The Effect of Reward Practices on Employees’ Motivation: The Case of Awash Insurance Company S.C

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Addis Ababa University


The general objective of the study was to determine the effect of reward practices on employees’ motivation at Awash Insurance Company S.C. (AIC). This study was guided by three research objectives namely: assessing employees’ perceptions towards reward practices at their organization, determining the relationship between rewards and employees’ motivation and establishing the extent to which rewards can affect employees’ motivation at AIC. The study used both descriptive and inferential research design. A sample of one hundred twenty seven participants was selected out of the population of four hundred sixty eight employees using stratified sampling technique. This represented a 27% sample of the whole population. A structured Likert scale questionnaire was used to collect data from the respondents. The data was analyzed using the Statistical Package for Social Sciences (SPSS) Version 20. The result of correlation analysis evidenced that both financial and non-financial rewards treated in this study have a strong relationship with employees’ motivation. Furthermore, the model summary of regression revealed that Recognition, the Work itself, Merit Payment and Performance Based Bonus have significantly influenced employees’ motivation. The study recommends that the management of AIC needs to carefully survey employees’ needs, before designing any reward policy, in order to address the most valued employees’ needs and implement accordingly. With respect to promotion, it requires re-examining the existing promotion practices and makes the process free from bias. As the findings of the study indicated that the greater significance of performance based payments on improving employees’ motivation, implementing more individual rewards which are linked to employees’ performance might help the Company to encourage employees to perform better. Furthermore, in order to link the payment system with employees’ performance, the management needs to have specific, unbiased and measurable targets that can be expressed in quantifiable terms, so as to evaluate the employees’ performance in a tangible way



Employees’ Motivation, Financial Rewards, Nonfinancial Rewards