ASSESSMENT OF REWARD SYSTEM ON MINISTRY OF REVENUE: THE CASE

STUDY OF MEDIUM TAX PAYER OFFICE

A Thesis Submitted to the School of Graduate Studies of New Global College in Partial
Fulfillment of the Requirements for the Master of Art in Business Administration (MBA)

Prepared By: Hanna Shigute Bekasa

Advisor :- Biruk T. (PHD)

May, 2022

Addis Ababa, Ethiopia

 Declaration

I declare that this Research Report on “Assessment of a reward system on ministry of revenue ”
is my own original work with assistances and guidance from my Advisor and not submitted
before for any institution and any purpose. I further declare that all the sources used in this
research report have been properly recognized and acknowledged as in-text-citation and
reference list.

Hanna Shigute

_______________________________ _____________________

Signature Date

Advisors approval

Biruk T. (PHD)
Signature-------------------------------------------

Date--------------------------------------------------
 NEW GLOBAL VISION COLLEGE

DEPARTMENT OF BUSINESS ADMINISTRATION

Assessment of a Reward System on Ministry of revenue In Case of Medium tax payer

office

By: Hanna Shigute

Signed by the examining Committee

__________________________________ _________________ ________________

Advisor Signature Date

__________________________________ _________________ ________________

External Examiner Signature Date

__________________________________ _________________ ________________

Internal Examiner Signature Date

List of Content
 Title Page
Acknowledgements.......................................................................................................................VI
List of Acronyms and abbreviation............................................................................................VVI
Abstract………………………………………………………………………………………...
…………VII

List of Tables………………………………………………………………………………………
……..IX

List of
Figure………………………………………………………………………………………………
X

Contents………………………………………………………………………………………..
…………VI

CHAPTER ONE..............................................................................................................................1
1.INTRODUCTION........................................................................................................................1
1.1.Background of the Study...........................................................................................................1
1.2.Statement of the problem……...
………………………………………………………………………..5

1.3.Research Question………………………..
………………………………………………………….…6

1.4.Objectives/purpose/ of the study...............................................................................................6

1.5.Significance of study…………………………………...
………………………………………………7

1.6. Scope and limitation of the study.............................................................................................6

1.7.Definitiono f term…….
…………………………………………………………………………………7

1.8.Organization of the Study Design............................................................................................7

CHAPTER TWO.............................................................................................................................9
2 .LITERATURE REVIEW............................................................................................................9
2.1. Reward and Reward mgt overview..........................................................................................9
2.2. Types of rewards as classified by differentvAuthers..............................................................11
2.3. Purpose of the reward.............................................................Error! Bookmark not defined.
2.5. Reward System According Armstrong..................................................................................14
2.5.1. Features of a Reward system...............................................................................................16
2.5.2. Determinants of Reward System........................................................................................16

2.5.3 Evaluating the Reward Systems...........................................................................................17

2.5.4. Factors that infuence a company ‘s reward system.............................................................18
2.5.5. Criteria for an effective Reward System............................................................................18
2.5.6. Components of reward system.............................................................................................19
2.5.7.Type of Reward……………………………………………………..
…………………………….…20

2.5.7.1. Financial rewards..............................................................................................................20

2.5.7.2. Non-financial rewards......................................................................................................20
2.7. Strategic Aims of Reward System Management....................................................................21
2.8. Pay Reward System................................................................................................................23
2.9.Rewardphilosophy………………………………….
…………………………………………………23

2.10. Perception of Employees......................................................................................................24

2.11. The Multi-Dimensionality of Reward..................................................................................24
2.12. Reward Practices..................................................................................................................25
2.12.1. Base pay.............................................................................................................................25
2.12.2. Employee Benefits.............................................................................................................25
2.12.3. Recognition........................................................................................................................26
2.12.4. Promotion..........................................................................................................................27
2.12.5. Working Conditions...........................................................................................................27
2.13. Types of Evaluation..............................................................................................................28
2.14. Types of grade and pay structure..........................................................................................28
2.15. Types of Compensation........................................................................................................29
2.16. The impact of incentives on employee motivation...............................................................29
2.17. Challenges in the implementation of Reward Management Systems..................................30
2.18. Overcoming the challenges of reward system......................................................................30
CHAPTER THREE.......................................................................................................................31
RESEARCH DESIGN...................................................................................................................31
3.1. Research Method and approach..............................................................................................31
3.2.Study population and sample...................................................................................................33
3.3. Data gathering technique........................................................................................................33

CHAPTER FOUR.........................................................................................................................34
DATA PRESENTATION, ANALYSIS AND INTERPRETATION...........................................34
4.1.Demographic characteristic of respondent……………………….
…………………………………...38

4.2. General Reward System of the minisry of revenue ...............................................................38

CHAPTER FIVE...........................................................................................................................54
SUMMARY, CONCLUSION AND RECOMMENDATIONS....................................................54
5. 1 Summary of Major Findings...................................................................................................54
5.2.General questions on the organization’s reward system..........................................................55
5.3.Reward Composition...............................................................................................................56
5.4.Conclusion...............................................................................................................................57
5.5.Recommendations....................................................................................................................58
Reference……………………...
…………………………………………………………………………..61
 Acknowledgements

Above all, I praise my God for enabling me to complete my Work. I would like to express my
deepest gratitude to Biruk T. (PHD), the advisor of my thesis for his valuable guidance, support
and dedication throughout the period of the study.

I would also express my special thanks to the employees and Managers of Ministry of revenue
and who helped me in filling the questionnaires and interviews patiently and promptly by
sacrificing their precious time.

My sincere and heartfelt gratitude goes to my best friend Abdena Obssa (MBA) for his valuable
comments and helpful research materials he has provided me with throughout my thesis
preparation.

Thank you

Miss. Hanna Shigute

List of Acronyms and abbreviation

MOR- Ministry of Revenue

SPSS- Statistical program for social students

MTO –Medium Tax Payer Office

MBA-Master of Business Administration

MGT-Management

HRM-Human Resource Management

HR-Human Resource

5555-Miss Value
 Abstract

The purpose of this study was to assess the reward system on Ministry of Revenue : the case of
Medium Tax Payer Office. To address the research question, the researcher has conducted
interviews with the branch manager. In addition to this, the analysis was done by the help of
SPSS version 20 and presented using descriptive statistics. Tables are used to provide
information on the variables. Interpretation is made on the frequency and percentage of the data.
The results are investigated in terms of descriptive statistics followed by inferential statistics on
the variables. A Total of 125 questionnaires were distributed to the employees in the medium tax
payer branches and a total of 112 employees completed the questionnaire properly. The study’s
result has implied that employees of the MOR were not motivated by the Office reward system.
Even though the implemented both financial and nonfinancial rewards, currently the financial
reward that implemented is not attractive when comparing with competitors and current market.
Employees like to be consulted what they need most when they perform better. Therefore the
MOR should modify the existing reward system especially financial rewards, make available
exceptional rewards to retain skilled and high performing employee. Finally, the researcher’s
lack of prior experience in conducting systematized research and absence of prior works on the
subject matter in Ethiopian context would have some impact on the results of the study that will
call up for other researchers to prove the reliability of this study

Key words: Reward system, reward types, Employee Ministry of Revenue

List of Table

Contents Title
Pag

e
Table 1:The Components of Total Reward...................................................................................13
Table 2: is adopted with some adjustment to indicate the components of total reward................21
Table 3.Proportinat Sampling Determination………………………………………………………………….
…………………….36

Table 4. Demographic profile of respondents by Age..................................................................39

Table 5. Demographic profile of respondents by Sex..................................................................39
Table 6. Summary of respondents Educational Background.........................................................40
Table 7.Summary of respondents on job position of respondent..................................................41
Table 8. Summary of respondents on job Experience of respondent...........................................41
Table 9.Reward practice in MOR..............................................Error! Bookmark not defined.43
Table 10.Satisfaction with reward system.....................................................................................44
Table 11 The reward is fair in your org(MOR)...............................................................................44
Table 12. Respondents on both financial and non-financial reward............................................45
Table 13. Respondents compensated enough in (MOR)..............................................................46
Table 14.Investment of human asset to ward employee morale....................................................47
Table15.Employee motivation/Composition/ in organization.......................................................48
Table16.Reward system consider all employees and Policy organization....................................49
Table17.Mgt gives attention on reward mgt practice……………………………..
………………………50

Table18.Factors of turnover..........................................................................................................51
Table19.When compared to similar organizatio............................................................................52
Table20.Incentive lead you to further commitment to stay in MOR.............................................53
Table21. Summary of Cases Survey in the study..........................................................................54

List of Figure

Title Page

Figure1: How A Reward System Operates Source………………………….16

 CHAPTER ONE
INTRODUCTION

This chapter presents the general idea of the whole thesis. It covers the background of the study,
statement of the problem, research questions and objectives of the study, significance of the
study, scope of the study, limitation and organization of the study.

