“The Effect of Reward Management System on Employee Performance: In The Case of Ethiopian Electric Utility Ambo District”

Abstract

This study examines the impact of reward management systems on employee performance at the EEU Ambo District, focusing on the interplay between intrinsic (non-monetary) and extrinsic (monetary) rewards. A mixed-methods approach was employed, combining a structured questionnaire administered to 162 employees for quantitative survey with four FGDs involving 28 key customers. Quantitative data were analyzed using descriptive statistics, Pearson correlation, and multiple regression (SPSS version 26), while qualitative insights from FGDs explored observable behaviors, processes, and outcomes linked to employee performance during service delivery. The regression model explained 73.5% of the variance in employee performance, confirming a strong relationship between reward systems and performance outcomes. Recognition emerged as the strongest predictor of performance, followed by challenging work and career advancement opportunities. Extrinsic rewards, including basic salary, performance-based bonuses, and promotions also showed significant positive correlations, though employees expressed dissatisfaction with salary adequacy and promotion transparency. FGD findings corroborated these results, emphasizing that structured recognition programs and transparent incentives (e.g., merit-based promotions, timely bonuses) enhance service speed and quality, while systemic gaps in reward distribution hinder motivation. Recommendations include integrating intrinsic and extrinsic rewards through formal recognition initiatives, merit-driven promotion frameworks, and job enrichment strategies. This research contributes to the discourse on holistic reward management in public sector organizations by underscoring the dual role of intrinsic and extrinsic motivators in driving sustainable employee engagement and productivity, validated through both quantitative rigor and qualitative triangulation via FGDs.