ASSESSMENT OF FACTORS AFFECTING EMPLOYEES’

PERFORMANCE IN WEGAGEN BANK, ETHIOPIA.

By:

TADESSE ASSEFA AYELE

Under the Guidance of:

WONDWOSSEN SEYOUM (Ass.Professor)

and

FIREW MULATU (MBA)

A thesis Submitted to the School Graduate Studies of Jimma University

Partial Fulfillment of the Award of the Degree of Masters of business
Administration (MBA)

JIMMA UNIVERSITY FACULTY OF BUSINESS AND ECONOMICS

MBA PROGRAM

JUNE, 2018
JIMMA, ETHIOPIA
 CERTIFICATE

This is to certify that the thesis entitled

―Assessment of Factors Affecting Employees‗Performance in Wegagen Bank, Ethiopia‖,
submitted to Jimma University for the award of the Degree of Master‗s in Business
Administration (MBA) and is a record of valuable research work carried out by Mr. Tadesse
Assefa, under our guidance and supervision.

Therefore, we hereby declare that no part of this thesis has been submitted to any other
university or institutions for the award of any degree of Diploma.

Main Advisor‗s Name Date Signature

__________________ ____________ __________

Co- Advisor‗s Name Date Signature

___________________ ____________ ___________

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 DECLARATION

I hereby declare that this Thesis entitled ―Assessment of Factors Affecting Employees‗
Performance in Wegagen Bank, Ethiopia‖ has been carried out by me under the guidance
and supervision of Wondwossen Seyoum (Ass. Professor) and Ato Firew Mulatu.

The thesis is original and has not been submitted for the award of degree of diploma in any
university or institutions.

Researcher‗s Name Date Signature

......................................... ............................... .....................

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 ACKNOWLEDGEMENT

I would like to extend my gratitude to Jimma University for giving me this opportunity to
pursue my studies in MBA.

I thank my Supervisors Wondwossen Seyoum (Ass. professor) and Ato Firew Mulatu for
their consistent guidance, advice and unlimited support that they have offered throughout
my research thesis and also my fellow students for the great support they offered.

To all my family and friends for the constant encouragement to pursue this undertaking and
moral support offered during my entire school period.

Above all immeasurable gratitude to the Almighty God for this far He has brought me.

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Table of Contents
CERTIFICATE ..................................................................................................................... i
DECLARATION ...................................................................................................................... ii
ACKNOWLEDGEMENT ........................................................................................................ iii
Lists of Tables .........................................................................................................................vi
Lists of figures ....................................................................................................................... vii
ACRONYMS/ABBRIVATIONS ............................................................................................. viii
ABSTRACT ..............................................................................................................................ix
1. INTRODUCTION ................................................................................................................ 1
1.2 Statement of the Problem .............................................................................................. 2
1.7 Organization of the study .............................................................................................. 4
2. LITERATURE REVIEW ...................................................................................................... 5
2.1.1 Definitions .............................................................................................................. 5
2.2 Conceptual Review ........................................................................................................ 7
2.2.1 Training and Development ..................................................................................... 7
2.2.2 Leadership & Employees performance ................................................................ 10
2.2.3 Remuneration / compensation .............................................................................. 11
2.2.4 Job satisfaction: .................................................................................................... 13
2.2.5 Related to Employee Performance ...................................................................... 14
2.2.6 Customer Satisfaction in Banking Sector ............................................................. 16
2.3 Empirical Review ........................................................................................................ 17
2.3.1 Related to Performance & Leadership.................................................................. 17
2.3.2. Related to Compensation/Remuneration ............................................................. 18
2.3.3. Related to Job satisfaction ................................................................................... 19
2.3.4. Related to Training and Development ................................................................. 19
2.3.5. Related to Employees performance ..................................................................... 20
2. 4. Conceptual Framework.............................................................................................. 21
CHAPTERTHREE ............................................................................................................ 23
3. RESEARCH METHOD ..................................................................................................... 23
3.1 RESEARCH DESIGN ................................................................................................. 23
3.2 Sample Design and Population: ................................................................................... 23

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 3.3 Method of Data Collection .......................................................................................... 24
3.4 Sources of Data and Sampling size ............................................................................. 25
3.5 Reliability Analysis ..................................................................................................... 26
3.5.1 Reliability Analysis: ............................................................................................. 26
3.5.2 Validity Analysis: ................................................................................................. 27
3.5.3 Sensitivity Analysis: ............................................................................................. 27
3.6. Method of Data Analysis ............................................................................................ 28
3.7 Ethical Issues ............................................................................................................... 29
CHAPTER FOUR ............................................................................................................. 30
4. DATA PRESENTATION AND ANALYSIS ........................................................................ 30
4.1 Introduction ................................................................................................................. 30
4.2. Demographic Characteristics of Respondents‘........................................................... 30
4.3 Statistics for Employees performance dimensions of the study. ................................. 34
4.4 Correlation Analysis between independent and dependent variables ......................... 35
4.5 Assessing Multicollinearity Test ................................................................................. 37
4.6 Normality Test for Employees Performance .............................................................. 38
4.7 Multiple Regression Model Results ............................................................................ 39
5. SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATION ........ 43
5.1 Summary of Findings ............................................................................................... 43
5.2. Conclusion .............................................................................................................. 48
5.3. Recommendations................................................................................................... 49
5.4 Suggestions for the Future Research ...................................................................... 50
REFERENCES: ..................................................................................................................... 51
APPENDICES ....................................................................................................................... 55

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Lists of Tables

Table 2 Cronbach‘s alpha coefficient ……………………………………………......……27

Table 3 Gender Distribution of respondents‗……………….………………......…............. 30
Table 5: Respondents ‗Education level …………….…………………..….……….…...... 31
Table 6 Respondents‗Work Experience ….. ………… ….……… ……………..….. 31
Table 7: Dimension statistics for Employees performance ……………………….… ……33
Table 8 The Mean Score value of Employees Performance ………………….….……...…34
Table 9: Correlation Analysis on Employees performance ………………………………...36
Table 10 Test for Multicollinearity………………………………………….. ….…….…. 38
Table 11 Test of Normality ………………………………………………………….….. 39
Table 12 Regression Model Summary of Employees performance ………….……,….…. 40
Table 13 ANOVA Results Multiple Regression…………………...………….…………. . 41
Table 14 Regression Coefficients for independent variables Dimension on Employees‘
Performance ………………………………………………………………………..……………....39

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Lists of figures

Figure 1: Conceptual framework …………………………….……..….….……….. 22

Figure .4: Age Distributions of Respondents……………………………….…………………31

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ACRONYMS/ABBRIVATIONS

CEP Compensation in EP
EP Employees‗ Performance
ILO International Labor Organization
LEP Leadership in EP
TEP Training & Development in EP
JSEP Job satisfaction in EP
SPSS Statistical Package for Social Sciences
WB Wegagen Bank
VIF Variance Inflation Factors

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 ABSTRACT

A lot of companies currently try to take a general look at accepting the initiative of learning
and improving at both employee and organizational levels as a major source of competitive
advantage .In this regard employees are critically important as a great resources to confirm
the companies’ competitiveness. The purpose of this quantitative study was to assess the
effect of factors affecting on employees’ performance in Wegagen Bank. The research
approach applied was quantitative type of research where both descriptive and explanatory
analyses have been deployed. The target population of this study was employees of Wegagen
Bank working in the country dispersed branches. From 3,600 total populations of Wegagen
Bank, 360 employees were selected as the sample size of the study. Random sampling
technique was used to select the branches and individual respondents.
The standardized questionnaires concerning factors affecting employees’ performance, such
as, compensation, leadership, training & development, and job satisfaction were adapted
for this research. Correlation and multiple linear regressions were used to analyze the
relationship and its effect between factors and employees' performance. The regression
results showed that the factors significant contribution for organization and employees’
performance. Moreover, all factors dimensions have significant and positive effect on
employees’ performance. The result conformed that, if employees are satisfied in their jobs
and their demands were maintained, the competitiveness and productivity of the bank
directly and positively related to employees’ performance. Finally, the researcher made
conclusion and recommendation that the mentioned independent variables (compensation,
leadership, training& development and job satisfaction have direct/positive effects towards
employee performance at WB.

Key words: Compensation, Employees performance, Job satisfaction, Leadership,

Training & Development

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 CHAPTER ONE

1. INTRODUCTION

This chapter presents an overview of the study matter. In brief, it has background of the
study, statement of the problem, research objectives and questions, significance of the
study and delimitations of the study.

1.1 Background of the Study

Companies today are forced to compete and to act professionally in those harsh times;
therefore, it is very important to have capable employees who can account on them to create
competitive advantage. The importance of having effective and hardworking employees in
the company is vital for its survival. Employee performance is one of the most important
dependent variables and has been studied for decades (Wall et al., 2004).

Carlson et al. (2006) proposed five human resource management practices that affect
performance which are setting competitive compensation level, training and development,
performance appraisal, recruitment package, and maintaining morale. Tessema and Soeters
(2006) have carried out study on eight HR practices including recruitment and selection
practices, placement practices, training, compensation, employee performance evaluation,
promotion, grievance procedure and pension or social security in relation with the perceived
performance of employees. Therefore, it is concluded that these HR practices have positive
and significant associations with the perceived performance of employees.

Performance management can be defined as a systematic process for improving

organizational performance by developing the performance of individuals and teams
(Armstrong, 2006). According to him, it is a means of getting better results from the
organization, teams and individuals by understanding and managing performance within an
agreed framework of planned goals, standard sand competence requirements.

1
According to Armstrong and Murlis (2007), reward systems and recognition are consistently
acknowledged by organizations and managers as an important tool in motivating individual
employees. Reward systems are the clearest ways managers and leaders of an organization
can send a message to employees about what they consider important.It is a function that an
individual can successfully perform within framework of normal constraints and available
resources (Jamal, 2007).

According to Armstrong and Murlis (2007), reward systems and recognition are consistently
acknowledged by organizations and managers as an important tool in motivating individual
employees. Reward systems are the clearest ways managers and leaders of an organization
can send a message to employees about what they consider important.

For an employee to perform effectively in a company, job satisfaction is one of the cardinal
points. It is important for both the worker and the organization. Job satisfaction brings about
a sense of fulfillment and security to the employee. Due to these facts, the commitment level
of employee will be increased, absenteeism will reduce and the turnover rate will decrease
(Yücel, (2012:7, pp 44-58)). In the case of the organization, when employees aresatisfied
with their jobs, the workforce will be more committed and this will reduce the cost of
recruitment and training. An individual‘s general attitude towards his or her job is known as
job satisfaction (Syed and Yan, (2012:4, pp 318-342)).

Reviewing the literature, it was found that there are many human resource management
factors that can influence the firm performance include performance of employees. Factors
such as Compensation, Leadership, training and development, andjob satisfactionhave been
studied and researchers have demonstrated evidence on the relationship between these
factors and employee performance.

The purpose of this study is to examine the effect offactors affecting (such as Compensation,
Leadership, training and development, and job satisfaction)onEmployees performance in
Wegagen Bank.

2
1.2 Statement of the Problem

Companies today are forced to compete and to act professionally in those harsh times;
therefore, it is very important to have capable employees who can account to create
competitive advantage. Good results and increased output is assumed to be the result of
better workplace and will boost the employees and finally improve their productivity
(Carnevale, 1992).

