Oromia State University

The Effect of Leaders’ Motivational Incentives on Employees Job

Performance: The Case of Federal Public Sectors in Addis Ababa

MA Thesis

BY

Moges Temesgen

A Thesis Presented to the School of Graduate Studies of Oromia State

University in Partial Fulfillment of the Requirement for Degree of Masters

of Arts in Leadership and Change Management

June, 2018

Bishoftu, Ethiopia

THE EFFECT OF LEADERS’ MOTIVATIONAL INCENTIVES ON EMPLOYEES JOB

PERFORMANCE: THE CASE OF FEDERAL PUBLIC SECTORS IN ADDIS ABABA

A THESIS PRESENTED TO THE SCHOOL OF GRADUATE STUDIES

OF OROMIA STATE UNIVERSITY IN PARTIAL FULFILLMENT OF

THE REQUIREMENT FOR DEGREE OF MASTERS OF ARTS IN

LEADERSHIP AND CHANGE MANAGEMENT

BY

MOGES TEMESGEN

ADVISOR

FIRDISA JEBESSA (PHD)

JUNE, 2018

BISHOFTU, ETHIOPIA

THE EFFECT OF LEADERS’ MOTIVATIONAL INCENTIVES ON EMPLOYEES JOB

PERFORMANCE: THE CASE OF FEDERAL PUBLIC SECTORS IN ADDIS ABABA

Submitted by: MogesTemesgen __________ __________ Signature Date

Approved for submittal to thesis assessment committee

Firdisa Jebessa (PhD) __________ __________

Signature Date

Oromia State University

School of Leadership and Governance

Department of Human Resource Management and Leadership

As the members of the Examining Board of the final Master of Art (MA) open defense, we

certify that we have read and evaluated the thesis prepared by Moges Temesgen. The effect

of Leaders’ Motivational Incentives on Employees Job Performance: The Case of

Federal Public Sectors in Addis Ababa and recommended that it be accepted as fulfilling

the thesis requirement for the degree of: Master of Art (MA) in Leadership and Change

Management

_______________ _______________ _______________

Chairman Signature Date

_______________ _______________ _______________

Internal Examiner Signature Date

_______________ _______________ _______________

External Examiner

Signature Date

STATEMENT OF THE AUTHOR

First, I declare that this thesis is my bonafide work and that all sources of material used for

this thesis have been duly acknowledged. This thesis has been submitted in partial fulfillment

of the requirements for an advanced (MA) degree at Oromia State University, School of

Leadership and Governance, Department of Human Resource Management and Leadership

and is deposited at the University/College library to be made available to borrowers under

rules of the Library. I solemnly declare that this thesis is not submitted to any other institution

anywhere for the award of any academic degree, diploma, or certificate. Brief quotations from

this thesis are allowable without special permission provided that accurate acknowledgement

of source is made.

Name: Moges Temesgen Signature: ______________

Oromia State University, School of Leadership and Governance

Department of Human Resource Management and Leadership

Date of Submission: ________________________

ACKNOWLEDGEMENTS

Had it not been with the assistance of several people, this study would have not been possible.

First and for most, the author would like to express his sincere gratitude to his research

advisor, Dr. Firdisa Jebessa, for his invaluable comment, professional guidance and

dedication in this study ever since the write up of the proposal.

The author would like to thank the Ethiopian Meat and Dairy Industry Development Institute

(EMDIDI) for allowing him to participate in this study program and for the financial support

to this study.

He would like to express his sincere gratitude to Mr. Assaminew Shewangizaw, Animal Feed

Product, Research and Processing Industry Development Directorate Director at EMDIDI, for

his guidance during the proposal preparation. He also thanks him for the support in data

handling and analysis, and unforgettable brotherly approach, which allowed him to

successfully complete his postgraduate program.

He thanks Mr. Addisu Teferi Lecturer of Hawasa University support to him throughout this

study.

He recognizes and appreciates the encouragement of the Oromia State University lecturers.

The support and love of my wife, Mrs. Meserete Feleke and all my sons and I love all my

concerning families.

ACRONYMS AND ABBREVIATIONS

ANOVA Analysis of variance EMDIDI Ethiopian Meat and Dairy Industry Development Institute

FPS Federal Public Sectors of Ethiopia

MOFED Ministry of Finance and Economy Development

MOI Ministry of Industry

MOLFRD Ministry of Livestock and Fishery Resource Development

PCA Principal components analysis

SPSS

Statistical Packages of the Social Science

ii

TABLE OF CONTENTS

ACKNOWLEDGEMENTS I

ACRONYMS AND ABBREVIATIONS II

LIST OF TABLES V

ABSTRACT VI

CHAPTER ONE: INTRODUCTION 1

1.1. Background of the Study 1

1.2. Statement of the Problem 3

1.3. Objectives of the Study 5

1.4. Research Questions 6

1.5. Significance of the Study 6

1.6. Scope of the Study 7

1.7. Limitation of the Study 7

1.8. Operational Definitions 8

1.9. Organization of the Paper 9

CHAPTER TWO: LITERATURE REVIEW 10

2.1. Theories and Concepts of Incentives 10

2.2. Leaders’ Motivational Incentives 11

2.3. The Effect of Leaders’ Motivational Incentives on Employees Job Performance 13

2.4. Linkages and Extents of Incentives and Employees Performance 14

2.5. Reducing Absenteeism as Employees’ Job Performance Indicator 16

2.6. Job Satisfaction as Employees’ Job Performance Indicator 16

2.7. Conceptual Framework 17

CHAPTER THREE: RESEARCH DESIGN AND METHODOLOGY 18

3.1. Description of the Study Area 18

3.2. Study Approaches 18

3.3. Research Design 18

3.4. Sample Size and Sampling Techniques 19

3.5. Data Collection Tool 20

iii

3.6. Data Analysis 21

3.7. Validity Test 21

3.8. Reliability Test 22

3.9. Ethical Issues 22

CHAPTER FOUR: RESULTS AND DISCUSSIONS 22

4.1. Profile of the Respondents 23

4.2. Principal Components Loadings of Items 24

4.2.1. Principal components loadings motivational incentives items 24

4.2.2. Principal components loadings of employees job performance items 27

4.3. Reliability Analysis 28

4.4. Relationship of Motivational Incentives and Performance Dimensions 29

4.5. The Relationship between Appreciation on Performance Indicators 32

4.6. The Effect of Motivational Incentives on Job Performance Dimensions 35

4.6.1. Linkages of leaders’ motivational incentives to employees’ job satisfaction 35

4.6.2. Linkages of leaders’ motivational incentives to employees’ reducing absenteeism 38

4.7. Linkages and Extents of Motivational Incentives and Performance Dimensions 41

4.8. Motivational Incentive Preferred to High Employees' Job Performance 44

SUMMARY, CONCLUSIONS AND RECOMMENDATIONS 44

5.1. Summary 45

5.2. Conclusions

5.3. Recommendations

43

44 REFERENCES 45

APPENDIX: QUESTIONNAIRE 53

LIST OF TABLES

Table 1: Profile of the Respondent 23

iv

Table 2: Principal components loadings motivational incentives items 25

Table 3: Principal component loadings of employees’ job performance items 26

Table 4: Reliability of measurement instrument 27

Table 5: Correlations of independent variables and job performance dimensions 28

Table 6: Coefficients of correlations between variables 31 Table 7: Model summary for multiple regression of analysis on job satisfaction dimension 33

Table 8: ANOVA for job satisfaction dimension 33

Table 9: Coefficients of predictor variables on job satisfaction dimension 34

Table 10: Model Summary multiple regression of analysis on reducing absenteeism 35

Table 11: ANOVA for reducing absenteeism 36

Table 12: Coefficients for the relationship between predictors and reducing absenteeism 36

Table 13: Model summary for stepwise method for job satisfaction 38

Table 14: Model summary for stepwise method for reducing absenteeism 39 ABSTRACT

The purpose of the study was to investigate the effects of leaders’ motivational incentives on

employees’ job performance at Federal Public Sectors in Addis Ababa. Case study design

was employed at Finance, Livestock, Industry and Public Service and Ministries in Addis

Ababa following a mixed approach. The research instrument was a structured questionnaire

and interview questions. A total of 250 employees of these ministries constituted the sample.

Pearson’s correlation analysis and linear regression were employed to examine the

relationship between dependent variable and the independent variables. Trust, honest,

collaborative work environment, appreciation with positive recognition and ”difference” to

society were found to be leaders’ intrinsic motivational incentives. Promotion, participation,

recognition and freedom collectively were found to be leaders; extrinsic motivational

incentives. Appreciation, freedom and recognition were the most important significant

predictors of job performance in terms of job satisfaction and reducing absenteeism.

Appreciation and freedom contributed 37.5% and identified to be significant predictors of job

satisfaction job performances. Recognizes the extra effort was identified to be a significant

predictor of employees’ job performances explained by reduced absenteeism. An interesting

finding of the research is that appreciation contributed 30.7% and is considered more

v

important that significantly predict and linked to job satisfaction dimension of employees’

job performance. Fair evaluation, protection, and payment were found to be positive

insignificant predictors of employees’ job performances in the studied Federal Public Sectors

in Addis Ababa. Thus the current provision of motivational incentives through fair evaluation

(fairness), protection and payment are somewhat weak and hardly contribute for better

employees’ job performance. Employees who work harder and perform well and meet their

targets should be motivated by their respective organizations by giving them a special

treatment in terms of incentives like promotion with fair evaluation, protection and better

payment to induce others to follow their footsteps.

Keywords: appreciation, incentives, leaders’ motivation, performance,

vi

CHAPTER ONE: INTRODUCTION

1.1. Background of the Study

Leaders’ motivational incentives and employees’ job performance are important topics of

study because it matters that the public sector can attract, retain and motivate employees who

are capable of delivering on the complex objectives of the public sectors. Public sector is a

term used to describe those outfits owned and managed by the government, federal, state or

local. Thus, the existence of public sector can be attributed to the prevalence of political and

social ideologies, which depart from the premises of consumer choice and decentralization of

decision making (Chukwuemeka et al., 2014). Public sector means those areas of societal

activity directly owned, funded and managed by the State as opposed to private sectors which

are organized and owned by individuals and groups (Nwali and Nkwede, 2011).

Motivational incentives are the important elements used to encourage employees for

contributing their best effort to generate innovation ideas that lead to better services

functionality and furthermore, improve public sector performance both financially and

nonfinancially. Bandiera et al. (2017) state that offering motivational incentives is one

potential strategy to address both the aims of attracting stronger candidates and motivating

better job performance in the public sector. These motivational incentives are broadly two

types, namely extrinsic and intrinsic. Recently, Makki and Abid (2017) define intrinsic

motivation as the self-desire to find new things and new challenges, to assess one's potential,

to observe and to gain knowledge. It is influenced by an interest or enjoyment in the task

itself, and exists within the individual rather than depending on external pressures or a desire

for reward. Intrinsic motivational incentives are that behavior which an individual produces

because of the pleasant experiences associated with the behavior itself (Mosley et al., 2012).

Examples are receiving positive recognition, appreciation, and a sense of achievement and

meeting the challenge.

Extrinsic motivation refers to the performance of an activity in order to gain a desired

outcome and it is the opposite of intrinsic motivation (Makki and Abid, 2017). Extrinsic

motivation comes from influences outside of the individuals. According to Ndungu (2017),

extrinsic motivation incentives which provide extrinsic motivation which in turn encourage

better performance and intrinsic motivational incentives which likewise promote intrinsic

motivation which lead to better performance. Makki and Abid (2017) indicate that there is a

positive correlation between intrinsic and extrinsic motivation and employees’ job

performance. Mosley et al. (2012) describe extrinsic motivation as the behavior performed,

not for its own sake, but for the consequences associated with it. Examples include salary,

benefits and working conditions. Extrinsic motivational incentives come from the

organization as money, perquisites or promotions from supervisors and co- workers as

recognition (Beer and Walton, 2014).

As job performance of employees is significant for public service, the management should

consider improving performance of workers in their companies by encouraging them to do

their tasks and duties as efficiently and effectively as possible. Ndungu (2017) indicates that

staff individual performance is shaped by the nature of the incentives or rewards, attitude of

the staff and knowledge of reward schemes. Employees who are motivated and excited about

their jobs carry out their responsibilities to the best of their ability and production numbers

increase as a result. Unmotivated employees are likely to spend little or no effort in their

jobs, avoid the workplace as much as possible, exit the organization if given the opportunity

and produce low quality work. On the other hand, employees who feel motivated to work are

likely to be persistent, creative and productive, turning out high quality work that they

willingly undertake (Ganta, 2014).

