Final Research

EFFECTS OF MOTIVATION ON EMPLOYEE
PERFORMANCE: A CASE STUDY IN COMMERCIAL BANK

OF ETHIOPIA NAKAMTE TOWBN BRANCHES
A THESIS SUBMITTED TO THE COLLEGE OF BUSINESS AND

ECONOMICS, DEPARTMENT OF MANAGEMENT, IN PARTIAL
FULFILLMENT OF THE REQUIREMENT FOR THE DEGREE
OF MASTERS OF BUSINESS ADMINISTRATION
By HABTAMU ETANA
ADVISOR NAME: DARAJE ASFAWU (PHD)
GREAT LAND COLLEGE

COLLEGE OF BUSINESS & ECONOMICS
MBA PROGRAM
JUNE 2023
NEKEMTE, ETHIOPIA
EFFECTS OF MOTIVATION ON EMPLOYEE
PERFORMANCE: A CASE STUDY IN COMMERCIAL BANK
OF ETHIOPIA NAKAMTE TOWN BRANCHES
A THESIS SUBMITTED TO THE COLLEGE OF BUSINESS AND

ECONOMICS, DEPARTMENT OF MANAGEMENT, IN PARTIAL
FULFILLMENT OF THE REQUIREMENT FOR THE DEGREE
OF MASTERS OF BUSINESS ADMINISTRATION
By HABTAMU ETANA
ADVISOR NAME: DARAJE ASFAWU (PHD)
GREAT LAND COLLEGE

COLLEGE OF BUSINESS & ECONOMICS
MBA PROGRAM
JUNE, 2023
NEKEMTE, ETHIOPIA
STATEMENT OF CERTIFICATION
This is to certify that Habtamu Etana has carried out his research work on the topic entitled
“Effects Of Motivation On Employee Performance: The Case Of Commercial Bank Of
Ethiopia Nakemte Town Branches’’ The work is original in nature and suitable for submission
for the award of Masters of Degree in Business Administration.
Fikadu Tasgara (Phd __________ ________
Advisor Sign Date

DECLARATION
I hereby declare that this thesis entitled “Effects of Motivation on Employee Performance.
The Case of Commercial Bank of Ethiopia Nakemte Town Branches’’, has been carried out
by me under the guidance and supervision of Fikadu Tasgara (Phd)
The thesis is original and has not been submitted for the award of any degree or diploma to any
university or institutions.
Researcher’s Name Date Signature
HABATAMU ETANA ___________________ ___________________

Table of Contents
STATEMENT OF CERTIFICATION........................................................................................................3
DECLARATION.......................................................................................................................................4
CHAPTER ONE..........................................................................................................................................9
INTRODUCTION.......................................................................................................................................9
1.1 Background of the Study...................................................................................................................9
1.2 Statement of the Problem.................................................................................................................10
1.2 Research Questions..........................................................................................................................11
1.3 Objectives of the Study....................................................................................................................12
1.6 Significance of the Study.................................................................................................................12
1.7 Scope of the Study...........................................................................................................................12
1.8 limitation of the study.........................................................................................................................13
1.8 Organization of the Paper....................................................................................................................13
CHAPTER TWO...................................................................................................................................14
RELATED LITERATURE REVIEW...................................................................................................14
Introduction...............................................................................................................................................14
2.1 The Concept of Motivation..............................................................................................................14
2.2. Theories of Motivation...................................................................................................................15
2.2.1. The Content (Need) Theories.......................................................................................................15
2.2.1.2. ERG Theory..........................................................................................................................15
2.2.1.3. Herzberg’s Two Factor Theory.............................................................................................16
2.2.1.4. Acquired-Needs....................................................................................................................16
2.2.2.1. Expectancy Theory...............................................................................................................16
2.2.2.2. Equity Theory.......................................................................................................................17
2.2.2.3. Goal Theory..........................................................................................................................17

2.3. The Effects of Motivation on Employee Performance....................................................................17
2.4. Employee Motivational Packages...................................................................................................18
2.4.1. Money......................................................................................................................................18
2.4.3. Working Environment.............................................................................................................19
2.5. Levels of Employee Motivation......................................................................................................19
2.6. Employee Performance Measurement............................................................................................19
2.6.1. Performance Appraisal............................................................................................................20
2.6.2. Performance Appraisal Purpose...............................................................................................20
2.7. Empirical Literature Review...........................................................................................................20
2.8. Research Gap..................................................................................................................................22
CHAPTER THREE...................................................................................................................................24
3. RESEARCH METHODOLOGY...........................................................................................................24
3.1 Introduction.....................................................................................................................................24
3.2 Research Approach..........................................................................................................................24
3.3 Research Design..............................................................................................................................24
3.4 Population and sample Size Determination.....................................................................................25
3.4.1 Target Population of the Study.................................................................................................25
3.4.2 Sample Size Determination and Sampling Technique..............................................................25
3.6 Data Sources....................................................................................................................................27
3.6.1 Primary Sources............................................................................................................................27
3.6.2 Secondary Sources........................................................................................................................27
3.7 Data Collection Technique..............................................................................................................27
3.8 Data Analysis Techniques and Procedures......................................................................................28
3.9 Ethical Considerations in the Study.................................................................................................28
CHAPTER FOUR.....................................................................................................................................29
DISCUSSIONAND RESULT...................................................................................................................29
4. Introduction...........................................................................................................................................29
4.1 Response Rate.....................................................................................................................................29
4.4. Respondents' Perception on effect motivation on employee performance...................................30
4.4.2 Testing for normal distribution of data.................................................................................36
4.4.3 Test of linearity.......................................................................................................................37
4.4.4 Homoscedasticity....................................................................................................................38
4.5 Multiple regression of employee motivation and employee performance.................................39
CHAPTER FIVE............................................................................................................................................42
SUMMARY, CONCLUSION AND RECOMMENDATIONS.................................................................42
5.1 Summary.............................................................................................................................................42
5.2 Conclusion...........................................................................................................................................43
5.3. Recommendations..............................................................................................................................44
5.4 Limitation
and Suggestion for Further Research....................................................................................................45
Reference...................................................................................................................................................46
Abstract
The main objective of the study is Employee’s motivation on employee performance is crucial for
any business to survive and prosper in today’s competitive business world. Realizing this, the
main aim of this research was to analyze the effect of motivation on employee performance in the
case of commercial bank of Ethiopia Nakamte branches with the motivational dimensions of
enhanced salary, car loan, fringe benefits, promotion, and working environment. The study used
primary and secondary data sources. Simple random sampling technique and purposive
samplings were employed. Questionnaire was designed to collect relevant data from the selected
165 respondents 152 questionnaires were completed and analyzed. Both descriptive and
inferential analytical techniques were used. Statistical Programmed of Social Science (SPSS)
version 26 tools were used to generate data that was presented in tables as was necessary. The
multiple regressions result indicated that all the independent variables had positive relation and
significant effect on employee performance. Correlation analysis also used in this study based on
this, all variables had positive relationship with employee performance. The regression result
showed that the independent variables used in the study explain 67.3% variability on employee
performance. The study concluded that all the independent variables such as enhanced salary,
car loan, fringe benefits, promotion, and working environment had positive relation and
significant effect on employee performance. Finally, recommendation forwarded as all the
independent variables have positive relation and significant effect on employee performance the
bank needs to work on these motivational variables continuously and consistently with a due
attention to attract, motivate, satisfy and retain its staffs as this works directly proportional to
the employee performance which is the base for the bank to prosper and to be a leading
competitive bank in the industry.
Keywords: motivation, performance, employee, salary, promotion and recognition.