The importance of having effective and hardworking employees in the company is vital
for its survival. Employee performance is one of the most important dependent variables
and has been studied for decades (Wall et al., 2004). Reviewing literatures, it was found
that there are many human resource management factors that can influence the firm
performance include performance of employees. Factors such as job satisfaction,
training and development, compensation and leadership, have been studied and
researchers have demonstrated evidence on the relationship between these factors and
employee performance.
Western studies have focused on employee performance to increase their country
competitiveness and economic growth. It can be concluded that in a developing country
like Ethiopia, with rich natural resource and sufficient human capital can achieve
economic success and its competitiveness by adopting the right tools to increase the
employee performance. The purpose of this study is to find the effect of firm
performance includes employee performance and the human resource management
factors - such as, job satisfaction, training and development, compensation and
leadership are expected to influence the performance of employees in Wegagen Bank.
Extensive research provides greater understanding behind the significant variation in job
performance between employees and organizations. Factors such as motivation and job
satisfaction (Wang, 2011), training and development (Harel and Tzafrir (1999), Sultana,
2013), compensation (Fulmer, 2003) and leadership (GryaYukl, 2006 & Peter Northouse
(2010) have been studied to determine the effect of factors affecting variables to
Employees performance (MacDuffie, 1995).
The purpose of this study was so, to assess & examine the effect of factors affecting the
Employees performance in Wegagen Bank, one of private commercial bank in Ethiopia.

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1.3 Research Questions

This study intended to answer the following questions:

 Is there a relationshipbetween compensation and employee performance in
Wegagen Bank?
 Is there a relationship between job satisfaction and employee performance in
Wegagen Bank?
 Is there relationship between Leadership and employee performance in
Wegagen Bank?
 Is there relationship between training and development and employee
Performance in Wegagen Bank?

1.4 Objective of the Study

1.4.1 General objective

The main objective of this study was to assess the Factors affecting Employees‗
Performance in Wegagen Bank, Ethiopia.

1.4.2 Specific objectives

The specific objectives of the study were:

 To assess the effect of compensation on employee Performance at Wegagen

Bank,
 To assess the effect of leadership practices on employees‗ performance at
Wegagen Bank,
 To examine the effect of training &development on employee Performance in
Wegagen Bank ,
 To assess the effect of job satisfaction on employee performance in the Bank

1.5 Scope of the Study

The applicability of the findings of this study covers the objective situation in Wegagen
Bank level throughout the country despite the fact that data were collected from
branches situated. This was based on understanding the working conditions, the policies,
strategies, etc. in bank throughout the country is substantially similar. In addition to this,
it is being under scored that individual performance in the long term amounts to
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 organizational performance. From total population of the bank, sample size was
designed and questionnaire data collection was applied in this thesis.

1. 6 Significance of the study

This study addresses the outcomes being exhibited at the bank level which in turn is
critically important in crafting strategy with the Employees Performance. The result of
the study will serve as an input for the organizations to re-examine how much their
effectiveness from the factors affecting employees that employed by the organizations
towards improving the performance of the workforce to take corrective action for the
future. The organizations, research scholars and others should build their research
wings for finding and implementation of those factors which contribute in making the
level of employees‗ performance better as reference documents. Also benefit to
academia by extending knowledge, filling specific knowledge gap, Self-worth and
contentment of the researcher, etc.

1.7 Organization of the study

Generally this study was comprised of five distinctive chapters. The first chapter deals
with the brief introduction about the study, problem statement, objective of the study,
research questions, significances and scope of the study. Chapter two contains
conceptual, theoretical explanations and empirical framework of existing literature
review. Chapter three provides brief explanation about the methodologies used, data
analysis, presentations, and interpretations for the study. Chapter four provides with
contents of data presentation and analysis. Chapter five focuses on summary,
conclusions and recommendations regarding the study. The report also contains
references and appendices at the end.

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 CHAPTERTWO

2. LITERATURE REVIEW

This chapter gives the reader an insight on assessing the determinant factors of
employees‗ performance in Wegagen Bank. The Chapter lays down contextual
knowledge to assist in a better understanding of what is going to be examined and
reported in the study. In accordance with the aims and objectives of the study, the
chapter provides a theoretical review, empirical review and conceptual framework.

2.1 THEORETICAL REVIEW

2.1.1 Definitions

2.1.1.1 Performance
Performance has been defined by Hellriegel, Jackson and Slocum (1999) as the level of
an individual‗s work achievement after having exerted effort. Cummings and Schwab
(1973) and Whetten and Cameron (1998) believe that performance is ultimately an
individual phenomenon with environmental variables influencing performance primarily
through their effect on the individual determinants of performance – ability and
motivation.

2.1.1.2 Employees Performance

Employee performance has been shown to have a significant positive effect on
organizational performance (Collis and Montgomery, 1995). One of the major pitfalls in
an organization occurs when managers believe their organizations are constantly
operating at the highest level of efficiency, or that they do not require input from their
employees (Foot and Hook, 1999).

2.1.1.3 Compensation/Remuneration
Industrialists and researchers have been in constant search for the factors that affect
employee performance. In his early attempt, Taylor had suggested prescriptions which
looked for the 'one best way' of production attached to a reward package which enabled

5
‗economic man' to maximize income in return for his/her great effort. This was an early
attempt to couple employee motivation with productivity and output.
(Ting, Y., 1997 L.W. Porter and J.P. Hite, 1995).

2.1.1.4 Training & Development

According to Harel and Tzafrir (1999), training can influence performance by improving
skills and abilities relevant to employees' tasks and development. The findings of
McEvoy (1997) reveal that training influences organizational commitment, participant
knowledge and organization-based self-esteem.

2.1.1.5 Job Satisfaction

There are a number of definitions of job satisfaction found in the literature. Among the
most cited definition of job satisfaction is the definition of Locke (1976) who defined it
as ―a pleasurable or positive emotional state resulting from the appraisal of one‗s job or
job experiences‖. The appraisal involves various elements related to the job such as
salary, working conditions, colleagues and boss, career prospects and, of course, the
intrinsic aspects of the job itself (Berghe&Hyung, 2011). Traditionally, job satisfaction
has been defined; ―as the feelings a worker has about his or her job or job experiences
in relation to previous experiences, current expectations, or available alternatives‖
(Balzer et al., 2000).

2.1.1.6 Customer Satisfaction

As expressed by Tsoukatos and Rand (2006), customer satisfaction is a key to long-term
business success. To protect or gain market shares, organizations need to outperform
competitors by offering high quality product or service to ensure satisfaction of
customers. In proportion to Magesh (2010), satisfaction means a feeling of pleasure
because one has something or has achieved something.

2.1.1.7 Leadership/Management

According to Bass (1997), in the modern business environment much research has
proved that leaders make a difference in their subordinates‗ performance, and also make
a difference as to whether their organizations succeed or fail. Kotter (1988) argues for
the ever-increasing importance of leadership in organizations, because of significant

6
 shifts in the business environments, such as the change in competitive intensity and the
need for more participation of the total workforce.
Leadership is perhaps the most thoroughly investigated organizational variable that has a
potential impact on employee performance (Cummings and Schwab, 1973). Winning
leaders understand what motivates employees and how the employee's strengths and
weaknesses influence their decisions, actions, and relationships. Cummings and Schwab
(1973) mention the connection between leadership traits or leadership behaviors and
employee performance. However, they stress that the literature was not based on
empirical evidence and therefore has become discredited over time (Cummings and
Schwab, 1973; Fiedler and House, 1988).

2.2 Conceptual Review

2.2.1 Training and Development

Employee training and development continues to be an essential element for

organizations striving for sustainable competitive advantage and survival in the twenty-
first century. Kaplan also suggested that employee performance review should take
place on a regular basis. The way in which an organization manages people can
influence its performance (Delany 1996). In particular, employee participation and
empowerment job redesign including based production system, extensive employee
training at work- place and performance continuity incentive compensation are widely
believed to improve the performance of organization. (Refer 1994).

According to Gold stem (1980) and Latham (1988), training is defined as the systematic
acquisition and development of the knowledge and skills, altitudes required by
employees to adequately perform an assigned job or tusk to boost performance in the job
environment. According to Salas (1999), Trained should import new knowledge and
skill and thus meet organization needs, and efficiency and thus and thus improve
organization performance.

Takeda (1993) agreed that organization should contribute to technology evolution and
revolution but the two should be combined with organization work system to enable
individual employee and groups to reach the highest level of performance. Selcoran
(1998) argued that satisfied workers gives the results in the organization like to improve

7
work life quality, performance reward linkage improve the overall atmosphere of
organization.

Training and development is a formal training given to employees. It is designed to

develop technical skills or basic skills, such as work teams, and leadership (Delery and
Doty 1996). According to Anthony (1999) argued that, training involves learning and
teaching employee due to a need for development of skills and knowledge. Training
involves three man activities which are training, education and development. Arthur
(1995) states that training an employee to get along well with authority and with people
who entertain diverse point of view is one of the best guarantees of long term success.

Harel and Tzafrir! (1999) confirm that training affects performance in two ways:
I. Training improves the skills and capabilities,
II. Training increase staff satisfaction about their jobs and the workplace.
In the field of human resource management, training and development is the field
concerned with organizational activity aimed at bettering the performance of individuals
and groups in organizational settings.

While training focuses more on current job duties or responsibilities, development points
to future job responsibilities. However, sometimes these terms have been used
interchangeably or have been denoted by the single term performance consulting, which
emphasizes either the product of training and development or how individuals perform
as a result of what they have learned (Robinson, 1995).

Training is an educational process. People can learn new information, re-learn and
reinforce existing knowledge and skills, and most importantly have time to think and
consider what new options can help them improve their effectiveness and performance
at work. Effective trainings convey relevant and useful information that inform
employees and develop skills and behaviors that can be transferred back to the
workplace. (Montana &Charnov, 2000).

The goal of training is to create an impact that lasts beyond the end time of the training
itself. The focus is on creating specific action steps and commitments that focus people‗s
attention on incorporating their new skills and ideas back at work. Training can be

8
offered as skill development for individuals and groups. In general, trainings involve
presentation and learning of content as a means for enhancing skill development and
improving workplace behaviors (Karlan&Valdivia, 2011). These two processes,
training and development are often closely connected. Training can be used as a
proactive means for developing skills and expertise to prevent problems from arising
and can be an effective tool in addressing any skills or performance gaps among staff.

Development can be used to create solutions to workplace issues, before they become a
concern or after they become identifiable problem (Aguinis&Kraiger, 2009).
Development is a process that ―strives to build the capacity to achieve and sustain a
new desired state that benefits the organization or community and the world around
them‖ (Garavan, Costine, and Heraty 1995 as cited in AbuKhalifeh, Som, and AlBattat
(2013).

Development perspective examines the current environment, the present state, and helps
people on a team, in a department and as part of an institution identify effective
strategies for improving performance. In some situations, there may not be anything
wrong at the present time; the group or manager may simply be seeking ways to
continue to develop and enhance existing relationships and job performance. In other
situations, there may be an identifiable issue or problem that needs to be addressed; the
Development process aims to find ideas and solutions that can effectively return the
group to a state of high performance.

Development implies creating and sustaining change (Beer, 2011). Training and
development describes the formal, ongoing efforts that are made within organizations to
improve the performance and self-fulfillment of their employees through a variety of
educational methods and programmes. In the modern workplace, these efforts have
taken on a broad range of applications—from instruction in highly specific job skills to
long-term professional development. In recent years, training and development has
emerged as a formal business function, an integral element of strategy, and a recognized
profession with distinct theories and methodologies (Beer, 2011).

In general, training programmes have very specific and quantifiable goals, like operating
a particular piece of machinery, understanding a specific process, or performing certain
procedures with great precision. Developmental programmes, on the other hand,

9
concentrate on broader skills that are applicable to a wider variety of situations, such as
decision-making, leadership skills, and goal setting. (Aguinis&Kraiger, 2009).

2.2.2 Leadership & Employees performance

The success of an organization is reliant on the leader's ability to optimize human
resources. A good leader understands the importance of employees in achieving the
goals of the organization, and that motivating these employees is of paramount
importance in achieving these goals.

To have an effective organization the people within the organization need to be inspired
to invest themselves in the organization's mission- the employees need to be stimulated
so that they can be effective; hence effective organizations require effective leadership
(Wall, Solum and Sobol, et al, 1996). Fiedler and House, (1988) indicate that
organizational performance will suffer in direct proportion to the neglect of this.
Ultimately it is the individual employee who either performs, or fails to perform, a task.