1.1. Background of the Study

The idea of paying or rewarding an individual for his/her labor is not new. It is as old as with the
development of modern human being. As Kunango and Mendonca (1994, p.51) stated the notion
of reward is deeply embedded in every culture and society. Any company, whether it is engaged
in manufacturing or provision of service, needs human resource in order to achieve its objectives.
Among other things, people usually consider the attractiveness of the reward package that an
organization offers at the time of employment. Existing employees, also, works in expectation of
some rewards. (Kunango and Mendonca (1994, p.51)

In the current dynamic market condition, where competition is becoming stiffer than ever,
having the right quality and quantity of employees and rewarding them based on their need is
very important. Despite the level of combination of a reward system, in general, reward is
believed to be a source of motivation for employees to perform with their maximum potential
Kanungo & Mendonca, (1994). Employees who perceive their reward system as fair and
equitable will have better work motivation, job performance, job satisfaction and lower turnover.
Kanungo & Mendonca, (1994).

A reward system that is designed with appropriate combination of financial and non-financial
options and provided depending on the performance, needs and values of employees will have
greater importance in winning the psychology of employees so as to utilize their maximum
potential for the achievement of organizational objectives.

In most cases, reward systems are designed to attract and retain skilled employees, to promote
specific job behaviors appropriate for high level of performance and motivate employees to work
harden in return to help the company achieve its strategic goals (Gomez-Mejia, Balkin & Cardy,
2005; Kunango & Mendonca, 1994, p. 50; Hume, 2000, p. 5-6).Since the time of scientific
management, most managers have tried to relate effort and reward. It was common to use
incentive plans like “piece of work” schemes or sales “spiffs” were thought to motivate or incite
workers to improve production or sell (Bowen, 2000; P. 2).

Kanungo & Mendonca (1994, p.42) argues that one reward for all employees will not be
effective to induce greater work motivation among employees. They added that a reward system,
in order to attract and retain skilled employees and motivate workers to high level of
performance, has to comprise both monetary and non-monetary rewards. Proko penko (1987,
p.208) supports this idea and states that the only way to ensure cooperation of workers is, to
share with them the gains from productivity both in monetary and non-monetary terms.

Most companies have developed their own reward system contextual to their environment and
based on their organizational culture. A reward system comprises both monetary and non-
monetary rewards. However, in the past, most managers had been emphasized on the monetary
aspect of reward.

The differing value of rewards among employees will influence imbalanced reward practice
between monetary and non-monetary rewards. As a result, companies will fail to achieve the
aims of reward system. Even though most scholars suggest on the inclusion of financial and non-
financial rewards in the total rewards system, many companies are still reluctant to either include
or implement it. According to Hume (2000, p. 74) a poorly designed reward system is likely to
manifest itself in the recruitment of poor quality staff, undesirable level of employee
performance and motivation, and high level of employee turnover.

Rewards are an ever-present and always controversial feature of organizational life. Some
employees see their jobs as the source of a paycheck and little else. Others derive great pleasure
from their jobs and association with coworkers. Even volunteers who donate their time to
charitable organizations, such as the Red Cross, walk away with rewards in the form of social
recognition and pride of having given unselfishly of their time. Hence, the subject of
organizational rewards includes, but goes far beyond, monetary compensation. (Kreitner,2010:
255). A good reward system should attract talented people and motivate and satisfy them once
they have joined the organization. Further, a good reward system should foster personal growth
and development and keep talented people from leaving (Kreitner, 2010:257).

The Ethiopian Revenues and Customs Authority (ERCA) is the body responsible for collecting
revenue from customs duties and domestic taxes. In addition to raising revenue, it is responsible
to protect the society from adverse effects of smuggling and contraband. It seizes and takes legal
action on the people and vehicles involved in the act of smuggling, any tax evasion and
avoidance while it facilitates the legitimate movement of goods and people across the border
(May 03.2017).
The Ethiopian Revenues and Customs Authority (ERCA) was established by the proclamation
No .587/2008 on 14 July 2008, by the merger of the Ministry of Revenue, Ethiopian Customs
Authority and the Federal Inland Revenue Authority for the purpose of enhancing the
mobilization of government revenues, while providing effective tax and Customs administration
and sustainability in revenue collection. The main objective of the establishment of ERCA was
to streamline the public revenue generation function by bringing the relevant agencies under the
umbrella of the central revenue collector body. This structuring aimed at improving service
delivering, facilitating trade, enforcing the tax and customs laws and thereby enhancing
mobilization of Government revenue in sustainable manner (2017, June 29).
BUT right now ministry of revenue is established with proclamation number 256/1994 issued on
oct.10 ,2002 on article 4,516 and 26 .in accordance with the proclamation the aims, power and
duties bestowed on the former revenue board on proclamation no 5/1987 are fully transferred to
the ministry of revenue .in addition the ministry is given the responsibility of conducting the
revenue sector reform program continuously .furthermore , the ministry leads and supervises
three affiliated revenue sectors .namely :the federal inland revenue(FIRA),the Ethiopian customs
Authority (ECUA) and the national lottery administration (NLA).
The ministry has prepared its vision mission statement .the vision and mission statement are
prepared with fully participation of the staff, stack holders and collaborators .
 1.2 Statement of the Problem
Reward is very important for an organization to compete with this challenging and changing
world. It is basically directly related to employee but its ultimate effect goes to organization
because the end user is the organization itself

In our more heavily skilled & knowledge based economy, employees have become the most
important determinant factors of the organizational success. Reward management policies should
take account of employees’ aspirations, expectations & need of employees as well as
stakeholders in the organization. (Armstrong, 2007:7-24). Employees desire certain rewards
through their respective jobs. Organizational systems that have tendency to reward employees’
performance will have a great contribution on the productivity of employees. The purposes of
reward management are to reward people fairy, equitably and consistently in accordance with
their value to the organization and thus help the organization to achieve its strategic goals.
Reward management practice deals with the design, implementation and maintenance of reward
systems (processes, practices and procedures) that aim to meet the needs of both the organization
and its stakeholders (Armstrong, 2006, 615).
In this study the researcher has tried to identify the reward system implemented, identify criteria
which applied and type of reward on Ministry Of Revenue medium tax payer office. So due to
these reason, I want to study such problem areas in order to deal with the possible solutions for
the reward problems. Therefore, the purpose of this study is to assess the reward system
implemented in Ministry Of Revenue medium tax payer office.

1.3. Research Questions

Hence, this study intends to answer the following leading questions. These research Questions
are:-
1. What are the reward systems looks like in Ministry Of Revenue?
2. What are types of reward system applied in Ministry Of Revenue?
3. What are the Criteria of the reward system application on Ministry Of Revenue?

1.4. Objectives/purpose/ of the study

a) General Objective
The general objective of the study was to assess current reward system of Ministry of Revenue
(MOR).
b) Specific Objectives
• To investigate the reward packages available.
• To identify the factors considered in reward system
• To identify the major problems of the reward system
1.5. Significance of the study
The student researcher believed that this study will have the following benefits; Basically it
enables the student researcher to have basic experience & knowledge, It is believed that it helps
the management of MOR to realize major problem of areas related to reward management
system and give due consideration to reward management practices. Since this project is carried
out to partially fulfill the requirements for the award of Masters of Business Administration, the
researcher will get a benefit from the challenges of research work. The researcher also believes
that this study also helps other researchers who study on this issue.