CHAPTER ONE
INTRODUCTION
1.1 Background of the Study

Commercial Bank of Ethiopia plays significant roles in national, regional and global economies
and the best sources of providing products to customers are its staffs. Employees can create a
good perception and long-lasting image in the eyes of banks customers by offering excellent
service. Petcharak(2004), stated that motivation of employees has a significant role in attaining
maximum level of satisfaction to bank’s customers. The banking industry is one of the most
competitive and more globalized sector as the highly use of information communication
technology by banks across the world operating in the sector. Even though, information
technology has become the back bone of all banks in the financial sector at the global level,
human resource is still remains invaluable in the highly digital banking industry, because all the
jobs performed by banks cannot be performed exclusively by electronic devices such as
automated teller machines (ATM), point of sale (POS), computers or other similar devices.
Ombati (2010), stated that services are intangible and categorized into hightouch and high-tech
services. The primary one services are more dependent on human beings and the later one
services are primarily based on the use of information technology devices but the firms still
demand human beings to operate them. In using staffs to provide services, it is not good to
completely rely on the number of staffs employed, year of experience, qualification and their
capability but motivating them adequately and consistently is also necessary. Robbins and Judge
(2018), stated that motivation is the force that energizes, direct and consistently maintain an
individual’s effort towards the accomplishment of a goal. In the presence of capability and was
willingness a motivated staffs was exert maximum efforts towards the accomplishment of
organizational objectives. The difficult task for this day’s management is to run motivational
packages which was motivating staffs to enhance their job performance. Today’s management of
firms in the banking industries are therefore Implementing different kind of motivational
packages not only to retain staffs and also to achieve competitive advantage. The research has
proposed useful recommendations for enhancing the employees‟ performance. The findings of
the research have support academicians in broadening the existing body of knowledge in the area
of motivation and its impact on performance. Additionally, the findings of the research has
benefit the human resource management of the firm and others, by providing an opportunity to
deeply view the benefits of using different variables that has studied in this research, to foresee
the variables that affect the performance of employees and develop corrective actions to exploit
their best performance.
1.2 Statement of the Problem

The desire to improve productivity and efficiency in any firms has led to raising academic
interest about motivation over the years. Academicians have been highly interested in figure
outing as what factors are affecting the level of motivation to work. Therefore, for both
academicians and practitioners of human resource management motivation has become an
important issue (Loretta Sarpong, 2016). Motivation is not simple thing rather it is a complex
and it is about providing for the employees the appropriate guidance, plan or direction, resources
and incentives that stimulates the employees to achieve the organizational goal (Ludhans, 1992).
Employees of an organization are one of the most valuable assets. Motivated staffs are loyal to
their organization and keeping motivated staff builds an organization and reduces the cost of
recruitment and training. Mullins (2006), one of the major responsibilities of managements in
any organization is motivating their staffs effectively. According to Omollo (2015, p.88), “the
loss of employees represent a loss of skills, knowledge and experiences which can create a
significant economic impact and cost to corporations as well as impacting the needs of
customers. Managers who can motivate employees assist the organization by improving
employee retention.” Anthony Kusi (2014), as employees is not motivated adequately they was
quit their organization and inversely as they motivated adequately in a consistent manner they
become loyal to their organization.
Commercial Bank of Ethiopia is using several approaches in order to motivate and maintain
employees by providing mortgage loan, car loan and various fringe benefits in addition to basic
salary. Unfortunately, the bank still faces the challenges of employee retention, high cost of
recruitment, training, increased competition, and high rate of technological growth especially the
mobile phones that now offer banking services for example M-birr, Hello cash & others. The
probability of potential and experienced staff moving from this bank to other banks is a source of
worry because they need to be replaced at a higher cost to fill the gap. The data from the bank
corporate human resource office showed that the total number of staffs leaved CBE in the last
five years are 120 and the number of staffs leave the bank increase from year to year as the
figures revealed in year 2013 the number of staffs leaved CBE are 245 by the year 2015
increased to 616, the number of staffs leaved the bank increased in a shocking manner to 420.
The bank incurred a lot of millions for these staffs starting from recruitment up to their
resignation the cost of recruitment, cost for training and education, medical cost and others (CBE
Nakamte district)
The bank should also need to give attention to the loss of competitive advantage strategies
specially related with the loss of vice presidents and directors because as the data from the bank
corporate human resource office showed that the number of directors and managers resigned
their job in the last five years are five including the bank managers. As evidenced by
Commercial Bank of Ethiopia labor union press release in the presence of known TV stations
held in Addis Ababa exhibition center in 23 July, 2018 Commercial Bank of Ethiopia employees
are faced by problems of feeling de-motivated and overworked specially in the recent period
related with the new structure launched by the bank. As the loss of staffs lead to a loss of
knowledge and experiences that have a big economical influence to the firm and affecting the
customers need thus in the light of these that the research intends to look into the effects of
motivation on the performance of employees at CBE Nakamte branches this is the essence of the
study
1.2 Research Questions

The research has addressed the following specific questions:
1. What is the effect of salary on employee performance at CBE?
2. How do car loan affect employee performance at CBE?
3. What is the effect of fringe benefits on employee performance at CBE?
4. What is the effect of promotion on employee performance at CBE?
5. How does working environment affect employee performance at CBE?
1.3 Objectives of the Study
The general objective of the study is to analyze the effect of motivational packages on employee
performance at CBE. The specific objectives are:
 To examine the effect of salary on employee performance at CBE.
 To assess the effect of car loan on employee performance at CBE.
 To evaluate the effect of fringe benefits on employee performance at CBE.
 To assess the effect of promotion on employee performance at CBE.
 To examine the effect of working environment on employee performance at CBE.
1.6 Significance of the Study

The study is important in so many ways. It would reveal: Whether these packages improve
employee performance and how organizations can strategically maximize their employees‟
potentials and benefit from it. The find outs of the research therefore give important information
to policy makers and human resource managers of the bank to consolidate or revise ways of
motivating staffs of the bank. The results of the research has also add to the existing body of
knowledge on the area of motivation and its effect on performance and academically the study is
vital for future advanced studies in this area.
1.7 Scope of the Study

Even though west wallagga district Nekemte Town of CBE has 9 branches, the study
purposively selected all branches namely nekemte, biftu, leka, cheleleki, sorga, komto, bake
jema, jamea and kumsa moroda. Although the population size is finite which requires sample
size determination formula but the sample size determined through the formula made the
collection of data manageable, and the study was utilized standardized table which is
representative. Although the population size is finite which requires sample size determination
formula but the sample size determined through the formula made the collection of data
unmanageable, and the study has utilized standardized table which is representative.
1.8 limitation of the study
The major limitation of this study was failure to address all different employee motivation that
affect the performance of employees and also covers only Commercial Bank of Ethiopia
specifically at Nekemte town. Regarding the geographical area coverage, the study is limited to
focus only on employees who are under western Region Nekemte town and outlying area, this is
due to the fact that the concept of employee motivation is a high level strategic concept and it is
assumed that it is more familiar to employees who are near to issues related to the conception,
development and execution of strategic matters
1.8 Organization of the Paper

This thesis had been structured in five chapters as follows. Following introduction in the first
chapter, chapter two contained a review of literature. The research methodology were been
presented in chapter three. Specifically, this chapter shows the Population and Sampling
Techniques, Research Design, Instruments of Data Collection and Method of Data Analysis. In
chapter four, the results and findings of the study were discussed. Finally, the last chapter
encompassed the summary of findings, conclusions drawn and recommendations of the results
CHAPTER TWO
RELATED LITERATURE REVIEW
Introduction
This chapter reviews related theoretical and empirical literature on the subject matter. The
relevant literature would be reviewed under the following outline: motivation and corporate
performance in the banking sector, theories of motivation, effects of motivation on employee
performance, the motivational packages, level of employee motivation, performance appraisal
methods, employee performance measurement, research gap and conceptual framework. 2.
Motivation and Corporate Performance in the Banking Sector
2.1 The Concept of Motivation

According to Robbins and Judge (2018), motivation is an intensity, direction, and persistence of
an employee’s effort in order to accomplish a goal.” Intensity is about how strongly an individual
attempts. Majority of us concentrate on intensity when we think about motivation but high
intensity not assure best output unless it is through with the right direction that consistent with
the firm objective and benefits the firm. The persistence dimension is about how long an
individual keep up its attempts. Motivated staffs staying on the job long enough to attain their
objectives. Motivation can be categorized into extrinsic and intrinsic motivation. Extrinsic
motivation is related to external factors like salary and fringe benefits and promotion. Intrinsic
motivation is related to internal factors like job satisfaction, responsibility, challenging work and
achievement, appreciation and recognition (Kinicki, Cole, Digby, &Natash, 2014). Firms focus
on how employees consistently be motivated by those both extrinsic and intrinsic motivations as
their target is to ensure that employees are performing their job as directed to the organizational
goals. Various authors are stated that motivation has a goal directed behavior. Mullins (2006),
stated that, motivation is essentially interested with why and how an employee’s exert their
maximum effort what we called intensity, for a long period of time as to achieve their
Goals even with difficulties what we called persistence, towards a specific goal what we said
direction.
2.2. Theories of Motivation