In order for an organization to perform, an individual must set aside his personal goals,
at least in part, to strive for the collective goals of the organization (Cummings and
Schwab, 1973). In an organizational context, the very nature of performance is defined
by the organization itself (Cummings and Schwab, 1973). Employees are of paramount
importance to the achievement of any organization. Thus, effective leadership enables
greater participation of the entire workforce, and can also influence both individual and
organizational performance (Bass, 1997; Mullins, 1999). Effective leader behavior
facilitates the attainment of the follower's desires, which then results in effective
performance (Fiedler and House, 1988; Maritz, 1995; Ristow, et al., 1999).

Cummings and Schwab (1973) mention the connection between leadership traits or
leadership behaviors and employee performance. However, they stress that the literature
was not based on empirical evidence and therefore has become discredited over time
(Cummings and Schwab, 1973; Fiedler and House, 1988).

There is agreement in the literature (Maritz, 1995; Bass, 1997) that leadership is a
critical factor in the success or failure of an organization; excellent organizations begin
with excellent leadership, and successful organizations therefore reflect their leadership.

10
Leaders are effective when the influence they exert over their subordinates works
towards achieving organizational performance (Jones and George, 2000).

Furthermore, leadership is often regarded as the single most critical success factor in the
success or failure of an institution (Bass, 1990). Dimma (1989) believes that leadership
is undoubtedly the critical determinant of the success of an organization, and thus
determines organizational performance in the competitive global market. Research into
organizational behavior in different environments found that transformational leadership
has a positive influence on employee performance, and therefore organizational
performance (Bass and Avolio, 1994; Ristow, 1998).

However, through research by Pruijn and Boucher (1994) it was shown that
transformational leadership is an extension of transactional leadership (Bass, 1997).The
difference between these two models is that followers of transformational leadership
exhibit performance which is beyond expectations, while transactional leadership, at
best, leads to expected performance (Bass and Avolio, 1994).

Ristow (1998) states that transactional leaders were effective in markets, which were
continually growing, and where there was little or no competition, but this is not the case
in the markets of today, where competition is fierce and resources are scarce. Research
data (Brand, et al., 2000) has clearly shown that transformational leaders are more
effective than transactional leaders, regardless of how ―effectiveness‖ has been defined.

2.2.3 Remuneration / compensation

The manner in which reward is observed on any given organization stand to influence
the manner to will the employees are motivated in their work environment.
Dessler(2008) defines employee compensation to include all forms of pays given to the
employees arising from their employment. Rewards management policy is one of the
elements organizations use to attract and retain its most valuable and worthy assets.
Literature has identified various human resources management practices which are
considered to be the best practices for retaining and motivating human capital in an
organization. A good rewards management practice is one of such practices.

11
Khan (2011) further notes that Human Resources are the key drivers of the prosperity
and success of any organization and unless the organization does offer salary, rewards
and due benefits according to its employees needs and wants it will not be able to
conquer the highest level of efficiency and competency of its employees. Khan et al
continues to point out that rewards management is a complex process which requires
accuracy and precision and if not carried out properly may lead to organizational
concerns.

Grud (2008) notes that extraordinarily high wage increases are not in general associated
with further increases in individual productivity. On the contrary these high wage
increases may lead to an inefficient employee. Nawab (2011) in their study revealed
that compensation management can affect job satisfaction and employees organizational
commitment. Organizations can use employee compensation as a method for enhancing
employee‗s job satisfaction and their commitment with the organization. Both financial
and non-financial compensation are significant in fostering overall organizational
commitment which when realized helps maximize employee contribution.

International Labor Organization ( ILO ) publications such as ―an introduction to

performance and skill- based pay systems ― (1998) has pointed out pay as an important
and contentious element in an employment relationship with the employer, employee
and the government having equal interests. For the employer it forms part of a greater
part of his costs and it also affects his ability to recruit and retain quality labor force. To
the employee it is fundamental to his/her standard of living and is a measure of the value
and his/her services.

The government is interested since salaries affect aspects of macro-economic stability

such as employment, inflation, purchasing power and socio-economic development in
general. Tsai K et al (2005) in their study demonstrated that employee benefits offer
advantage in organization productivity through improvement of labor efficiency.
Benefits also help increase employee satisfaction which is a sign of good management
and happy environment in any organization.

Ismail et al., (2010) note that performance based pay acts as a precursor to job
satisfaction. When employees perceive that they receive adequate pay from their
employer and that they are actively involved in the pay systems this leads to greater job
12
satisfaction. In case studies of different firms it was found that production increased,
when system changed from monthly salary to daily wages. This means that increased
wages have direct effect on employee performance (Lazear, 2000). In case of fruit
pickers, the progress of workers increased significantly when pay system was shifted
from incentive pay (Bandiera et al., 2005).

Managerial performance bonuses have the capability to enhance employee output. As far
as posts of higher management are concerned, managers often emphasize on recruiting
and retaining capable workers by moving from piece rate to salary. The core purpose of
this activity is retaining efficient man power by providing more incentives (Bandiera et
al., 2007).People who works on monthly pay system do not show noticeable
enhancement in their production while the workforce who is employed on piece rate
system usually shows enhanced output (Fernie and Metcalf, 1999).

Compensation is not isolated in an organization it is inextricably linked to the

technology, marketing, operations and financial decisions of an organization. Given the
important effects of compensation for both organization performance and employee
behavior it is important to understand what factors managers should consider when
designing their organizations compensation systems and what elements should be in
place for compensation systems to produce desirable worker behavior. This brings to the
fore the need to design strategic compensation packages to enhance employee
performance.

The packages should have an integrated framework of strategic compensation. Benefits

also help increase employee satisfaction which is a sign of good management and happy
environment in any organization.

2.2.4 Job satisfaction:

Hulin and Judge (2003) have defined job satisfaction as ‖multidimensional psychological
responses to one‗s job‖. As such, job satisfaction can be considered as both an affective
and cognitive state. Hulin and Judge (2003) suggested that job satisfaction is an attitude
and that attitudes are either emotions or judgments.
In other words, affect is considered an emotion or feeling, whereas judgment comes
from the cognitive realm. Saari and Judge (2004) utilized attitudes and satisfaction

13
synonymously, reflecting one belief that job satisfaction could be an effective response.
Consequently, job satisfaction can be seen as containing three components: an affective
component, a cognitive component, and a behavioral component. While the affective
component refers to a feeling about a job, the cognitive component represents a belief
concerning a job. Often these two aspects are related.

The behavioral component is an indicator for behavioral intentions towards a job such as
getting to work in time and working hard (Saari& Judge, 2004).External environment
effects on human sensations in work place. Thus, as job is a large part of life, job
satisfaction can have its influence on total satisfaction of human (Berghe&Hyung,
2011).

Therefore, it can be concluded that there is a mutual effect between job satisfaction and
life so managers should not only monitor the job situations but also check their
employee life conditions (Poyrazli, Yesilyaprak, &Milliogullari, 2012). When
employees are hired, they will have a set of needs, wishes, and previous experiences,
which make totally the job expectations. Organization‗s reaction and response to these
needs will produce negative or positive attitude among personnel toward their job. Job
satisfaction shows the relation between human expectations and advantages taken from
job (Dizgah, Chegini, &Bisokhan, 2012).

2.2.5 Related to Employee Performance

Performance refers to the degree of achievement of the mission at work place that builds
up an employee job (Cascio, 2006). Different researchers have different thoughts about
performance. Most researchers have used the term performance to express the range of
measurements of transactional efficiency and input & output efficiency (Stannack,
1996). Job performance has been defined as the value an organization can expect from
discrete behaviors performed by an employee over time (Motowidlo& Van Scotter,
1994).

Borman and Motowidlo (1997) distinguished between two types of job performance;
task performance and contextual performance. Task performance represents those things
that are typically on a job description and involve the transformation of materials into
goods and services such as sales or operating manufacturing equipment.

14
Contextual performance refers to the ―behavior that contributes to organizational
effectiveness through its effects on the psychological, social, and organizational context
of work‖ (Borman&Motowidlo, 1997).

The performance is defined as the attained outcome of actions with the skills of
employees who perform in some situation (Prasetya& Kato, 2011). According to
Suhartini (1995) employee performance is a mutual result of efforts, abilities and
perception of tasks. Good performance is the step towards achievement of organizational
aims. Hence more effort is required to improve the employee performance. (Tarantino,
2005) argued that business managers fail to appreciate their people, even though they
claim their employees are more important than other assets.

Dharma (1991) said that performance is something that is done or products formed and
offered by a group of people. Swasto (1996) said that employee performance is the
actions or the completion of errands that were done by individuals within specific period
of time. According to (Freeman 2005), one can link people‗s feelings and performances,
suggesting an association of employee performance and organizational climate. Further,
Freedman suggested that different groups in the same organization can be driven by
different factors indicating that the influences of organizational climate on employee
performance may be available to identification and measurement could possibly assist
organizations in receiving the maximum potential out of their employees.

The literature pertaining to employee performance as a factor within organizations was

presented from several perspectives. Some authors believed that as employees become
empowered they enjoy their jobs more causing them to stay and help organizations avoid
high turnover costs (Aranoff et al, 2005). An employee who is enthusiastic is more apt to
stay with the organization and produce at a higher level than an employee who is not
enthusiastic in his or her organizational environment.

According to Armstrong (2009), the criteria for reviewing performance should be

balanced between: achievements in relation to objectives; the level of knowledge and
skills possessed and applied (competences or technical competencies); behavior in the
job as it affects performance (competencies); the degree to which behavior upholds the
core values of the organization; day-to- day effectiveness. As Mathis and Jackson (1997)
stressed, performance criteria are standards commonly used for testing or measuring

15
performances. Criteria for evaluating job performances can be classified as trait-based,
behavioral based, or results based.

2.2.6 Customer Satisfaction in Banking Sector

It is an action of fulfilling a need, desire, demand or expectation. Customers compare

their expectations about a specific product or services and its actual benefits.
As stated by Kotler & Armstrong, (2010), satisfaction as a person‗s feelings of pleasure
or disappointment resulting from the comparison of product‗s perceived performance in
reference to expectations. Customer‗s feelings and beliefs also affect their satisfaction
level. Zeithaml (2009) satisfaction or dissatisfaction is a measure or evaluation of a
product or service‗s ability to meet a customer‗s need or expectations. Razak et al.
(2007) also reported that overall satisfaction is the outcome of customer‗s evaluation of
a set of experiences that are linked with the specific service provider.

It is observed that organization‗s concentration on customer expectations resulted into

greater satisfaction. If the customers of an organization are satisfied by their services the
result is that, they will be loyal to them and consequently be retained by the
organization, which is positive for the organization because it could also mean higher
profits, higher market share, and increasing customer base (Karatepe et al., 2005).

Customer satisfaction has become important due to increased competition as it is

considered very important factor in the determination of bank‗s competitiveness (Berry
et al., 2002). Continuous measurement of satisfaction level is necessary in a systematic
manner (Chakravarty et al., 1996). Because satisfied customer is the real asset for an
organization that ensures long-term profitability even in the era of great competition.
Cronin et al., (2000) mentioned in their study that satisfied customer repeat his/her
experience to buy the products and also create new customers by communication of
positive message about it to others.
On the other hand, dissatisfied customer may switch to alternative products/services and
communicate negative message to others. Customer satisfaction is a set of feeling or
outcome attached with customer‗s experience towards any product/ service (Solomon,
1998). Hence, organizations must ensure the customer satisfaction regarding their
goods/services.

16
Customers will always assess the services they experienced by comparing them with
whatever they wish to receive. According to Kotler (2003), satisfaction is a person‗s
feelings of pleasure or disappointment resulting from comparing a product‗s perceived
performance in relation to his or her expectations. Here we see that there is a close
relationship between service quality and customer satisfaction because they seem to be
measured in terms of the difference between perceived performance and expected
performance.