1.6. Scope and limitation of the study

Due to time constraints, the research was only limited to FDRE Ministry of Revenue Medium tax
payer office branch, that is located around Kirkose subcity Kazanchis. The research assessed
and analyzed the reward practice of the organization, in that particular branch. Although the
research is believed to reach its aims, it has some restrictions. Since this research was conducted
only in one branch, the result may not be applicable to all staff in the organization. The time
given for the research work was not adequate enough to supplement the study exhaustively and
hence, the study by no means claims to be conclusive. It would rather serve as a spring board for
further studies in the area
1.7. Definition of terms

Reward- refers to both financial and non-financial rewards that are provided to employees in
return of their contribution.
Extrinsic rewards: - Financial, Material and social Rewards that come from the environment.
Intrinsic/psychic Rewards: - Self granted pleasures one can get from the task itself or
experiences a sense of competence or self-determination.
Recognition- is special awards for employee achievement, is less common and is associated with
performance but usually operated separately and where many of the rewards are non-cash.
(Stredwick, 2005)
Pay- refers to the amount of pay (the fixed salary or wage) that constitutes the rate for the job.

Benefit - refers to employee’s satisfaction with pension, medical scheme and leave. Employee
benefits refer to compensation other than hourly wage or salary.
Promotion- refers to opportunities that organizations offer for advancement. (Robbins &Judge,
2013) asserts that promotions create the opportunity for personal growth, increased levels of
responsibility and an increase on social standing.
Working condition- includes working hours, relationship with coworkers, and quantity of work
and availability of resources.

1.8. Organization of the Study Design

This study design is organized into five chapters. The first chapters deals with background of the
study, statement of the problem, objective of the study, significance of the study, scope of the
study, definition, limitation of the study. The second chapter elaborated review of related
literature that the researcher has utilized in support of the study. The third chapter discussed
about research methodology and design. The fourth data presentation, analysis and
interpretation. chapter five deals about conclusion and recommendation of research findings.
 CHAPTER TWO
2 LITERATURE REVIEW

This chapter talks about the detailed theoretical concepts that the researchers believe they
provide a good back ground to carry out the research work. Concepts like assessment of reward
system are the main focuses.

2.1. REWARD AND REWARD MANAGEMENT OVERVIEW

Human Resource Management (HRM) deals with the design of formal systems in an
organization to ensure the effective and efficient use of human talent to accomplish
organizational goals. In an organization, the management of human resources means that they
must be recruited, compensated, trained, and developed (Mathis & Jackson, 2011). A reward can
be anything that attracts an employee’s attention and stimulates him to work. It is the benefit that
workers receive by performing a task and discharging a responsibility. Rewards is also defined
as one of the important elements to motivate employees for contributing their best effort to
generate innovation ideas that lead to better business functionality and further improvise
company performance both financial and nonfinancial (Aktar, Sachu, & Ali, 2012).

Previously organizations used to reward the greater number of their staff on the basis of their
knowledge, the physical energy they exert, the degree of their responsibility and the
circumstances of their work situations. Nowadays, however, organizations go beyond these
considerations in order to achieve success. Consequently, some vague sounding terms like
Commitment and Involvement are given emphasis in recent times, as it is well accepted that “to
everyone, work offers an opportunity to gain some type of tangible and intangible rewards” and
not just a pay check (Henderson, 1976: 359).Although good salary is essential in retaining highly
desirable manpower, organizations need to go beyond throwing money at their employees.
Repeated research results show that other non-monetary rewards such as meaningful work, an
understanding employer etc. are as much or even more important reasons that make people stay
in a work place (Kaye et al, 2002). Adequate compensation is in the mind of the receiver.

(Mondy et al, 2002: 350) The implication of a reward package goes beyond just the money
provided and this makes reward management a difficult task. Reward is the total of all
compensation employee get for their contribution to an organization.
Human Resource Management (HRM) deals with the design of formal systems in an
organization to ensure the effective and efficient use of human talent to accomplish
organizational goals. In an organization, the management of human resources means that they
must be recruited, compensated, trained, and developed (Mathis & Jackson, 2011). A reward can
be anything that attracts an employee’s attention and stimulates him to work. It is the benefit that
workers receive by performing a task and discharging a responsibility. Rewards is also defined
as one of the important elements to motivate employees for contributing their best effort to
generate innovation ideas that lead to better business functionality and further improvise
company performance both financial and nonfinancial (Aktar, Sachu, & Ali, 2012).

Generally, a reward is given in return for good work or in recognition of merit or for
performance of a service rendered (Mansor, Borhannuddin, & Yusuf, 2012). So I also advice the
MOR use the package of reward system for achievement of organizational goal.

2.2. Types of Rewards as classified by different Authors

Rewards can be classified into two broad categories: extrinsic and intrinsic. (Mondey et al 2002
394). They define extrinsic rewards as “rewards external to the job, such as pay, promotion, or
fringe benefits” and intrinsic rewards as “those that are part of the job itself, such as the
responsibility, challenge, and feedback characteristics of the job”.
Mondy et al also classify rewards as follows:
Direct financial compensation - Is a type of reward obtained from salaries, bonuses and sales
commission.
Indirect financial compensation - is a type of reward that includes all financial benefits that are
not part of direct compensation, like health care benefits.
Non-financial compensation - is a type of reward that an employee gets from enjoying the type
of job he is handling and/or from his work environment like being satisfied about his relationship
with her/his work mates and supervisors and from liking the condition of his work
circumstances.
Similarly, Handerson states two types of rewards-Monetary and non-monetary.
Monetary Rewards: are rewards including base pay as well as other additional monetary
incentives paid for extra performance over and above initially set requirements. This reward type
includes most of the employee benefit schemes, which although not viewed as monetary
nevertheless cost the origination cash and save money to the recipient. Included in this category
are benefits like sick leave, vacation time, and educational and insurance programs.

Non-monetary rewards; are any incentive programs aimed at rewarding increased productivity
other than monetary remuneration. These include among other things, the opportunity to express
creativity and initiative; the opportunity for public recognition, the freedom to establish one’s
own work schedule etc (Henderson, 1976:433)

Total Reward
As defined by Armstrong, (2006:629) total reward includes all types of rewards - indirect as well
as direct, and intrinsic as well as extrinsic. Each aspect of reward, namely base pay, contingent
pay, employee benefits and non-financial rewards, which include intrinsic rewards from the work
itself, are linked together and treated as an integrated and coherent whole. Total reward combines
the impact of the two major categories of reward as defined below -transactional rewards, and
relational rewards.
Total reward combines the effects of the two main reward classifications also labeled as
transactional and relational rewards.
Transactional rewards: are tangible rewards concerned with exchanges that organizations and
their work force make with regard to salary (base pay, contingent pay, cash bonuses) and
employee benefits (Pension, health care, holiday).
Relational rewards: are intangible rewards mainly concerned with inner aspects of job
satisfaction, obtained from gaining experience, self-improvement and advancement such as
learning and development.

Intangible rewards can also come from the work itself and/or the work environment such as
leadership, employee voice, autonomy (ibd).

Table 1:The Components of Total Reward

Transactional Contingency Pay Total Remunerate
Rewards (Extrinsic rewards)
Total
Employee benefit Reward
Relational Learning and Development Non-financial
Rewards The work experience (Intrinsic rewards)

(Armstrong, 2006)
So I also advice company managers use effective both reward (Extrinsic & Intrinsic) for getting
success of organization.
2.3. Purposes of the Reward
Reward could be done for the following purposes:-
 Reward people according to what the organization values and wants to pay for.
 Reward people for the value they create.
 Reward the right things to convey the right message about what is important in terms of
behavior and outcomes.
 Develop a performance culture.
 Motivate people and obtain their commitment and engagement.
 Help to attract and retain the high quality people the organization needs.
 Develop a positive employment relationship and psychological contact.
 Align reward practices with both business goals and employee values;
 Operate fairly-People feel that they are treated justly in accordance with what is due to them
because of their value to the organization.
2.5. Reward Systems According Armstrong

To Armstrong (2010), reward system contains all elements of reward such as policies, practices,
processes, procedures and structures.