There are many theories that trying to elaborate the nature of motivation. Mullins, et al. (2006),
classified those theories in to two broad categories Content theories and Process theories.
2.2.1. The Content (Need) Theories

Content theories are trying to elaborate those specific issues which really motivate an employee
at work. Theories under this category are deals with identifying employee’s needs and their
comparative ability, and the objectives they pursue to satisfy these needs. Generally, content
theories focus on the nature of needs and the factors what motivates. Theories that are included
under content theories are Hierarchy needs theory (Maslow’s hierarchy of needs), ERG theory,
Herzberg Two Factor Theory and Acquired needs theory (McClelland’s/Learned need theory).
2.2.1.1. Hierarchy Needs Theory (Maslow’s Hierarchy of Needs)
Abraham Maslow‟s hierarchy of needs theory is the most popular content (need) theory of
motivation (Kinicki et al. 2014). He listed out that each person has a hierarchy of five needs:
 Physiological needs: the needs for food, shelter, clothe, and other basic needs.
 Safety needs: the needs for security and protection.
 Social needs: the need for affection, acceptance, belongingness, and friendship.
 Esteem needs: the need for internal esteem and esteem of others, internal esteem includes self-
respect, confidence, independence, strength, achievement and esteem of others includes
reputation, status, recognition, attention and appreciation.
 Self-actualization need: the need for achieving one’s potential, and self-fulfillment, becoming
what one is capable of becoming. As each of these needs essentially satisfied, the next need
becomes more crucial and essentially satisfied need was no longer motivate. Therefore, if
someone needs to motivate somebody, according to Maslow, first it is necessary to understand
the level of hierarchy that person is currently on and emphasis on satisfying that person’s needs.
2.2.1.2. ERG Theory

It is an alteration or adjustment of hierarchal needs of Abraham Maslow and it‟s introduced by
Clayton Alderfer. kinicki et al. (2014), according to Alderfer basic human needs classified in to
three groups namely Existence, Relatedness, and Growth. The existence group is about basic
material necessity which what listed in physiological and safety needs of Maslow. The
relatedness is about the needs for developing relevant interpersonal relationships and it‟s related
with social need and esteem of others need of Maslow’s. The growth is about intrinsic desire for
personal development and aligns with Maslow’s need for internal esteem and self-actualization
need. According to Alderfer‟s ERG theory in addition to replacing five needs to three, two needs
may go simultaneously.
2.2.1.3. Herzberg’s Two Factor Theory

There are two factors namely hygiene factor and motivators that affect motivation and
performance. According to Mullins et al.(2006),The hygiene factors are organizational policy,
work conditions and external to the job itself and become reason to dissatisfaction if not present
and if present no dissatisfaction but not satisfaction. The motivating factors are those factors if
present used to motivate employees to enhance performance which are accomplishment,
recognition, accountability, work itself and intrinsic to the job itself and become reason to
satisfaction if present however, if absent cause to no satisfaction but not dissatisfaction.
2.2.1.4. Acquired-Needs
Theory of David McClelland’s It is also named as Learned Need Theory or the Three-Need
Theory. Kinicki et al. (2014), as the name indicate the three-need theory emphasis on three needs
namely achievement, power, and affiliation. • Achievement need: The force to succeed, to attain
the plan. • Power need: The need to influence others in order to behave in attaining
organizational goal. • Affiliation need: The need for good friendly interpersonal relationship.
2.2.2. Process Theories Process theories: trying to identify the relationship between the dynamic
variables which increase motivation. These theories are interested more with how behavior is
begin, directed and maintained. Process theories focus on the real process of motivation. The
theories under process theories are Expectancy theory, Equity theory, Goal theory and
Attribution theory.
2.2.2.1. Expectancy Theory

According to DuBrin (1978), how hard an employees do their job actually depends on what they
anticipate to benefit in achieving organizational goal to satisfy their personal goal is the basic
assumption of expectancy theory.
2.2.2.2. Equity Theory
According to Mullins et al. (2006), Equity theory emphasis on employee‟s feelings of how fairly
they treated in an evaluation of relative to the treatment others received for the same type of job
and performance of job
2.2.2.3. Goal Theory

It is one of the basic functions of the management to support the employees in order to achieve
their goals and to give the required guidance and/or assistance in order to ensure that the
employee’s goals are compatible with the organizational goals (kinicki, et al. 2014). 2.2.2.4.
Attribution Theory according to Brooks (2006), Attribution is the ken reason for both our
behavior and others behavior and it can be internal and external attribution. The internal
attribution comes from our personal attributes and we have some control over it whereas, the
external attribution comes from external factors in the organization.
2.3. The Effects of Motivation on Employee Performance

The best way to make the staff hard worker and enjoying the job is motivation. Companies in
this dynamic and competitive world are attempting to consistently develop and motivate their
staffs to assist in achieving high performance with various motivational packages. (Shahzadi,
Javed, Pirzada, Nasreen, & Khanam, 2014). Even though, employees with specific, measurable,
attainable, realistic and time bounded what we called smart objectives, the required skills and
experience they are not perform their best without adequate motivation. Mullins et al. (2006),
Companies success is highly dependent on its employee’s motivation level whether they are
experienced or not, professional or not their motivation to exert maximum effort and abilities
that directed to the organizational goal is the bottom line of organizational success. Therefore, to
delight the customer first companies are expected to delight their staffs which lead to customer
satisfaction and delight which is the base for today’s business survivability. The challenge for
today’s management is to motivating their employees consistently to provide excellent service
beyond the customer expectations which is the secret of most successful companies in our
competitive world (Shahzadi et al. 2014).
2.4. Employee Motivational Packages
The concern of the study is to analyze the effect of motivational packages on the performance of
CBE employees because a motivational package has a major impact on the performance of
employees by linking the individual or employee’s need (goal) with organizational goals.
Companies that is able to motivate their staffs consistently by different motivational variables
their staffs was be satisfied, be loyal to their company and performs their best that leads to
customer satisfaction and organizational success and prosperity. There are different motivational
variables that affect the performance of employees like enhanced salary, promotion, house loan
scheme, car loan scheme, fringe benefits, working environment, recognition and so on.
2.4.1. Money
Money is a major motivating variable for most of peoples in different form either in salary and
fringe benefits or in other form that satisfies various needs. Money is a crucial factor for human
beings to meet basic physiological needs and safety need. In addition as money gives ability to
purchase something that indicate the status of that person money also satisfies esteem needs
(Ofelia Robescu, 2016).CBE considers enhanced salary is a major motivating variable for most
of its employees and works on it in a continues manner (CBE Informer, 2016).Money in the form
of salary and fringe benefits, house loan scheme, car loan scheme or in any other form given to
employees for their performance, money is crucial. According to Koontz & Weihrich (1990);
Edwin (1993), as cited in Omollo (2015), in order to ensure money as a successful reward tool
for achievements employees done the compensation must be depends on their performance. 2.4.2.
Recognition
Recognition is a reward for well performed staffs. Companies recognize their staffs in various
ways either orally or in written form and officially or inversely but the important thing is that as
money is not the only factor under any condition to motivate employees, today companies use
recognition as a motivational variable to increase their staffs motivation without incurring much
expense(Ofelia Robescu, 2016). Various authors state that recognition has significant impact on
the performance of employees as the same as other factors. CBE considers recognition as one of
the most important intrinsic motivational factor to motivate its employees (CBE Informer, 2017)
2.4.3. Working Environment
In today’s modern and intensive competitive business world companies have a legal and social
responsibility to create a supportive working environment that is free from unnecessary hazards
and companies must be recognize that the need to create conducive work environment for their
staffs and spend a lot to bring this pleasant work environment to their staffs in order to survive
and prosper their business for a long period of time (Decenzo & Robbins, 2010). Employees
need that their working environment to be safe for their physical as well as mental health with
the necessary and adequate tools and equipment that support their comfort and achieving the
organizational goal by performing their best.
2.5. Levels of Employee Motivation