2.3 Empirical Review

2.3.1 Related to Performance & Leadership

Preliminary research undertaken by Booysen and Van Wyk (1994, in Swanepoel, et al.,
2000) in a South African context found that outstanding leaders, in terms of
effectiveness, are perceived to show a strong and direct, but democratic and participative
leadership style, and are seen as agents of change and visionaries who increase
organizational performance.

Maccoby (1979), in Botha, 2001) indicated that the need of firms to flourish in the world
of escalating competitiveness, of technological advances, of altering government
regulations and of changing employee attitudes, requires an advanced level of leadership
more than ever before. His views further demonstrate the importance of leadership in the
business arena. According to Bass (1997), in the modern business environment much
research has proved that leaders make a difference in their subordinates‟ performance,
and also make a difference as to whether their organizations succeed or fail.

Leadership is perhaps the most thoroughly investigated organizational variable that has a
potential impact on employee performance (Cummings and Schwab, 1973). Winning
leaders understand what motivates employees and how the employee's strengths and
weaknesses influence their decisions, actions, and relationships. Cummings and Schwab
(1973) mention the connection between leadership traits or leadership behaviors and
employee performance. However, they stress that the literature was not based on
empirical evidence and therefore has become discredited over time (Cummings and
Schwab, 1973; Fiedler and House, 1988).

17
Research into organizational behavior in different environments found that l leadership
has a positive influence on employee performance, and therefore organizational
performance (Bass and Avolio, 1994; Ristow, 1998). However, through research by
Pruijn and Boucher (1994) it was shown that transformational leadership is an extension
of transactional leadership (Bass, 1997).The difference between these two models is that
followers of transformational leadership exhibit performance which is beyond
expectations, while transactional leadership, at best, leads to expected performance
(Bass and Avolio, 1994).
Research data (Brand, et al., 2000) has clearly shown that transformational leaders are
more effective than transactional leaders, regardless of how ―effectiveness‖ has been
defined.

Management styles can influence the commitment level of employees. Eisenbergeret al.
(1990) [as cited in Avolioet al., 2004] argue that managers and organizations must
reward and support their employees for the work that they do because this perceived
support allows for more trust in the organization. They discuss that those employees
who feel that they are cared for by their organization and managers also have not only
higher levels of commitment, but that they are more conscious about their
responsibilities, have greater involvement in the organization, and are more innovative.

Many articles also repeat the same topics and findings and the author chose to include
just to show that the findings are similar but from a wide range of domains. In many
researches in the literature it was determined that there was a strong relationship
between leadership styles and employee commitment (Lo et al., 2009; Lo et al., 2010;
Avolioet al., 2004; Bučiūnienė&Škudienė, 2008; Lok& Crawford, 1999;
Awan&Mahmood, 2009; Ponnu&Tennakoon, 2009). These studies were generally
conducted in business organizations, yet there have been few researches conducted in
education organizations specifically in Ethiopia. Thus, the aim of this research is to
determine the relationship between leadership styles and employee performance.

2.3.2. Related to Compensation/Remuneration

Fulmer (2003) investigated that the association between compensation and work
performance and found positive association between them. Compensation has a

18
significant correlation with worker performance outcomes (Jones, J.R. and J.
Schaubroeck, 2004). Moreover, a significantly positive relationship has been identified
by Teseema and Soeters (2006) between compensation practices and employee
performance. (Altarawmneh and AlexchangeKilani, 2010) state that
―employees are motivated when there are financial rewards directly tied to their
performance.‖

When workers are properly and fairly compensated, the more they will perform better at
the same time, organizational performance will increase (Bilal and Raja, (2011:3, pp
907-913)). Research has shown that rewarding employee will often lead to increased
employees performance (Amodt.2007). A successful incentive program will not only
increase profit, but also inspire staff loyally and raise morale. Larkin (2011) points out in
his research that, compensation is inherently strategic. Organizations use different
compensation strategies and have discriminatory powers in choosing their reward and
pay policies. These policies affect employee performance and are highly complementary
with other activities in an organization.

2.3.3. Related to Job satisfaction

Finding of Dizgah et al (2012) who referred the relationship between employee

performance and job satisfaction. They considered, job satisfaction is a tool that can lead
to higher productivity of the organization. The authors found that the relationship
between the two variables is significant and direct. Coomber et al (2007) found that
individual would work better when they are satisfied and they pointed out that the
relationship between the two variables is significant and positive. Thus, the findings of
the study are supported by the findings of other researchers and it can be interpreted as
the increase in job satisfaction will lead to the increase of employee performance, i.e.,
the more satisfied the employees, the higher his/her performance.

2.3.4. Related to Training and Development

A study by Zakaria and Rozhan (1993), showed that only 44 percent of the responding
organizations conducted formal training, 38 percent for informal training. Ong et al
(2000) indicated that training should be implemented and for the service quality. Besides
that, the Malaysia government has make a training need assessment which is an effort to

19
analyze and diagnose the person, task, and organization to determine whether or not
training is required (Goldstein, 1993)
Kaplan (2003) indicated that as a company grows, establishing a system for managing
behavior and ensuring that the result are consistent with the goal and strategies of the
organization.

2.3.5. Related to Employees performance

As the performance of an organization is dependent on the quality of the workforce at all

levels of the organization (Temple, 2002), it is essential to discuss the concept of
individual performance. ‗

Millcorvich and Bondream (1997) define employee performance as the degree to which
employees accomplish work requirements. To them employee performance in effect
reflects the efficiency of the organization. People are an organization's greatest assets:
individuals and organizations have learned about the importance of the role of people in
an organization, and how the success of an organization depends on its people (Bartlett
and Ghoshal, 1995). The role of human resources is absolutely critical in raising
performance in an organization (Armstrong and Baron, 1998).Ultimately it is the
performance of many individuals, which culminates in the performance of an
organization, or the achievement of goals in an organizational context (Armstrong and
Baron, 1998).

Amos, et al. (2004) states, that ―the effective management of individual performance is
critical to the execution of strategy and the organization achieving its strategic
objectives‖. Performance cannot be left in anticipation that it will develop naturally,
despite the employee's natural desire to perform and be rewarded for it. This desire
needs to be accommodated, facilitated and cultivated (Amos, et al., 2004). In return for
this performance, organizations extend themselves in various forms of
acknowledgement (Foot and Hook, 1999). Individual performance has become a topical
issue in today's business environment, so much so that organizations go to great lengths
to appraise and manage it (Armstrong and Baron, 1998).

20
Whetten and Cameron (1998), stated that individual performance is the product of ability
multiplied by motivation. Furthermore, Cummings and Schwab (1973) concur with the
belief that performance is ultimately an individual phenomenon with environmental
factors influencing performance, primarily through their effect on the factors are those
factors over which the organization has little or no control, such as demands for job
grading systems (Hellriegel, et al., 1999).

2. 4. Conceptual Framework
The study has four independent variables and one dependent variable. The leadership
plays an independent role and leader‗s commitment and employee‗s performance as
dependent variable.
The employee‗s performance questionnaire was developed taken from the research of
Campbell (1990), which focuses the improvement of individual work performance.
The employee performance cannot be increased merely by increasing the focus on the
authority, discipline and control in the organizations (Hart & Willower, 1994).Training
given to the employees improves their performance by the way of development in their
skill (Harel&Tzafrir,1999). McEvoy (1997) concludes training of the employees can
improve their commitment level, knowledge sharing and their honor to work in the
organization. Burke and Day (1986) found that the managers‗ performance can also be
amplified in the organization by the way of providing them training.
A conceptual framework is a graphical or diagrammatic representation of the
relationship between variables in a study Mugenda and Mugenda (1999). He further
notes that it is a hypothesized model identifying concepts under study and their
relationships.

Figure 1 shows the conceptualization of the dependent and independent variables of the
study depicting how they are related. The independent variables in the study, points out
the determinant factors of employee performance in Wegagen Bank which includes;
attractive compensation/remuneration, leading styles of managers, employee training
and development, which bring entire job satisfactions. The dependent variable in the
study is employees‗ performance. Based on the literature review and the theoretical
framework, conceptual framework on the effect of the Employees Performance can be
developed by the researcher as follows.

21
Figure 1: Conceptual framework

JOB SATISFACTION

LEADERSHIP EMPLOYEES’
PERFORMANCE

TRAINING&
DEVELOPMENT

COMPENSATION

Source: Compiled from Literature,2018

22
 CHAPTERTHREE
3. RESEARCH METHOD
In order to achieve the objective of this study, using of appropriate methodology could
help to approach the research scientifically is the priority attention given by the
researcher. Therefore, this chapter includes research design, sample and sampling
technique, instrument and procedure for data collection, method of data analysis,
reliability and validity and ethical issue.

3.1 RESEARCH DESIGN

The researcher employed explanatory study design, to explaining and understanding the
relationship between Independent variables (i.e., compensation, leadership, training &
development, and job satisfaction) and dependent variables (employees‘ performance).

This is a type of research that explaining phenomena by collecting numerical data

that are analyzed using mathematically based methods (in particular statistics)
(Creswell, 1994). For the purpose of this study, employee performance is supposed
to be a dependent variable and compensation, leadership, training & development,
and job satisfaction (factors affecting) employee performance are independent ones.

3.2 Sample Design and Population:

Simple random sampling type of sampling method was used in this study. It also known
as chance sampling or probability sampling where each and every item in the population
has an equal chance of inclusion in the sample and each one of the possible samples, in
case of finite universe, has the same probability of being selected.

Accordingly, target population of this study was employees of Wegagen Bank working
in the country dispersed branches. From 3,600 total employees of Wegagen Bank, 360
employees were selected as the sample size of the study. Simple Random sampling
technique was applied to select the branches and individual respondents to accomplish
this study.

23
Sekaran (2006) defined population as the entire group of people, events or things of
interest that the researcher wishes to investigate. The population of this study is the
entire Wegagen Bank employees in Ethiopia. The sample of this study was taken from
total population of 3600 of these employees. Sekaran (2006) defined the sample as the
process of selecting a sufficient number of elements from the population, so that results
from analyzing the sample are generalizable to the population.

Twenty branches were randomly selected which, in retrospect, turned out to have fairly
represented all areas. Then from each selected branch, employees with less than one year
experience (about 56 employees) were purposely excluded on the grounds that they did
not have adequate exposure to the Bank to provide reasonable responses.

3.3 Method of Data Collection

For this study‗s objective, the researchers choose Questionnaire to collect data –one of
the most common data collection instruments. Questionnaires are doubtless one of the
primary sources of obtaining data in any research method. However, the critical point is
that when designing a questionnaire, the researcher should ensure that it is ―valid,
reliable and unambiguous‖ (Richards & Schmidt, 2002).

The researcher use a series of questions designed to find out required information, which
is filled in by all participants in the sample and can be gathered by written questionnaire
as survey in which the respondents can answer the questionnaire. The researcher can
utilize a high-structured questionnaire to improve the validity of the data through
controlling the respondents‘ answers under research objectives. Thus, the respondents
may feel free to give their information or ideas honestly and the reliability of the data
collected is increased. In addition, using this instrument is to help the researcher to
summarize, using supportive tool as data analysis SPSS version20 software to work out
the research reliable.

Typically structured Questionnaire constitutes 45 item-scales. The questions were tested

as questionnaire for their validity and reliability, and proved as right for this research.
Furthermore, employee performance questionnaires were adopted from distinct scales

24
 which were developed by Campbell (1990) with 5-items of which were directed towards
measuring factors affecting employees performance.
A five point Likert scale was used in the questionnaire to measure the effects of factors
on employees performance outcomes. The scaling was ranging from(strongly agree)-
(strongly disagree)with a numeric value of 1 to 5 respectively.
The measuring instrument can be described as a self-report questionnaire, which the
participants had to indicate the degree to which they agreed or disagreed with each
statement in every dimension of the questionnaire. The usage of this particular scaling
method ensured that the research study illustrated the facts and measure quantifiable, so
that a pattern or trend may be produced in order to answer the research questions.