The formal reward systems in organizations must be aligned with the strategic goals for the
organization. It is important that the human capital in organizations be rewarded competitively
for their capabilities. Currently, many organizations are emphasizing reward based on individual,
team, and organizational (Stephen B. 2005). The key to an effective reward system is an
understanding of what it is that employees need and expect from the work situation (Collings &
Wood, 2009). According to Armstrong (2010), reward systems are based on the reward strategy,
which flows from the business strategy, for example to gain competitive advantage, and the HR
strategy, which is influenced by the business strategy but also influences it. The HR strategy
may, for example, focus on resourcing but it should also be concerned with satisfying people as
well as business needs. All these aspects of strategy are affected by the environment. Reward
strategies direct the development and operation of reward practices and processes and also form
the basis of reward policies, which in turn affect reward practices, processes and procedures.
These different aspects of a reward system are defined below (World at Work, 2010).

Figure 1: how a reward system operates source (Armstrong,2010)

2.5.1 Features of a Reward System

Reward systems have five aspects which have to be taken care of. These are: values of rewards,
amount of rewards, timing of rewards, likelihood of rewards, and their fairness. A reward system
has both monetary and non-monetary elements. The importance of the mixed nature of reward
systems is evident in its potency to provide the diversity needed to match the needs of individual
employees.

The timing, accuracy and frequency of incentives in reward systems are the very basis of
successful incentive plans. The plan requires that it should be properly communicated to the
employees to encourage individual performances, provide feedback and encourage redirection
(Armstrong, 2012). Reward systems include promotions and compensations. Promotion that has
to do with change and calls for greater responsibilities usually involves higher pay and better
terms and conditions of service, and therefore, a higher status or rank. It is an upward
advancement of an employee in an organization to another job, which commands better pay,
better status, and higher opportunities, challenges, responsibilities and authority, better working
environment and a higher rank.

Promotions usually put the worker in a position where he will be of a greater value to the
company and at the same time derive increased personal satisfaction and/or income. It is a kind
of recognition an individual’s performance and a reward that is expected to build up morale,
loyalty and a sense of belonging on the part of the employees (Armstrong, 2010). Compensation,
on the other hand, covers monetary and non – monetary types. Both types should be integrated in
a fashion that will satisfy employee’s basic needs and conform to the three parameters of
external equity, internal equity and individual equity. The external equity must ensure fairness
vis-à-vis compensation standards in the industry. Crucially while these three factors are related to
broad force such as the cost of living, the rate of inflation, pay scale in the industry and pay
scales within the organization, the company can like the rewards directly to its strategic goals by
pegging it to the employee’s contribution towards achieving them. Thus companies will be able
to ensure that their pay systems are integrated firmly into their business (IJBMER Vol. 6(6),
2015, 417-435).

2.5.2. Determinants of Reward System

Most organizations believe that the reward system is designed to pay off for merit. The problem
is that the definitions of merit are often data table. Some define merit as ‘deserving’, while to
others, merit is ‘achieving excellence’. Deserving rewards may take into consideration such
factors as intelligence, effort or seniority. A major contributor to the problem is the difficult of
defining excellence is performance, we concede how problem is the difficulty of defining
excellence. If excellence is performance, we concede how unsatisfactory our efforts have been at
trying to measure performance. Creation of quantifiable and meaningful performance measures
of almost all white-collar jobs, and many blue-collar jobs, has eluded us. While few will disagree
with the viewpoint that the merit concept for distributing rewards is desirable, what constitute
merit is highly debatable. (IJBMER Vol. 6(6), 2015, 417-435). The popular criteria by which
rewards can be distributed are: Performance, Effort, Seniority, Skills held , Job difficulty &
Discretionary time.
2.5.3. Evaluating the Reward System
The reward system should be audited regularly to assess its effectiveness, the extent to which it
is adding value and its relevance to the present and future needs of the organization. This audit
should include an assessment of opinions about the reward system by its key users and those who
are affected by it. This leads to a diagnosis of strengths and weaknesses and an assessment of
what needs to be done and why. The operation of the reward system should be monitored
continually by the personnel department through such audits and by the use of comparative ratio
and attribution analysis.

In particular, it is necessary to analyze data on upgrading, the effectiveness with which

performance management processes are functioning and the amount paid out on pay for-
performance scheme and the impact they are making on results (IJBMER Vol. 6(6), 2015, 417-
435). Internal relatives should also be monitored by carrying out periodic studies of the
differentials that exits vertically within departments or between categories of employees. The
studies should examine the differentials built into the pay structure and also analyze the
differences between the average rates of pay at different levels.

If this it is revealed that because of changes in job values and/or are no longer ‘felt fair’, then
further investigations to establish the reasons for this situation can be conducted and, if
necessary, corrective action taken. External relatives should also be monitored by tracking
movements in market rates by studying published data and conducting pay survey (IJBMER Vol.
6(6), 2015, 417-435). Moreover, no reward innovations should take place unless a cost-benefit
analyze has forecast that they will add value. The audit and monitoring processes should
establish the extent to which the predicted benefits have been obtained and check on the costs
against the forecast.

2.5.4 Factors that Influence A Company’s Reward Systems

Given reward system is affected by various internal and external factors. Only some of the
factors that are directly relevant to the study will be mentioned; mainly the internal factors.
Source of internal factors are within the company. These are the company’s reward philosophy,
organizational culture, organization’s financial performance, employees’ perception, and others.
External factors are beyond the control of the organization (Armstrong, 2010). These are the
labor market, level of competition, economic condition etc.
2.5.5. Criteria for an effective reward system
According to (Armstrong, 2010), the criteria for an effective reward system include the
following:-

It supports the achievement of business goals.

It takes account of the needs of employees as well as those of the organization and its other
stakeholders.
It has clearly defined and achievable objectives.
It can be turned into actionable programs that anticipate implementation requirements and
problems.
It is coherent and integrated, being composed of components that fit with and support each
other.
It provides a framework within which consistent reward decisions can be made.

2.5.6. Components of Reward System Different authors agree on the classification of total
reward in to two broad categories. However the naming differs from author to author with
similar connotation. To mention some of the classifications: financial and non-financial,

monetary and non-monetary, extrinsic and intrinsic, tangible and intangible, transactional and
relational etc. Regardless of the minor difference, all categories discuss about the same thing. As
a result, this study adopts the classification of financial and non-financial rewards.

The table 2: is adopted with some adjustment to indicate the components of total reward.
Financial Non-Financial
Direct Indirect
Salary Provident fund/pension Career development
opportunity
Wage Various types of loans Training
Bonus Medical provision Recognition
Contingent pay Various types of leaves Achievement
Overtime payment and others Educational support and Quality of work life
others Work autonomy and others
Source Armstrong (2009)

As indicated in the table, total reward is classified into two major categories i.e. financial and
non-financial. Financial reward is further sub-divided into direct and indirect payments. Direct
payment refers to payments which are made directly in cash to employees such as salary, wage,
bonus, and other direct payments. Indirect payment, on the other hand, refers to employee
benefits such as pensions/provident fund scheme, various types of leaves, insurance cover,
medical cover, company cars, etc.

The second category i.e. non-financial rewards refer rewards that do not involve any direct
payments. They may arise from the work itself, for instance, work autonomy, recognition,
training, career development opportunities, achievement, and quality of work life Armstrong
(2009).

2.5.7. Types of Reward

According to Luthans (2000), cited in (Aktar, Sachu, & Ali, 2012) there are two basic types of
rewards, financial and non-financial and both can be utilized positively to enhance performance
behaviors of employees.

2.5.7.1. Financial rewards

According to Aktar et al (2012), Financial rewards means pay-for performance such as
performance bonus, job promotion, commission, tips, gratuities and gifts etc. it comprises direct
payments such as salary, bonus, and other cash payments and indirect payments are provided to
employees in the form of benefits.

