not feeling overworked is 3.3
(SD = 1.2), indicating moderate agreement. This suggests that while some employees feel overworked,
it is not a pervasive issue but still an area for potential improvement. Feeling Tired by Demands: The
lowest mean score (M = 3.2, SD = 1.3) indicates that employees moderately disagree with the statement
that they do not feel tired by the demands placed on them. This highlights fatigue as a significant issue
affecting some employees.
These findings suggest that while employees at the Commercial Bank of Ethiopia's Asella Town
branches feel competent in meeting deadlines and taking sufficient breaks, there are notable concerns
regarding feeling overworked and tired. These issues point towards a need for improved workload
management to prevent employee burnout and enhance overall performance. This interpretation aligns
with Karasek's Job Demand-Control model (Karasek, 1979), which posits that high job demands paired
with low control can lead to stress and burnout, while balanced demands and sufficient control can
enhance employee well-being and performance.
In conclusion, while employees generally manage to meet deadlines and take breaks, addressing the
concerns about feeling overworked and fatigued is crucial. Implementing better workload management
strategies can help mitigate these issues, improve employee satisfaction, and enhance performance, as
supported by the principles of Karasek's Job Demand-Control model.

4.3.6 Discrimination

The study examined the impact of discrimination on employee performance through six specific items.
The summarized responses are presented in Table 4.7.
Table 4. 7 Descriptive Statistics of Discrimination
Item Mean Standard Deviation
Company hires employees regardless of gender 4.2 0.8
Fair treatment regardless of gender 4.1 0.9
No age-based discrimination 3.8 1.0
Inclusivity in decision making 3.7 1.1
Equal opportunity regardless of race 4.0 0.9
No discrimination based on religion 4.1 0.9
Source: Compiled from survey data, 2024
The responses indicate a generally positive perception of non-discriminatory practices within the
workplace at the Commercial Bank of Ethiopia's Asella Town branches.
38
Hiring Regardless of Gender: The highest mean score (M = 4.2, SD = 0.8) indicates that employees
strongly agree that the company hires employees regardless of gender, reflecting a robust commitment
to gender equality in hiring practices. Fair Treatment and Religion: Fair treatment regardless of gender
and the absence of discrimination based on religion both received high mean scores (M = 4.1, SD =
0.9), suggesting that employees perceive the workplace as fair and inclusive concerning gender and
religion. Equal Opportunity Regardless of Race: The mean score of 4.0 (SD = 0.9) for equal
opportunity regardless of race indicates a strong agreement that the organization promotes racial
equality. No Age-Based Discrimination: Employees moderately agree that there is no age-based
discrimination, with a mean score of 3.8 (SD = 1.0), indicating that while age discrimination is not a
major issue, there is some room for improvement. Inclusivity in Decision-Making: The lowest mean
score (M = 3.7, SD = 1.1) for inclusivity in decision-making reflects a moderate agreement, suggesting
that there is a perception of some gaps in inclusivity within organizational decision-making processes.
These findings suggest that the employees at the Commercial Bank of Ethiopia's Asella Town branches
generally perceive their workplace as fair and non-discriminatory, especially regarding gender, race,
and religion. However, there is a need to enhance inclusivity in decision-making processes to further
improve the work environment. This aligns with research by Colquitt et al. (2001), which emphasizes
the importance of perceived fairness and inclusivity in enhancing employee engagement and
performance. Fair treatment and inclusivity are critical components in creating a positive work
environment that promotes employee satisfaction and productivity.
In general, while the findings indicate a positive perception of non-discriminatory practices within the
workplace, efforts to improve inclusivity in decision-making processes could further enhance employee
engagement and performance. These improvements align with the principles highlighted by Colquitt et
al. (2001), underscoring the importance of fairness and inclusivity in the workplace.