3.4 Sources of Data and Sampling size

To determine the sample size as representative of the target population, the study uses
statistical instrument formula. The mathematical formula is adopted from Glenn D.
Israel (1992).
n =__N_
1+N (e2)
Where, n= sample size,
N=total target population,
e= margin error
The study assumes that the margin of error 5% and confidence level or error free of
95%.

Using the above portrayed statistical formula,the sample size of study was determined
according to the bank‗s report of end of June 30,2017; the total permanent employees
of Wegagen Bank S.C. were 3,656 (i.e. 2,450 male, and 1,206 female),hence:

n = N__ = 3600 = 3600 = 360 sample size

1+N (e2) 1+3600(0.052) 1+9

were selected out of total employees of 3656.Since, 56 of them exempted due to they might
have less than one year experience in the bank.

25
As per Glenn (1992) there are several approaches to determining the sample size. Thus
include using a census for small populations, imitating a sample size of similar studies, using
published tables, and applying formulas to calculate a sample size.
Since the population of the study are many in number it was difficult to use census, and also
imitating the sample size of similar studies was not possible because it was difficult to gate
this kind of research that is done in the Wegagen bank or other banks. Therefore the
researcher has used mathematical formula for determining sample size, because it is easy and
developed by experienced scholars. Since the study was delimited from total population size
of employees working in Wegagen bank‗s that have experienced more than one year and
above.

3.5 Reliability Analysis

The credibility of the research finding

The three analysis tools can check the credibility of any research

3.5.1 Reliability Analysis:

This can be done by using Cronbach‘sAlpha.To measure the internal consistency of items,
reliability analysis was conducted by calculating the Cronbach‘s alpha for the main construct.
Given that the multidimensionality of the construct, alpha coefficients were computed for all
dimensions separately that are presented.
The results show that Cronbach’s alpha measures for all dimensions exceed the
threshold point of 0.70 .
The reliability of items was assessed by computing the Cronbach‘s alpha. Cronbach‘s alpha
measures the internal consistency of the items and the details are in Table No : 2.. For the
purpose of this research, Cronbach‘s alpha has been computed separately to assess the
reliability of the scales adopted in the study. All the values of Cronbach‘s alpha ranges from
0.705 to 0.836. This indicates that all dimensions of the construct significantly contribute to
the reliability.

26
 3.5.2 Validity Analysis:

Validity tests have been conducted to select and assess the final items
of the construct that are finally used for statistical testing. Among several; two types of
validity tests namely, content and criterion-related validity have been conducted in this study.
According to Rungtusanatham (1998), the content validity of a construct is termed as the
degree to which the measure spans the domain of the construct‘s theoretical definition. It
represents the adequacy with which a particular domain of construct was sampled (Nunnally,
1978; Ahir, Golhar and Waller, 1996). Content validity is subjective and judgmental but is
often based on two standards as suggested by Nunnally: does the instrument contain a
representative set of measures, and were sensible methods of scale construction used (Flynn,
Sakakibara, Schroeder, Bates and Flynn, 1990).
For this study, the content validity of the instrument was ensured as the service quality
dimensions, recommend intentions and customer loyalty attributes were included from an
extensive review of related literature and feedback of banking customers obtained during
exploratory interviews. The selected attributes were thoroughly reviewed and approved
by two professor level academicians and two professionals from the related field.

3.5.3 Sensitivity Analysis:

As each of these items was evaluated on a five-point Likert scale, ranging from
1: ―strongly disagree‖ to 5: ―strongly agree‖. So because of use of Likert Scale confirm the
sensitivity check of the research.
Table No.2 Cronbach’s alpha coefficient

Number of Cronbach’s
Variables
items Alpha
Employee Performance 5 .793
Compensation 10 .820
Leadership 10 .705
Training and development 10 .776
Job satisfaction 10 .836

27
3.6. Method of Data Analysis

Descriptive statistics Analysis was used to summarize responses from massive respondents
in a few simple statistics. Descriptive analysis could be defined as the elementary
transformation of raw data in a way that describes the basic characteristics such as central
tendency, distribution and variability. (Zikmund, Babin, Carr, & Griffin, 2010).

Inferential statistics on the other hand is a branch of statistics largely concerned with the
analysis and interpretation of data obtained from the population (Hoyle and Ingram,
1991). The questionnaire response was basically based on closed ended questions
requiring responses on the likert continuum scale of the range of 1 to 5. Where,1 were
strongly disagree, 2 disagree,3 neutral, 4 agree and 5 strongly agreed. Factor analysis
was used in describing the variability among observed correlated variables in terms of a
potentially lower number of unobserved constructs in the questionnaire.

Under inferential statistics Pearson correlation analysis and multiple regression analysis
under the panel data framework were used in testing the hypotheses. Panel data analysis
is a method of studying a particular subject within multiple sites, periodically observed
over a defined time frame. Westham, (2009). The correlation analysis shows only the
degree of association between variables and does not permit the researcher to make
causal inferences regarding the relationship between variables
(Mack et al 2005). Therefore, multiple linear regression analysis was also used to
explain the relationship between independent variables and employees‗ performance
selected variables.
Data was analyzed by using the statistical package SPSS 20 versions. Descriptive
analysis of the data is presented in a table, showing the frequency; mean Scores and
standard deviations of the independent variable dimensions(factors affecting) and
dependent variables (employees‗ performance).

28
Model specification
Multiple regression analysis was employed to test the impact of factors affecting on
employees performance. It is a useful technique that can be used to analyze the
relationship between several independent variables and a single dependent (Hair et al.,
1998).
Regression tests shown in equation: Y = a + b x, where Y is the dependent variable, as is
the Y intercept, that is the value of Y when x = 0, b is the regression coefficient which
indicates the amount of change in Y given a unit change in x, and finally x is the value
for the independent variable.

Regression Equation:

Y = a + b1X1 + b2X2 + b3 X3 + b4X4

Where, Y = Dependent variable-Employees‗ Performance
a = Constant , b = beta
x1 = Compensation , x2 = Leadership,
x3 = Training & Development x4 = Job satisfaction

3.7 Ethical Issues

It could not be ethical to access some confidential documents of the organization.

Therefore, the organization‗s code of ethics was taken in to account without significantly
compromising findings of the study.
Additionally, all the research participants included in this study were appropriately
informed about the purpose of the research and their willingness and consent was
secured before the commencement of distributing questionnaire. Regarding the right to
privacy of the respondents, the study was maintained the confidentiality of each
respondent. In all cases, names were omitted for confidentiality hence collective names
like respondents‗were used.

Also it may not be ethical to ask employees to answer questionnaires while they are at
their work responsibility. Hence, enough time was given to respondents so that they can
either take the questionnaire to their home or use their break time.

29
 CHAPTER FOUR

4. DATA PRESENTATION AND ANALYSIS

4.1 Introduction

This chapter deals with analysis, interpretation and discussion of the data collected
through questionnaire. Responses for measures on the questionnaire were summarized
and analyzed by using SPSS version 20 software.
These research questions were designed as questionnaire form on the Likert Scale and
based on the respondents view regarding employees‗performance of Wegagen Bank.
Questionnaires were prepared and distributed to respondents of 360; however, 344
(96%)) responses were valid and used for data analysis purposes.

In addition to questionnaires, documents of the organizations, literatures, related journals

were used for the purpose of this study which has been discussed and analyzed per their
content.

4.2. Demographic Characteristics of Respondents’

The demographic profile of the respondents was presented in this section. The personal
profile of the respondents were analyzed as per their gender, age, levels of educational
achievements, and years of service in the organization and service year in the working
environment of the branches. Descriptive statistics were performed on the demographic
variables as a means of describing the respondents.
Table 3: Gender Distribution of respondents‗
Frequency Percent

male 232 67.4

Valid female 112 32.6

Total 344 100.0

Source: own survey (2018)

30
Both male and female employees were included in the survey; as respondents‗ illustrated
Table 3above shows that, out of 344 respondents, 232(67.4%) male and the rest
112(32.6%) were female employees.
Figure .4 :Age Distributions of Respondents

Source: own survey (2018)

The age distribution of respondent is illustrated in Table 3 above that ,first ranked of the
respondents are of the ages of 18 to 25 , 145(42.2%), while those within the age of 26 to
33 accounted for 137(39.8%), those aged 34 to 40 years were 49(14.82%) and the rest of
above 41 years amounted to 13 (3.8%).
This implies that, the age distribution of the employees indicate almost 82% of the
workforce are under the age of 33 years, i.e., hardworking and young people are
engaged.

Table 5. Education level of Respondents’

Cumulative
Frequency Percent
Percent
2nd degree/masters 16 4.7 4.7

1st degree 196 57.0 61.6

Diploma
71 20.6 82.3
Certificate
61 17.7 100.0
Total
344 100.0

Source: own survey (2018)

31
It is possible to understand from the above table that the majority 196(57%) of work
force are in the category of BA, and the second Wegagen Bank‗s employees educational
category are Diploma 71(20.6%) and remained employees of educational level
categorized TVET and MA are 61 (17.7%) and 16 (4.7%) respectively. This indicates,
the bank recently employs who have first degree (57% of the employees) in their
education background.

4.2.4 Working Experience of Respondents’ in the Bank

Table No. 6: Work Experience

Frequency Percent Valid Cumulative
Percent Percent
1-5years 133 38.7 38.7 38.7
6-10 years 96 27.9 27.9 66.6
11-15 years 20.9
72 20.9 87.5
above 16 years 12.5
43 12.5 100.0
Total 100.0
344 100.0

Source: own survey (2018)

Table 5 indicated about work experience, the subjects were divided into four groups
according to the number of years of service with the Bank (group-1: 1 to 5 year, group-
2: 6 to 10 years, group-3: 11 to 15 years, and group-4: above 16 years).

The number of respondents whose service in the Bank below 10 years are 229(66.6%)
and 115(33.4%) of respondents have above 11 years of service. According to employees
experience in the bank shows about 67% of employees working in Wegagen Bank are
assumed to be young. And the rest employees those more than 10 years were considered
as the management members, being their experience, skill, knowledge and qualification
contributed as criteria requirement for the post and leading & working ability in
managing the bank.

32
 Table 7: Dimension statistics for Employees performance
Dimensions N Minimum Maximum Mean Std. Deviation

Compensation 344 1.00 5.00 4.1128 .89185

Leadership 344 1.00 5.00 4.0093 .79262

Training & Development 344 1.00 5.00 4.0593 .82010

Job Satisfaction 344 1.00 5.00 4.2157 .79454

Employees' Performance
344 1.00 5.00 4.3378 .65898

Total 344

Source, own survey (2018)

A total number of 360 questionnaires were distributed to respondents, of which a total

number of 344 was answered,thus generated as usable response rate of 96 %( from
sample size of 360 respondents 344 were collected / answered) and was used for the
purpose of this research further analysis. The researcher wanted to get the opinion of
every member of staff working in the bank and not just a particular segment that was
why the questionnaire made use of the entire population. The above table 7 shows that
the collected data calculated statistically for further analysis which summarizes as
respondents view on the various questions that were associated with the dimensions
addressed in this study. Accordingly, the four independent variables (factors) examined
in this study shows that all of the four types of independent variables were exhibited in
relatively with acceptable mean standard of the dependent variable.

Table 7 above summarizes the reactions of respondents on the various question items
that were later associated to the various dimensions addressed in this study.
Accordingly, the four independent variables examined in this study: the compensation is
exhibited the least while Training & Development, leadership and job satisfaction were
rated at almost same level (about 4.0 in a Likert type scale ranging between 1 and 5). As
same thing that can be observed here is the fact that all the four variables are generally
rated to have been exhibited in a rather same way above 4.0 mean standards.

33
 4.3 Statistics for Employees performance dimensions of the study.