According to Robbins et al. (2018), there are three levels of employees‟ motivations. (1) The
direction; it refers to consistency with organizational goal. (2) The level of intensity; it refers to
how strongly an employee‟s attempt. (3) The level of persistence; it refers to how long an
employee‟s keep up its attempt. Kinicki et al. (2014), the level of motivation is different from
one person to other person and even it is different in one person at different circumstances.
Organizational staffs satisfaction was leads to customer satisfaction which in turn leads to
organizational success. In today‟s competitive world companiesare trying to retaining staffs that
have the abilities to provide excellent service because the satisfactions of their customers rely on
their staffs to deliver excellent service to their customers (Khan, 2010).
2.6. Employee Performance Measurement

According to Porter and Lawler (1968), as cited in Chen and Silverthorne (2008), there are three
types of performance measurement. The first one is measure of production rates or outcome
rates. The second type of measure is evaluating one person performance by other person. The
third type of measures is self-appraisal and self-evaluation. Appraisal is the process of assessing
employees performance against with the predetermined goals (Decenzo & Robbins, 2010).
According to CBE employees are measured by early reporting to work, staying on the job,
delight to customers, respect amongst colleagues and loyalty to the bank to achieve the
predetermined and cascaded goals of the bank.
2.6.1. Performance Appraisal
Decenzo et al. (2010), Performance appraisals must communicate and know how well an
employee’s done the predetermined goals. It is advisable to have two way communications in
setting goals as well as in performance measurement between the employees and the
management because this process by itself affects the motivation of employees. Staffs of an
organization need to know as how well they do their job and was ing to get feedback in order to
ensure as they are performing towards the organizational goal. The evaluation of staffs assists the
organization to grow, fill the gap, to facilitate training and development programs for the staffs.
Performance appraisal is the process of assessing an employee’s performance relative to the
predetermined goals (Dessler, 2013).
2.6.2. Performance Appraisal Purpose

According to Dessler et al. (2013), there are five reasons to appraise employees performance. *
First, for compensation and retention decisions purpose. * Second, appraisals have a major
impact in the overall performance management process. * Third, the appraisal gives the
opportunity to the management and employees to develop corrective actions for deficiencies, and
to reinforce the good job of employees. * Fourth, appraisals help to prepare future career
planning in light of SWOT analysis. * Finally, the appraisals help to identify training and
development needs of employees to the management. 2.6.3. Performance Appraisal Methods
Decenzo et al. (2010), stated that there are three ways for measuring employees performance
appraisal such as (a) absolute standards, (b) relative standards and (c) outcomes. Each has its
own strengths and weaknesses and there is no a single approach always best.
2.7. Empirical Literature Review

Empirical literature review is to discuss different previous researches in relation to this study.
Thomas Owusu (2012), conducted a research on effects of motivation on employee job
performance. The research intends to evaluate the motivational packages available at Ghana
Commercial Bank and the way how it influences the staff performance towards the corporate
goals. The research identified that companies can apply different motivational packages to
motivate staffs in the banking environment. The staffs are interested in enhanced salaries, fringed
Benefits, promotion, and car loans as motivating variable to motivate the bank staffs as to give
out their best performance. The study also revealed that the core functions of the bank is mainly
performed by clericals and their numbers are more than their supervisors to this end adequate
motivational packages should be provided to the clerical workers in order to assure customer
satisfaction. The research also revealed that conveniences office environment has first time
impression on the customers and the wellbeing of the staffs. Omollo (2015), conducted a
research on effects of motivation on employee performance. The main purpose of the research
was to evaluate the impact of motivation had on the performance of employees of the Kenya
Commercial Bank in Migori County. The research also interested on the demotivating variables
such as lack of promotion, irrational over load, unfair working hours and absence of recognition.
The researcher revealed that monetary incentives highly affect the staff performance and also job
enrichment as well as conveniences working environment with a fair and rational work load
would significantly affects the motivation level of employees.
Alalade (2015), also conducted a research on effects of motivation on employee performance.
The main purpose of the research was to analyze the impact of motivation on performance of
staffs in the Nigerian Banks. The research find out that staffs are frequently motivated with
average mean of 3.938 and average standard deviation of 0.93383. Additionally, the research
was find out that the level of performance of the organizations involved are excellent with
average mean of 4.12 and standard deviation of 0.85553. The major finding of the research
revealed that motivation has a significant impact on employees‟ performance. The researcher
advises that banks should use different motivational packages for their employees in order to
enhance their performance and firms in the future may face more challenge to develop
motivational packages that attracts and motivate as well as retain their staffs
Belly Onanda (2015), also researched on the effects of motivation on employees job
performance. The research analysis the impact of employee motivation on performance of 7
selected Kenya commercial bank region of coast. The study revealed that even though KCB is
making various efforts in order to motivate their employees but still the challenge exists. The
motivated staffs always enhance their performance by performing their best to achieve the
organizational goal. The researcher advises that bank managements need to update themselves to
issues related to employee motivation to satisfy and retain their employees as well as survive and
prosper their business.
Mohamedi (2013), conducted a research on effects of motivation on employee performance. The
main purpose of the research was to evaluate the effect of employee motivation on performance
in Tanzania banks. The research find out that enhanced salary, promotion and recognition are
weighty motivational factors for staffs of Tanzania Postal Bank. The research observed that TPB
does not provide any mortgage loan to its staffs and customers. The researcher advises that TPB
should offer mortgage loan to their staffs as one motivational variable and the management as
much as possible need to avoid the room of bias in measuring performance. The researcher also
advises that the bank should invest seriously on employees training and development because the
customer satisfaction mainly depends on them. NurunNabi, Islam M, Dip TM, Hossain AA
(2017), conducted a study on Impact of Motivation on Employee Performances. The main
purpose of the research was how motivational packages affect the performance of employee for
excellence in Karmasangs than Bank Limited, Bangladesh. The research revealed that if staffs
are positively motivated their efficiency and effectiveness enhances extremely for attaining
organizational goals
2.8. Research Gap

From the above and other empirical literatures, there are a lot of studies done on the effects of
motivation on employee performance. Kusi (2014), conducted a research on the effects of
motivation on job performance of local government employees in Ghana, Robescu (2016), also
conducted a research on the effects of motivation on employees performance in companies in
Romania. The studies revealed different findings and some of the find outs are contradicting
because researchers have emphasized on different organizations, industries and countries. But
the question persists that why companies still face motivational problems which hinder the level
of organizational performance. Commercial Bank of Ethiopia is using several approaches in
order to motivate and maintain employees. Unfortunately, a gap still persists in establishing the
effects of motivation on employee performance. Therefore, the baseline of this study is required
to investigate what and how employee motivation is contributing to general performance and
organizational objectives and goals in Commercial Bank of Ethiopia, particularly in North Addis
district city branches. As far as my reading concerns there is no prequel literature or research
conducted on the effects of motivation on employee performance in commercial bank of
Ethiopia. In other words, no major assessment has been made on effects of motivation on
employee performance in commercial bank of Ethiopia. In addition, in my preliminary
observation commercial bank of Ethiopia is playing significant role by creating job opportunity
for many employees and maintaining the economy of the country. However, regarding the
effects of employee motivation empirical studies fail to investigate by taking commercial bank of
Ethiopia as a case study.
Independent variables Dependent variable
Motivational Package
 Enhanced salaries to employee
 Employee car loan scheme
Employee
 Fringe benefits
Performance
 Promotions
 Working Environment
Source: From Review literature (2023)

CHAPTER THREE
3. RESEARCH METHODOLOGY
3.1 Introduction
This chapter describes the methodology to be used for the study. The main issues here are the
research approach, research design, research population, sample and sampling technique, source
of data and type, data collection procedures, ethical consideration, reliability and validity test and
method of data analysis. .
3.2 Research Approach

Research approach is an instrument that researchers employ whilst they administer any form of
inquiry or investigation (Walliman, 2011). Quantitative research is an empirical research where
the data are in the form of numbers. It aims at testing an assumption that has been formulated in
advance in the form of hypothesis (Flick, 2009). It tends to involve relatively large scale and
representative sets of data. In this study, quantitative research approach was used
3.3 Research Design

A research design is simply the framework or plan for a study that is used as a guide in collecting
and analyzing the data. It is a map that is usually developed to guide the research (Prabhat and
Menu Mishra, 2015). Descriptive research design sets out to describe and to interpret what is. It
looks at individuals, groups, institutions, methods and materials in order to describe, compare,
contrast, classify, analyze and interpret the entities and the events that constitute the various
fields of inquiry.
Explanatory research design aims at establishing the cause and effect relationship between
dependent and independents variables. Explanatory research design was used to understand the
nature and relationship between the independent variables (motivational packages) and the
dependent variable (employee performance), to measure the degree of association or correlation
between the variables. Thus, the researchers was used both descriptive and explanatory research
design with which to describe and explain the ten motivational packages and the relationship
between motivation and employee performance
.
3.4 Population and sample Size Determination
3.4.1 Target Population of the Study