Leaders could motivate their employees through motivational incentives for a job well done.

Leadership may be seen in effect in all kinds of social situations, and it is especially

apparent, where the situation demands that people work together toward common goals

(Babatunde and Emem, 2015). Leadership is a function of management; leadership styles

have their effect on group or individual within an organization. Leadership is the process of

initiating group activities toward goal setting and goal attainment (Sougui, 2015). An

organization is called as an efficient if it optimally can convert its resource input into output

(Ali & Ahmad, 2009). However, organizational performance solely depends upon, how much

talented and motivated are its personnel and its talent management team. The leader and their 2

workforces underneath are bridged by the level of performance (Bass et al., 2003). In the

same line, the success of public sectors only rests upon the performance of the employees

and the leadership. On the part of the employees their undaunted efforts, diligence and

efficiency leading to the desired objectives are the replica of various motivational incentives

(Iqbal et al., 2015).

The outcome from a motivated employee will produce high level of productivity since they

are enjoying their work. Therefore, they feel satisfied in the workplace which resulted in

lower absenteeism and reducing turnover rate. It is not an easy task especially for the

managers to retain highly motivated employees within the organization as they are the

valuable assets of the organization to achieve success in the future (Kreisman, 2002).

Employees are the human capital to the organizations, and performance of them within an

organization which can lead to organizational prosperity or failure (Salleh et al., 2011).

According to the report of MPSHRD (2016), the total numbers of permanent civil servants

under public sector of the country were 1,509,491. Out of these 132,812 were employed

under Federal Public Sector Ethiopia (MPSHRD, 2016).The public sectors are the main

instrument of the state and play important roles in the Ethiopian economies and their

employees are the best sources of delivering good services to their customers. In case of

using human beings to provide services, it is not enough to merely rely on the number of

people engaged, their qualification and experience or their ability but remunerating them

appropriately is also of paramount importance. Age old technique of carrot and stick does not

work in today’s environment and managers need to revolutionize the way they motivate

people and get the desired output and reward employee (Forson, 2012).

1.2. Statement of the Problem

Public sector means those areas of societal activity directly owned, funded and managed by

the State as opposed to private sectors which are organized and owned by individuals and

groups (Nwali and Nkwede, 2011). The notion that people are motivated to work in the

public service as a result of altruism, a desire to serve, or a wish to have an impact on society 3

is a long-standing one (O’Riordan, 2013). It is closely associated with the idea of public

service ethos, which is rooted in an understanding that the public service is different from the

private sector, both because of the tasks it performs and the behaviors it expects of its

employees (O’Riordan, 2013). The benefit of human resource is measured to be one of the

most important advantages of any organization; and in order to acquire the results with the

highest efficiency and effectiveness from human resource, motivation of employee is very

essential (Priya and Eshwar, 2014).

To administer motivational incentive programs which will encourage employees to improve

their work performance and productivity are challenges for leaders. Besides, different people

are motivated by different factors. Understanding what motivates employees is a complex

process, and to inspire and guide them to perform in alignment with the interest of the

organization, managers/leaders should pay great attention to examine how and which

motivational incentives that perceives as motivating and improving employees job

performance (Olubusayo et al., 2014).

The public sectors of Ethiopia have a worsening problem of in providing appropriate public

services to customers and being problems of good governance. Despite the Government of

have been undertaken salary increments to employees, subsequent price raise many

Government sectors are losing a number of workers. Intermittent motivational incentives

programs for employees and demotivated employees are the challenges for public sector

leaders’ in Ethiopia. Employee motivation has always been a central problem for leaders and

managers (Ganta, 2014). The main problem that most organizations face is whether the

organization staffs are motivated to perform at their jobs and whether employees find their

work interesting and meaningful (Ritz et al., 2016). Against a backdrop of global recession,

many governments are increasingly seeking to reform their public service, reducing cost and

increasing efficiency and effectiveness in the delivery of services (O’Riordan, 2013). With

that in mind, it inspires to carry out research in public sector, into the effect of motivational

incentives on employee job performance. It is the human resource amongst other factors of

production in the organization which really makes a distinction.

4

Few studies have been conducted on employee motivation by different researchers, like

Asfaw et al. (2015) conducted research on the impact of training and development on

employee performance and effectiveness. Tizazu (2015) conducted research on employee

motivation and its effect on employee retention in Ambo Mineral Water Factory. However,

these studies were conducted on private sectors. The problem is there is lack of research on

leaders’ motivational incentives effect on the employees’ job performance in public sectors

of Ethiopia. These actual problems of the sectors aroused the researcher interest to assess the

leaders’ motivational incentives affecting the employees’ job performances. Thus, the study

can allow policy makers, firstly, to consider and revise the current motivational incentives in

general and secondly, to focus on employees’ retention so that the sectors can improve the

quality of the public service by maintaining experienced public service workers. This study is

however also necessary because it will help with identifying the incentive current provided

and what kind of motivational incentives are lacking and required, as the case may be, needs

to put in place to earn employees commitment and productivity. Therefore, this study is an

invaluable resource in helping organizations identify and maximize on ways to motivate

employees whilst mitigating employee job satisfaction and reducing absenteeism.

1.3. Objectives of the Study

The general objective of the study is to investigate the effects of leaders’ motivational

incentives on employees’ job performance at Federal Public Sectors (FPS) in Addis Ababa.

The specific objectives are:

1. To investigate the relationship between leaders intrinsic motivational incentives and

employees job performance FPS in Addis Ababa,

2. To investigate relationship between leaders extrinsic motivational incentives and

employees job performance FPS in Addis Ababa,

3. To assess the extents leaders’ motivational incentives are linked to employees on job

performance FPS in Addis Ababa ,

4. To identify the kind of leaders’ motivational incentive that results in high employees’ job

performance.

5

1.4. Research Questions

The research questions that were addressed in this study include the following.

1. How do leaders’ intrinsic motivational incentives affect employees’ job performance FPS

in Addis Ababa?

2. How do leaders’ extrinsic motivational incentives affect employees’ job performance

FPS in Addis Ababa?

3. To what extents leaders’ motivational incentives are linked to employees on job

performance FPS in Addis Ababa?

4. Which type of motivational incentive is preferred for getting high employees' job

performance?

1.5. Significance of the Study

Motivational incentives lead to the success of the performance of an organization. The study

is an invaluable resource in helping organizations identify and maximize on ways to motivate

employees whilst mitigating employees’ job satisfaction and under-performance at FPS. The

study also recommended a motivational incentive framework that could suite to achieve a

better employees' performance in the FPS, and which leaders’ motivational incentives are

more effective and relevant with their organization

This study finding could contribute to the existing knowledge on factors that can enhance job

performance in public sectors. The results might have practical importance as leaders’ of

service organizations may use it to motivate their employees to improve job performance.

The study recommended a motivational incentive framework for the public sector that how

these leaders’ motivational incentives had more effective in job satisfaction, enhancing job

satisfaction and valued outcomes of employee in the FPS. The findings of this study might

important to various leaders especially in FPS and may help them to understand employee

behavior better. The findings of the study therefore provide vital information to policy

makers and human resource leaders of the public sector to either consolidate or re-think ways

6

of motivating employees. The findings assist the leaders in any other organization at large

that face the dilemma of understanding how to motivate their employees.

1.6. Scope of the Study

For the relevance of the intended research, in this study the various intrinsic and extrinsic

leaderships’ motivational incentives were used as the independent variables. Employee job

performance dimensions; job satisfaction, reducing absenteeism and achievement were used

as dependent variables. Factors such as the demographic variables were included in the

study. Most theories of motivational incentives and employee performance concepts were

considered. Due to limitation of time available to complete the study and the vast nature of

public sector, the scope of this study was limited to select FPS in Addis Ababa. Thus, the

geographical scope was selected Federal Ministries and their respected branches and

divisions operating in Addis Ababa.

Organizationally, the scope of the study was limited to four Ministries of Federal Public

Sectors in Addis Ababa; Ministry of Industry (MOI), Ministry of Finance and Economy

Development (MOFED), Ministry of Livestock and Fishery Resource Development

(MOLFRD) and Ministry of Public Service and Human Resource Development

(MOPSHRD). Besides, in terms of time scope, this study is a cross-sectional study that

focused on the status of motivational incentives and employees’ job performance.

1.7. Limitation of the Study

Limited resources and time constraints affect to incorporate all Federal Public Sectors (FPS)

of in Addis Ababa, Regional Public Sectors and those geographically located branches out of

Addis Ababa under the selected Ministries. The present study the data are limited to leaders’

motivational incentives and employees’ job performance in selected public sectors located in

Addis Ababa city. The study also had its share of limitation in the sampling frame which

only considered federal level public sector and therefore the results might not be generalized

or extrapolated to the whole public sector or to other types of organizations of the country.

7

There was less participation from respondents due to the busy schedule during working

hours.

There was limited time to have face to face meeting to explain any confusion with the

questionnaires. There were also some difficulties in getting the employees’ responses to the

questions because of their workload and the responsibility they have.

1.8. Operational Definitions

Leader: A leader is an individual, while leadership is the function that the individual

performs. Besides, an individual within an organization who have authority are often referred

to as a leader, regardless of how they act in their job.

Extrinsic motivation: It is motivation that comes from things or factors that are outside the

individual. For example being motivated to work hard at the office because you are looking

for a promotion is a type of extrinsic motivation. Social recognition, money, fame,

competition or material achievements are all examples of extrinsic motivation.

Intrinsic motivation: It is motivation that comes from within. It comes from the personal

enjoyment and educational achievement that derived from doing that particular thing. For

example for people who love music, their motivation to practice the instrument, attend

classes, is intrinsic motivation. Intrinsic motivation is crucial in today's work environment.

Research shows that it is a key factor in performance and innovation. At a personal level,

intrinsic motivation makes employees work fulfilling. It's a major reason for deciding to stay

on a job. It helps to keep employees stress level down.

Employee job performance: It is the attainment of performance is the result of efforts that

have been done and can be measured by certain indicators such as job satisfaction, reducing

absenteeism, achievement …etc.

Job satisfaction: The term job satisfaction reflects a person’s attitude towards their job and

the organization and can be defined as an employees’ emotional reaction towards their work

environment based on the evaluation of the actual results against their expectations

8

Absenteeism: The term absenteeism refers to failure to report to work. The definition itself

tells the failure of the organization process, if the employee fails to follow the set of rules and

standards of the organization. Absenteeism is a type of spontaneous action which threatens

the organization to fall in danger as it leads to the disruption of the daily processes.

1.9. Organization of the Paper

The study is presented in four chapters. The first chapter which is the introduction covers the

background of the study, problem statement, objectives of the study, research questions,

significance of the study, as well as the scope and limitations of the study. This is followed

by chapter two which reviewed extensive related empirical literature on the subject matter.

Among the various topics to be covered include, motivational incentives and employees’

performance. Chapter three looked at the research design and methodology which comprises

the research design, the research population, sample and sampling technique. It also

considered the data collection and data analysis. Chapter four is dedicated to the result and

discussion which includes the findings of the effects motivational incentives, linkages and

extents to job performance dimensions. The paper also contained conclusion,

recommendations and references lists.

9

CHAPTER TWO: LITERATURE REVIEW

2.1. Theories and Concepts of Incentives

Individual employee is motivated by different incentives or benefits and it is important to

know how they are motivated and what can satisfy them in order to encourage them to have

right attitudes to work which will invariably enhances employee performance and

organizational productivity. The incentive theory is one of the major theories of motivation

and suggests that employees are motivated to do things out of a desire for incentives

(Bernstein, 2011).

The public sector structure is comprised of different departments in which the employees

work as the basic units with different capacities. In this regard, the basic responsibility of a

leader is to raise the moral values, working capacity and ultimately the output graph of the

sector (Avolio and Bass, 2004). Leadership is the process of influencing and supporting

others to work enthusiastically towards achieving objectives (Elqadri et al., 2015).According

to Sundi (2013) leadership has two dimensions which include: (a) Active, leaders supervise

and look for deviations of various rules and standards, and taking corrective action, (b)

Passive, leader intervenes only if standards are not achieved.

The employees, in the presence of a leadership may not feel isolated from the central

authority which keeps them intact and resultantly they work with integrity and utmost

commitment. At macroscopic level, leadership is both a research area and a practical skill

(King et al., 2009). On the part of the researchers, the ongoing research highlights different

leadership styles in the different circumstances in diverse spheres of life. On the part of

individual level, it encompasses the abilities, leading capacity, skills and experience of a

person or group of persons (Tahir et al., 2014). While exercising the authority, the leadership

seeks the participation of the employees with all their dedication and sense of ownership

through the power of mobilization, motivation and communication in the organization

(Chandra &Priyono, 2016).