4.3.7 Employee Performance

The study evaluated employee performance through six specific items. The summarized responses are
presented in Table 4.8.
Table 4. 8 Descriptive Statistics of Employee Performance
Employee Performance Mean Standard Deviation
Deliver work within deadlines 4.1 0.8
Avoid absence from job 4.0 0.9
Effectively work with other employees 3.9 0.9
Regularly motivated to work 3.6 1.0

39
Eager to learn and improve productivity 3.7 1.1
Identify and prioritize tasks 3.8 1.0
Source: Compiled from survey data, 2024
The responses indicate a generally high level of employee performance at the Commercial Bank of
Ethiopia's Asella Town branches.
Meeting Deadlines: The highest mean score (M = 4.1, SD = 0.8) reflects that employees strongly agree
they can deliver work within deadlines. This is a positive indicator of time management skills and
commitment to meeting job requirements. Avoiding Absences: The mean score for avoiding absence
from the job is 4.0 (SD = 0.9), indicating that employees are reliable and maintain consistent
attendance. Effective Collaboration: Working effectively with other employees received a mean score
of 3.9 (SD = 0.9), suggesting a high level of teamwork and cooperation among employees. Task
Identification and Prioritization: The ability to identify and prioritize tasks has a mean score of 3.8 (SD
= 1.0), indicating that employees generally manage their tasks well and prioritize effectively. Eagerness
to Learn and Improve: The mean score for being eager to learn and improve productivity is 3.7 (SD =
1.1), reflecting a moderate to high level of willingness among employees to enhance their skills and
productivity. Motivation: The lowest mean score (M = 3.6, SD = 1.0) for regular motivation to work
indicates an area where improvement is needed, as some employees may feel less motivated on a
regular basis.
These findings suggest that while employees at the Commercial Bank of Ethiopia's Asella Town
branches generally perform well in terms of meeting deadlines, avoiding absences, and working
effectively with others, there are areas for improvement, particularly in maintaining regular motivation
and eagerness to improve productivity. This is consistent with Deci and Ryan's (2000) Self-
Determination Theory, which highlights the importance of intrinsic motivation and the need for
competence, autonomy, and relatedness to enhance employee motivation and performance.
Recent studies support these findings, emphasizing the importance of motivation, recognition, and
opportunities for development in enhancing employee performance. For example, a study by Kanfer et
al. (2017) highlights that motivation significantly impacts employee performance and well-being.
Furthermore, a meta-analysis by Gagné and Deci (2018) underscores the role of intrinsic motivation
and the positive impact of providing employees with opportunities for growth and recognition.
In conclusion, while the employees at the Commercial Bank of Ethiopia's Asella Town branches show
high levels of performance in meeting deadlines, attendance, and collaboration, enhancing motivation
and opportunities for learning and productivity improvement can further boost overall performance.

40
Implementing strategies aligned with Self-Determination Theory, such as recognizing employee efforts
and providing development opportunities, can address these areas for improvement and support
sustained high performance.

4.4 Results from Inferential Statistics

4.4.1 Correlation Analysis

The study investigated the relationships between various aspects of the work environment and
employee performance using Pearson correlation analysis. The variables included in the analysis were
presented in the followin table:
Table 4. 9 Pearson Correlation Coefficients Among Variables
Variables PE R TR WLB WL DS EP
Physical Environment 1.000 0.321** 0.298** 0.256** 0.284** 0.265** 0.471**
(PE)
Reward Aspects (R) 0.321** 1.000 0.398** 0.379** 0.338** 0.312** 0.523**
Training and 0.298** 0.398** 1.000 0.410** 0.336** 0.341** 0.551**
Development (TR)
Work-Life Balance 0.256** 0.379** 0.410** 1.000 0.298** 0.278** 0.496**
(WLB)
Workload (WL) 0.284** 0.338** 0.336** 0.298** 1.000 0.299** 0.482**
Discrimination (DS) 0.265** 0.312** 0.341** 0.278** 0.299** 1.000 0.465**
Employee Performance 0.471** 0.523** 0.551** 0.496** 0.482** 0.465** 1.000
(EP)

Note: **p < .01

Source: Compiled from survey data, 2024

The correlation analysis reveals several significant relationships between the work environment factors
and employee performance. Each correlation is discussed in detail below.
Physical Work Environment (PE) and Employee Performance (EP): The physical work environment
shows a moderate positive correlation with employee performance (r = 0.471, p < .01). This indicates
that improvements in the physical workplace environment, such as better office design, noise control,
and safety measures, are associated with better employee performance. This finding is supported by Dul
and Ceylan (2011), who highlighted the importance of a conducive physical environment in enhancing
employee creativity and performance. Reward Aspects (R) and Employee Performance (EP): Reward
aspects have a strong positive correlation with employee performance (r = 0.523, p < .01). This