Population is defined as the entire collection of individual from which the researchers collect
data. It is the entire group that the researcher is interested in (Jackson, 2008).The sampling frame
describes the list of all population units from which the sample was selected (Cooper &
Schindler, 2003). It is a physical representation of the target population and comprises all the
units that are potential members of a sample (Kothari, 2008). Target population of study consists
of 280 employees of the nine CBE branches in Nekemte Town. The sample unit is the unit that
the study has to be targeted (Mugenda, 2003). Therefore, the units of analysis for this study were
employees of CBE branches which are found in Nekemte town.
3.4.2 Sample Size Determination and Sampling Technique

The basic idea of sampling is that by selecting some of the elements in a population we may
draw a conclusion about the entire population (Cooper and Schindler, 2013). Sample is a subset
of a population to which the researcher was selected with due cares and intends to generalize the
results of the study to the entire populations. Sampling plays an important role in the research
design. The researcher was use a sufficient number of units of analysis to provide enough
primary data for statistically legitimate analysis to take place. Making use of sampling methods
is a tactical, practical, feasible and advantageous approach because analyzing a whole population
is generally not possible. After determining the sample size, respondents were selected from each
of those six branches based on proportional allocation as shown in the following table. In
selecting the representatives following the method of proportional allocation under which the
sizes of the samples from different branches are relatively kept proportional to the sizes of the
branches. Thereafter, every respondent was being selected randomly from each branch to give
equal chance of selection since the study targeted to all staffs. Sampling was done based on
margin of error. One must decide the tolerable margin of error; that is, the accuracy one requires
from the estimated sample. In this study, the researcher wanted to achieve a minimum 90%
accuracy.
Thus, sampling must be selected for a higher level of accuracy such as 95%. This study applied a
simplified formula provided by Yamane (1967) in order to determine the required sample size at
95% confidence level and with the level of precision of e = 0.05% is
N
n= 2
1+ N (e)
280 280
n= =
1+ 280∗ 0.05
2
1+ 280 ∗0.0025
280
¿
1+ 0.7
280
¿ =¿164.705  165
1.7
By using the sample size obtained from the above formula, the proportion or the strata sample
size is determined for each branch. The strata sample size is determined based the following
equation: ( ) Where; - is the sample size for stratum h - is the population size for stratum h N -is
the total population size n -is the total sample size
No Name of Branches in Nekemte Number of Employees Sample Size

Town
1 Biftu Nekemte 60 60/280*165=36
2 Nekemte Br. 80 80/280*165=46
3 Leka 45 45/280*165=26
4 Harosorga 20 20/280*165=12
5 Kumsa moroda 23 23/280*165=13
6 Jamea 12 12/280*165=7
7 Bake jama 15 15/280*165=9
8 cheleleki 15 15/280*165=8
9 komto 10 10/280*165=8
Total 250 165
Source: CBE 2015 report

3.6 Data Sources
3.6.1 Primary Sources
In this study, the researcher was used primary data get first-hand information about the issue
under investigation. Regarding the sources of data, the sources of the primary data which
collected through questionnaire for this study was employees.
3.6.2 Secondary Sources

In addition to primary data, information from the secondary sources of data was collected from
different published and unpublished materials, which included data from libraries, the internet;
previous journals on the area was accessed and reviewed to give a strong background and
context for the study.
3.7 Data Collection Technique

In this study, questionnaires were used to collect data from respondents. A questionnaire is an
instrument that presents structured questions to extract information from respondents. These
questions are usually in a pre-determined order and have a uniform scale to measure dimension.
Questionnaires are one of the most popular instruments for data collection because they save
time and cost; they allow quick extraction of data from respondents; they provide flexibility in
arranging time and place; they have readily available software tools for analysis; they can make
large samples feasible and they lack the same potential for bias found in observation and
interview methods (Boyce, 2003).
The purpose of using a questionnaire is to test associations between independent and dependent
variables already described (Gray, 2009). Owing to its strengths in saving time and upholding the
principle of confidentiality, close-ended questionnaire method was used to collect data from the
staff members working in the nine CBE branches. Likert scale (5= strongly agree, 4= agree, 3=
neutral, 2= disagree & 1 strongly disagree) was principally used in the questions to maintain
uniformity and ease of coding and categorizing variables in responses. Questionnaires were then
delivered personally, in hard copy, to the respondents.
3.8 Data Analysis Techniques and Procedures
The raw data that was obtained from the questionnaires was coded for descriptive statistics.
Systematic coding of data was required because they were collected in a hurry or respondents
may have not entered the details correctly. Questionnaire data was checked for any
inconsistencies. Various statistical tests were carried out using SPSS software package Version
26 for coded and categorized data (Pallant, 2007). Interview data was transcribed, categorized,
unitized and then analyzed according to the theoretical hypotheses (Saunders et al., 2009).
3.9 Ethical Considerations in the Study

Christians (2000) mentions the minimum requirement for a research to undertake in domain of
“research ethics” is to commence participant awareness regarding subject matter of research,
informed consent, privacy and confidentiality, and accuracy. It is important to consider ethical
issues when executing research in both natural and social sciences. Neuman and Baron (1995)
narrate in this context that a researcher must safeguard the human rights of the participants and
guide them to supervise their interest while they participate in the subject research. The
researcher addressed all of the above mentioned ethical considerations during execution of the
current research. Thus, the researcher introduced the purpose of the study and requested the
respondents to participate in the study on a voluntary basis and refusal or abstaining from
participating was permitted. The researcher also assured the respondents of confidentiality of the
information given and protection from any possible harm that can arise from the study since the
findings were used for the intended purposes only. The researcher also strongly hates the act of
plagiarism and tried to make the research as original as possible. Generally, the whole process of
the study was conducted within the frame of acceptable professional ethics
CHAPTER FOUR
DISCUSSIONAND RESULT
4. Introduction
The purpose of this research was to analyze the effect of motivational packages on employee
performance at CBE: A study conducted in Nakamte branches of Commercial Bank of Ethiopia.
Data Analysis of the findings generated from the results of survey which were conducted through
the questionnaires. This chapter presented a discussion of the final results and the process
through which the results obtained. In addition to this, background information of respondents
also presented. Finally, the statistical methods of analysis were discussed, which included a
descriptive analysis, a correlation analysis, and a regression analysis through SPSS version 26.
4.1 Response Rate

A total of 125 questionnaires were distributed and the response rate was indicated in the table
below
Table 4.1 age of the respondent

Table 4. 1: Gender
Frequency Percent Valid Percent Cumulative
Percent
Male 100 65.8 65.8 65.8
Female 52 34.2 34.2 100.0
Total 152 100.0 100.0
Source: own survey 2023
Table 4.2 presents the background information of the respondents of the study. The survey
showed that from 120 samples of respondents Male respondents represent 65.8 Percent, and the
rest 34.2 percent were females. It clearly indicates that majority of the respondents were male.
Table 4.2 Age the respondent

Percent
18-25 9 5.9 5.9 5.9
26-40 91 59.9 59.9 65.8
41-60 37 24.3 24.3 90.1
>60 15 9.9 9.9 100.0
Total 152 100.0 100.0
Source: own survey 2023
As the table 4.2 also depicts, 59.9 percent of the respondents of selected Bank were found in the
age interval of 26 to 40 years. The remaining 24.3 percent were found in the age interval of 41 to
60 years. This shows that the majority of respondent is age 26 to 40.
Table 4.3 status of the respondent
Table 4. 3: Position
Percent
Managerial position 22 14.5 14.5 14.5
Valid Non managerial position 130 85.5 85.5 100.0
Total 152 100.0 100.0
Source: own survey 2023,
As the table 4.5 shows the majority of the respondent 130(85.5) were non managers and 22(14.5)
were manager. It shows that majority of the respondent for study was non manager.
4.4. Respondents' Perception on effect motivation on employee performance

In this section the respondents’ perception or attitude regarding the bank selection factors were
accessed. The statistical analysis such as frequency, percentage, mode and standard deviation
were applied. Mode refers the most frequently observation while the standard deviation shows
the dispersion of the observations around their mean.
Table: 4.1 Enhanced salaries to employee
Enhanced salaries to employee N Mean Standard Dev.
The salary scale of the bank is rational 152 3.52 1.274
My current salary enables me to cover my basic needs so 152 3.73 1.292

I can fully concentrate on my job
There is periodical increase in salary 152 3.73 1.292
The periodical increase in salary is considering to the 152 3.83 1.275
real world
The periodical salary enhancement make my customer 152 3.76 1.242
service very delighted
Source: own survey SPSS v. 26
One of the factors that motivativate employee performance is salary, As it is illustrated in Table
4.4,1 the standard deviations of respondent response were small, which indicates that the
respondent perceptions were almost close to one another. Furthermore, the mean value for seven
questions ranges from 3.3 to 3.8, which implies that the respondents have agreed that their
salaries effect of people skills, sufficient knowledge to implement the performance, innovative
ideas about the execution of performance, bring up the feedback of the employee on the
performance
Table: 4.2 Employee car loan scheme
Employee car loan scheme N Mean Standard Dev.