Table No. 8: The Mean Score value of Employees Performance Rating

Std.
Item mean
deviation
Good performance is clearly related to productivity and customer
4.68 .627
satisfaction
Employees in the company are effective 4.47 .818
The performance of employees is high. 4.36 .793
Employees‗ performance reflects the efficiency of the
4.28 .937
organization.
High employees‗ performance indicates Strong team work. 4.61 .782
Source: own survey (2018)
Table no. 8 above summarizes the reactions of respondents on the question items that
were associated to the employees‘ performance dimensions addressed in this study.
Accordingly, it can be seen from the table that of the five employees performance
examined in this study employees performance related to productivity and customer
satisfaction scored the highest mean exhibited the highest while employees efficiency
were rated the least mean from the other five. However, all questions were almost same
level (about 4.0 in a Likert type scale ranging between 1 and 5).
As indicated on above table no. 8, for the first question ―Good performance is clearly
related to productivity and customer satisfaction‖, 96% of the respondents agreed & the
remained disagreed at Likert scaled.
For the second question ―Employees in the company are effective‖, 91.8% of the
respondent agreed & the mean score 4.47 was calculated to measure the variable.
For the third question ―The performance of employees is high‖, 91.8% respondents
agreed, 6.1% disagreed & the remained 1.7% .indifferent in their idea, mean score of
variable is 4.36.
For the fourth question ―Employees‘ performance reflects the efficiency of the
organization‖, 87.2% of the respondents agree with measuring idea, 10.5% of the
respondents were disagree &2.3% indifferent/neutral, the mean score was concluded 4.2.
For the last question ―High employees‘ performance indicates Strong team work‖,
92.4% of the respondents were agreed, 5.5% disagreed & 2% indifferent/neutral in their
response,& mean score was concluded 4.61.

34
4.4 Correlation Analysis between independent and dependent variables

To find out the relationship between job satisfaction dimensions and Employees
Performance, Pearson‗s correlation coefficient (r) which measures the strength and
direction of a linear relationship between two variables is used. Values of Pearson‗s
correlation coefficient are always between -1 1. A correlation coefficient of +1 indicates
that two variables are perfectly related in a positive sense; a correlation coefficient of -1
indicates that two variables are perfectly related in a negative sense, and a correlation
coefficient of 0 indicates that there is no linear relationship between the two variables.

As indicated table no.9 below, correlation coefficient; 0.00-0.19 suggests that the
relationship between two variables is ―very weak‖ or very low. If r is between 0.20 and
0.59 the relationship is weak and moderate. A high and strong correlation coefficient
shows greater than 0.6 which indicates a strong relationship between variables. The
direction of the dependent variable's change depends on the sign of the coefficient. If the
coefficient is a positive number, then the dependent variable will move in the same
direction as the independent variable; if the coefficient is negative, then the dependent
variable will move in the opposite direction of the independent variable.

Hence in this study both the direction and the level of relationship between the
dimensions of compensation and employees performance are conducted using the
Pearson‗s correlation coefficient. The table below depicts the result of the relationship
analysis made using bivariate relations.

35
Table 9 : Correlation Analysis on Employees performance

Training & Job

Compensation Leadership
Development Satisfaction

Pearson Correlation 1
Sig. (2-tailed) .000

Compensation N 344
Pearson Correlation .415** 1
Sig. (2-tailed)
.000
Leadership N 344 344
Pearson Correlation **
.164 .393** 1
Training& Sig. (2-tailed)
.002 .000
Development
N 344 344 344
Pearson Correlation .481** .405** .414** 1
Sig. (2-tailed) .000 .000 .000
N
Job Satisfaction 344 344 344 344
Pearson Correlation
.486** .542** .469** .632**
Employees'
Sig. (2-tailed) .000 .000 .000 .000
Performance
N 344 344 344 344

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

As indicated table no.9 above, Employees Performance has a strong correlation with Job
satisfaction and Leadership. Likewise, Employees performance has positive direction
correlation with all four variables; Job satisfaction, leadership, Training & Development,
and Compensation. Employee performance has moderate correlation with compensation
and Training & Development. Employee performance has a weak relationship of
correlation with compensation. But Employee Performance has correlation in positive
direction with Job satisfaction, Leadership, and Training and Development.
Compensation has moderate correlation from others, and Training & Development has
weak correlation from all other factors.

36
Similarly, Job satisfaction has Positive direction correlation with leadership and
compensation. Compensation has a moderate correlation in positive direction with
others. All the tested factors are having positive correlation with employees‗
performance.

Table no.9 above shows that, the highest correlation is found between employee
performance and job satisfaction at correlation of 0.632 and followed by leadership
(0.542), compensation, and training and development at correlations of 0.486 and 0.469
respectively. The relationship between the variables was examined based on the Pearson
correlation and the value of the coefficient of the relationships.

4.5 Assessing Multicollinearity Test

Multicollinearity (also Collinearity) is a phenomenon in which two or more predictor

variables in a multiple regression model are highly correlated, meaning that one can be
linearly predicted from the others with a substantial degree of accuracy.
Multicollinearity refers to the assumption that the independent variables are
uncorrelated. The researcher is able to interpret regression coefficients as the effects of
the independent variables on the dependent variables when Collinearity is low. i.e.,
make inferences about the cause and effects of variables reliably. Multicollinearity
occurs when several independent variables correlate at high levels with one another, or
when one independent variable is a near linear combination of other independent
variables.

The more variables overlap (correlate) the less able researchers can separate the effects
of variables (Keith, 2006). If this assumption is not satisfied, auto-correlation is present.
Multicollinearity can result in misleading and unusual results, inflated standard errors,
reduced power of regression coefficients that create a need for larger sample sizes
(Jaccard et al., 2006).Widely used technique of identifying the existence of
Multicollinearity is calculating variance inflation factor (VIF) between all independent
variables. The VIF is an index of the amount that the variance of each regression
coefficient is increased over that with uncorrelated independent variables (Keith, 2006).

When a predictor variable has a strong linear association with other predictor variables,
the associated VIF is large and is evidence of Multicollinearity (Shieh, 2010). A rule of

37
 thumb of Collinearity VIFs is 10 or lower to suggest no Multicollinearity in the model
(Kock, 2013). Andy (2006) suggests that a tolerance value less than 0.1 almost certainly
indicates a serious Collinearity problem. (Liu2010) also suggests that a VIF value
greater than 10 is because for concern and in these research data the values are below10
for all predictors. It seems from these values that there is not an issue of co linearity
between the predictor variables. This means that the derived model is likely to be
unchanged by small changes in the measured variables. Higher VIFs mean more severe
Multicollinearity. More over the Rule of thumb: VIFs (βi) >5 indicates severe
Multicollinearity. The researcher checked through Tolerance and VIF and the above
table result indicated that there is no Multicollinearity between the variables.

Table 10 Test for Mulicolliniarity

Collinearity Statistics
Model
Tolerance VIF
(Constant)
1 Compensation .699 1.430

Leadership .706 1.416

Training & Development .756 1.323

Job satisfaction .641 1.559

Dependent Variable: Employees‗ performance

4.6 Normality Test for Employees Performance

Table below shows the test statistics results on Employees Performance dimensions. The
statistics used for normality test in Anderson- Darling statistics and with p-value <0.05
indicates the non-normality of data. The p-value is less than 0.05 confirm the non-normality
of the data. The results of table below derived from the two well-known tests of normality,
namely the Kolmogorov-Smirnov Test and the Shapiro-Wilk Test. Shapiro-Wilk Test is more
appropriate for small sample sizes (< 50 samples) but can also handle sample sizes as large as
200. For this reason, the Shapiro-Wilk test used as numerical means of assessing normality.

38
 Table 11 : Tests of Normality
Kolmogorov-Smirnova Shapiro-Wilk
Statistic df Sig. Statistic df Sig.
Employees'
.157 344 .000 .852 344 .000
Performance
a. Lilliefors Significance Correction

The normal test of result represented in the table above confirmed that the data does not
follow a normal distribution model. As can be seen in the p-value which are less than 0.05.
Therefore, due to non-normality of data, non-parametric test was used and considered more
appropriate for data analysis in case rather than a parametric test (McBurnay and
white,2010).

4.7 Multiple Regression Model Results

Regression analysis is a statistical process for estimating the relationships among
variables. It includes many techniques for modeling and analyzing several variables, but
the focus is on the relationship between a dependent variable and one or more
independent variables. More specifically, regression analysis helps one understand how
the typical value of the dependent variable changes when any one of the independent
variables is varied, while the other independent variables are held fixed. In this study
regression analysis is used to identify the impact of factors affecting dimensions on
employees‗ performance thus it answers the four research questions in this study.

In this study, a multiple regression analysis was conducted to test the influence among
predictors (independent variables) on the response or dependent variable. In this
research the predictors are the effects of compensation, leadership, training &
development, and job satisfaction to Employees performance. The effect of these
predictors on employees‗ performance was analyzed using the statistical package for
social sciences (SPSS version 20) to code, enter and compute the measurements of the
multiple linear regressions.

39
The regression coefficient is the slope of the regression line and tells us what the nature
of the relationship between the variables is. It shows how much change in the
independent variables is associated with how much change in the dependent variable.
The larger the regression coefficient the more change.

R- Square or coefficient of determination is a commonly used statistic to evaluate model

fit. The model summary table 11 below shows that the coefficient, using all the
predictors simultaneously, is R=0.800(R2=0.641) and the adjusted R2 is 0.627, meaning
that 62.70% of the variance in Employees performance can be predicted from combined
effects of independent variables.

Adjusted R square value is found to be 0.627. This value represents strength of the
model of Regression Model .Adding to this, for current study it is found that 62.7% of
change in dependent variable is explained by Independent variables of the study. As, p-
value is significant of multiple variables regression model, therefore all above listed
questions are answered.

Table12: Result of multiple Regressions between dependent & Independent variables

Model Summary

Std. Change Statistics

Adjusted Error of
R
Model R R the R
Square F Sig. F
Square Estimate Square df1 df2
Change Change
Change

1 .800a .641 .627 .17908 .641 69.977 4 339 .000

a. Predictors: (Constant), COP, LED, TRD, JBSAT

At ANOVA table 13 below, it has been determined that F = 69.98 and p<.05, which
confirms that independent variables have significant impact on employees‗ performance.
Hence the result depicted that the alternative analysis ―independent variables have a
significant impact on employees‗ performance in Wegagen Bank ‗‗ is accepted.

40
Table No. 13. ANOVA Results of Multiple Regressions between dependent
and Independent Variable
ANOVAa
Model Sum of df Mean F Sig.
Squares Square
1 Regression 58.595 4 14.649 69.977 .000b
Residual 49.671 339 .147
Total 108.266 343

a. Dependent Variable: Employees' Performance

b. Predictors: (Constant), Job Satisfaction, Leadership, Training & Development,
Compensation

The following table 13 shows as one of the most important tables of regression
coefficients table that indicates the standardized beta coefficients. The regression
equation stated in the table below has established by taking all factors into account.

The researcher constructed a regression equation by using the unstandardized coefficient

value listed as β. The regression findings revealed that taking all other independent
variables at zero, a unit increasing in compensation would lead to improved employees
performance by 0.135. In addition the findings shows a unit increased in leadership
would lead to improve in employees‗ performance by 0.201. Furthermore, the finding
shows that a unit increase in training & development would lead to improve in
employees‗ performance by 0.184.

To compare the independent variables, it is important to look at the standardized

coefficients. In this case the researcher was interested in comparing the contribution of
each independent variable; therefore the researcher used the beta values to compare the
independent variables. In this case the largest beta coefficient is 0.317, which is
employees performance gets from job satisfaction. This indicates that job satisfaction
variable makes the strongest unique contribution or effect on employees performance in
Wegagen Bank.

The second larger beta value have for leadership i.e. 0.201, which indicate that due to
lack in leadership highly affect the performance of employees in WB. The third factor

41
 that has contribution value as the researcher gets is training &development i.e. 0.184.
And the last and value which contributes 0.135 is compensation. This indicates that the
performance of employees was affected by factors in WB due to lack of compensation,
training & development, etc.

