The Challenges of Implementing Performance Based Pay System: the Case of Ethio-Telecom

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Addis Ababa University


The study sought to assess the Challenges of Implementing Performance-Based Pay System in the case of Ethio-Telecom. In this research, a case study approach was employed. To realize the objectives of this research, both qualitative and quantitative data were collected from the target study population. To this effect, 39 raters from the management and supervisors as well as 390 employees of the organization working in Addis Ababa in different divisions were selected using a non-probability sampling technique. Two sets of Close-ended questionnaires were employed for data collection instrument from both group and five managers who work in the HR Division were interviewed. Then the response was analyzed using a simple statistical tool. The findings of the research show that target and goals of the organization is not communicated to all level in the same manner and the claimed current performance management system as well as the performance measurement tools are not appropriately used to measure performance of employees. Consequently, the performance-based pay system that was introduced in the previous year was merely based on subjective assessment of employees by their raters rather than evaluation based on set objectives that could measure actual performance. The research indicates that there is lack of link between employees’ performance and the pay system in the organization