10

Globalization of the economies has increased human resource mobility and organizations are

looking for ways to retain talent, improve employee performance, improve their corporate

image and also achieve corporate goals. The right conditions for motivational management to

work include fair pay and conditions, comfortable and safe working environment;

opportunities for employees to socialize and make friends, clearly defined work

responsibilities and goals, education and training opportunities, as well as career

opportunities. Public sector is a term used to describe those outfits owned and managed by

the government, federal, state or local. Thus, the existence of public sector can be attributed

to the prevalence of political and social ideologies, which depart from the premises of

consumer choice and decentralization of decision making. Public sector means those areas of

societal activity directly owned, funded and managed by the State as opposed to private

sectors which are organized and owned by individuals and groups (Nwali and Nkwede,

2011). Incentive compensation is a form of material provided by the organization for its

employees who have worked loyally. Therefore, many employees tend to try even harder if

the remuneration received by giving satisfaction to what was expected

2.2. Leaders’ Motivational Incentives

Incentives are designed to get the maximum performance from the employees and help retain

the most productive among them. Organization can consider a variety of ways to reward the

employees for their work performance, but an organization need to consider using the best

employee incentives to get the desired results (Olubusayoa et al., 2014). Appreciation can be

defined as “acknowledge the value and meaning of something an event, a person, a behavior,

an object and feeling a positive connection to it” (Fagley & Adler, 2012). Appreciation may

help employees feel appreciated and an aspiration to help peers, clients and leaders. When

employees are appreciated, feel good about themselves and they have many things give to

others, on the other hand when they are exhausted, less able to perform their job functions

properly and performance level become worse (Fagley & Adler, 2012). Study Griffin (2012)

affirms that motivation exists merely when individual appreciates an optimistic correlation

that endeavor direct to work performance and work performance directs to incentives.

11

Job related and social incentives such as opportunity to use one's ability, interesting work,

recognition of a good performance, development opportunities, a sense of challenge and

achievement, participation in decision making, and being treated in a caring and thoughtful

manner (Olubusayoa et al., 2014). On the other hand, extrinsic motivation exists when

behaviour is performed to attain externally administered incentives.

Study of Makki and Abdi (2017) showed that intrinsic and extrinsic motivation has positive

correlation with employee’s task performance and intrinsic and extrinsic motivation has

impact on employees’ task performance. The extrinsic motivational incentives are tangible

and classified as basic needs since it refers to doing something for external rewards such as

money, fame, or status. It is opposite to intrinsic motivational incentives which influence

aperson’s behavior by his or her inner desire and motivation. Also, unlike motivator factors,

the presence of hygiene factors will not motivate, but could avoid dissatisfaction, however

the absence will surely lead to demotivation (Lipman, 2014). Definitely, there is a need to

improve the employees’ performance to bring a positive change by the acceptance of

mechanisms to develop the performance of the institutions (Salman et al., 2011). Perry and

Hondegem (2008) point out that ‘the meaning of public service motivation varies across

disciplines and fields, but its definition has a common focus on motives and action in the

public domain that are intended to do good for others and shape the wellbeing of society.

Motivation results from the interaction of both conscious and unconscious factors such as the

intensity of desire or need, incentive or reward value of the goal, and expectations of the

individual and of his or her peers (Ganta, 2014).

According to the literature incentives encourage the employees and hence productivity

enhances by affecting the performance, efficiency, satisfaction, responsibility, effectiveness

and commitment of employees (Mamdani and Minhaj, 2016). Higher the level of incentives;

better will be employees' performance. Ali and Ahmad (2009) established that there is a

substantial affiliation between rewards and recognition and similarly in employee motivation

and job satisfaction. The success of an organization based on how an organization keeps its

employees motivated and in what way they evaluate the performance of employees for job

12

compensation. Employees who feel motivated to work are likely to be persistent, creative and

productive, turning out high quality work that they willingly undertake (Ganta, 2014).

To motivate is to create desire, willingness to performance in a manner in which managers

want to get work done (Ackah, 2014). Incentives are often considered as forms of extrinsic

motivation. Employees tend to perform their jobs well when incentives such as performance

pay and bonuses are in place (Kaiser, 2014). Incentives are tools used to encourage changes

in behaviour. They are used to attract and retain qualified staff and motivate employees to

perform better (Weller, 2008). Incentives can be classified as financial and non-financial;

both motivate employees to join, stay and perform well at their work.

2.3. The Effect of Leaders’ Motivational Incentives on Employees Job Performance

To enhance the performance of an employee, his/her dependence upon the leadership, which

is operative, has a definite status. In the same phenomenon, the central role of the leadership

along with his credibility becomes most prominent (Bass et al., 2003). Actually, the

transformational leader is a psychoanalyst, as he/she learns, comprehend and analyze the

minds, thoughts, attitudes and desires of the followers/employees to reach the final decision

which help in augmenting the employees level of performance (Qaisar and Sara, 2009). The

leader of this category always pursues democratically and believes to solve every issue in the

organization according to the popular will of the employees. The diagnostic skills of the

leadership, either they are intrinsic or gained are valuable for the resolving the issues related

with the individuals and with the organization as a whole (Durga and Prabhu, 2011). The

employees’ performance is directly proportional to the effectiveness of the leadership.

Through the powers of comprehension, analysis, planning and motivation, the

transformational leaders augments the mercury level of the employees output (Iqbal et al.,

2015). Adequate incentives have been found to be one of the means through which

organization can adopt to motivate and increase their workers’ performance (Olubusayoa et

al. 2014).

13

According to Umaru et al. (2014) there is significant relationship between leaders’ technique

and performance of employees in organizations in order to achieve organizational goals. For

high employee performance (maximum), need a leader who is able to manage own human

resources (Elqadri et al., 2015).This is supported by statements Alberto et al., in Wati (2010)

that leadership style has a strong positive effect on performance. A leader has a way to

influence others or subordinates such a way that the person is willing to do the will of the

leadership to achieve company goals. In recent years, both academicians and practitioners

have highly recognized the significance of effective employees and good leaders in the

organization performance (Kehoe and Wright, 2013). Furthermore, organizational

performance depends on the performance of the people in that organization.

The performance of the individuals solely depends upon the policies of the concerned

institution about their pay package, rewards, bonuses, yearly increments and other perks and

privileges (Bodla and Nawaz, 2010). Still, the academic profile of the employees has the

highest standing among all other factors. On the whole, the productivity/output can be

enhanced and sustained by the effectiveness of the leadership and an agile response of the

employees (Rizwan et al., 2016). On one hand, the leaders’ induces emotional strength,

motivation, commitment and the working relationship while on the other side, the employees

performs with their utmost ability and diligence. The main attributes extracted from the

relevant literature are the efficiency, effectiveness, innovativeness, responsiveness. There are

some other attributes related with the employees’ performance like the work ethics,

communication, creativity, development, professionalism and the commitment. All of them

contribute to the effective performance on the part of employees.

2.4. Linkages and Extents of Incentives and Employees Performance

Hameed et al. (2013) developed a model explaining the association between incentive

motivators, organization-based self-esteem and employee performance in private banking

sector of Pakistan. The outcomes revealed positive and significant effect of incentive

motivators and organization based self-esteem on employees’ performance. Khan et al.

14

(2013) investigated different factors determining intrinsic and extrinsic rewards in the light

of

Herzberg’s two factor theories and their impact on banking employee’s job satisfaction and

job performance and endeavors to influence overall performance of the commercial banks of

Pakistan. The study revealed that both intrinsic and extrinsic rewards had significant linked

with employees’ job performance. Hameed et al. (2014) studied the impact of compensation

on employee performance in private banking sector of Pakistan. It was revealed in the

study’s results that compensation had progressive extents and effect on employee

performance. It was proved from correlation analysis that indirect compensations

(nonmonetary) had weak relationship or linkages to performance whereas monetary

compensations had significant and positive impact on employee performance. Gichuru

(2015) paper showed relationship between motivational incentives and employee

performance. The study highlighted that motivation improved level of efficiency of

employees where the level of a subordinate or an employee did not only depend upon his

qualifications and abilities. The findings further suggested that motivational incentives

affected employee performance in an organization in various ways as increased output,

boosting employee morale, improved participation and improved employee relations.

Financial and non-financial incentives have a positive relationship with the efficiency and

effectiveness of staffs (Wei and Yazdanifard, 2014). Money has the dominancy to magnetize,

retain and motivate individuals towards higher performance (Stanley, 2012). People do not

work for free; employees want to be compensated for the work that they do. Employees must

be motivated through adequate incentives plans and reward systems and this will invariably

encourage them to be proactive and have right attitude to work, thereby promote

organizational productivity. Research provided evidences that monetary incentives offered a

higher motivation to employees in comparison with non-monetary incentives (Zani et al.,

2011). However, an-other study suggested that financial incentives will only provide a short

term positive behavior. Staffs do look for more incentives which are non-monetary in order

to sustain a long term positive performance in organizations (Zani et al., 2011).When

employees are rewarded for their performances, they will most likely to increase the behavior

and perform better. Therefore, monetary or extrinsic rewards reinforced employees’ work 15

behavior positively (Rudge et al., 2011). When employees obtain acknowledgement from

managers or supervisors as a result of their job well done, they will feel appreciated and have

a sense of belonging to the company (Shiraz et al., 2011). This is highly valued by staffs and

it is very likely that they will strive to perform better (Gohari et al., 2013).

2.5. Reducing Absenteeism as Employees’ Job Performance Indicator

Ngima & Kyongo (2013) reported that reduced absenteeism was as the employees’ job

performance indicator. Frequent absence by employees from the work place prevents team

and group from continuity of being productive. Absenteeism of employee at his/her station

will add extra work to the rest of the staff to adjust the missing part which may end up

omitting the original flair of the absent employee. Attendance is very important to ensure

sustainable performance to complete the required tasks and avoid management conflict and

diminished performance (Root, 2016). If motivational incentives are being ignored by

employers, employees might show annoyance through poor performance, demotivation,

noncommitment, turnover and absenteeism (Kalhoro et al., 2017).

2.6. Job Satisfaction as Employees’ Job Performance Indicator

Ngima & Kyongo (2013) reported that job satisfaction was as the employees’ performance

indicators. Kiviniemi et al. (2002) described that job satisfaction of the employees’ increase

by the rewards they receive from the organizations. According to Balzar et al. (1997) job

satisfaction is a sensation that employees have about their work environment and their

expectations towards work. Thus, job satisfaction can be recognized as what one wants or

values from a job (Brief and Weiss 2002). Different kinds of satisfaction lead to diverse

objectives and behaviours that ascend from different types of motivation in getting different

types of rewards (Luthans et al. 2005). There is a significant relationship between reward and

recognition, and between motivation and job satisfaction (Ali and Ahmed, 2009). Rewards

have a direct link with the motivation and job satisfaction of the employees. Variations in

rewards and recognition can bring a positive change in work motivation and job satisfaction

16

of the employee (Ali and Ahmed, 2009). Employee attitudes such as satisfaction contribute

to (or discourage) absenteeism, reduction in the wastages, industrial accidents and they help

establish the culture of the organization (Edward, 2009).

2.7. Conceptual Framework

The conceptual framework of the study was developed from reviewed literature and relevant

research objectives. The frame work shows that a relationship exists between the independent

variables (extrinsic and intrinsic motivational incentives) factors trust, honest, collaborative

work environment, appreciation, promotion, participation, freedom, recognition and

”difference to society and dependent variable (employee job performance) which can be

measured using the following employee performance indicators: job satisfaction and

reducing absenteeism (Aarabi et al., 2013; Rehman et al., 2016; Kalhoro et al., 2017).

Source: Developed for this research

17

Job performance

Reducing absenteeism ▪

Job satisfaction ▪

society “Difference” to • Work environment •

Honest, • Trust •

Appreciation •

Participation • Freedom •

Recognition • Promotion •

Extrinsic motivational incentives

motivational incentivesIntrinsic

1.3.

CHAPTER THREE: RESEARCH DESIGN AND METHODOLOGY

3.1. Description of the Study Area

The target population of this study included both employees and leaders at Federal Public

Sectors in Addis Ababa; Ministry of Industry (MOI), Ministry of Finance and Economy

Development (MOFED), Ministry of Livestock and Fishery Resource Development

(MOLFRD) and Ministry of Public Service and Human Resource Development

(MOPSHRD). Their respected branches of them in Addis Ababa were considered subjects.