41
suggests that employees who perceive the reward system as fair and satisfactory are likely to perform
better. The importance of rewards in motivating employees and enhancing performance is well-
documented in the literature (Deci & Ryan, 2000).
Training and Development (TR) and Employee Performance (EP): Training and development
opportunities show a strong positive correlation with employee performance (r = 0.551, p < .01).
Employees who receive adequate training and development opportunities tend to perform better. This is
consistent with Noe et al. (2014), who emphasized the role of training in improving employee skills and
performance. Work-Life Balance (WLB) and Employee Performance (EP): Work-life balance is
positively correlated with employee performance (r = 0.496, p < .01). This indicates that employees
who can balance their work and personal life tend to perform better. Greenhaus and Allen (2011) also
found that work-life balance significantly impacts employee well-being and performance.
Workload (WL) and Employee Performance (EP): There is a moderate positive correlation between
workload and employee performance (r = 0.482, p < .01). This suggests that manageable workloads are
associated with better employee performance. Excessive workload can lead to burnout and reduced
performance, as highlighted by Karasek (1979). Discrimination (DS) and Employee Performance (EP):
Discrimination shows a moderate positive correlation with employee performance (r = 0.465, p < .01).
This indicates that a non-discriminatory work environment, where employees are treated fairly
regardless of gender, age, race, or religion, is associated with better performance. Colquitt et al. (2001)
emphasized the importance of fairness and inclusivity in enhancing employee engagement and
performance.
The correlation analysis demonstrates that various aspects of the work environment significantly impact
employee performance. Specifically, training and development opportunities, reward systems, and a
supportive physical environment are strongly correlated with higher performance levels. Work-life
balance and non-discriminatory practices also play crucial roles in enhancing performance, though to a
slightly lesser extent. These findings underscore the multifaceted nature of the work environment and
its critical influence on employee outcomes. Enhancing these factors can lead to substantial
improvements in employee performance, aligning with recent research emphasizing the importance of a
supportive and inclusive work environment (Gagné & Deci, 2018; Kanfer et al., 2017).
In conclusion, the results of the Pearson correlation analysis highlight the significant impact of various
work environment factors on employee performance at the Commercial Bank of Ethiopia's Asella
Town branches. By addressing these factors, organizations can foster a more productive and engaged
workforce.
42
4.4.2 Regression Analysis
To explore how different facets of the work environment influence employee performance, a multiple
regression analysis was conducted. The analysis used employee performance (EP) as the dependent
variable and included six independent variables: physical work environment (PE), reward aspects (R),
training and development (TR), work-life balance (WLB), workload (WL), and discrimination (DS).
The model summary is presented in Table 4.10.
Table 4. 10 Model Summary
Model R R² Adjusted R² Std. Error of the Estimate

1 0.782 0.611 0.596 0.386

Source: Compiled from survey data, 2024
R: The correlation coefficient (R = 0.782) indicates a strong positive relationship between the
independent variables and employee performance. R²: The coefficient of determination (R² = 0.611)
suggests that approximately 61.1% of the variance in employee performance can be explained by the
model. Adjusted R²: The adjusted R² (0.596) takes into account the number of predictors and provides a
more accurate measure of the model’s explanatory power, indicating that the model is a good fit.
Standard Error of the Estimate: The low standard error (0.386) indicates that the model’s predictions
are close to the actual data points. The regression coefficients are presented in Table 3.
Table 4. 11 Regression coefficients
Predictor Unstandardized Std. Standardized t Sig.
B Error Beta
(Constant) 0.874 0.315 2.776 0.006
Physical Environment 0.192 0.060 0.203 3.188 0.002
(PE)
Reward Aspects (R) 0.215 0.062 0.228 3.452 0.001
Training and Development 0.247 0.058 0.268 4.256 0.000
(TR)
Work-Life Balance (WLB) 0.168 0.052 0.192 3.231 0.002
Workload (WL) 0.142 0.054 0.161 2.624 0.010
Discrimination (DS) 0.131 0.059 0.139 2.222 0.028
Source: Compiled from survey data, 2024
Physical Environment (PE): The positive coefficient (B = 0.192, p = 0.002) suggests that a better
physical work environment leads to improved employee performance. This finding is consistent with
Dul and Ceylan (2011). Reward Aspects (R): The positive coefficient (B = 0.215, p = 0.001) indicates
that fair and satisfactory rewards enhance employee performance, aligning with the conclusions of Deci
and Ryan (2000). Training and Development (TR): The significant positive coefficient (B = 0.247, p <