2.5.7.2. Non-financial rewards

Non-financial rewards are non-monetary/non cash and it is a social recognition such as
acknowledgement, certificate, and genuine appreciation etc. The non-financial rewards is also
called materials award (Neckermann & Kosfeld, 2008)

Non-financial rewards can be classified as follows:

i. Individual extrinsic rewards: non-financial recognition, praise, feedback.

ii. Individual intrinsic rewards: fulfilling work, opportunity to grow;

iii. Collective extrinsic rewards: work–life balance policies, employee well-being services,
concierge services, voluntary benefits, learning and development and talent management
programs;
iv. Collective intrinsic rewards: work environment enhancement and work system design.
Rewards can be extrinsic or intrinsic, extrinsic rewards are tangible rewards and these rewards
are external to the job or task performed by the employee. External rewards can be in terms of
salary/ pay, incentives, bonuses, promotions, job security, etc. Intrinsic rewards are intangible
rewards or psychological rewards like appreciation, meeting the new challenges, positive and
caring attitude from employer, and job rotation after attaining the goal (Aktar, Sachu, & Ali,
2012).

2.7. Strategic Aims of Reward System Management

The overall strategic aim of reward system management is to develop and implement the reward
policies, processes and practices required to support the achievement of organizational goals by
helping to ensure that it has the skilled, competent, well-motivated and committed people it
needs (Mintzberg, 2011). The philosophy underpinning the strategy is that people should be
rewarded for the value they create. The objective is therefore to create reward processes that are
based on beliefs about what the organization values and is prepared to pay for. The reward
strategy will be driven by the need to reward the right things to convey the right message about
what is important in terms of expected behaviors and outcomes (Federick, 1986). Reward system
management strategy defines what the organization intends to do in the longer term to develop
and implement reward policies, practices and processes that will enhance the achievement of its
goals. It establishes priorities for developing reward plans that are aligned to human resource and
organizational strategies. Brown (2011) asserts that reward strategy is ultimately a way of
creating value and recognizing that effective reward system management encapsulates the
process of clearly defining goals that are linked to organizational objectives, designing pay and
reward system management program that are tailored to the needs of organizations and their
people in a consistently integrated fashion.

The aims of reward management according to (Armstrong, 2010) are to:

a. Reward people according to the value they create;

b. Align reward practices with business goals and with employee values and needs;

c. Reward the right things to convey the right message about what is important in terms of
behaviors and outcomes;
d. Help to attract and retain the high-quality people the organization needs;

e. Motivate people and obtain their engagement and commitment;

f. Develop a high-performance culture.

g. Support the achievement of business goals through high performance;

h. Develop and support the organization’s culture;

i. Define what is important in terms of behaviors and outcomes;

j. Reward people according to what the organization values;

k. Win the engagement of people.

The aims of reward management are achieved by developing and implementing strategies,

policies, processes and practices that are founded on a philosophy, operate in accordance with
the principles of distributive and natural justice, function fairly, equitably, consistently and
transparently, are aligned to the business strategy, fit the context and culture of the organization,
are fit for purpose and help to develop a high performance culture (World at Work, 2010).

2.8. Pay Reward System

The debate as to whether money motivates is still on-going. There is however the contention that
money can take on varying degrees of importance because it has the potential of serving sundry
needs (Bright, 2012). More importantly, pay reward system is a product of an organization’s
philosophy and policy that provide guidelines for the implementation of reward strategies and
the design of incentives and packages. This understanding explains why the policy direction and
the level of rewards of an organization is an indicator of its pay reward system whether the
company is a high payer, is content to pay average. Pay reward system that is an out-growth of
policy refers to the ‘pay stance’ of an organization.

2.9. Reward philosophy

Reward management is based on a well-articulated philosophy – a set of beliefs and guiding
principles that are consistent with the values of the organization and help to enact them. The
philosophy recognizes that if HRM is about investing in human capital from which a reasonable
return is required, then it is proper to reward people differentially according to their contribution
(i.e. the return on investment they generate) (Armstrong, 2010)..

The philosophy of reward management also recognizes that it must be strategic in the sense that
it addresses longer-term issues relating to how people should be valued for what they do and
what they achieve. Reward strategies and the processes that are required to implement them have
to flow from the business strategy (Armstrong, 2010).

2.9.1. Perception of Employees

According to Babakus et al. (2003) cited in (Khan, Shahid, & Nawab, 2013), the perceptions that
employees have with regards to their reward climate influences their attitudes towards their
employees. In addition, the commitment of managers towards their organization is also shown by
how the manager rewards his/her employees. And Gouldner (1960) cited in (Khan, Shahid,
&Nawab, 2013) mentions the norm of reciprocity, which focuses on the ability of organization to
accommodate the needs of their employees, and reward them for their efforts.

In exchange for the rewards provided to them, employees should reciprocate by increasing their
commitment towards their organization and their work, in addition to increasing their ‘socio
emotional bonds’ with their company and their colleagues. What companies need to realize is
that by remixing their rewards in a more cost-effective way, they can strengthen their programs
and improve employees’ perception of value without necessarily increasing their overall
investment (Ruddy, 2007).

2.10. The Multi-Dimensionality of Reward

Reward is a broad construct that can include 'anything an employee may value and desire that an
employer is able or willing to offer in exchange for employee contribution. A conceptual
distinction can be made between the three main constituents of reward - type, system, and
criterion (Chiang & Birtch, 2006).

Reward type refers to the nature of the reward itself (e.g., financial and non-financial; extrinsic
and intrinsic). Reward system represents the method or mechanism (e.g., seniority-based,
performance- based) by which organizations determine employee reward outcomes (e.g., pay in-
Creases). Systems can be either performance or non-performance oriented. Reward criterion
then, refers to the basis of allocation (i.e., individual or group) used to determine the reward
(Chiang & Birtch, 2006).

2.11. Reward Practices

2.11.1. Base pay

The base rate is the amount of pay (the fixed salary or wage) that constitutes the rate for the job.
It may be varied according to the grade of the job or the level of skill required (Armstrong,
2010).

2.11.2. Employee Benefits

Employee benefits refer to compensation other than hourly wage or salary. Three fundamental
Roles characterize benefits: protection programs (income and health, respectively), paid time-off,
and accommodation and enhancement benefits (Armstrong, 2010).

Protection programs provide family benefits, promote health, and guard against income loss
Caused by catastrophic factors like unemployment, disability, or serious illnesses.

Paid time-off policies compensate employees when they are not performing their primary work
duties, such as during vacation, holidays, and bereavement (Stone & Stone-Romero, 2008).
Accommodation and enhancement benefits promote opportunities for employees and their
Families. There is a wide variety of programs, including stress management classes, flexible
work schedules, and tuition reimbursement (Stone & Stone-Romero, 2008). The employee
benefits include:-

a. Fringe Benefits - this can include a variety of options. Sick leave, paid vacation time, health
club memberships, daycare services.

b. Health Benefits - most organizations provide health and dental care benefits for employees.
In addition, disability and life insurance benefits are offered.

c. Flexible benefit - this benefit schemes allow employees to decide on the make-up of their
benefits package within certain limits (Armstrong, 2010).
2.12.3. Recognition
Recognition is to acknowledge someone before their peers for desired behavior or even for
accomplishments achieved, actions taken or having a positive attitude. Appreciation on the other
hand centers on showing gratitude to an employee for his or her action. Such rewards help
employees to gauge their performance and know whether they are doing good or bad (Njanja,
Maina, Kibet, & Njagi, 2013). Recognition is one of the most powerful methods of rewarding
people. They need to know not only how well they have achieved their objectives or carried out
their work but also that their achievements are appreciated (Stredwick, 2005).

The recognition should be meaningful, but also stay within established program boundaries: For
example, recognition should be given only for performance considered over and above
established standards. Recognition rewards usually are relatively small and are given at the time
of achievement (Ruddy, 2007).

The most common strategies of recognition programs according to Ruddy (2007) are:

i. Rewarding employees for making exceptional contributions above and beyond their daily Job
functions.

ii. Strengthening employee morale.

iii. Increasing retention.

iv. Tying performance to the company’s mission. According to Shore & Shore (1995) cited in
Khan, Shahid, & Nawab (2013), employees who are able to experience and receive recognition
for their work are also able to have a better perception of their work, their workplace and the
people they work for.