Table No. 14. : Regression coefficient of relationship between Employees

Performance and all the predictive Variables.

Employees Performance
Model Unstandardized Standardized
Coefficients Coefficients T P
Β Std. Error Beta
1 (Constant) .834 .189 4.415 .000
Compensation .135 .034 .176 3.993 .000
Leadership .201 .036 .244 5.577 .000
Training &Development .184 .041 .191 4.520 .000

Job Satisfaction .317 .039 .370 8.052 .000

a. Dependent Variable: Employees' Performance

Y = a + b1x1 + b2x2 + b3x3 + b4x4

EP = .834 +.135CEP + .201LED + .184TED +.317JSAT

Where, EP=Employees performance

COP = Compensation

LED = Leadership

TED =Training & Development

42
 CHAPTER FIVE

5. SUMMARY OF FINDINGS, CONCLUSION AND

RECOMMENDATION

5.1 Summary of Findings

The basic objective of this study is to find out the effect of factors affecting employees‘
performance in Wegagen Bank. The results of the research mainly depend on
information gathered from target population of respondents & literatures comprised in
the document.

The population for this study was employees of Wegagen Bank who were working at
different branches dispersed in the country. From total population of 3656 (WB report,
June 30, 2017), 360 sample size were selected through sampling technique for this
research. Accordingly, 380 questionnaires are delivered in paper as survey method to the
respondents and the researcher received 344 answers, no questionnaire is unsatisfactory.
A total of 344 responses were collected valid and consistent with the research sample
size of 360.

The majority of the respondents are male 232(67.4%) and 112 (32.6%) female. This
indicates, though Wegagen bank applies both men and women with equal employment
opportunity (EEO) as a workforce, the number of women employees are less than male
workforces. Discrimination according to (Henderson, (2010: pp 191-192)) means
showing distinction amongst people whereby treating some differently from others by
other reasons.

Accordingly, the findings revealed by the researcher were discussed as follows:

The first research question intended to find the relationship between employee
performance and compensation. This research revealed a positive and direct relationship
between employee performance and Compensation. Table 9 shows that, the relationship
between the job satisfaction & compensation variables is positive at 0.486 because of the
positive sign in front of the coefficient. The relationship is significant because the
correlation is significant at the level 0.01.
43
Therefore, the second research question ―Is there a relationship between compensation
and employees performance in Wegagen Bank?‖ is answered.

In related findings, researcher (Amodt.2007) has shown that rewarding employee will
often lead to increased employees performance (A successful incentive program will not
only increase profit, but also inspire staff loyally and raise morale. In his research,
Larkin (2011) points out that, compensation is inherently strategic. Organizations use
different compensation strategies and have discriminatory powers in choosing their
reward and pay policies. These policies affect employee performance and are highly
complementary with other activities in an organization.

Fulmer (2003) also investigated that the association between compensation and work
performance and found positive association between them. Compensation has a
significant correlation with worker performance outcomes ( Jones, J.R. and J.
Schaubroeck, 2004). Moreover, a significantly positive relationship has been identified
by Teseema and Soeters (2006) between compensation practices and employee
performance. (Altarawmneh and AlexchangeKilani ,2010) state that
―employees are motivated when there are financial rewards directly tied to their
performance.‖ When workers are properly and fairly compensated, the more they will
perform better at the same time, organizational performance will increase (Bilal and
Raja, (2011:3, pp 907-913)).

The second question of this research proposed a relationship between employee

performance and job satisfaction. The analysis confirmed that the relationship between
the two variables was found positive and significant. Meanwhile, this research proposed
a positive and direct relationship between the two variables. Table 9 shows that the
correlation between employee performance and job satisfaction at 0.632 is positive
(r>0.6), because of the positive sign and significant because the correlation is significant
at the 0.01 level. Therefore, the second research question ―Is there a relationship
between job satisfaction and Employees‗ performance in Wegagen Bank?‖ is answered.

Similarly, other researchers have examined the relationship and found similar findings.
For instance, the finding of this study is in agreement with the finding of Dizgah et al
(2012) who referred to the relationship between employee performance and job
satisfaction. They considered, job satisfaction is a tool that can lead to higher

44
productivity of the organization. The authors found that the relationship between the two
variables is significant and direct. Coomber et al (2007) found that individual would
work better when they are satisfied and they pointed out that the relationship between
the two variables is significant and positive. Thus, the findings of the study are
supported by the findings of other researchers and it can be interpreted as the increase in
job satisfaction will lead to the increase of employee performance. i.e., the more
satisfied the employees, the higher his or her performance.

The third research question intended to find the relationship between employee
performance and Leadership/management. This question reflects a positive and
significant relationship between employee performance and Leadership is positive at.
Table no.9 shows that, the relationship between employee performance and leadership is
positive because of the positive .542** sign in front of the coefficient and it is significant
(r>0.5), because the correlation is significant at the level of 0.01.

Therefore, the third question of the research ―is there any relationship between
Leadership and employee performance in Wegagen Bank?‖ is answered. Other literatures
supported the relationship and found similar findings. For reference, According to
(Adair J, 2002), ―Leadership is the ability to persuade others to seek defined objectives
enthusiastically. It is the human factor which binds a group together and to improve their
performance and to direct them towards goals.‖

Leadership is a process by which an executive can direct, guide and influence the
behavior and work of others toward the accomplishment of specific goals in a given
situation. Leadership is an ability of a manager to induce the subordinates to work with
confidence and zeal. Leadership can be defined as the capacity to influence a group
realization of the goal. Leaders are required to develop the future vision, and to motivate
the organizational members to want to achieve the visions and to improve the
performance. (KourdiJ, 1999) suggested that leadership is to deal and cope with change,
focusing on the long-term and the big picture, not always doing to safe himself in fact to
take risks, and concentrating on people and their values, not just the bottom line.

According to (Collins J, 1995) published an article in the Harvard Business Review

about leadership ―Good to Great‖, in that article, titled leadership, ―the most
powerfully transforming executives possess a paradoxical mixture of personal humility
45
and professional will…they are timid and ferocious. They are focus on empowerment
rather than control for the development of employees‗ performance. The employees had
also demanded for a better performance, that supervision and leadership in the bank
should be more cordial. Giving employees the free hand to make decisions concerning
their job functions brings about motivation and job satisfaction.
Wegagen Bank‗s leaders should expect one of the critical factors to motivate their
followers to perform beyond expectations by influencing them to pursue higher and
convincing followers to replace their self-interest with organizational interests. Among
the factors affecting employees performance the Leadership, as indicated in result the
company should maintain to empower employee and let them participate or engage more
in their work for their highest performance through bellowed recommendations:

The fourth question of this research assumed that the relationship between employee
performance and training and development activities is positive and significant. After
testing the question, the assumption was accepted and the relationship was found as a
positive and direct relationship between employee performance and training and
development. Table 9 shows that the correlation between the two variables is positive at
0.469 because of the positive sign in front of the coefficient. The relationship is
significant because the correlation is significant at the level 0.01. Therefore, the fourth
research question ―Is there relationship between training and development and employee
performance in Wegagen Bank?‖ is accepted.

The finding of the study was supported by other researchers‗ findings. Singh and
Mohanty (2012) refer to that training is an important tool to increase employee
productivity. They found that relationship between training and development, and
employee performance is significant. In similar approach, Sultana et al (2012) found
training and development significant for the employee performance and they suggested
that the organization must increase their investment in training and development to
increase the performance of employees as well as their skills and capabilities. Therefore,
training and development is important for increasing the employee performance.

The result of the study can be explained as the increase in training, and development
activities by the organizations lead to increase in employee performance. Training is a
type of activity which is planned, systematic and it results in enhanced level of skill,

46
knowledge and competency that are necessary to perform work effectively (Gordon,
1992). Existing literature presents evidence of an existence of obvious effects of training
and development on employee performance.

According to Wright &Geroy (2001) notes that employee competencies change through
effective training programs. Training has been proved to generate performance
improvement related benefits for the employee as well as for the organization by
positively influencing employee performance through the development of employee
knowledge, skills, ability, competencies and behavior (Appiah 2010; Harrison 2000;
Guest 1997).

Most of managers give training to their employees for three main purposes (Belcourt,
Wright and Saks, 2000), which are (1) to increase productivity or the performance of
employees; (2) to achieve organizational goals; and (3) to invest in employees to
succeed in the unpredictable and turbulent business environment. There are 3 most
important types of training: training needs assessment (TNA), training contents and
delivery.

On the other hand, there are strong relationships among independent variables. The
relationships between compensation and job satisfaction(r=0.481), followed by
compensation and leadership(r=0.415), training and development and job satisfaction
(r=0.414) and leadership and job satisfaction (0.405).

Accordingly, the result confirmed that there is a positive and significant relationship
between job satisfaction and employees‗ performance. Hence any improvement in one
of the dimensions was positively contributed in enhancing the employees‗ performance
in Wegagen Bank.

Performance refers to the degree of achievement of the mission at work place that builds
up an employee job (Cascio, 2006). Different researchers have different thoughts about
performance. Most researchers have used the term performance to express the range of
measurements of transactional efficiency and input & output efficiency (Stannack,
1996).

47
5.2. Conclusion

The main purpose of this thesis is to analyze the factors affecting employee performance
in Wegagen Bank, Ethiopia. Employee performance is supposed to be one of the most
important factors affecting the overall organization performance and the success of the
organization in the competitive market nowadays. Through the data analysis mentioned
in the above chapters, the researcher figured out the general conclusions:

The findings of the study revealed that there were positive and direct relationship
between employee performance and job satisfaction, leadership, training and
development and compensation. In the case of the organization, when employees are
satisfied with their jobs, the workforce will be more committed and this will reduce the
cost of recruitment and training, etc. When employees were demanding for a better
compensation and other factors, that supervision and leadership in the bank should be
more cordial. Giving employees the free hand to make decisions concerning their job
functions brings about motivation and job satisfaction.

All those organizations who are interested for High growth through increasing employee
performance must pay attention on Training and Development, Compensation,
leadership, and job satisfaction for policy development.

According to the survey result, the employees seem happy with the opportunities offered
to them for training, which in turn enable them extend their professional abilities and
skills. Similarly, the workers believe the bank they were working for are committed to
nurturing a cordial relationship with their work force. Hence, the findings of the study
has shown that giving adequate training to employees is positively related to employees
job satisfaction, commitment, retention and organizational performance in general.
Evidence from previous researches also indicates that, firms with superior training
programs are likely to have lower staff turnover than organizations that neglect staff
development.

Decision makers should have to be concerned about the employees benefit package
(compensation) and create employees can enjoy and feel sense of belonging while they
are working. Moreover, teamwork spirit must be emphasized in the workplace. Pay and
benefits are essential for employees therefore; they must be based on performance and

48
 contribution of the employees. Continuous motivation along with fair and justice
environment can lead to increase the performance of employees and encourage them to
repeat the desired productivity at large.

5.3. Recommendations

According to the above findings of four main factors affecting employee

performance at WB, improving employees‗ performance through improving factors
affecting their performance should be considered and the company‗s management
levels should consider the following recommendations:
• The bank should invest on employees‗ job satisfaction factors to enhance its
employees‗ performance become high for the bank to operate proactively and
management‗s focus area should emanate from strategic plan to succeed
productivity with customer satisfaction.
• The bank should exert its maximum effort to bring high Employees‗
performance, thus productivity & customer satisfactions are the outcomes of
Employees‗ performance. When a leader builds a confident, motivated,
enthusiastic team working together to meet the vision of the organization, he/ she
build a better team and greatly enhance to success.
• It is obvious that compensation as financial reward and its importance stipulated
to both the employees and employers. Compensation is the major element to
influence organization‗s staff. When workers are adequately compensated, the
better they perform. Compensation is a core motivational tool for employees and
this motivation is defiantly going to reflect on the organizational performance.
• The bank‗s management should assess the existing leaders and training for
leadership improvement as well as identifying the Gap in Leadership
competency. After evaluation of leadership capability of the existing potential
leaders and the gaps, the bank should develop training programs pursuant to
training needs based on the bank‗s need including on job training, job rotation,
coaching and mentoring. If people are empowered and encouraged to proactively
take risks, and challenge the norm, always be motivated and be innovative.
Besides this, it‗s necessary for the company to improve and much pay attention
to the management level‗s to make the employee feel more encouraged for their
better performance.

