The Mediation Effect of Job Satisfaction between Reward Practice and Employee Retention: The Case of Private Banks in Ethiopia
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Date
2024-05-30
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A.A.U
Abstract
This research examined the mediating role of job satisfaction in the nexus between reward
practice and employee retention in the private banking sector of Ethiopia. Using quantitative
methodology, the study distributed a standardized questionnaire to employees of Dashen, Lion,
and Bunna banks. These institutions were chosen to represent the first, second, and third
generations of banks in the country. Out of the 380-target participants, 335 successfully
completed the surveys. Analytical methods both descriptive and inferential (correlation,
regression, and mediation) analysis have been used to examine the link between independent
variable (reward practice; salary, benefits, promotion, recognition, and working conditions) and
the dependent variables (employee retention), alongside the mediating variable (job
satisfaction). The Data analysis was conducted using the Statistical Package for Social Science
(SPSS) version 20.0.
The result of this study found that all reward practices– salary, benefits, promotion, recognition,
and working conditions have statistically significant and positive relationship with employee
retention. The regression analysis identified that salary is the predominant reward practice. The
research has also established a strong, positive correlation between reward practices, job
satisfaction, and employee retention. Baron and Kenny mediation analysis revealed that job
satisfaction mediates the relationship between reward practices and employee retention.
Overall, Regression analysis confirms job satisfaction's mediating effect, supporting all eight
hypotheses of the study.
The study findings suggest that among the studied private banks, while promotion, recognition
and working condition have some impact, compensation is key to boosting job satisfaction and
employee retention. Banks focusing on compensation-driven reward approach are likely to see
improved employee satisfaction and loyalty.