2.12.4. Promotion
Promotion is an important feature of employee’s life style and occupation, affecting other job
experience levels and can have an obvious impact on other job aspects like job attachment and
responsibilities. Additionally, promotion can influence the instrument of exerting better attempts,
if employees put an important value on it. If not, the companies would focus on pay increase to
reward high effort and productivity. Indeed, the employees may be worth the promotions since
they make an increase in job services (Gohari, Ahmadloo, Boroujeni, & Hosseinipour, 2013).
2.12.5. Working Conditions
The physical environment in which the work is performed is described here. Adverse
environmental conditions such as noise, heat, and fumes are detailed along with the frequency of
exposure. Most professional and executive job descriptions do not include this section because
work is assumed to be performed under normal office conditions. If it is not, the section should
be included (Ruddy, 2007) Working conditions is defined by criteria such as:

a. Physical effort

b. Working environment

c. Sensory attention

d. Physical risks.

2.13. Types of Evaluation

Job evaluation is a systematic process for defining the relative worth or size of jobs within an
organization in order to establish internal relativities. It provides the basis for designing an
equitable grade and pay structure, grading jobs in the structure and managing job and pay
relativities. (Armstrong, 2006:659)
Job evaluation can be analytical or non-analytical.
Analytical job Evaluation
Is the process of making decisions about the value or size of jobs, which are based on an analysis
of the level at which various defined factors or elements are present in a job in order to establish
relative job value. The set of factors used in a scheme is called the factor plan, which means each
of the factors used and the levels within each factor. Analytical job evaluation is the most
common approach to job evaluation.
Non - analytical job evaluation
Non analytical job evaluation compares whole jobs to place them in a grade or rank order they
are not analyzed by reference to their elements or factors. Non analytical schemes do not meet
the requirements of equal value law.

2.14. Types of grade and pay structure

According to Armstrong (2007:265) Grade and pay structure gives as a medium through which
the organization communicates the Job and pay opportunities available to employees’ grade.
Structure consists of a sequence of grades, bonds, or levels into which groups of jobs that are
broadly comparable in size are placed.
Grade structure becomes pay structure when pay ranges, brackets of scales are attached to each
grade, band or level, pay structure provide scope for pay progression in accordance with
performance, competence, contribution or service.
The main types of grade and pay structure are
Narrow graded (malty- graded structure) Narrow graded is consisting of a sequence of job
grades into which jobs of broadly equivalent value are placed. There may be 10 or more
grades and long established structures.
Broad graded structures (fewer grades)Have six to nine grades. They may include “reference
points” or “Market anchors” which indicate the rate of pay for a fully competent performer in
the grade and are aligned to market rates in accordance with “Market stance” policy.
Broad Band structures Broad banded structures compress multi-graded structures into four or
five “bands”. Broad banded structure contained no more than five bands.

2.15. Types of Compensation

According to Handerson (1976:297) compensation is the Human Resource Management function
that deals with every type of reward individuals receive in exchange for performing
organizational tasks. It is one of the major methods used to attract employees and motivate them
for more effective performance. It is all forms of pay or reward going to employees and arising
from their employment.

2.16. The impact of incentives on employee motivation

Armstrong clearly put that money, in the form of pay or some other sort of remuneration, like
bonus, performance related pay ... is the most extrinsic reward. Doubts have been cast by
Herzberg on the effectiveness of money because, they claimed, while the lack of it can cause
dissatisfaction, its provision does not result in lasting satisfaction. For those people on fixed
salaries or rates of pay who do not benefit directly from an incentive scheme, they may feel good
when they get an increase; apart from the extra money it is a highly tangible form of recognition
and en effective means of helping to feel that they are valued. But this feeling is rapidly died
away. Armstrong also put that money in itself have no intrinsic meaning. (2006:267)
2.17. Challenges in the implementation of Reward Management Systems
The challenges of reward management strategy are less in accepting the idea and more in putting
it into practice. It could take as long as a year on the average to develop and put a total reward
system in practice. (Armstrong, 2002) Developing a total reward system requires a significant
amount of time. It also requires the full support of management.
Some of the challenges in the implementation of reward Management System are
 Lack of responsibility for managing reward system.
 Managers may not do what HR expects them to design reward system and if they compelled
to- they may be half-hearted about it.
 This carelessness by managers puts tremendous burden on HR and Reward Specialists.

2.18. Overcoming the challenges of reward system

Actions to solve the challenges of reward system are:-
o Developing technology for specifying desirable behaviors
o Using evaluation procedures that recognize multidimensional nature of performance
o Training supervisors to use performance appraisal system appropriately and to understand
potential sources of bias.
o Training managers to establish appropriate contingencies between rewards and performance.

CHAPTER THREE

3 RESEARCH DESIGN AND METHOD

3.1. Research Method and approach

This study is a survey study that adopted descriptive type of research Design. Descriptive
method set out to describe and to interpret what is going on. Descriptive research, according to
Best (1970, quoted in Cohen, Lawrence, & Keith, 2000, p. 169) is concerned with “conditions or
relationships that exist; practices that prevail; beliefs, points of views, or attitudes that are held;
processes that are going on; effects that are being felt; or trends that are developing.” Descriptive
researches are more concerned with facts.

Accordingly, this study has attempted to describe the general reward system of the company
under study, employees’ perception on the existing reward system, the level of reward
composition, immediacy of the reward and about the Government office culture. In addition,
the study has employed mixed approach (both qualitative and quantitative) in analyzing the data
collected through questionnaire and in-depth interview by random sampling techniques.

3.2 Study population and sample

Reward system of the MOR under medium tax payer office subjects for the study. Out of the in
Addis Ababa City area, the researcher has proposed to select medium tax payer office to the
working area. Based on the number of customers they serve and amount of transaction they
handle, the branches in Ministry of Revenue are many brunches at federal level in the regional
part of Ethiopia like jimma brunches ,Hawasa ,Adama, whaile classified in to four different
brunches at federal level , in Addis Ababa city.
Total populations of the study were MTO staffs from all eight department (tax assessment, tax
audit, tax registration & cancellation, cash register machine follow up, tax debt follow up,
finance, human resource administration and others . There were total of 450 staffs in the
organization.

The study respondents’ were sampled from eight different departments by random sampling
techniques. Based on Yamane (1967) sample size determination formula, from a total of 450
Medium tax payer office at the calculated sample size is 125, at 95 % confidence level and 0.05
precision levels.

N
The formula below is used to determine the sample size: no=
1+ N ( e2 )

Where, n = Correct sample size

N = Population Size

e = Margin of error

Table 3.: Proportionate Sampling Determination

Sample size
No Total No of
Department Proportion of sample
staf
1 TAX ASSESSMENT 101 (101/450) x 125]= 28

2 TAX AUDITER 83 (83/450) x 125]= 23

TAX REGISTRATION AND

3 44 (44/450) x 125]= 12
CANCILATION
CASHE REGITRATION MACHIN
4 55 (55/450) x 125]= 15
FOLLEW UP

5 TAX DEBT FOLLEW UP 55 (55/450) x 125]= 15

6 FINANCE 42 (42/450) x 125]= 12

7 HR 40 (40/450) x 125]= 11

8 OTHERS 30 (30/450) x 125]= 9

450 125

3.3. Data gathering technique

The study is based on the data that was collected from both primary and secondary sources.
Primary data was collected through structured questionnaires (closed ended) and semi structured
in-depth interviews.

The researcher has proposed to conduct the interview from some individuals at the brunch office
Human Resource officers and Branch Managers on the basis of their experience and closeness to
reward and benefit management process. On the other hand, Secondary sources would constitute
reports, manuals, websites, books, articles, magazines and any published and unpublished
documents related to the topic understudy.

3.4. Data analysis technique and presentation modality

Both qualitative and quantitative data analysis method (mixed data) was applied based on the
nature of data collected. As it is discussed in the beginning of this section, the study has
employed descriptive statistics. Therefore, the quantitative data gathered through structured
questionnaire has been analyzed by using computerized software SPSS (Statistical Package for
Social Science) version 20, and presented using frequency tables and percentages.