Data collection was conducted across the aforementioned from March and April, 2018.

3.2. Study Approaches

In this study, both quantitative and qualitative approaches were employed and operated. This

is because of the researcher believed that combined both approaches can provide broader and

deeper understanding of the issue. The quantitative approaches dealt with descriptive

analysis by collecting data from the respondents and understand the behavior of the

population of interest. It was used a quantitative approach to measure and analyzes the effect

of leaders’ motivational incentives on employees’ job performance. It established that the

leaders’ motivational incentives dimensions were tested for relationship on job performance

of employees dimensions.

3.3. Research Design

Case study was employed with detail related analysis of limited number of events or people

and their relationship. According to Yin (2009) case study research is an empirical

investigation that investigates contemporary phenomena with in real life context, when

boundaries between phenomena and context are not clearly evident and in which multiple

sources of evidence are used. Correlation and regression research design that applies

quantitative approach and uses the case study method to collect data. The focus of this

research is on employees to collect data from the target population of Federal Public Sectors

18

in Addis Ababa viz. MOI, MOFED, MOLFRD and MOPSHRD in Addis Ababa. The

correlation and regression research design was employed in the study to analyze and describe

the effect of intrinsic and extrinsic motivational incentive on individual employee job

performances dimensions. The research involved gathering data, describes phenomenon and

then organizes, tabulates, depicts and describes data collection, in the form of tables, in order

to help the reader understand the distribution of data. This study focuses on the leaders

motivation incentives consisting of trust, honest, collaborative work environment,

appreciation, promotion, participation, freedom, recognition, and ” difference” to society as

independent variable and their effect on job performance dimensions (job satisfaction,

reducing absenteeism and achievement) as dependent variable.

3.4. Sample Size and Sampling Techniques

The total sample was consisted of all of employees’ strata; professional (professional

science) and supporting staff (administrators and finance chair persons, secretaries, drivers,

cleaners, messengers, plumbers, gardeners, security officers, cashiers, and others). Individual

of aforementioned Ministries office were considered. The appropriate sample size was

determined if the population along with the required level of precision is known. According

to Kothari (2004, pp. 179) the following formula was used to calculate the minimum sample

size from known population.

Where

N = size of population n = size of sample e = acceptable error (the

precision) p = sample proportion belonging to the specified

category, q = 1 – p; sample proportion not belonging to the

specified category z = standard variants at a given confidence level.

Therefore, the minimum required sample size was calculated by first knowing the values of

both p and q; where p is the proportion belonging to the specified category and q is the

19

proportion not belonging to the specified category (Saunders et al., 2009 pp. 581-582).

According to the recent information obtained from MOPSHRD (2016) total number of

employees’ in the selected Ministries and under their respective branches was 14,

946.Twenty percent of the professional stuffs were selected, belonging to the specified

category staff, p. Therefore, 80% is the proportion not belonging to the specified category

staff; q. The minimum sample size was calculated to increase precision, confidence and

variability. The calculation worked at a 95% confidence level, corresponds to Z-score of

1.96, and a margin error (e) of 5%.

According to (Kothari, 2004), formula minimum sample size (n):

The minimum sample size (n) calculated only was 242 respondents. During data collection a

total of 250 questionnaires were returned out of the 304 questionnaires distributed to

respondents.

3.5. Data Collection Tool

A questionnaire used to collect the data giving a set of questions or a written statement to the

respondents (employees) to be answered; the form of the question consists of motivational

incentives and employee job performance. The instruments utilized to collect data from the

sample were questionnaire and interview. The questionnaires used to collect data were Likert

scale that should be made up of four or six points (Nemoto and Beglar, 2014). Thus, a

sixpoint Likert scale was employed in this study as they permit the possibility of increased

measurement precision scale (Nemoto and Beglar, 2014). A six-point Likert scales (Strongly

disagree, Disagree, Slightly disagree, Slightly agree, Agree and Strongly agree), which

moves from a weaker endorsement of the item (i.e., Strongly disagree) to a stronger

endorsement of the item (i.e., Strongly agree).

20

The data were collected from a sample of employees of FPS through closed questionnaires.

Self-complete research questionnaire which were distributed to the target population and

collected after a few days. Primary data were collected from the subject of study. The

questionnaire that used in this study was divided into three sections. Section One:

demographic characteristics of the respondents, Section Two: Statements to capture

perception of employees on the Leaders’ motivational incentives and Section Three: used to

capture employees’ job performances.

A key informant interview in Section Four: is an open-ended questionnaire interview guide

was another tool which applied for purposively selected expert. This is one ways of

collecting qualitative data so as to collect data which was not be able to collect via

selfcomplete research questionnaire of the quantitative data collection method. The collected

data through this key informant interview of an open-ended questionnaire method was used

to enhance and crosscheck the quantitative data and analysis.

3.6. Data Analysis

Descriptive and inferential statistical techniques were used for data analysis. In inferential

statistics, Pearson’s correlation and regression analysis were employed by using Statistical

Packages of the Social Science (SPSS) version 23. Pearson’s correlation was used to

investigate strength of relationship of predictor variables with response variables. Multiple

regression analysis using enter method was used to determine the effect of independent

variables and the dependent variable. Stepwise regression analysis was used to determine

which among the predictor variables contributed most to job performance of employees.

3.7. Validity Test Validity refers to research study that is based on accuracy of findings and explains whether

the factors that are included in study are properly evaluate and explain in a way that it is

supposed to measure (Saunders et al., 2009). In this study best tried to focus on variables and

show a relationship between motivational incentives and employee job performance

21

dimensions. Different motivational incentives and relate it with empirical part that led to

know the relationship between employee motivational incentives and employee job

performance dimensions. The correlation analysis is used that shows the relationship

between variables that are used further regression analysis. The analysis measurement done

by behaves the way as it should be due to motivation (intrinsic and extrinsic) and employee

job performance dimensions relationship with each other’s. The correlation is use for the

relationship of variables that how strongly variables are connected with each other and it is

what the purpose of the study. The analysis result depends on the relation of variables with

each other. Validity shows there was correlation between variables that shows great

understanding of the research data.

3.8. Reliability Test Reliability refers to the notion that a measuring instrument sufficiently reliable to be used as

a data collection tool, as a tool is already good measure. Calculation of reliability point in

this study using the facilities provided by SPSS version 23 for measuring reliability with

Cronbach Alpha statistical test (α), which is a construct or variable said to be reliable if the

Cronbach’s alpha value ≥ 0.60. For this study Cronbach’s alpha was used to assess the

internal consistency of variables in the research instrument. Cronbach’s alpha is a coefficient

of reliability used to measure the internal consistency of the scale; it represented as a number

between 0 and 1. Thus, in this study, a Cronbach’s alpha score of 0.70 or higher was

considered adequate to determine reliability

3.9. Ethical Issues The researcher was ensured that introducing him and seeks permission to collect a research

data from FPS respondents and good luck permission was given. Also in a copies of

questionnaires distributed, privacy and confidentiality were observed because the

respondents were told not to write their names, however the respondents were told that this

study is for academic purpose only and not otherwise, also the study did not entertain

discrimination thus why randomly selection were used.

22

CHAPTER FOUR: RESULTS AND DISCUSSIONS

4.1. Profile of the Respondents

Personal and demographic information of the respondents is presented in Table1 below. Table 1: Profile of the Respondent

Variables Category Frequency(N=250) Percentage

Sex Female 93 37.20%

Male 157 62.80%

Age

20 to 25

26 to 35

36 to 45

32

133

53

12.80%

53.20%

21.20%

46 to 55 28 11.20%

56 and above 3 1.60%

Educational qualification

High School Complete

Technical and Vocational

Bachelor’s Degree

12

5

198

4.80%

2.00%

79.20%

Master’s Degree 31 12.40%

PhD Degree 4 1.60%

Work experience

Less than 3 years

3 to 6 years

7 to 10 years

59

39

67

23.60%

15.60%

26.80%

11 to 15 years 33 13.20%

16 to 20 years 18 7.20%

More than 20 years 34 13.60%

The distribution of the respondents by gender is clear that the majority of the respondents,

157 (62.80%), were male as opposed to females who were 93 (37.2%). It is clear that from

the total 250 respondents the majority of respondents, 133(50.0%) were in the age range of

26-35 years, this was followed by 53 (21.20%) in the age range of 36-45, followed by

32(12.80%) in the age range of 20-25, then 28(11.20%) in the age range of 46-55 years while

23

the least age range was 56+year which was represented by only 4(1.6%). This meant that the

majority of respondents (who took part in the study) were aged 25-30years. The result shows

that a relatively high percentage of the workforce is in their active productive years. It further

explains that the recruitment policy the public sector is consistent with contemporary

requirements, which emphasizes recruitment of relatively younger and mature people.

Results show that the majority of respondents 189 (79.20%) were bachelor’s degree holders

while Masters and PhD holders tied at 35(14%), and the diploma/certificates holders were

the least represented with only 17 (6.80%). This implies that most respondents were in a

position to give a very fair assessment of their performance as well as that of the

motivational incentives of the immediate supervisor. The large proportion of respondent

(50.4%) do have an experience of less than three years and 7-10 years in their current

working organization, again the remaining proportion (49.6%) of sample respondent shared

other experience categories.

4.2. Principal Components Loadings of Items

4.2.1. Principal components loadings motivational incentives items

Principal components analysis (PCA) is the standard extraction method, which was used to

extract correlated linear combinations of the variables Table 2 below. The

convergentdiscriminant validity in which all the highlighted diagonal values illustrates that

items are strongly converged onto its own construct than the other and correlated values

show the positive results. It was adopted to undertake more analysis through principal

components analysis application. In component loading which is also known as cross loading

was an attempt to measure how closely factors relate with each other (Kothari, 2004). The

cut off value was all highlighted diagonal values show that items are strongly loaded onto its

own constructs than the others construct (Kalhoro et al., 2017). Those items in Table 2

related to trust, honest, work environment, appreciation, promotion, participation, freedom,

recognition, and ” difference” to society were loaded together.

24

25

Table 2: Principal components loadings motivational incentives items

Items Appreciation Fairness Protection Payment Build relationships of trust and mutual understanding 0.86 0.04 0.15 0.11 Makes to rely on open and honest communication 0.84 0.04 0.24 0.10 Create a collaborative work environment 0.83 0.13 0.11 0.08 Encourages the participation of employees in workshops 0.68 0.14 0.27 -0.04 Appreciation and positive recognition 0.64 0.49 0.05 -0.04 Facilitate possibility of promotion and growth 0.64 0.49 0.10 0.17 Recognizes for extra effort 0.62 0.53 0.16 -0.09 Provides freedom in deciding how to carry out work 0.53 0.42 0.23 0.15 Provides opportunity to “make a difference” to society 0.51 0.36 0.32 0.01 Fair and constructive evaluation 0.17 0.68 0.20 0.23 Explicit performance criteria 0.23 0.68 0.27 0.12 Career advancement and/or pay raise 0.05 0.66 0.12 -0.17 Evaluation forms include the roles and responsibilities 0.20 0.66 0.33 0.10 Variety of training programs 0.26 0.57 0.22 0.18 Leaders’ specialized skills and obtain feedback 0.37 0.46 0.41 0.11 Protected due to enshrined in law 0.19 0.16 0.74 -0.06 Protected based on standard practice 0.16 0.29 0.68 0.29 Set clear criteria for promotions 0.21 0.17 0.65 0.35 Cares about the health and safety 0.00 0.24 0.65 0.33 Up to date IT support and infrastructure 0.14 0.33 0.58 0.28 Creative and produces meaningful job 0.37 0.23 0.56 -0.27 Financial incentives 0.12 0.03 0.52 0.01 Respects the individual characteristics 0.29 0.36 0.47 0.15 Enough paid a salary to cater basic needs 0.03 0.12 0.14 0.73 Prompt and on time payment 0.25 -0.13 0.15 0.63 Performance related pay schemes -0.13 0.39 0.07 0.54

25

Those items related to fairness, protection and payment were loaded in second and third

component respectively. All constructs in the present study fulfill the criterion for internally

consistent established factors because they all have Cronbach’s alpha values of greater than

0.70 in Table 4 below, indicating the highest reliability (Hair et al., 2010). To check for the

discriminant validity of the constructs, the entered all of the items (26) into a principal

component analysis using rotation, then extracted four non-overlapping factors: appreciation

(9 items), fairness (6 items) protection (8 items) and payment (3 items).