43
0.001) implies that opportunities for training and development are crucial for enhancing employee
performance, which supports Noe et al. (2014). Work-Life Balance (WLB): The positive coefficient (B
= 0.168, p = 0.002) shows that a good work-life balance contributes to better employee performance, as
noted by Greenhaus and Allen (2011). Workload (WL): The positive coefficient (B = 0.142, p = 0.010)
indicates that manageable workloads are beneficial for employee performance, in line with Karasek
(1979). Discrimination (DS): The positive coefficient (B = 0.131, p = 0.028) suggests that non-
discriminatory practices enhance employee performance, supporting the findings of Colquitt et al.
(2001). This analysis provides a comprehensive understanding of how various work environment
factors contribute to employee performance at the Commercial Bank of Ethiopia’s Asella Town
branches. The significant predictors identified in this study are essential for developing strategies to
improve employee performance through enhancements in the work environment.

44
 CHAPTER FIVE

SUMMARY, CONCLUSION AND RECOMMENDATIONS

This chapter deals with summary, conclusions, and recommendation of the study. These discussions are
made based on the results of statistical analysis and discussions of findings from chapter four.

5.1 Summary of the main findings

The aim of this research to analyze Effect of Work Environment on Employee

Performance” at the Commercial Bank of Ethiopia’s Asella Town branches. The study
revealed significant findings, incorporating quantitative measures to illustrate the impact of
various work environment aspects on employee performance. The physical workplace
environment scored well, with employees expressing strong agreement on having the
necessary equipment (M = 4.1, SD = 0.9) and a high perception of safety (M = 4.3, SD =
0.8). The organization of the work environment was well-regarded (M = 4.0, SD = 0.9),
though design and layout, as well as peacefulness and noise control, were areas identified
for potential improvement.

In the realm of rewards, satisfaction with work was generally high (M = 3.9, SD = 0.9), and
promotional opportunities were seen favorably (M = 3.7, SD = 1.0). The benefit system’s
perceived fairness was moderate (M = 3.6, SD = 1.2), and there was a consensus that
financial and non-financial rewards could be enhanced. Training and development
opportunities were deemed adequate (M = 4.0, SD = 0.8) and relevant (M = 3.9, SD = 0.9),
with educational opportunities viewed positively (M = 3.8, SD = 0.9). However, fairness in
training selection was a point of dissatisfaction (M = 3.5, SD = 1.0).

Work-life balance showed moderate positivity in the congruence between work and family
life (M = 3.4, SD = 1.2), with a moderate agreement that work demands do not interfere
with personal life (M = 3.3, SD = 1.3). Job-induced strain and time impact were areas
needing attention (M = 3.2, SD = 1.2; M = 3.1, SD = 1.3). Workload factors such as meeting
deadlines were strongly agreed upon (M = 4.0, SD = 0.9), but feelings of being overworked
and fatigue highlighted the need for better workload management.

Discrimination factors scored highly, with strong agreement on gender equality in hiring
and fair treatment (M = 4.2, SD = 0.8; M = 4.1, SD = 0.9), and no discrimination based on
45
race or religion (M = 4.0, SD = 0.9; M = 4.1, SD = 0.9). Age-based discrimination and
inclusivity in decision-making were moderately agreed upon (M = 3.8, SD = 1.0; M = 3.7,
SD = 1.1).

Employee performance was high in meeting deadlines and avoiding absences (M = 4.1, SD
= 0.8; M = 4.0, SD = 0.9), with effective collaboration and task management also receiving
high ratings (M = 3.9, SD = 0.9; M = 3.8, SD = 1.0). Eagerness to learn was moderate to
high, though motivation was identified as an area for improvement (M = 3.7, SD = 1.1; M =
3.6, SD = 1.0).

The correlation analysis found significant positive correlations between employee

performance and factors such as the physical work environment, reward aspects, training
and development, work-life balance, workload, and discrimination. The regression analysis
showed a strong model fit, explaining 61.1% of the variance in employee performance (R² =
0.611), with a correlation coefficient (R = 0.782) and adjusted R² (0.596) confirming the
model’s robustness.