Finally, qualitative data gathered through interview and document review is analyzed through
organization based on their types and reduction through summarization and categorization.
 CHAPTER FOUR

4.0 DATA PRESENTATION, ANALYSIS AND INTERPRETATION

This chapter presents findings, interpretation and analysis of information for data collected from
MOR medium tax payer office Addis Ababa selected city branches using interviews and
questionnaires. In order to achieve the objective of the study and tackle the key research
questions the researcher has tried to conduct a detailed and technical investigations related to the
study.

This section of the study deals with the statistical analysis of the collected data and interpretation
of the result making use of SPSS version 20 software. As stated in the previous chapters of this
paper, questionnaire were Designed and distributed to a total of employees of the concerned
selecting branches. 125 Accordingly, 112 questionnaires were appropriately filled and returned
which gives a 90% return Rate that is assumed to be suitable for further analysis.

4.1. Demographic Characteristics of the Respondents

The first part of the questionnaire consists of five items about demographic information of the
respondents. It covers the personal data of respondents, such as sex, age, academic background,
title of jobs in the organization, year of experience. The following subsequent tables reveal the
total demographic characteristics of the respondents.

Table 3. Demographic profile of respondents by Age

Frequency Percent Valid Cumulative

Percent Percent
BELOW25 6 5.4 5.4 5.4
25-35 73 65.2 65.2 70.5
Valid 35-45 29 25.9 25.9 96.4
45-55 4 3.6 3.6 100.0
Total 112 100.0 100.0
Missi
5555 13 10.4
ng
Total 125 100.0
Source: survey 2022
Regarding the respondents age category, below 25 is 6(5.4%), 64(66.7) fall under the age is higher
category of 25-35(65.2%), the next age is 35-45(29%),(25.9%) fall under the age categories of The
remaining has above 45-55 4(3.6%)Years and respectively. This clearly shows that majority of the
employees are young individuals who are more productive to realize the office vision statement.
In other word, with regard to the office branch expansion in recent times, the absorbing majority of
new graduate manpower from the Universities which shows that the office is playing a great role
in minimizing unemployment rate in the country.

Table 4. Demographic profile of respondents by Sex

Frequency Percent Valid Percent Cumulative

Percent
Valid MALE 62 55.4 55.4 55.4
FEMAL 50 44.6 44.6 100.0
Total 112 100.0 100.0
Source: survey 2022

The demographic result of the study indicates that 62 (55.4%) were male and the remaining 50
(44.6%) females .were fill the response from this result the majority of respondent were male.

Table 5. Summary of respondents Academic Background

Frequency Percent Valid Cumulative

Percent Percent
HIGH SCHOOL
2 1.8 1.8 1.8
COMPITE
DIPLOMA 12 10.7 10.7 12.5
Valid
DEGREE 77 68.8 68.8 81.3
MATER AND ABOVE 21 18.8 18.8 100.0
Total 112 100.0 100.0
Missi
5555 13 10.4
ng
Total 125 100.0
Source: survey 2022
The above table 5 also indicates the academic background of the respondents. Accordingly, 2
(1.8%) of the total respondents were high school complete, first degree followed by holders 77
(68.8%) and 21 (18.8%) of MA Degree holders respectively. The remaining were 12 respondents
were 12(10.7%) holder of diploma. From this result, it is clear that the brunch has more
educated man power who can able to make the brunch office learning organization,’ that can
meet the core value of world class Ministry of revenue.

As the document in HRM indicates, little part of first degree holders (next to fresh graduates)
are those sponsored by the Ministry of revenue to improve their academic status with half and or
full scholarship. From this it could be inferred that the bureaucracy is more or less professional
and the Ministry of revenue has been paying due attention to upgrade the educational status of its
employees.

Table 6.Summary of respondents on title job of respondent

Frequenc Percent Valid Cumulative

y Percent Percent
TAX ASSESSMENT 29 23.2 25.9 25.9
TAX AUDITER 18 14.4 16.1 42.0
TAX REGISTRATION AND
11 8.8 9.8 51.8
CANCILATION
CASHE REGITRATION MACHIN
13 10.4 11.6 63.4
Valid FOLLEW UP
TAX DEBT FOLLEW UP 16 12.8 14.3 77.7
FINANCE 10 8.0 8.9 86.6
HR 9 7.2 8.0 94.6
OTHERS 6 4.8 5.4 100.0
Total 112 89.6 100.0
Missing 5555 13 10.4
Total 125 100.0

Source: survey 2022

Ministry of revenue is the 4 categories were tax operation, tax low body ,plant asset management
and finance ,manager so that The title result of the study indicates that the tax assessment team
29 (25.9%) ,were tax audit team 18(16.1%).,Tax registration and cancelation team were
11(9.8%),cash register machine follow up team 13(11.6%) ,tax debt follow up team
16(14.3%),finance team 10(8.9%),HR 9(8%),and remain others 6(5.4) fall under categories of
respondent on job title tax assessment team and tax audit team more human power on
organizational structure on tax operation categories .

Table 7. Summary of respondents on job Experience of respondent

Frequency Percent Valid Percent Cumulative

Percent
1-3 19 15.2 17.0 17.0
4-6 48 38.4 42.9 59.8
Valid 7-10 26 20.8 23.2 83.0
>11 19 15.2 17.0 100.0
Total 112 89.6 100.0
Missing 5555 13 10.4
Total 125 100.0

Source: survey 2022

The data shows that Table 7 show experience of respondent were 1-3 19( 17%) of the respondents
are in position and 4-6 48(42.9%) are in the position. And also 7-10 26(23.2%) of the respondents
have company experience , 0ver 10 years 19(17)% of respondents of experience. So majority of
the respondents have company experience of 4-6 years or below.

4.2 General Reward System of the Ministry Of Revenue (MOR)

In this section of the questionnaire, the researcher has tried to assess the general knowledge and
Attitude of employees towards the company’s reward system. It was developed by five items
using Likert Scale. All statements were measured on a five-point scale where 1 represents
strongly agree, 2 represents disagree, 3 represents I don’t know (Neutral), 4 represents agree and
5 Represents strongly Dis agree.
Table 8. Reward Practice exist in your orge(MOR)
reward practice exist in your orge
Valid Frequency Percent Valid Cumulative
Percent Percent
Strongly
19 15.2 17.0 17.0
Agree
Disagree 8 6.4 7.1 24.1
Neutral 35 28.0 31.3 55.4
Agree 42 33.6 37.5 92.9
Strongly
8 6.4 7.1 100.0
Disagree
Total 112 89.6 100.0
Missing 5555 13 10.4
Total 125 100.
Source: survey 2022

Table 8 show that About 8 (17%) of the total respondent strongly disagree that the organization
exist its Reward practice in MOR. Contrary to this, 42(375%) of respondents are agreed on that
the organization its Reward practice in MOR. However, 35 (31.3%) of Employees do not know
neutral) about the issue at all.

The general implication of the response is More than half of the respondents have agreed the
there is Reward practice in MOR to all employees. Finally table indicated that majority of the
respondents agreed about the issue. On the similar way, the result of the Interview suggests that
there is reward practice exist in the organization on MOR.
 Table 9.Satisfaction with reward system
Valid Frequency Percent Valid Cumulative
Percent Percent
Strongly Agree 3 2.4 2.7 2.7

Disagree 26 20.8 23.2 25.9

Neutral 43 34.4 38.4 64.3

Agree 21 16.8 18.8 83.0

Strongly Disagree 19 15.2 17.0 100.0

Total 112 89.6 100.0

Missing 5555 13 10.4

Total 125 100.0

Source: survey 2022

Table 9 show About 26 (23.2%) of the total respondent disagree that the company clearly
communicates its Satisfaction with reward system. Contrary to this, 21(18.8%) of respondents
are agreed on that The company clearly communicates its Satisfaction with reward system.
However, 43 (38.4%) of Employees do not know neutral) about the issue at all. So the reward
systems not satisfy the employee.

Table 10. The reward is fair in your org(MOR)

Valid Frequency Percent Valid Cumulative

Percent Percent
Strongly Agree 6 4.8 5.4 5.4

Disagree 30 24.0 26.8 32.1

Neutral 37 29.6 33.0 65.2

Agree 19 15.2 17.0 82.1

Strongly Disagree 20 16.0 17.9 100.0

 Total 112 89.6 100.0

Missing 5555 13 10.4

Total 125 100.0

Table 10 show About 30 (26.8%) of the total respondent disagree that the organization reward
system not fair.