4.2.2. Principal components loadings of employees job performance items Employees’ job performance items were loaded in three factor loadings are presented in

Table 3. Those items related to retention, valued outcome, and job satisfaction was loaded

together (Job satisfaction).

Table 3: Principal component loadings of employees’ job performance items

Items Job satisfaction

Reducing absenteeism

Achievement

Attracting and retaining the right kind of people 0.84 0.01 0.18 Motivational incentives provides valued outcomes 0.80 0.28 0.08

Satisfied with performance 0.70 0.01 0.44

Continuous attending and reducing absenteeism -0.05 0.79 0.24

Continuous quality improvement -0.04 0.70 0.43

success and job satisfaction at work 0.47 0.70 0.03

Motivational incentives motivate to perform well 0.50 0.64 -0.13

Better performance than similar qualifications 0.40 0.42 0.32

Proud to work for the public sector 0.17 0.16 0.78

Achieving a balance between work and private life 0.15 0.13 0.77

Feel motivated after performance review 0.38 0.37 0.41

Those items related to reducing absenteeism, quality improvement, success, motivated and

better than colleagues with similar qualifications were loaded in second component or

27

dimension (reducing absenteeism). Proud to work for the public sector, achieving a balance

between work and private life, and motivated feeling were loaded under the third

component/dimension (achievement). Briefly, all constructs in the present study fulfill the

criterion for internally consistent established factors because they all have Cronbach’s alpha

values of greater than 0.70 in Table 4 below, indicating the highest reliability (Hair et al.,

2010). To check for the discriminant validity of the constructs, the entered all of the items

(11) into a principal component analysis using rotation, then extracted three non-overlapping

factors: job satisfaction (3 items) reducing absenteeism (5 items) and achievement (3 items).

4.3. Reliability Analysis

Cronbach’s Alpha for reliability and internal consistency was measured and presented in

Table 4. Cronbach’s alpha of questionnaire items have to be greater than 0.7, and shows that

all the items are reliable and valid to measure the opinions of respondents. For the result of

the reliability test, it is found that the variable and common factors, a Cronbach's Alpha of

ranged 0.726 to 0.904 was obtained, thus all questions related to motivational incentives and

employees job performance are reliable.

Table 4: Reliability of measurement instrument

Factors Reliability Statistics Cronbach's Alpha N

Appreciation 0.904 9 Fairness 0.902 6

Protection 0.896 8

Payment 0.730 3

Job satisfaction 0.790 3

Reducing absenteeism 0.776 5

Achievement 0.726 3

28

In table above, the level of reliability is determined by the coefficient alpha ranges where

alpha range from 0.80 to 0.95 shows very good reliability, ranges from 0.70 to 0.80 shows

good reliability; ranges from 0.60 to 0.70 shows fair reliability and coefficient alpha less than

0.60 shows poor reliability(Saunders et al., 2009). 4.4. Relationship of Motivational Incentives and Performance Dimensions

Appreciation with positive recognition factor was significantly and positively associated with

job satisfaction and reducing absenteeism. Table 5 shows that relationship between fairness,

protection and payment related incentives and all performance dimensions (job satisfaction,

reducing absenteeism and achievement) is not significantly positive.

Table 5: Correlations of independent variables and job performance dimensions

Dimensions 1 2 3 4 5 6 7

Appreciation 1.00 Fairness 0.00 1.00

Protection 0.00 0.00 1.00

Payment 0.00 0.00 0.00 1.00

Job satisfaction 0.675** 0.04 -0.124* -0.05 1.00

Reducing absenteeism 0.223** -0.140* -0.155* -0.02 0.00 1.00

Achievement 0.11 -.155* 0.05 -0.168** 0.00 0.00 1.00

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

As presented in Table 5 the highest correlation was found between appreciation and job

satisfaction (r=0.675; p<0.01).The high correlation strongly suggests that the two tests are

measuring the same thing and doing so with great consistency. The high correlation reflects

two windows of the same attribute. Appreciation with positive recognition factor variables

included trust, honest, work environment, appreciation, promotion, participation, freedom,

recognition, and” difference” to society. Job satisfaction factor included attracting and

29

retaining right kind of people, valued outcomes, and satisfaction. Reducing absenteeism

included variables related absent, quality improvement, motivated feeling, and increased

success and better performance.

Fairness, protection and payment were not positively correlated with all performance

dimensions (job satisfaction, reducing absenteeism and achievement). The selected

participants for interview expressed different motivational incentives toward the

nonavailability of certain incentives, which significantly affected their overall work

performance. The majority of the interviewees reported that the more dissatisfied they are

with respect to the limitation and/or absence of certain incentives for performance, the less

productive they would be at work. In general, the results showed that providing additional

monetary and nonmonetary incentives to public employees could improve their work

performance and increase productivity. A study by Ivancevich (2004) shows that, the

fairness in performance evaluation and the feedback given to the employee plays a great role

in increasing employee’s productivity. Therefore, the Government of Ethiopia give attention

and revise the evaluation systems of employees, provision of protection (health and safety)

and payment related to salary and performance based payment. Armstrong (2006) extrinsic

motivations are defined as tangible benefits such as salaries/incentives, fringe benefits,

security, and are required to motivate their employees. Dessler et al. (2002) found out that,

the fundamental premise of variable pay and other reward scheme is top performers must get

top pay and rewarded in order to secure their commitment to the organization. They also

argue that accurate performance appraisal or measurable outcome is a precondition of

effective pay for performance plan. According to Perry and Hondeghem (2008), the public

sector has traditionally offered some strong extrinsic motivators that might attract people,

such as security of tenure, career and development opportunities and the pension system.

Appreciation, trust, honest, collaborative work environment and” difference” to society were

leaders’ intrinsic motivational incentives. Intrinsic motivational incentives promote intrinsic

motivations which lead to better performance. Intrinsic motivational incentives come from

verbal rewards such as positive feedback and praise which lead to job satisfaction.

30

Intrinsically motivated employees participate eagerly in their jobs for internal reasons.

Promotion, participation, freedom, participation and recognition are leaders’ extrinsic

motivational incentives. The extrinsic motivational incentives bring about extrinsic

motivation. Extrinsically motivated employees tend to focus on performance outcomes.

The present study reveals intrinsic and extrinsic motivational incentives are significantly and

positively associated with employees’ job performance. The results of the study confirmed

that intrinsic and extrinsic motivational incentives were directly related to employee job

performances. Similarly, Khan et al. (2013) found out that both extrinsic and intrinsic have

equal importance for employee motivation. Tahir et al. (2014) identified that extrinsic factors

are fundamental factors whereas intrinsic factors are essential to provide inner motivation,

and have positive relationship with employee performance.

Intrinsic motivation incentives are positively correlated with job performance is in line with

Zafar et al. (2012), there is a significant relationship between motivation and employees'

performance (“When the intrinsic motivation level of employees increases the work

performance of employees will also increase”). According to Zhang, (2010) intrinsic

motivation is one of the most appropriate and strong influence on workers creativity.

Employees get intrinsic reward directly from job they perform. Job satisfaction, interesting

work, job appreciation or the sense they help a client. Intrinsic motivated workers employ in

a job because of their own interest in it and enjoy the job due to search for new solutions for

business challenges and are more likely to burn up energy to identify problems and find

innovative solutions (Cooper & Jayatilaka, 2010). Intrinsic motivation begins from a positive

response to qualities of a job role. According to where a person has the ability to choose and

high intrinsic motivation, higher achievement is likely (Vadell and Ewing, 2011). Because of

all the different opinions that individuals have, it takes a strong leader to be able to influence

individuals to see things their way of organizations (Sougui, 2015).Therefore, if leaders’

intrinsic motivational incentives increase, employee performance will increase. Previous

researchers have also come out with similar findings (Tahir et al., 2014; Asfaw et al., 2015).

31

4.5. The Relationship between Appreciation on Performance Indicators

The first research question examined leaders’ intrinsic motivational incentives affect

employees’ job performance. The findings show the existence of a significant relationship

between intrinsic motivational incentives and employee performance.

32

The components examined under intrinsic motivational incentives including trust, honest, collaborative work environment, appreciation and

”difference” to society were collectively found to be significant predictors of employees’ job performance at Federal Public Sectors in Addis

Ababa.

Table 6: Coefficients of correlations between variables Variables 1 2 3 4 5 6 7 8 9 10 11

Collaborative work environment 1 Trust .781** 1

Honest .695** .763** 1

"Difference” to society .477** .471** .476** 1

Participation .490** .512** .568** .475** 1

Freedom .424** .437** .504** .357** .579** 1

Promotion .548** .531** .569** .419** .567** .665** 1

Appreciation .566** .509** .481** .530** .448** .506** .633** 1

Recognition .539** .519** .543** .547** .520** .579** .596** .710** 1

Job satisfaction .409** .416** .404** .405** .468** .501** .494** .556** .547** 1

Reducing absenteeism .030 .095 .140* .186** .140* .088 .125* .132* .216** .000 1

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

31

The second research question examined leaders’ extrinsic motivational incentives affect

employees’ job performance. The components examined under extrinsic motivational

incentives including promotion, participation, freedom and recognition were collectively

found to be significant predictors of employees’ job performance at Federal Public Sectors of

Addis Ababa.

The result of Pearson correlation coefficients showed significant values at leaders'

motivational incentives variables (appreciation) with job performance dimensions (job

satisfaction and reducing absenteeism) are presented in Table 6 above. The highest

correlation value was observed between leaders’ intrinsic motivational incentive variables

and employees’ job performance dimensions (job satisfaction and reducing absenteeism); the

high correlation strongly suggests that the two tests are measuring the same thing and doing

so with great consistency. The high correlation reflects two windows reflected those

identified in this study such as recognition, collaborative work environment, appreciation,

trust, honest, promotion, participation, freedom, “difference” to society were found to have

significantly positive linkage with employees’ job performance dimensions. These

motivational incentives were animated by personal enjoyment, interest, or pleasure. Hence

motivation energizes and sustains activities through the spontaneous satisfactions inherent in

effective volitional action (Nyambegera and Gicheru, 2016).

4.6. The Effect of Motivational Incentives on Job Performance Dimensions

4.6.1. Linkages of leaders’ motivational incentives to employees’ job satisfaction

Computing the coefficient of determination present how much variance the independent

variables share with the dependent variable job satisfaction. Independent variables (trust,

honest, work environment, appreciation, promotion, participation, freedom, recognition and

”difference” to society) have the highest correlation (r = 0.641,p < 0.01) which when squared

indicates 0.411 shared variance. Therefore, intrinsic rewards help to explain nearly 41% of

the variance in respondents’ scores on the employee job performance scale (Table 7). In other

words, the R-squared value from model summary is 0.411 which means 41.10% of variation

35

in job performance is accounted by variation in the motivational incentives variable namely,

recognizes, trust, "difference” to society, freedom, appreciation, promotion, honest,

collaborative work environment.

Table 7: Model summary for multiple regression of analysis on job satisfaction dimension Model R R Square Adjusted R Square Std. Error of the Estimate

1 .641a .411 .389 .78298

a. Predictors: (Constant), Recognizes, Trust, "Difference” to society, Freedom, Appreciation,

Promotion, Honest, Collaborative work environment b. Dependent Variable: Job satisfaction

Although the table of regression shows the value of R about 0.641 which identifies the strong

relationship among independent variable (recognizes, trust, "difference” to society, freedom,

appreciation, promotion, honest, collaborative work environment) and dependent variable job

satisfaction. Whereas, R square shows co-efficient of simple determination which 41.10%

variance is in recognizes, trust, "difference” to society, freedom, appreciation, promotion,

honest, collaborative work environment explained by job satisfaction.

. The results of ANOVA are presented in Table 8. F= 18.64 and p < 0.000. That means that

least one of the 9 independent variables can be used to explain job performance in the FPS.

Table 8: ANOVA for job satisfaction dimension

Model Sum of Squares df Mean Square F Sig.

1 Regression

Residual Total

102.868 9 11.430 18.644 .000b

147.132 240 .613

250.000 249

a. Dependent Variable: Job satisfaction

b. Predictors: (Constant), Recognizes, Trust, "Difference” to society, Freedom, Appreciation,

Promotion, Honest, Collaborative work environment

The results indicate that the model has power to predict employees’ performance significantly

from the predictors’ variables.

36

Table 9 presents the correlation between motivational incentives variables and job

performance (job satisfaction).

Table 9: Coefficients of predictor variables on job satisfaction dimension

Unstandardized Standardized

Model Coefficients Coefficients t Sig.