Overall, the study highlights the intricate nature of the work environment and its profound
effect on employee performance. Addressing key areas like training and development,
reward systems, and physical environment conditions can lead to marked improvements in
performance, fostering a more productive and engaged workforce. Ensuring work-life
balance and non-discriminatory practices are also essential for enhancing employee
performance.
5.2. Conclusions

In conclusion, the comprehensive study conducted at the Commercial Bank of Ethiopia’s

Asella Town Branches has provided a detailed examination of the multifarious elements that
constitute the work environment and their consequential impact on employee performance.
Utilizing robust statistical methods, including correlation and multiple regression analyses,
the research has elucidated the profound influence of the physical work environment,
reward systems, training and development opportunities, work-life balance, workload
management, and discrimination practices on employee productivity and well-being.

The study underscores the significance of the physical work environment, which

46
encompasses office design, noise control, and safety measures. It has been determined that
enhancements in these areas are directly correlated with elevated levels of job satisfaction
and productivity. This finding is in harmony with the premises of environmental
psychology, which posits that the physical surroundings can substantially affect an
individual’s behavior and performance.

The implementation of fair and motivating reward systems has emerged as a pivotal factor.
The research supports the self-determination theory, which advocates that intrinsic and
extrinsic motivations are essential for optimal performance. A reward system that is
perceived as equitable and motivating not only fosters a sense of accomplishment but also
propels employees to achieve higher performance levels.

Furthermore, the opportunities for training and development have shown a strong
correlation with enhanced performance. The study highlights the necessity of continuous
skill enhancement and productivity growth, suggesting that investment in employee
development is a critical driver of organizational success.

Promoting work-life balance has been identified as a crucial element. The ability of
employees to effectively manage their professional and personal responsibilities has a
substantial impact on their job satisfaction and performance. This aspect of the work
environment is particularly salient in the contemporary era, where the boundaries between
work and personal life are increasingly blurred.

The association between manageable workloads and better performance is also emphasized.
The study corroborates the notion that excessive workloads can lead to stress and burnout,
while reasonable workloads enable employees to meet deadlines and maintain high
performance levels. This aligns with the job demand-control model, which suggests that job
demands should be balanced with the individual’s ability to control their work environment.

Lastly, the practice of non-discrimination and inclusivity within the workplace is shown to
foster higher engagement and productivity. The study aligns with the organizational justice
theory, which posits that fairness and equality in the workplace lead to better organizational
outcomes.

The insights garnered from this research suggest that management should prioritize

47
improvements in these key areas to cultivate a supportive and productive work environment.
By doing so, they can significantly enhance employee performance, leading to a more
engaged and efficient workforce. The detailed conclusions drawn from this study serve as a
testament to the intricate relationship between the work environment and employee
performance, providing a valuable framework for organizational development and strategic
human resource management.

5.3 Recommendations

Based on the findings of the study on the effect of the work environment on employee
performance at the Commercial Bank of Ethiopia, Asella Town Branches, several
recommendations are proposed to enhance employee performance by improving various
aspects of the work environment. First, improving the physical work environment through
better office design, ergonomic furniture, proper lighting, noise control, and maintaining
safety and cleanliness standards is crucial. Second, developing a fair and motivating reward
system that includes competitive salaries, bonuses, recognition programs, and clear
promotion opportunities can significantly boost employee performance. Third, regular
training sessions, personalized development plans, and educational opportunities should be
provided to enhance employee skills and knowledge. Fourth, promoting work-life balance
through flexible working arrangements and family-friendly policies can help employees
manage their professional and personal responsibilities more effectively. Fifth, managing
workloads by ensuring balanced work distribution and adequate breaks can prevent fatigue
and burnout. Sixth, promoting inclusivity and fairness by adopting non-discriminatory
practices, providing diversity training, and ensuring equal opportunities for all employees is
essential. Implementing a robust employee feedback mechanism and conducting regular
assessments of the work environment facilitated continuous improvement. These
recommendations, when implemented, can significantly enhance the work environment at
the Commercial Bank of Ethiopia, Asella Town Branches, leading to improved employee
performance. Future research could explore additional variables such as leadership style,
organizational culture, and technological advancements on employee performance, and
longitudinal studies could provide insights into the long-term effects of work environment
changes on employee performance.