The only new brand car loan procedure of the bank is 152 3.88 .861
rational The
The time period to benefit car loan is rational 152 3.37 .974
The car loan engineering estimation is competitive with 152 3.63 .871
market price
car loan repayment period is rational 152 3.70 .910
If the bank allows used car loan the staffs was be more 152 3.70 .933
motivated
As it is illustrated in Table 4.4,1 the standard deviations of respondent response were moderate,
which indicates that the respondent perceptions were almost close to one another. Furthermore,
the mean value for five questions ranges from 3.37 to 3.88, which implies that the respondents
have agreed that Employee car loan scheme performance is one of the factor that affect the
employee performance.
Table 4.3: Fringe benefits
Fringe benefits N Mean Standard

Dev.
There is adequate level of allowances 152 3.12 1.037
The different allowances and yearly bonuses of the 152 3.80 .935
bank is rational
The various allowances of the bank is considerable to 152 3.95 .914

the real world
There is a fair allowance between all staffs of the bank 152 3.80 .761
The various allowances of the bank enhances the staffs 152 3.93 .771
life standard and motivate to stay longer at the bank
The perception of respondents for fringes benefit in the employee Performance is presented in
the Table 4.3 As it indicates, most of the mean values for fringes benefit were between 3.1 and
3.9, which reveals that there is mixed response of moderately agree and agreed with the fringes
benefit. The respondents were agreed that the employee are always was to help, have the
necessary to answer my questions, is responsible for the time to obtain the right information.
Table 4.4 Promotions
Promotions N Mean Standard

Dev.
There is adequate opportunity to promotion 152 3.12 1.037
The promotion is through effective performance 152 3.80 .935

appraisal system
Working hard in CBE awards promotion 152 3.95 .914
The bank benefits its staffs in various form in relation to 152 3.80 .761
promotion that improves their life standard
The bank promote me rationally so that I have no 152 3.93 .771

intention of resigning
The perception of respondents for Promotion in the employee Performance presented in the
Table 4.4 As it indicates, most of the mean values for Promotion were between 3.1 and
3.9,which reveals that there is mixed response of moderately agree and agreed with the
promotion. The respondents were agreed tha is responsible for the time to obtain the right
information.
Table 4.5 Working Environment
Working Environment N Mean Standard
I feel as I am safe in my work place 152 3.45 1.213
I have the necessary tools and equipment adequately to 152 3.67 1.349
perform my tasks efficiently and effectively
The overall working environment of the bank is goo 152 3.37 1.327
Regarding the capacity, a total of three questions were covered. As it is shown in the above table,
most of the mean values for working environment was almost between 3.3 and 3.9, which
revealed on average the respondents were agreed that many times have not to cancel
commitments to performance depending up on the working environment and having to prepare
priority lists to get done all the performance.
Table 4.6 Employee Performance
Employee Performance mean Mean Standard D.

I am always early report to work 35 I am always actively 152 3.87 .751
staying on my job
I always perform my best to delight the customer 152 3.83 .914
I always perform my job by respecting my colleagues 152 3.10 .935
I am always committed and loyal to the bank 152 3.87 .037
After discussing the factors for the employee motivation on the employee performance, it is
important to understand the level of effectiveness of the employees related with the above stated
factors. As the respondents gave their perceptions, the mean value is between 3.1 and 3.8. This
indicates that most of the respondents were agreed that they are effective in the employee
performance.
4.3 Correlation analysis
In determining the strength of the relationship based on Pabachnic and Fidell, (2007), the value
of the coefficient of correlation between 0 &1 are interpreted as follows; r=.10 to .29 or r= -.10
to -29 week, r=.30 to .49 or r= -.30 to -.49 moderate and r=.50 to 1 or r= -.50 to - 1 strong.
Table 4.7: Correlation
Enhance car loan Fringe Promoti Worki Employ
d salaries scheme benefits ons ng ee
enviro Perfor
nment mance
Enhanced Pearson Correlation 1
salaries Sig. (2-tailed)
Car loan Pearson Correlation .645** 1
scheme Sig. (2-tailed) .000
Fringe Pearson Correlation .791** .741** 1
benefits Sig. (2-tailed) .000 .000
Promotions Pearson Correlation .745 .786 1
Sig. (2-tailed) .000 .000 .000
Working Pearson Correlation .699** .750** .743** 1
Environment Sig. (2-tailed) .000 .000 .000 .000
Employee Pearson Correlation .757** .608** .755** .726** .742** 1

Performance Sig. (2-tailed) .000 .000 .000 .000 .000
**. Correlation is significant at the 0.01 level (2-tailed).

Source: own survey 2023, computed SPSS V.26
The correlation analysis of the table 4.15 below shows that there is strong positive and moderate
positive relationship or correlation between motivational package variables and employees
performance. Enhanced salary and employees performance (r = 0.757, p < 0.05) has strong
positive correlation, car loan and employees performance (r =0.755, P < 0.05) has moderate
positive correlation, Promotions and employees performance (r = 0.726, P < 0.05) has strong
positive correlation, Working Environment and employees performance (r =0.742, p)).
4.4.1 Multi-Collinearity Diagnostics
Multicollinearity exists when there is too highly correlation between two or more predictors in a
regression model. Multicollinearity poses a problem only for multiple regressions because it
involves more than two predictors. Perfect Collinearity exists when at least one predictor is a
Perfect linear combination of the others. According to different statistical books, one way of
identifying Multicollinearity is to scan the correlation matrix of all of the predictor variables.
Another method is to produce a Collinearity diagnostics with the use of SPSS, and one of which
is the variance inflating factor (VIF). The VIF indicates whether a predictor has strong linear
relationship with the other predictor(s). Although there are no hard and fast rules about what
value of the VIF should be a cause for concern, (Gujarati, 2004) suggests that value of less than
10 is good value and he suggest that if the average VIF is greater than 1 then there is no
Multicollinearity in the regression model
Table: 4. 8: Collinearity Statistics
Model Collinearity Statistics
Tolerance VIF
Enhanced salaries .346 2.892
Car loan scheme .362 2.766
Fringe benefits .268 2.728
Promotions .340 2.945
Working Environment .362 2.766
Source: Own Computation using SPSS V 26
in this study as indicated in Table 4.16, the Variance inflation factors (VIFs) for the independent
variables included in the regression equation is greater than 1 and less than 10. For tolerance
statistics, values above 0.1 and below 1 are worthy of concern. Considering the regression model
for 46 this study the tolerance statistics values are greater than 0.1 and below 1 for all predictors
as indicated in tables 4.16 as such no Multicollinearity is observed in this model..
4.4.2 Testing for normal distribution of data

Normality test Multiple regressions assume that variables have normal distributions. This means
that the errors between observed and predicted values (i.e., the residuals of the regression) should
be normally distributed. This assumption may be checked by looking at a histogram or a Q-Plot.
Normality can also be checked with the decision is obtained by looking at the normal probability
plots, that is from the points where the data points form a linear pattern, so that it can be
considered as consistent with a normal distribution. The result of the tests is presented in the
figure below.
Figure: 4. 1. Normality test
Source: Own Survey, 2023 computed by SPSS V 26
4.4.3 Test of linearity

