A Comparative Study of the Use of Reward Systems between Production and Service Sectors

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Addis Ababa University


This study is about reward system, which essentially is a steering instrument available to maintain the organizational efficiency and productivity and which also have the purpose of motivating the employees to act in the best interest of the organization as well as to reach organizational goals. The purpose with this study was to see how companies in different sectors make use of a reward system in order to increase their effectiveness and efficiency. The aim was also to see to what extent organizations are linking the organizational goals with the individual goals that occur within an organization. A comparison between the sectors has done in order to observe similarities as well as differences. As groundwork of this thesis theories regarding motivation and effectiveness and efficiency were used. The research question was based on the purpose with this study and stated as follows: “In what way are organizations using a reward system to motivate the employees to work in the best interest of the organization and reach organizational goals?” In order to answer the research question I have conducted a qualitative study. I have made two interviews with different companies within two different sectors, a total of four interviews. The sectors that I have chosen to focus on were the production sector and the service sector. The interviews were all face to face meetings in Addis Ababa. The empirical findings have then been tried to be analyzed by linking them to the theories used in the theoretical framework. The main conclusions I have made is that all companies are focusing primarily on profitability and results when rewarding. Within all sectors, the companies have found very difficult to link individual goals to organizational goals in the organization. It is only Ethiopian Electric Power Corporation (EEPCO) that already laid the ground for linking individual goals to organizational goals though it is not yet started implementing the system. Based on my finding the production sector is working more satisfactorily concerning employees’ job satisfaction and motivation. Further I could conclude that the less developed reward system an organization has and considers it to be a steering instrument the less thoroughly developed will the groundwork for it be and vice versa. Some similarities that I could see within the two sectors were that they all are using monetary and non monetary rewards (financial and non financial rewards) and that the rewards are being given to both individuals to teams though differ in extent. Key words: effectiveness, efficiency, motivation, reward, reward system



effectiveness, efficiency, motivation, reward, reward system