48
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 Appendix
Dear Respondents;

This questionnaire is prepared for a research purpose entitled “Effect of Work Environment on
Employee Performance: The Case of Commercial Bank of Ethiopia Asella Town Branches”. The
expected respondents for this questionnaire will be Operational Employees of Commercial Bank
of Ethiopia Asella Town Branches. The researcher asks respondents to give sincere and accurate
data to make proper analysis of. The researcher would like to note that data will be kept
confidential and will only be used for study purpose. I would like to thank you in advance for
your honest cooperation. Put a “√’’ on your choice of agreement.

Section One: Demographic Information

1. Sex
Male
Female
2. Age of the respondents
Below 25 year
25-35 years
36-55 years
55 and above years
3. Marital Status
Married
Widowed
Divorced
Single
4. Educational background
Certificate and below
Diploma
BA/ BSC Degree
Master’s degree and above
5. Your work experience in the banking Sector;
Below one year
1-5 years

52
 6-10 years
11-15 years
16 and above years
6. What is your level of employment?
Top management

Middle management
Low level management
Section Two: For the following Likert scale questions: Tick (√) or check the appropriate cell by
expressing your opinion on the following 5-points scale shown below to the best of your

knowledge. Rating Scale: 1=Strongly Disagree (SD); 2= Disagree (DA); 3=Neutral (N); 4=
Agree (A); 5=Strongly Agree (SA).

No Questionnaire Description Response

Physical work place environment 5 4 3 2 1

1 PE I have the requisite equipment to perform my duties

2 PE My office space is well designed

3 PE The layout of my offices and workspaces here are

good

4 PE The surrounding of my work place is peaceful to work

5 PE My work place is devoid of unnecessary noise

6 PE My working environment is free from life threatening

dangers

7 PE My work environment is ordered and well organized

Reward aspects of work 5 4 3 2 1

1 R The benefit system of the organization treats

each employee reasonably.

53
2 R My work provides a great deal of promotional
opportunities

3 R Recognition are provided to me in the work place for

my good performance

4 R I’m satisfied by the work I do in the current work

5 R The financial rewards of my work place are satisfactory

6 R Supervisor in my work place provides sufficient non-

financial rewards

Training 5 4 3 2 1

1 TR Enough training is provided for me before any job

2 TR Education opportunities are available in my work place

3 TR There is fair selection of employees for training

4 TR The training given in my work place are relevant to the

job that I perform

5 TR My organization helps me identify my training and

development needs through performance appraisals.

6 TR The organization ensures that training and

development plans are developed and monitored for all
employees thus helping manage employee
performance.
Work life balance 5 4 3 2 1

1 WLB There is congruence between my work expectation and

my family life

2 WLB The demands of my work do not interfere with my

home and family life

54
3 WLB The amount of time my job takes up do not affect me
to fulfill family responsibilities

4 WLB My job doesn’t produce strain that makes it difficult to

fulfill family duties

Management/Leadership Style 5 4 3 2 1

LS My manager role models high standards for quality

performance.

2 LS Senior management gives staff a clear picture of the

direction in which the organization is headed hence
motivating me to work.

3 LS Management involves staff decision making

4 LS I am able to contact senior management or work hand

in hand with my superior at the work place

Work Load 5 4 3 2 1

1 WL I didn‘t work long and difficult working hours and days

2 WL I am able to meet the dead line I have for my work

3 WL I didn’t feel over worked by the demand place on me

4 WL I didn’t feel tired by the demand placed on me

5 WL I am able to take sufficient breaks

Discrimination 5 4 3 2 1

1 DS The company hire employee regardless of their gender

2 DS Fair treatment is given to all employees, whether they

are male or female.

55
 3 DS Discrimination based on age doesn‘t prevail
in work place.

4 DS My supervisor includes all members of different

ethnicity in problem solving and decision making.

5 DS The company provides equal opportunity for

workers regardless of their race.

6 DS Discrimination based on religion doesn’t prevail in

work place.

Employees Performance 5 4 3 2 1

1 EP I am always able to deliver my work within the set

deadlines

2 EP I try my best to avoid absence from my job

3 EP I effectively work with other employees

4 EP I’m regularly motivated to work

5 EP I am eager to learn on ways of making myself more

productive

6 EP I am able to identify and give top attention to top

priorities in my work place

Lastly, what is your average annual work evaluation result

56