B Std. Error Beta

(Constant)

Collaborative work

-2.010 .186 -10.802 .000

environment -.026 .064 -.036 -.399 .690

Trust .076 .075 .102 1.014 .312

Honest -.048 .069 -.061 -.686 .493

"Difference” to society .034 .047 .046 .721 .472

Participation .100 .051 .136 1.966 .050

Freedom .123 .054 .167 2.296 .023

Promotion .025 .056 .035 .450 .653

Appreciation .175 .055 .252 3.186 .002

Recognition .105 .054 .153 1.925 .055

a. Dependent Variable: Job satisfaction

Regression equation

Job satisfaction = -2.01-0.026W+0.076T -0.048+0.038D+0.100P -0.123F+0.025Pr -

0.175A+0.105R.

Where; W=Work environment T=Trust, H=Honest, D="Difference” to society,

P=Participation, F=Freedom, Pr=Promotion, A=Appreciation and R=Recognition

The results show that appreciation and freedom had significant relationship with job

satisfaction (B = 0.175, p < 0.05) and (B = 0.123, p < 0.05) respectively. However the rest

37

variables were found to be not significant. Johnson et al. (2010) suggests the aims of

incentives to include; attract, retain and motivate employee, to support the attainment of the

organizations’ strategic and short term objectives by helping to ensure that it has the skilled,

competent, committed and well-motivated workforce it needs to meet the expectations of

employees, believing for equitably, fairly and consistently to their contributions. However,

Neckermann and Kosfeld (2008), highlighted two distinctive motivational incentives to

include; intrinsic motivational incentives which are often referred to as non-financial reward.

It includes recognition, praising for a job well-done etc. while the extrinsic reward is

concerned with motivation such as money, compensation, salary, bonus, retirement benefit

etc.

Employees’ question in this research is “what does the general concept of incentive mean to

employees in the public organization?” This question was developed in an attempt to capture

the general picture of motivational incentives in the mindset of employees, particularly public

employees. To some extent, respondents can express their thought or opinion about

incentives through examples or other means. Among those responses, the three most

frequently repeated by respondents were: promotion, money or encourage employees to work

harder. The other categories were: appreciation, recognition, collaborative working

environment. These categories generally matched the characteristics of intrinsic and extrinsic

motivational incentive categories.

4.6.2. Linkages of leaders’ motivational incentives to employees’ reducing absenteeism In Table 10, the R-squared value from model summary is 0.084 which means 8.5% of

variation in job performance is accounted by variation in the motivational incentives variable

namely, recognition, trust, "difference” to society, freedom, appreciation, promotion, honest,

collaborative work environment.

Table 10: Model Summary multiple regression of analysis on reducing absenteeism

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

1 .289a .084 .049 .97703

38

a. Predictors: (Constant), Recognition, Trust, "Difference” to society, Freedom, Appreciation,

Promotion, Honest, Collaborative work environment b. Dependent Variable: Reducing

absenteeism

The results of ANOVA are presented in Table 11, F= 2.64 and p < 0.05. That means that least

one of the 9 independent variables can be used to explain job performance in the FPS.

Table 11: ANOVA for reducing absenteeism

Model Sum of Squares df Mean Square F Sig.

1 Regression

Residual

Total

20.898 9 2.322 2.433 .012b

229.102 240 .955

250.000 249

a. Dependent Variable: Reducing absenteeism,

b. Predictors: (Constant), recognizes, trust, "difference” to society, freedom, appreciation,

promotion, honest, collaborative work environment

Table 12 presents the correlation between motivational incentives variables and job

performance (reducing absenteeism, quality improvement, motivated, satisfaction and better

performance).

Table 12: Coefficients for the relationship between predictors and reducing absenteeism

Model

Unstandardized

Coefficients

Standardized

Coefficients

t Sig. B Std. Error Beta

1 (Constant)

Work environment

Trust

Honest

"Difference” to society

Participation

-.541 .232 -2.329 .021

-.185 .080 -.257 -2.299 .022

.038 .094 .050 .402 .688

.084 .087 .107 .970 .333

.083 .059

.064

.114 1.422 .156

.035 .047 .546 .585

39

Freedom

Promotion

Appreciation

Recognition

-.074 .067 -.100 -1.099 .273

.035 .070 .049 .496 .620

-.017 .069 -.025 -.250 .803

.157 .068 .230 2.313 .022

a. Dependent Variable: Reducing absenteeism Regression equation

Reducing absenteeism = -0.541-0.185W+0.038T +0.084H+0.083D+0.035P -0.074F+0.035Pr

-0.017A+0.157R

Where;

W=Work environment T=Trust, H=Honest, D="Difference” to society, P=Participation,

F=Freedom, Pr=Promotion, A=Appreciation and R=Recognition

The results show that appreciation and freedom had significant relationship with job

satisfaction and job satisfaction (B = -0.185, p < 0.05) and (B = 0.157, p < 0.05) respectively.

However the rest of variables were found to be insignificant.

According to the findings of this study, it can be easily observed that extrinsic as well as

intrinsic motivation are important and employers need to design incentive schemes matching

the magnitude of the task and hard work of employees put in place. From the results it is also

observed that extrinsic and intrinsic factors have their own value and by providing employees

with extrinsic motivational incentives (promotion, recognition, freedom, participation) as

well as intrinsic motivational incentives (appreciations, trust, honest, work environment,

“difference” to society) employers can motivate their employees for higher performance and

drive organizational commitment which might reduce expenditures on unnecessary attrition.

Findings of this study suggest that well-motivated employees are more committed, efficient

and effective for organization.

Consequently if motivational incentives are being ignored by leaders’, employees might show

annoyance through increased job satisfaction and reducing absenteeism, dissatisfaction and

demotivated. It is therefore crucial for FPS to keep employees happy by extrinsic and

intrinsic motivational incentives. Trust, honest, work environment, appreciation, promotion,

participation, freedom, and recognition) had a statistically significant, direct and positive

40

effect on employees’ job performances. Hence, if such motivational incentives offered to

employees were to be altered, then there would be a corresponding change in job

performances.

4.7. Linkages and Extents of Motivational Incentives and Performance Dimensions

Table 13 (model summary), displays the results of the multiple regression analysis between

leaders motivational incentives and job performance (job satisfaction) using the Stepwise

Method. The results indicate that appreciation is the most significant predictor of job

satisfaction and job satisfaction contributing to 30.9% of performance, and followed by

freedom, which contributes a further 6.7% to performances, together, appreciation and

freedom contributes a total of 37.5% to job performance.

Table 13: Model summary for stepwise method for job satisfaction

Model R R Square Adjusted R Square

Std. Error of the

Estimate

1 .556a .309 .307 .83432

.79566 2 .612b .375 .369

a. Predictors: (Constant), Appreciation

b. Predictors: (Constant), Appreciation, Freedom

The third research question investigate extents of leaders’ motivational incentives are linked

to employees on job performance. Appreciation, freedom and recognition were the most

important significant predictors of job performance. Appreciation and freedom were

contributed 37.5% and identified to be significant predictors of job satisfaction. Recognizes

the extra effort was found to be significant predictors of employees’ job performances

explained by reducing absenteeism.

Therefore, it can be concluded that the two leaders’ motivational incentives variables,

appreciation and freedom were found to be the significant predictors of job satisfaction and

job satisfaction of the employees in the FPS that were studied. As the result of the study

41

considered appreciation with positive recognition for well-done job and freedom in decision

making, intrinsically and extrinsically, respectively were strong predictors of job satisfaction

dimension.

Table 14 (model summary), displays the results of the multiple regression analysis between

leaders motivational incentives and job performance dimension (reducing absenteeism) using

the Stepwise Method. The results indicate that recognition is the most significant predictor of

reducing absenteeism contributing to 4.7% R Square value. As the result of the study

considered recognizes the extra effort was a predictor of reducing absenteeism dimension

(reducing absent, quality improvement, motivated, satisfaction and better performance),

therefore more consideration should be given to its factor as compared to intrinsic

motivational incentive factors.

Table 14: Model summary for stepwise method for reducing absenteeism

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

1 .216a .047 .043 .98024

a. Predictors: (Constant), Recognition

A positive and significant effect of intrinsic motivational incentives through appreciation on

job satisfaction was observed. This indicates a significant linkage was existed between

appreciation and reducing absenteeism. Findings reveal extrinsic and intrinsic motivational

incentives are positively and significantly and positively associated with employees’

performance. Findings also suggest that extrinsic and intrinsic motivation shows positive

linkage with employee job performance dimension (job satisfaction and reducing

absenteeism). Similar findings were reported by Kalhoro et al. (2017) that extrinsic and

intrinsic motivation shows positive linkage with employee job performance.

Appreciation of employees with positive recognitions of employees at Federal Public Sectors

of Ethiopia found that members were most likely to perceive appreciation and positive

recognition and that is one of the causes of enhances valued outcome, employee job

satisfaction and retention. As expected, the results of this study shows that the relationship

between employee appreciation with positive recognition (leaders’ intrinsic motivational

42

incentive) and job performance dimensions such as valued outcome, job satisfaction and

retention is significant (ρ<0.05). The result further indicates that the direction of the

associations is positive in which it implies that the more appreciation is given to the

employees, the possibility of them to enhance valued outcome, job satisfaction and retention

will be higher. This study finding is in line with Kalhoro et al. (2017) who stated that

intrinsic motivational incentive (appreciations) of employers can motivate their employees

for higher performance and drive organizational commitment which might reduce

expenditures on unnecessary attrition. Rehman et al. (2016), intrinsic motivation is one of the

majority appropriate and consistent influences on the creative-ability and innovativeness. Job

related and social incentives such as opportunity to use one's ability, interesting work,

recognition of a good performance, development opportunities, a sense of challenge and

achievement, participation in decision making, and being treated in a caring and thoughtful

manner (Olubusayoa et al., 2014). Intrinsically motivated workforce renders more attachment

to the job duty for their own attention, as well as to look for substitute technique of resolving

dissimilar complication happening in business (Rehman et al., 2016). Most employees would

actually like to be recognized by their levels of skills and competencies within the

organizations because they tend to feel relevant and the sense of belonging to the

organization (Nyambegera and Gicheru, 2016). This further enhances their attachment to the

organization. Findings of Kalhoro et al. (2017) reveal extrinsic and intrinsic motivations are

positively and significantly and positively associated with employees’ performance. Findings

also suggest that extrinsic and intrinsic motivation shows positive linkage with organization

commitment.

Enhancing job satisfaction are more important than other human resource functions because

talented and intellectual capitals never fall in shortage and if not satisfied of current situations

they are easily switch over to another of many choices. Different reasons why peoples are

either staying or leaving organizations; one of these reasons is employee satisfaction, other

theoreticians call it job satisfaction, if an employee is satisfied with his/her job then they tend

to perform well while opposite is correct, and individuals are eager to leave the organization

due to opportunities in other places (Al-Qeed et al., 2016). In other words, high performing

employees will leave the organizations if they don’t feel valued, while employees who feel

valued and trusted tends to be more productive than their counterparts(Al-Qeed et al., 2016).

43

The role of good leader is to know how to attract and retain those intellectuals for the sake of

organization because hiring new intellectuals and talented employees is more expensive than

sustaining old one (Al-Qeed et al., 2016). In order to overcome challenges, organizations

should create a strong and positive relationship with its employees, direct them towards task

fulfillment and ensure they have job satisfaction (Fisher, 2012).

4.8. Motivational Incentive Preferred to High Employees' Job Performance The fourth research question the type of motivational incentive is preferred to getting high

employees' job performance. The interviewed showed that proposed and preferred payment

related motivational incentives their morale can be boosted since the ability of the leaders’ to

attract and retain employees depend on how much monetary incentives, it is prepared to

offer. Poor wages and salaries as well as poor protection and fairness are a constant source of

frustration to employees and when they engage management in constant strife, the result is

decrease productivity. However, the public sectors attract and retain employees depend on

how much employees receive appreciation and positive recognition from leaders’ for

welldone job and provision freedom in deciding how to carry out work and encourages to

take initiatives. Promotion, better pay fringe benefit and other social incentives are essential

factor that motivate the employees to increase productivity (Olubusayo et al., 2014). It is

therefore recommend that public sectors should strive to improve on monetary and

nonmonetary incentives systems giving to their employees in order to get the best output.