According to David Garson (2012) as a rule of thumb, an indicator of non-linearity is when the
standard deviation of the residuals exceeds the standard deviation of the predicted value
(dependent variable). So in this case standard deviation of the predicted value exceeds the
standard deviation of the residuals this indicated that this assumption is not violated.
Figure 4.2: Linearity test
Source: Own Survey, 2023 computed by SPSS V 26
4.4.4 Homoscedasticity
There should be homoscedasticity check before running multiple regression analysis, this means
that the residuals (the differences between the values of the observed and predicted dependent
variable) are normally distributed, and that the residuals have constant variance. Figure 4.3 has
demonstrated homoscedasticity of the variables. Homoscedasticity is meant by where the
variances along the line of best fit remain similar as you move along the line.
Figure 4. 3: Homoscedasticity test
Source: Own Survey, 2023
4.5 Multiple regression of employee motivation and employee performance

Multiple regressions are a model for the relationship between a dependent variable and a
collection of independent variables. It also used to model the value of a dependent scale variable
based on its linear relationship or “straight line” relationship to one or more predictors. The
researcher determine the relationship between a dependent variable (employee performance) and
multiple independent variables (Enhanced salaries, car loan scheme, Fringe benefits ,Promotions
and working environment ) using multiple regression analysis. Out of the five hypotheses that
the researcher initially set for test, five of them are tested using multiple regression model.
Model Summary
Model R R Square Adjusted R Std. Error of the Estimate
Square
1 .821a .673 .664 .34565
Table 4.7. :Model Summary

a. Predictors: (Constant), Enhanced salaries, car loan scheme, Fringe benefits ,Promotions
and working environment ,
The model summary in the above table 4.14 reports the strength of relationship between the
independent variable (Employee motivation) and the dependent variable (employee
performance). In the above table the R is a Pearson correlation between predicted values and
actual values of dependent variable, with a value of 0.821. R² is multiple Correlation
coefficients that represent the amount of variance of dependent variable i.e. employee
performance is explained by the combination of four independent variables of employee
motivation (Enhanced salaries, car loan scheme, Fringe benefits ,Promotions and working
environment) and 67.3% variance of employee performance is explained by four predictors.
Value of R square implies 67.3% it mean that the variable which is used as employee motivation
factors is contributing to the employee performance by 67.3% and remaining 32.7% can be
attributed by other factors which are not studied, because they are beyond the scope of study.
Table: 4. 8 ANOVA
Model Sum of Df Mean Square F Sig.

Squares
Regression 36.189 4 9.047 75.726 .000b
1 Residual 17.563 148 .119
Total 53.752 152
Source: Own Survey, 2023 computed by SPSS V26
a. Dependent Variable: employee Performance
b. Predictors: (Constant), Enhanced salaries, car loan scheme, Fringe
benefits ,Promotions and working environment
The ANOVA tells us whether the model, overall, results is a significantly good degree of
prediction of the outcome variable. F-ratio is the test statistic used to decide whether the model
as a whole has statistically significant predictive capability, considering the number of variables
needed to achieve it. Since the significance result on the ANOVA table 4.15 is 0.000 which is p<
0.05 and the regression mean square is greater than residual mean square with F value 75.726,
the regression model fit to a good degree of prediction
4.6 Model coefficients
Table: 4. 9 Coefficients
Model Unstandardized Standardiz T Sig.
Coefficients ed
Coefficient
s
B Std. Error Beta
(Constant) 1.030 .213 4.847 .000
Enhanced salaries .349 .081 .044 4.290 .000
to employee
Employee car loan .055 .056 .078 .991 .323
scheme
Fringe benefits .227 .068 .304 3.340 .001
Promotions
Working .271 .069 .318 3.927 .000
Environment
a. Dependent Variable: Employee Performance
Based on the above table 4.19 sig. Value is used test the impact of each independent variable on
employee’s performance. Based on this if sig. value is less than p-value we can conclude that
motivational package variables have significance effect on employee’s performance or the
independent variable have significant effect on the dependent variable in this study. The result of
table 4.19 showed that the significance value is less than the significance level Value (0.05) for
all five independent variables.
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATIONS
5.1 Summary
The study was intended to investigate the effect of motivation on employee performance; the
case of commercial bank of Ethiopia Nakamte branches based on the questionnaire consisting of
125. The results of background information of respondents indicated that majority of the total
respondents (65.8%) are male, the major designation group were (66.7%) are customer service
officers, and (49.2%) of the respondents were have been worked with the bank for 3- 5 years
which takes the majority. The items included in the rating scale were grouped in to seven
dimensions these are enhanced salary, mortgage loan, car loan, fringe benefits, promotion,
recognition and working environment. The results of the descriptive statistical analysis indicated
that most of the respondents are moderate for the motivational packages or variables and the
motivational packages has a major impact on the performance of employees by linking the
individual or employees need (goal) with organizational goals. Employees exert week
performance for week motivational packages, moderate performance for moderate motivational
packages and their best performance for strong and attractive motivational packages. Therefore,
the bank needs to work on these motivational packages such as enhanced salary, mortgage loan,
car loan, fringe benefits, promotion, recognition, and working environment continuously to make
the motivational packages strong and attractive that satisfies, motivate and retain its staffs which
leads to customer satisfaction and delight which is the bottom line of organizational success and
prosperity. The finding of the correlation analysis showed that there is a positive strong
correlation between employees‟ motivational variables such as enhanced salary, car loan, fringe
benefits, promotion, recognition and working environment and employee performance. Mortgage
loan have a positive but moderate correlation with employee performance. From the R square
value it is shown that 67.3% of variation in employee performance is explained by the
independent variables. In other word The R square value of 0.6, demonstrates that 67.3% of
variation in employee performance can be explained by the independent variables (enhanced
salary, car loan, fringe benefits, promotion, and working environment) that were included in this
study. The multiple regression results showed that all the independent motivational variables
such as enhanced salary, car loan, fringe benefits, promotion, and working environment have
positive relation and significant effect on the dependent variable (employee performance).
5.2 Conclusion
The general objective of this study was to analyze effect of motivation on employee
performance; the case of commercial bank of Ethiopia Nakamte branches. The study analyzed
the effect of enhanced salary, mortgage loan, car loan, fringe benefits, promotion, recognition
and working environment to test employee performance. In determining the strength of the
relationship based on Pabachnic and Fidell, (2007), the value of the coefficient of correlation
between 0 &1 are interpreted as follows; r=.10 to .29 or r= -.10 to -29 week, r=.30 to .49 or r=
-.30 to -.49 moderate and r=.50 to 1 or r= -.50 to - 1 strong. The correlation analysis shows that
there is strong positive and moderate positive relationship or correlation between motivational
package variables and employees performance. Enhanced salary and employees performance (r =
0.757, p < 0.05) has strong positive correlation, car loan and employees performance (r =0.755, P
< 0.05) has moderate positive correlation, Promotions and employees performance (r = 0.726, P
< 0.05) has strong positive correlation, Working Environment and employees performance (r
=0.742, p). The study in general showed that all the independent motivational variables included
in this study such as enhanced salary, car loan, fringe benefits, promotion, and working
environment have positive relation and significant effect on employee performance (dependent
variable).
5.3. Recommendations
Based on the findings and conclusions of the study, the researcher forwards the following
recommendations. As the enhanced salary have positive relation and significant effect on
employee performance the bank needs to give a due attention to the variable enhanced salary and
needs to work on enhanced salary in order to improve employee performance. Mortgage loan
also have positive relation and significant effect on employee performance therefore the bank
expected to give the necessary emphasis for mortgage loan and to have attractive mortgage loan
procedure to enhance employee performance. Similarly car loan have positive relation and
significant effect on employee performance therefore the bank expected to give the necessary
attention for car loan and to have attractive car loan procedure to increase employee
performance. Fringe benefits also have positive relation and significant effect on employee
performance therefore the bank needs to give due emphasis and work on fringe benefits
continuously in order to enhance employee performance.  Promotion also have positive relation
and significant effect on employee performance for this the bank expected to concern for
promotion to improve employee performance. The intrinsic motivational variable recognition has
positive relation and significant effect on employee performance therefore the bank needs to give
the necessary attention to recognition in order to enhance employee performance. Finally, the
other intrinsic motivational variable working environment also have positive relation and
significant effect on employee performance therefore the bank expected to give the necessary
emphasis to the working environment and needs to create conducive working environment to
increase employee performance.  In general all the independent motivational variables such as
enhanced salary, mortgage loan, car loan, fringe benefits, promotion, recognition and working
environment have positive relation and significant effect on employee performance. Therefore,
the bank needs to work on these motivational variables continuously and consistently with a due
attention to attract, motivate, satisfy and retain its staffs as this works directly proportional to the
employee performance which is the base for the bank to prosper and to be a leading competitive
bank in the industry.
5.4 Limitation and Suggestion for Further Research
The findings of this study are based entirely upon the research conducted in Commercial Bank
on Nekamte branches and hence may not be applicable to other districts and regions. Lack of
similar research done in the country was another limitation of the study. Therefore, the research
paves the way to other research opportunity in CBE or other organization in our country to
investigate the effect of motivation on employee performance. Hence, the finding of this study
may have significant practical value. In an attempt to address the limitations of this research, it is
recommended that further research can be conducted to investigate the effect of motivation on
Therefore, the researcher recommends the following for future researches: A replica of this
research can be carried out with longitudinal data and on a wider scale (nation-wide) so that
cross-regional similarities and differences can be studied.
 Comparative study by including more banks with regard to the effect of motivation on
 The approach of this paper can be extended by including other motivational variables not
used in this thesis.
Reference
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in commercial banks in Bangladesh: An empirical study. IOSR Journal of Business and
Management.
 Albeiti, M. (2015). The Role of Motivation on Employees‟ Performance: The Case of
Victoria Commercial Bank of Kenya. Unpublished MBA, Thesis. United States
International University - Africa.
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limited
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diss,Rand Afrikaans University.
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Implications for retaining federal employees.
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edition. New York: McGraw-Hill
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Business and Management.
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New Delhi: New Age International (P) Ltd.
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Ghana limited, journal of business theory and practice vol.4, No. 1. Available @
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 Mullins, L. J. (2006). Essentials of Organizational Behavior, Prentice Hall Nienaber R,.
(2011) the relationship between personality types and reward preferences:
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(2012). The effect of perceived service quality on customer loyalty in internet service
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APPENDICES
QUESTIONNAIRE
COLLEGE OF BUSINESS AND ECONOMICS
MBA PROGRAM
Dear sir/madam this questionnaire is designed to collect information about the Effects of
motivation on employees‟ performance in case of commercial bank at Nakamte Town branches.
The data or information collected in such a way shall be used as primary data in my thesis, which
I am conducting as a partial fulfillment for the requirement of my study in MBA Finally, I
confirm you that the information that you share me was be kept confidential and only used for
the academic purpose. No individual’s responses was be identified as such and the identity of
persons responding was not be published or released to anyone. All information was be used for
academic purposes only. Your honest and thoughtful response is invaluable
Thank you for your participation Kind regards,
PART I: Socio- Demographic Characteristics

