Abstract:
A reward system is an important method that management uses as a system for employees’
creativity in desired ways, such as better functionality and further improvement of company
performance. This study is aimed to examine the effect of reward systems on employees’
creativity in the case of Oromia Bank’s head office, Addis Ababa, Ethiopia. Both descriptive
and explanatory research designs were applied, and a mixed research approach was employed.
The quantitative data is collected by taking closed-ended questionnaires, and the qualitative
was collected using open-ended questionnaires. A simple random sampling technique was used
to select participants in the survey data. From the total target population of 435 permanent
employees, 204 samples were taken. Sources of data were both primary and secondary. Data
analysis was applied through descriptive statistics (mean, frequency, percentage, and standard
deviation) and inferential statistics (Pearson correlation and multiple linear regression
analysis) using SPSS version 23 for data operation and analysis. The results of descriptive
statistics demonstrate that Oromia Bank's current practice of both intrinsic and extrinsic
rewards is neutral. The results of the Pearson correlation show that there is a significant
positive relationship between extrinsic rewards, intrinsic rewards, and an employee’s creativity.
The overall outcome of the regression study shows that both intrinsic and extrinsic rewards can
account for 74.8% of an employee's creativity. In a similar vein, the results show that employee
creativity is more positively influenced by intrinsic rewards than by extrinsic ones. It is
necessary for management to effectively use both extrinsic and intrinsic reward systems for
their employees in order to address employee creativity for the achievement of corporate goals.