SUMMARY, CONCLUSIONS AND RECOMMENDATIONS

5.1. Summary The purpose of the study was to investigate the effects of leaders’ motivational incentives on

employees’ job performance at selected Federal Public Sectors (FPS) in Addis Ababa. The

research instrument was a structured questionnaire and interview questions. A convenience

sampling technique was used to select the respondents for this study at four selected

Ministries in Addis Ababa. A total of 250 employees of these Ministries constituted the

44

sample. Pearson’s correlation analysis and linear regression were employed to examine the

relationship between dependent variable and the independent variables. The first research

question examined leaders’ intrinsic motivational incentives affect employees’ job

performance. The findings show the existence of a significant relationship between intrinsic

motivational incentives and employee performance. The components examined under

intrinsic motivational incentives including trust, honest, collaborative work environment,

appreciation and ”difference” to society were collectively found to be significant predictors

of employees’ job performance at FPS in Addis Ababa. The second research question

examined leaders’ extrinsic motivational incentives affect employees’ job performance. The

components examined under extrinsic motivational incentives including promotion,

participation, freedom and recognition were collectively found to be significant predictors of

employees’ job performance at FPS in Addis Ababa. The third research question investigate

extents of leaders’ motivational incentives are linked to employees on job performance.

Appreciation, freedom and recognition were the most important significant predictors of job

performance. Appreciation and freedom were contributed 37.5% and identified to be

significant predictors of job satisfaction. Recognizes the extra effort was found to be

significant predictors of employees’ job performances explained by reducing absenteeism.

The fourth research question the type of motivational incentive is preferred to getting high

employees' job performance. Payment related motivational incentives were proposed and

preferred since employees morale can be boosted; even though the present public sector

leaders’ motivational incentives are used appreciation and freedom to attract and retain

employees.

5.2. Conclusions

On the basis of the results obtained indicating, all the dimensions leaders’ motivational

incentives instrument were assessed using correlation and multiple regression analysis to

ascertain the extent to which they explain the variance in employees’ job performance

dimensions. The finding indicates appreciation, fairness; protection and payment were

leaders’ motivational incentives dimensions. Whereas job satisfaction, reducing absenteeism

and achievement were employees job performance dimensions. Appreciation with positive

recognition factor was found to be significant predictors of employees’ job performance (job

satisfaction and reducing absenteeism).

45

Fairness, protection, and payment were found to be insignificant positive predictors of

employees’ job performance (job satisfaction and reducing absenteeism). The provision of

motivational incentives through fair and constructive performance evaluation, protection and

payment are somewhat weak and hardly contribute for better employees’ job performance.

From the findings it is concluded that provision of both intrinsic and extrinsic motivational

incentives have strong positive effect on employees’ job performance. Appreciation and

positive recognition for the extra effort that put at workplace, and freedom in deciding how to

carry out work and encourages employees to take initiatives were linked and reflect

positively on the performance of employees.

Appreciation and positive recognition for the extra effort that put at workplace is highly

linked that the public sectors leaders’ are used to attract and retain employees (job

satisfaction). When employee is appreciated, freed and recognized for the work carry out,

improves his/her motivation and results in delivering more than the required amount of

output and result in higher degree of efficiency. Poor wages and salaries as well as poor

protection and fairness are a constant source of frustration to employees and when they

engage management in constant strife, the result is decrease productivity. Promotion, better

pay fringe benefit and other social incentives are essential factor that motivate the employees

to increase productivity.

5.3. Recommendations

Current provision of motivational incentives through fairness, protection and payment are

somewhat weak and hardly contribute for employees’ job performance at public sector. The

Government should give attention and revise the performance evaluation systems, protection

(health and safety provision) and salary payment.

Employees who work harder and perform well and meet their targets should be motivated by

their respective organizations by giving them a special treatment in terms of incentives like

46

promotion with fair evaluation, protection and better payment to induce others to follow their

footsteps.

Public sectors should strive to improve fairness, protection and payment motivational

incentives systems giving to their employees in order to get the best performance.

Motivating employees’ by providing motivational incentives help the public sector to retain

experienced workers longer. Thus, the government should develop proper policies which

motivate employees’ to retain longer and for ultimate performance.

Public sectors leaders should acknowledge the effect of their motivational incentives on such

organizational aspects as employee reducing absenteeism levels and employee job

satisfaction rates.

Public sectors organizations should improve its performance evaluation system by setting

clear criteria for evaluation. In addition the results (feedback) of performance evaluation

should be communicated timely to the staff.

Further studies in this area should increase the sample size; attention should also be giving to

the role of leaders’ motivational incentive on employees’ job performance in regional and

cities level.

REFERENCES

Aarabi, M.S., Subramaniam, I.D. & Akeel A.A. 2013. Relationship between motivational

factors and job performance of employees in Malaysian Service Industry. Asian

Social Science; 9(9), 301-310.

Ackah, D. 2014. The impact of motivation on employee performance in the manufacturing

industry in Ghana. Global Journal of Management Studies and Researches, 1(5):

291-310.

47

Ali, R., & Ahmad, M.S. 2009. The impact of reward and recognition on employees’

motivation and satisfaction: An Empirical Study. International Review of Business

Research Papers, 5(4): 270-279.

Al-Qeed, M.A. Al-raggad, M.A., Al-shura, M.S., Alqaisieh N.M. & Al-Azzam, Z.F. 2016.

The impact of ideal employee award on the retention of distinctive competencies in

public sector organizations in the Hashemite Kingdom of Jordan: A field study of

public sector employees who obtained the ideal employee award civil service

Bureau. International Journal of Business and Social Science, 7(3): 104-114.

Anderson, J. C., & Gerbing, D. W. (2011). Structural equation modeling in practice: A

review and recommended two-step approach. Psychological bulletin, 103(3): 411.

Asfaw, A.M, Argaw. M.D., Bayissa. L. 2015. The impact of training and development on

employee performance and effectiveness: A case study of district five administration

office, Bole Sub-City, Addis Ababa, Ethiopia. Journal of Human Resource and

Sustainability Studies, 3: 188-202.

Avolio, B. & Bass, B. 2004. Multifactor leadership questionnaire: Third Edition Manual and

Sampler Set, Mind Garden Inc., Palo Alto, CA.

Babatunde, O. &Emem, I. 2015.The impact of leadership style on employee’s performance in

an organization.Public Policy and Administration Research, 5(1): 193-205.

Balzer, W., Kihm, J., Smith, P., Irwin, J., Bachiochi, P., Robie, C., Sinar, E. & Parra, L.

1997. Users’ manual for the job descriptive index (JDI; 1997 Revision) and the job

in general (JIG) scales. Ohio: Bowling Green State University, USA.

Bernstein, D. A. 2011. Essentials of psychology. Belmont, CA: Wadsworth. Bandiera, O., Khan, A. &Tobias, J. 2017. Rewarding bureaucrats: Can incentives improve

public sector performance? IGC Growth Brief Series 008. London: International

Growth Centre.

Bass, B.M., Avolio, B.J., Jung, D. I., & Berson, Y. 2003. Predicting unit performance by

assessing transformational and transactional leadership. Journal of Applied

Psychology, 88(2): 207-218.

Beer, M. & Walton, R.E. 2014. Reward systems and the role of compensation. In J.G. Searle,

Manage people, not personal. Boston: Harvard Business Review.

48

Bodla, M.A., & Nawaz, M. 2010.Comparative study of full range leadership model among

faculty members in public and private sector higher education institutes and

universities. International Journal of Business and Management, 5(4): 208-214.

Brief, A.P. & Weiss, H.M. 2002. Organizational behavior: Affect in the workplace. Annual

Review of Psychology, 53, 279-307.

Chandra, T., & Priyono, L. 2016.The Influence of leadership styles, work environment and

job satisfaction of employee performance. International Education Studies, 9

(1):131-140.

Chukwuemeka, E.E.O., Anigbogu, T., Onwuka, E.M. & Nwali, T.B. 2014. Comparative

analysis of motivation and leadership theories as tools for effective public sector

administration. European Journal of Business and Social Sciences, 3(4): 39-55.

Cooper, B.R. & Jayatilaka , B. 2010. Group creativity: The effects of extrinsic, intrinsic and

obligation motivations. Journal of creativity research, 18(2): 153-172.

Cooper, D.C. & Schindler, P.S. 2009.'Business Research Methods', 9th ed., Tata McGrawHill,

New Delhi.

Dessler, G., Cole, N. D. & Sutherland, V. L. 2002. Human Resources Management in

Canada. Canada: Prentice-Hall, Inc., a division of Pearson Education.

Durga, D.P. & Prabhu, N. 2011.The relationship between effective leadership and employee

performance. International Conference on Advancements in

Information Technology, 20: 198-207.

Edward, E. 2009. Pay and organizational effectiveness. A Psychological View. New York.

McGraw – Hill.

Elqadri, Z.M., Suci, R.P. & Chandr, T. 2015.Effect of leadership style, motivation, and

giving incentives on the performance of employees—PT. Kurnia Wijaya Various

Industries. International Education Studies, 8(10): 183-192.

Fagley, S.N. & Adler, G.M. 2012. Appreciation: a spiritual path to finding value and meaning

in work place. Journal of management, 9(2), 167-187.

49

Fisher, D.M. 2012. Facet personality and surface-level diversity as team mental model

antecedents: Implications for implicit coordination. Journal of Applied Psychology,

97(4): 825-841.

Forson, J.E.M. 2012, Impact of motivation on the productivity of employees at Gtbank

Ghana, 1-136.

Ganta, V.C. 2014. Motivation in the workplace to improve the employee performance.

International Journal of Engineering Technology, Management and Applied

Sciences, 2(6): 221-230.

Gichuru, C. 2015. Effects of motivational incentives on employee performance in small and

medium enterprises in Kenya: A Case Study of Family Bank, School of Business and

Management Studies, Technical University of Kenya.

Gohari, P., Ahmadloo, A., Boroujeni, M.B. & Hosseinipour, S.J. 2013.The relationship

between rewards and employee performance. Interdisciplinary Journal of

Contemporary Research in Business, 5(3): 543-570.

Hair, J. F., Black, W. C., Babin, B. J., Anderson, R. E. and Tatham, R. L. 2006. 'Multivariate

data analysis', 6th ed., New Jersey: Pearson Education.

Hameed A., Ramzan, M., Hafiz, M. Zubair, K., Ali G., &Arslan, M. 2014. Impact of

compensation on employee performance (empirical evidence from banking sector of

Pakistan). International Journal of Business and Social Science, 5(2): 302-309.

Hameed, Z., Maqbool, A., Athar, M.R., Ijaz, M.S. & Hassan, E. 2013. How to increase

employee performance: investigating the impact of incentive motivators and

organization-based self-esteem in a Pakistani Perspective, Middle-East Journal of

Scientific Research, 14(5): 696-702.

Iqbal, N., Anwar, S. &Haider, N. 2015. Effect of leadership style on employee

performance.Arabian J Bus Manag Review., 5: 146. doi:10.4172/22235833.1000146.

Ivancevich, J.M. 2004. Human Resource Management. New Delhi: Tata McGraw-Hill Publishing Company Limited.

Johnson, R. A., Houmanfar, R & Smith, G. S. 2010. The effect of implicit and explicit rules

on customer greeting and productivity in a retail Organization. Journal of

Organizational Behaviour Management, 30 (1): 38-15.

50

Kaiser, L.C. 2014. Job satisfaction and public service motivation,” IZA Discussion Paper No.

7935, January 2014, (Bonn: Institute for the Study of Labour).

Kalhoro, M., Jhatial, A.A. & Khokhar, S. 2017. Investigating the influence of extrinsic and

intrinsic motivation on work performance: study of Bank Officers. GMJACS, 7(1),

121-129.

Kehoe, R.R. & Wright, P.M. 2013. The impact of high-performance human resource

practices on employees’ attitudes and behaviors. Journal of Management, 39(2):

366–391.

Khan, M.A., Rehman, K., Rehman, I., Safwan, N. & Ahmad, A. 2011.Modeling link between

internal service quality in human resources management and employees retention: A

case of Pakistani privatized and public sector banks.African Journal of Business

Management, 5(3): 949-959.

King, A.J, Johnson, D.P., &Vugt, M.V. 2009.The origins and evolution of leadership.

Current Biology, 19: 911–916.

Kiviniemi, M.T., Snyder, M. & Omoto, A.M. 2002. Too many good things? The effect of

multiple motivations on stress. Personality and Social Psychology Belletin, 28,

732743.

Kothari, C.R. 2004. Research methodology: Methods & methodology. 2nd revised edition

Published by New Age International (P) Ltd., Publishers, New Delhi.

Kreisman, B.J. 2002. Identification of the drivers of employee dissatisfaction and turnover. (Doctoral dissertation, University of Texas, 2002).

Lipman, V. 2014. Want motivated employees? Offer ample opportunities for growth.

