Effect Of Reward System On Employees’ Creativity: The Case Of Oromia Bank Head Office, Addis Ababa, Ethiopia

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.