49
5.4 Suggestions for the Future Research

It would be interesting if further research should have also involved with survey
covering samples at all the directions concerning employees‗ performance. It also
suggested that, if comparisons can also be made between the industries and other
financial service provider sectors in the country.

Finally, the researcher believes that this study is not exhaustive that could consider all
the related factors of topic. However, it gives a bird-eye view on the topic and it
stimulates for further discussion, critics and research.

50
 REFERENCES:
Aguinis, H., 2009. Performance Management.2nd edition, Person education, Inc.,
publishing as Prentice Hall.
Aguinis, H., &Kraiger, K. (2009). Benefits of training and development for
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54
APPENDICES

APPENDIX I : DATA GATHERING QUESTIONNAIRES

A: Introduction

Dear respondent,

You are kindly requested to respond the following inquiries for student‗s Thesis purpose.
This is an academic research geared towards fulfilling the requirements for the degree of
Master‗s in Business Administration Award under the guidance of Jimma University.

The information you provide will be used to concord with the Topic –Assessment of
Employees Performance Factors in Wegagen Banks, with the mentioned objectives
below. You are advised under no obligation to state your name or affix/append your
signature on this questionnaire. The study assures you that data collected will be used
only for academic purpose and treated strictly confidential. Your discretion and
authentication in answering these questions will be highly appreciated.

Please answer the following questions by placing a tick or mark in the appropriate
spaces provided.

55
B : Personal information;
i) Gender ( ) Male ( ) Female

(ii) Age ( ) 18 – 25 ( ) 26 – 33 ( ) 34 – 40 ( ) above 41

iii) Education level ( ) 2nd degree/Masters ( ) 1st Degree ( ) Diploma

( ) certificate ( ) other

iv) Job experience: ( ) 2-5 years ( ) 6-10 years ( ) 11-15 ( ) above 16 years

C : Questions on Employees performance

Please read each statement carefully and show your agreement on the statements by
putting or ‖x‖ mark in the boxes using the following rating scales (Likert scales):
Strongly agree (SA)=5, Agree(A)=4, Neutral(N)=3, Disagree(D) = 2, Strongly disagree
(SD)=1.

Objective 1: To identify the Remuneration/Compensation on Employees

Performance at your bank:
Strongly Strongly
No. Statement Disagree Neutral Agree
Disagree Agree
1 salary and benefits of the
employee paid always on time
2 The current employees benefits
package is fair and equitable
3 Allowances paid are sufficient in
my organization
4 Employees‗ job assignment and
benefits paid couldn‗t agree.

5 All benefits are paid as per

current benefit packages in the
bank.
6 Incentives & Rewards more
attracts employees
performance
7 Salary & Benefit packages
highly influences employee‗s
performance
8 more employees recognize
benefits during their work

56
 9 Employees benefit not equitable
with performance they achieved

10 More employees prefer job

opportunities than pays

Objective 2: to identify Leadership effect on Employee‗s Performance at your bank.

Level of Agreement
No.
No. Items TOTAL
% SD D N A SA
The assigned manager is quiet
1 competent & mastered at his/her
roles.
The immediate supervisor provides
supportive supervision to individuals
2
while maintaining a harmonious
working relationship.
The main focus of supervisor is
3
deliverable to employees
Effective leader facilitates the
4 attainment of the follower's desires to
job.
Every supervisor delegates Work
5
assignment to team members.
All employees are free to express
6 objectively their feelings about jobs
to their supervisor
Leadership is a critical factor in the
7 success or failure of an organization.
8 Leadership is a critical factor in the
success or failure of an organization.

9 My leader provides
recognition/rewards when others
achieve their duties.
10 Leadership is undoubtedly the critical
determinant of the success of an
organization.

57
Objective 3: Training and Development on Employees performance
No. Level of Agreement
Items No. % TOTAL
SD D N A SA

1 The organization has a clear path that

allows promotion to employees.
Training positively influences the level of
2 performance of employees.
The bank has continuous employees
3
training plan.
Training and development package in the
4
bank is appropriately implemented.
Employees promotion is depend on the
5 level of skills and experience they
acquired.
All employees are equal to acquire skills
6 and knowledge relevant to the work.

Training can be offered as skill

7 development for individuals and groups.

Training conducted contributes to the

8 employees' and the bank to attain
objectives.
Training allows employees to acquire
9 greater competencies that are needed to
perform their duties in better ways.
Training influences employees‗
10 performance in the banking operation.

Objective 4. Employees Job satisfaction in Wegagen Bank S.Co

Level of Agreement
Items No. % TOTAL
4 SD D N A SA

I am satisfied with my job

1 performance.
Individual job performance
2 had clear measurement in
the bank.

58
 The immediate
supervisor/manager
3
follows the appropriate
performance measurement.
Employees were fully
aware of their performance
4
evaluation system in this
bank.
Employee‗s performance is
measured based on
5
specified objectives of the
bank.
Formal communication
with immediate supervisor
6
regarding employees‗
performance is open.
7 The supervisor provides
feedback with necessary
guidelines to improve
employees‗ performance.
8 My supervisor sets jobs
jointly and objectively with
me.
9 Job performance of
employees evaluated
without any biasness by
his/her immediate
supervisor.
10 The duties assigned to each
employee are expected to
be accomplished.

5.Information on performance of employees:

No.
Level of Agreement
Items No. % TOTAL
SD D N A SA

1
Good performance is clearly
related to productivity and
customer satisfaction.

59
2
Employees in the company are
effective.
3
The performance of employees
is high.
4
Employees‗ performance
reflects the efficiency of
the organization.
5
High employees performance
indicates Strong team work

Thank you very much, for your patience.

60
 APPENDIX II :Mathematical tables
1 Correlations
Compensati Leadership Training & Job Employees'
on Development Satisfaction Performanc

Pearson Correlation 1

Compensation Sig. (2-tailed)

N 344
Pearson Correlation .415** 1
Sig. (2-tailed) .000
Leadership
N 344 344
Pearson Correlation .164** .393** 1
Training & Sig. (2-tailed)
.002 .000
Development
N 344 344 344
Pearson Correlation .481** .405** .414** 1

Job Satisfaction Sig. (2-tailed) .000 .000 .000

N 344
344 344 344
Pearson Correlation .542 **
.486** .469** .632** 1
Employees' Performance
Sig. (2-tailed) .000 .000 .000 .000

N 344 344 344 344 344

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

Regression Analysis
Model Summaryb
Model R R Square Adjusted R Std. Error of
Square the Estimate

1 .632a .400 .398 .43590

a. Predictors: (Constant), Job Satisfaction

b. Dependent Variable: Employees' Performance

61
 Correlations
Employees' Job
Performance Satisfaction
Employees' 1.000 .632
Performance
Job Satisfaction .632 1.000
Pearson Correlation Employees'
.000
Performance
.
Sig. (1-tailed)
Job Satisfaction .000 .

Employees'
Performance 344 344
N
Job Satisfaction
344 344

ANOVAa
Model Sum of df Mean Square F Sig.
Squares
Regression 43.282 1 43.282 227.791 .000b
1 Residual 64.983 342 .190
Total
108.266 343

a. Dependent Variable: Employees' Performance

b. Predictors: (Constant), Job Satisfaction

Coefficientsa
Model Unstandardized Standardized t Sig.
Coefficients Coefficients

B Std. Error Beta

1 (Constant) 2.056 .157 13.055 .000

Job Satisfaction .542 .036 .632 15.093 .000

a.Dependent Variable: Employees' Performance

62
 Model Summaryb
Model R R Square Adjusted R Std. Error of
the Estimate
Square

1 .542a .294 .292 .47288

a. Predictors: (Constant), Leadership

b. Dependent Variable: Employees' Performance

Coefficientsa
Model Unstandardized Standardized t Sig.
Coefficients Coefficients

B Std. Error Beta

(Constant) 2.562 .157 16.342 .000

1
Leadership .445 .037 .542 11.923 .000

a. Dependent Variable: Employees' Performance

ANOVAa
Model Sum of Squares df Mean Square F Sig.

Regression 31.790 1 31.790 142.166 .000b

1 Residual 76.476 342 .224
Total
108.266 343

a. Dependent Variable: Employees' Performance

b. Predictors: (Constant), Leadership

63
Correlation
Employees' Leadership
Performance

Employees' Pearson 1.000 .542

Correlation Performance

Leadership .542 1.000

Employees'
.000
Performance
.
Sig. (1-tailed)
Leadership .000 .
Employees'
344
Performance
344

Leadership 344 344

N

Descriptive Statistics
Mean Std. Deviation N

Employees' 4.4064 .56182

344
Performance
Leadership 4.1407 .68348 344

Model Summaryb
Model R R Square Adjusted R Square Std. Error of the
Estimate

1 .469a .220 .218 .49694

a. Predictors: (Constant), Training & Development

b.Dependent Variable: Employees PerfprmanceCoefficientsa

64
 Model Unstandardized Standardized t
Coefficients Coefficients

B Std. Error Beta

1 (Constant) 2.467 .199 12.377 .

Training & .451 .046 .469 9.819
.00
0 Development

a. Dependent Variable: Employees' Performance

ANOVAa
Model Sum of df Mean Square F Sig.
Squares

Regression 23.810 1 23.810 96.417 .000b

1 Residual 84.456 342 .247
Total
108.266 343

a. Dependent Variable: Employees' Performance

b. Predictors: (Constant), Training & Development

65
Correlations
Employees' Training &
Performance Development
Employees'
1.000 .469
Performance
Pearson Correlation
Training &
.469 1.000
Development
Employees'
. .000
Performance
Sig. (1-tailed)
Training &
.000 .
Development
Employees'
N 344 344
Performance
Training & 344 344
Development

Model Summaryb
Model R R Square Adjusted R Std. Error of
the Estimate
Square

1 .486a .236 .234 .49170

a. Predictors: (Constant), Compensation

b. Dependent Variable: Employees' Performance

66
Correlations
Employees' Compensation
Performance

Employees' Pearson 1.000 .486

Correlation Performance

Compensation .486 1.000

Employees'
.000
Performance
.
Sig. (1-tailed)
Compensation .000 .
Employees'
344
Performance
344

Compensation 344 344

N

ANOVAa
Model Sum of Squares df Mean Square F Sig.

1 Regression 25.582 1 25.582 .242 105.814 .000b

Residual 82.684 342
Total
108.266 343

a. Dependent Variable: Employees' Performance

b. Predictors: (Constant), Compensation

Coefficientsa
Model Unstandardized Standardized t Sig.
Coefficients Coefficients

B Std. Error Beta

(Constant) 2.812 .157 17.888 .000

1
.486
Compensation .373 .036 10.287 .000

a. Dependent Variable: Employees' Performance

67
Model Summaryb
Model R R Square Adjusted R Std. Error of
the Estimate
Square

1 .736a .541 .536 .38278

a. Predictors: (Constant), Job Satisfaction, Leadership,

Training & Development, Compensation
b. Dependent Variable: Employees' Performance

Coefficientsa
Model Unstandardized Standardized t Sig.
Coefficients Coefficients

B Std. Error Beta

1 (Constant) .834 .189 4.415 .000

Compensation .135 .034 .176 3.993 .000
Leadership
.201 .036 .244 5.577 .000
Training &
.184 .041 .191 4.520 .000
Development
Job Satisfaction
.317 .039 .370 8.052 .000

a. Dependent Variable: Employees' Performance

68