Accessed 5.5.2018.

https://www.forbes.com/sites/victorlipman/2014/01/24/want motivated

employees- offer-ample-opportunities-for-growth/#faad08552c66.

Luthans, F., Avolio, B. J., Walumbwa, F. O. & Li, W. 2005. The psychological capital of Chinese workers: Exploring the relationship with performance. Management and Organization Review, 1, 247-269.

Makki, A. & Abid, M. 2017. Influence of intrinsic and extrinsic motivation on employees

task performance. Studies in Asian Social Science, 4(1): 38-43.

51

Mamdani, K.F. & Minhaj, S. 2016. Effects of motivational incentives on employees’

performance: a case study of banks of Karachi, Pakistan. South East Asia Journal of

Contemporary Business, Economics and Law, 9(2): 32-39.

Mosley, D.C., Pietri, P. H. & Mosley Jnr, D. C. 2012. Supervisory management: The art of

inspiring, empowering and developing people. Mason, OH: Thompson

SouthWestern.

MPSHRD, 2016. Ministry of Public Service and Human Resource Development, National

Public Service Human Resource Statistics, Pp 83.

Ndungu, D.N. 2017.The effects of rewards and recognition on employee performance in

Public Educational Institutions: A Case of Kenyatta University, Kenya. Global

Journals Inc. (USA), 17(1): 42-68.

Neckermann, S. & Kosfield, M. 2008. Working for nothing? Th effective of non-material

Awards on Employee Performance. Frank Goethe- University Germany.

Nemoto,T. & Beglar, D. 2014. Developing Likert-scale questionnaires.In N. Sonda& A.

Krause (Eds.), JALT2013 Conference Proceedings. Tokyo: JALT.

Ngima, W.M. & Kyongo, J 2013. Contribution of motivational management to employee performance. International Journal of Humanities and Social Science, 3(14), 219239.

Nwali, T. B. & Nkwede, J. O. 2011. Public private partnership in the development of public

sector administration in Nigeria: Issues and Challenges. International Journal of

Social Sciences and Humanities Review, 2(3): 165-173.

Nyambegera, S.M. & Gicheru, C.N. 2016 Extrinsic and intrinsic factors influencing

employee motivation: Lessons from AMREF Health Africa in Kenya. International

Journal of Business and Social Research, 6(9): 20-31.

Olubusayoa, F.H., Stephenb, I.A. Maxwell, O. 2014. Incentives Packages and Employees’

Attitudes to Work: A Study of Selected Government Parastatals in Ogun State,

South-West, Nigeria. International Journal of Research in Business and Social

Science IJRBS, 3(1): 63-74.

O’Riordan, J. 2013. Public service motivation: In the State of the Public Service research

series. Institute of Public Administration, IPA, Irish, PP, 36.

52

Perry, J.L. & Hondeghem, A. 2008. Building theory and empirical evidence about public

service motivation. International Public Management Journal, 11(1): 3- 12.

Priya, T.U. & Eshwar T.S. 2014. Rewards, motivation and job satisfaction of employees in

Commercial Banks- An investigative analysis. International Journal of Academic

Research in Business and Social Sciences, 4(4): 70-78.

Qaisar, A., & Sara, Y. 2009. Effect of leadership development on employee performance in

Pakistan. Pakistan Economic and Social Review, 47(2): 269-292.

Rehman, M.K.U., Shahzad, S., Khan, S. & Khan, Z. 2016. The impact of extrinsic and

intrinsic motivation on employee’s engagement: An Empirical Study of Health Care

Sector of Peshawar, Pakistan. The Discourse, 02(01), 7-18.

Rizwan, M., Nazar, K., Nadeem, B., & Abbas, Q. 2016.The impact of workforce diversity

towards employee performance. American Journal of Marketing Research, 2(2): 53-

60.

Root. J. N. 2016. How employees with poor attendance affect the workplace, Chron. [Online]

Available through: http://smallbusiness.chron.com/employees-poor-attendanceaffect-

workplace-11517.html [Accessed 30th Jun 2018]

Rudge, A. 2011. Birmingham city council links increased contribution and outcomes to

reward and recognition. Human Resource Management International Digest,

19(5):6-8.

Sahinidis, A.G. & Bouris, J. 2008. Employee perceived training effectiveness relationship to

employee attitudes. Journal of European Industrial Training, 32(1): 63–76.

Salleh, F., Dzulkifli, Z., Abdullah, W.A.W., & Yaakob, N.H.M. 2011. The effect of

motivation on job performance of state government employees in Malaysia.

International Journal of Humanities and Social Science, 1, 147-154.

Salman, Z., Riaz, A., Saifullah, M., & Rashid, M. 2011. Leadership styles and employee

performance. Interdisciplinary Journal of Contemporary Research in Business, 3(6):

257-267.

53

Saunders, M., Lewis, P. & Thornhill, A. 2009. Research methods for business students. 5 th

edition, Pearson Education, printed and bound by Rotolito Lombarda, Italy, pp,

581582.

Shiraz, N. Rashid, M. &Riaz, M. 2011.The impact of re-ward and recognition programs on

employee’s motivation and satisfaction. Interdisciplinary Journal of Con-temporary

Research in Business, 3(3): 1428-1434.

Sougui, A.O. 2015. The impact of leadership styles on employees performance in Telecom

Engineering companies. Aust. J. Basic & Appl. Sci., 7(13): x-x, 2015.

Stanley, T.L. 2012. Motivation in today’s workplace. Human Resource Journal, 55(7): 1-9.

Sundi, K. 2013. Effect of transformational leadership and transactional leadership on

employee performance of Konawe Education Department at Southeast Sulawesi

Province

Tahir, L., Abdullah, T., Ali, F., & Daud, K. 2014. Academics transformational leadership: an

investigation of heads of department leadership behaviors in Malaysian Public

Universities. Educational Studies, 40: 473-495.

Tizazu, K. 2015. Employee motivation and its effect on employee retention in Ambo Mineral

Water Factory. International Journal of Advance Research in Computer Science and

Management Studies, 3(3), 11-21.

International Journal of Advance Research in Computer Science and Management Studies,

3(3), 11-21.

Umaru, D. M., Munirat, O.Y.&Isyaka, M. S. 2014.Therelationship between leadership

approach and employees performance in organizations (A Study of Selected

Business Organizations in Federal Capital Territory, Abuja Nigeria).European

Journal of Business and Management, 6(22):

Vadell, J. & Ewing, C. 2011. Intrinsic motivation and servant leadership: A case for

autonomy supporting work environments in the military. International Journal of

Humanities and Social Science, 1(19), 249–251.

Wati, E. 2010. Effect of independence, leadership style, organizational commitment, and

understanding the employee performance Good Governance Government Auditor

(Thesis published, Navan: University General Sudirman).

54

Wei, L.T. &Yazdanifard, R. 2014.The impact of positive reinforcement on employees’

performance in organizations. American Journal of Industrial and Business

Management, 4: 9-12.

Weller, B. 2008. Guidelines: Incentives for health professionals (Geneva, Switzerland: World

Health Organization).

Yin, R. K. 2009. Case study research: Design and methods. Newbury Park, CA: Sage.

Zafar K.A., Ibn-E-Waleed, Q. & Sadiya, A. 2012. The effective leadership style in NGOs:

Impact of servant leadership style on employees‟ work performance and mediation

effect of work motivation. International Journal of Economics and Management

Sciences, 1(11): 43–56.

Zani, R.M., Rahim, N.A. Junos, S., Samanol S. & Ahmad, S.S. 2011. Comparing the impact

of financial and non-financial rewards towards organizational motivation.

Interdisciplinary Journal of Contemporary Research in Business, 3(4): 328-334.

Zhang, A. 2010. Linking empowering leadership and employee creativity: The influence of

psychological empowerment, intrinsic motivation, and creative process engagement.

Academy of management journal, 53(1): 107-128.

55

APPENDIX: QUESTIONNAIRE

OROMIA STATE UNIVERSITY

DEPARTMENT OF HUMAN RESOURCE MANAGEMENT AND LEADERSHIP

RESEARCH QUESTIONNAIRE

I am Moges Temesgen, a student of Master of Art (MA) Program Leadership and Change

Management at Oromia State University. I am conducting a research on The Effect of

Leaders Motivational Incentives on Employee Job Performance: The Case of Federal Public

Sectors in Ethiopia under supervisor of Firdisa Jebessa (PhD).

You are requested to help us by filling this questionnaire. Your response will be highly

appreciated. As per ethics the data will be kept confidential.

Section One: Demographic Information Please fill out the following information:

1. Sex: Female Male

2. Age:

20 to 25 46 to 55

26 to 35 56 to 65 36 to 45 66 and above

3. Educational Qualification:

High School/TVET Master’s Degree

Bachelor’s Degree PhD Degree

4. Work Experience:

Less than 3 years More than 20 years 3 to 6 years

7 to 10 years

11 to 15 years

16 to 20 years 5. Position/ Job Title:___________________________________

56

Section Two: Motivational Incentives The number 1 to 6 represents a continuum with 1 being strong disagreement and 6 being strong agreement, where Strongly disagree (1), Disagree (2), Slightly disagree (3), Slightly agree (4) Agree (5) and Strongly agree (6). Based on your experience as an employee, please tick (√) the number that best reflects your opinion about the statement.

Items 1 2 3 4 5 6 1. My salary payments are prompt and on time 2. I am paid a salary that is enough to cater for my basic needs 3. Our organization has introduced performance related pay schemes 4. I believe financial incentives (salary, bonus and other perks) could

increase motivation at work place.

5. My leader makes any possible effort to create a collaborative work environment

6. My leader makes to build relationships of trust and mutual understanding among employees.

7. My leader makes to rely on open and honest communication and to share knowledge and information in all directions

8. The organization has set clear criteria for promotions, based on meritocracy and transparent procedures

9. In our organization is that employment is protected due to enshrined in law

10.

In our organization is that employment is protected based on standard practice

11.

The management cares about the health and safety of employees.

12.

It provides adequate and up to date IT support and infrastructure.

13.

It respects the individual characteristics of employees’ personality and encourages their development

14.

Your leader requires different specialized skills and you obtain ongoing feedback indicating success in their accomplishment

15.

My job is creative and produces something meaningful

16.

Your leader provides you the opportunity to “make a difference” to society

17.

Work evaluation is based on explicit performance criteria

18.

Performance evaluation forms include the roles and responsibilities of employees, the extent of achievement to pre-determined targets and the quality of final deliverables

19 Evaluations are fair and constructive

57

. Items 1 2 3 4 5 6 20.

Good evaluation has a positive impact on career advancement and/or pay raise of employees

21.

My leader encourages the participation of employees in seminars, workshops and conferences

22.

My leader provides employees the freedom in deciding how to carry out their work and encourages them to take initiatives

23.

My leader facilitate possibility of promotion and growth within an organization

24.

I receive appreciation and positive recognition from my leader for well-done job

25.

My leader recognizes the extra effort that I put at workplace

26.

My organization has variety of training programs to improve employee’s ability

Section Three: Job Performance The number 1 to 6 represents a continuum with 1 being strong disagreement and 6 being strong agreement, where Strongly disagree (1), Disagree (2), Slightly disagree (3), Slightly agree (4) Agree (5) and Strongly agree (6). Based on your experience as an employee, please tick (√) the number that best reflects your opinion about the statement.

Items 1 2 3 4 5 6 1. I feel motivated after my performance review 2. I am proud to work for the public sector organization 3. I have no problems in achieving a balance between my work and

my private life

4. My performance is better than that of my colleagues with similar qualifications

5. I am satisfied with my performance at my work place 6. My leader’s motivational incentives facilitate the implementation of

strategy by attracting and retaining the right kind of people

7. I am committed to have continuous quality improvement in my work

8. I am committed to have continuous attending and reduce reducing absenteeism in my work

9. My leader, motivational incentives are viewed as goals that employees generally strive for, and an instrument that provides valued outcomes

Items 1 2 3 4 5 6

58

10. Being appreciated and being praised by my leader increases my success and job satisfaction at work

11. The leaderships’ motivational incentives motivate me to perform well in my job.

Interview (Section Four): Motivational incentives opinion

1. What type of leaders’ motivational incentive do you have in your organization?

2. What types of non-monetary incentives are available in your organization?

3. Which incentive is more important for employee to motivate?

4. What are the positive financial consequences of performance are utilized effectively

5. How do you overcome problems in achieving a balance between public service needs and

your job performance

6. What are the negative financial consequences of performance are utilized effectively

Thank You for Your Cooperation!!!

59