1. Gender Male Female
2. What is your designation at CBE?
Branch Manage □ CSM SCSO CSO
3. How many years have you been working at CBE?
< 3 years
3-5 years
6-10 years
>10 years
PART II: Effect of Motivational Packages on Employee Performance
The following questions are presented on a five point Likert scale. If that aspect is much better
than you hoped it could be choose 5 (strongly agree), if that aspect is even better than you
expected it to be choose 4 (agree) if that aspect is what you would like it to be choose 3 (fair),
you would like choose 2 if it to be somewhat poor (disagree) and if that aspect is much poorer
that you would like it to be choose 1 (strongly disagree).
S Enhanced salaries to employee 1 2 3 4 5
N
SD D N A SA
The salary scale of the bank is rational
My current salary enables me to cover my basic needs so I

can fully concentrate on my job
There is periodical increase in salary
The periodical increase in salary is considering to the real

world
The periodical salary enhancement make my customer service
very delighted
Employee car loan scheme
The only new brand car loan procedure of the bank is rational
The
The time period to benefit car loan is rational
The car loan engineering estimation is competitive with

market price
car loan repayment period is rational
If the bank allows used car loan the staffs was be more
motivated
Fringe benefits
There is adequate level of allowances
The different allowances and yearly bonuses of the bank is rational
The various allowances of the bank is considerable to the real world
There is a fair allowance between all staffs of the bank
The various allowances of the bank enhances the staffs life standard
and motivate to stay longer at the bank
Promotions
There is adequate opportunity to promotion
The promotion is through effective performance appraisal system
Working hard in CBE awards promotion
The bank benefits its staffs in various form in relation to promotion

that improves their life standard
The bank promote me rationally so that I have no intention of
resigning
Working Environment
I feel as I am safe in my work place
I have the necessary tools and equipment adequately to perform my
tasks efficiently and effectively
The overall working environment of the bank is goo
Employee Performance
I am always early report to work 35 I am always actively staying on

my job
I always perform my best to delight the customer
I always perform my job by respecting my colleagues
I am always committed and loyal to the bank

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EFFECTS OF MOTIVATION ON EMPLOYEE

PERFORMANCE: A CASE STUDY IN COMMERCIAL BANK

A THESIS SUBMITTED TO THE COLLEGE OF BUSINESS AND

ADVISOR NAME: DARAJE ASFAWU (PHD)

GREAT LAND COLLEGE

A THESIS SUBMITTED TO THE COLLEGE OF BUSINESS AND

ADVISOR NAME: DARAJE ASFAWU (PHD)

GREAT LAND COLLEGE

Fikadu Tasgara (Phd __________ ________

Advisor Sign Date

Researcher’s Name Date Signature

HABATAMU ETANA ___________________ ___________________

1.1 Background of the Study...................................................................................................................9

1.2 Statement of the Problem.................................................................................................................10

1.2 Research Questions..........................................................................................................................11

1.3 Objectives of the Study....................................................................................................................12

1.6 Significance of the Study.................................................................................................................12

1.7 Scope of the Study...........................................................................................................................12

1.8 limitation of the study.........................................................................................................................13

1.8 Organization of the Paper....................................................................................................................13

RELATED LITERATURE REVIEW...................................................................................................14

2.1 The Concept of Motivation..............................................................................................................14

2.2. Theories of Motivation...................................................................................................................15

2.2.1. The Content (Need) Theories.......................................................................................................15

2.2.1.2. ERG Theory..........................................................................................................................15

2.2.1.3. Herzberg’s Two Factor Theory.............................................................................................16

2.2.2.1. Expectancy Theory...............................................................................................................16

2.2.2.2. Equity Theory.......................................................................................................................17

2.2.2.3. Goal Theory..........................................................................................................................17

2.4. Employee Motivational Packages...................................................................................................18

2.4.3. Working Environment.............................................................................................................19

2.5. Levels of Employee Motivation......................................................................................................19

2.6. Employee Performance Measurement............................................................................................19

2.6.1. Performance Appraisal............................................................................................................20

2.6.2. Performance Appraisal Purpose...............................................................................................20

2.7. Empirical Literature Review...........................................................................................................20

2.8. Research Gap..................................................................................................................................22

3.2 Research Approach..........................................................................................................................24

3.3 Research Design..............................................................................................................................24

3.4 Population and sample Size Determination.....................................................................................25

3.4.1 Target Population of the Study.................................................................................................25

3.4.2 Sample Size Determination and Sampling Technique..............................................................25

3.6 Data Sources....................................................................................................................................27

3.6.1 Primary Sources............................................................................................................................27

3.6.2 Secondary Sources........................................................................................................................27

3.7 Data Collection Technique..............................................................................................................27

3.8 Data Analysis Techniques and Procedures......................................................................................28

3.9 Ethical Considerations in the Study.................................................................................................28

4.1 Response Rate.....................................................................................................................................29

4.4. Respondents' Perception on effect motivation on employee performance...................................30

4.4.2 Testing for normal distribution of data.................................................................................36

4.4.3 Test of linearity.......................................................................................................................37

4.5 Multiple regression of employee motivation and employee performance.................................39

SUMMARY, CONCLUSION AND RECOMMENDATIONS.................................................................42

and Suggestion for Further Research....................................................................................................45

Keywords: motivation, performance, employee, salary, promotion and recognition.

1.1 Background of the Study

1.2 Statement of the Problem

1.2 Research Questions

Fikadu Tasgara (Phd __

HABATAMU ETANA _ _

Employee Pearson Correlation .757 .608 .755 .726 .742** 1