Contrary to this, 19 (17.0%) of respondents agree on the reward system in the organization
reward system. However, 37(33%) of employees do not know about the issue raised.

The general implication of the response is more than 50% of the respondents have disagreed of
the organization reward system not fair in the organization total reward system. Finally,
indicated that majority of the respondents have disagreed on the issue.

Table 11 The reward system include both financial & non financial Rewards (MOR)

Valid Frequency Percent Valid Cumulative

Percent Percent
Strongly Agree 6 4.8 5.4 5.4
Disagree 42 33.6 37.5 42.9
Neutral 20 16.0 17.9 60.7
Agree 19 15.2 17.0 77.7
Strongly Disagree 25 20.0 22.3 100.0
Total 112 89.6 100.0
Missing 5555 13 10.4
Total 125 100.0
Source: survey 2022
Table 11 show About 42 (37.5%) of the total respondent dis agree that the organization the
reward system in cloud both financial and non-financial .Contrary to this, 19 (17.0%) of
respondents agree on the reward system in cloud both financial and non-financial reward system.
However, 20(17.9%) of employees do not know about the issue raised. The general implication
of the response is more than 50% of the respondents have dis agreed of the organization reward
system the reward system in cloud both financial and non-financial. Finally, indicated that
majority of the respondents have dis agreed on the issue.

Table 12 You feel you are compensated enough in your orge (MOR)

Valid Frequency Percent Valid Cumulative

Percent Percent
Strongly Agree 1 .8 .9 .9
Disagree 34 27.2 30.4 31.3
Neutral 29 23.2 25.9 57.1
Agree 5 4.0 4.5 61.6
Strongly Disagree 43 34.4 38.4 100.0
Total 112 89.6 100.0
Missing 5555 13 10.4
Total 125 100.0
Source: survey 2022
When we come back to the respondents’ view on employee /composition/motivation of the
organization employee reward system, we find that 77 (68.8%) of the respondent claim that the
organization employee /composition/motivation is not satisfied. Contrary to this, 6 (5.4%) of the
respondent satisfied on the employee /composition/motivation. Whereas, 29 (25.9%) of the
employees do not have any idea/neutral on the point.
The result on this table also shows that majority of the respondents disagree/not satisfied/ on the
organization Employee compensation/Motivation system. It is vital for a company to know what
its competitors are rewarding their employees motivation. The above response calls the
organization once again to look what its reward package is and to compare it with other similar
companies within the industry.
Hence, the organization should take timely correction or revision of the total reward system
toward employee composition/motivation. Lack of motivating reward package and inadequate
incentives in the organization have recently Increasing employees turn over as experienced staffs
are shifting to private companies.
However, this has indirectly been affecting the organization productivity as well experienced
employees are leaving for other private companies in search of better Compensation and reward
package.” In order to be competitive enough in the industry, the researcher recommends that the
organization has to improve its current Compensation/Motivation system.
Table 4.9 the organization reward system is capable to retain best performers

Table 13. Your organization invests in human assets.

Valid Frequency Percent Valid Percent Cumulative
Percent
Strongly Agree 6 4.8 5.4 5.4

Disagree 25 20.0 22.3 27.7

Neutral 42 33.6 37.5 65.2

Agree 14 11.2 12.5 77.7

Strongly Disagree 25 20.0 22.3 100.0

Total 112 89.6 100.0

Missing 5555 13 10.4

Total 125 100.0

Source: survey 2022

It is known that companies the organization investment of human assets toward employee
indicated on above table. However, as indicated in the Table 13 from total respondents dis
satisfied 50(44.6%) neutral is 42(37.5%) while Respondents of interview had similarly
responded that they are satisfied with the existing employee composition system i. As we will
discuss later on, each employee has his/her own unique characteristics. What is valued more by
one individual will not be valued similarly by others.

Hence, being strong at one aspect could hurt the level of reward system of employees. As a
result, the company should evaluate its rewarding practice and try to adjust its reward com Table
 Table 14. your org. builds a greater employer jobs

Valid Frequency Percent Valid Cumulative

Percent Percent
Strongly Agree 6 4.8 5.4 5.4
Disagree 36 28.8 32.1 37.5
Neutral 36 28.8 32.1 69.6
Agree 14 11.2 12.5 82.1
Strongly Disagree 20 16.0 17.9 100.0
Total 112 89.6 100.0
Missi
5555 13 10.4
ng
Total 125 100.0
Source: survey 2022
One importance of a given reward system is to build employees jobs access . The above table 14
indicated that majority of respondents do not agree on the builds employer opportunity jobs
reward system consider all employees and Policy organization. In other words, 56 (41.8%) of the
respondent disagree on the builds employer opportunity jobs reward system. Contrary to this, 20
(17.9%) respondents agree on the employer opportunity jobs. Finally, about 36 (32.1%) do not
know (neutral) about the issue. Therefore, it is recommended that the organization has given big
attention towards the current reward system considered all employees and Policy organization so
that it could be give attention its the builds employer opportunity jobs.

Table15.Reward system consider all employees and Policy organization

Valid Frequency Percent Valid Cumulative
Percent Percent
Strongly Agree 8 6.4 7.1 7.1

Disagree 25 20.0 22.3 29.5

Neutral 36 28.8 32.1 61.6

Agree 13 10.4 11.6 73.2

Strongly Disagree 30 24.0 26.8 100.0

Total 112 89.6 100.0

 Missing 5555 13 10.4

Total 125 100.0

Source: survey 2022

One importance of a given reward system is to retain skilled employees. The above Table15
indicated that majority of respondents do not agree on the strength of the existing reward system
consider all employees and Policy organization. In other words, 30 (26.8%) of the respondent
disagree on the capability of the company’s reward system to retain its best performers. Contrary
to this, 13 (11.6%) respondents agree on the capability of the reward system consider all
employees and Policy organization system to retain best performers. Finally, about 36 (32.1%)
do not know (neutral) about the issue. Therefore, it is recommended that the organization has
given big attention towards maximizing the current reward system considered all employees and
Policy organization so that it could retain its skilled manpower.

Table16. the management give due attention for reward management practice?
Valid Frequency Percent Valid Cumulative
Percent Percent
Strongly Agree 4 3.2 3.6 3.6

Disagree 28 22.4 25.0 28.6

Neutral 41 32.8 36.6 65.2

Agree 18 14.4 16.1 81.3

Strongly Disagree 21 16.8 18.8 100.0

Total 112 89.6 100.0

Missing 5555 13 10.4

Total 125 100.0

Source: survey 2022
 Majority of respondents disagree on the Management gives attention on reward management
practice 49(43.8%) of the respondents disagree on the above question. About 22 (19.7%) of the
respondents agree. 41(36.6%) of the respondents do not know (neutral) about the issue. The
above table 16 indicates that majority of the respondents’ disagreement. This implies that the
company’s reward management practice has not acceptable to employees.

In general, results in the organization total Management reward system call the attention of the
organization to review the system. Besides, the reward system is not competitive, not well
communicated, incapable to retain best performers and unable to differentiate high performers
and low performers. All in all, employees who do not see any value in the reward system will not
be motivated through it. Implication of the above result of the study is that employees of the
organization are not motivated by the Management reward system especially with financial
reward of the company.

Table 17.Factors of turnover

Valid Frequency Percent Valid Cumulative

Percent Percent

LESS PAYMENT 53 42.4 70.7 72.0

LESS
11 8.8 14.7 86.7
COMMPOSATION
NO PROMOTION 10 8.0 13.3 100.0
Total 75 60.0 100.0
Missing 5555 50 40.0
Total 125 100.0
Source: survey 2022
In Ministry of revenue medium tax payer High Rate of Turn over Due to several Factors Such as
Payment, Compensation and promotion According to Source from HRM of the organization.
From total respondents About 33 (34.4%) of the total respondent agree due to less payment,
53(42.4%) due to less compensation, while the remaining 10(8%) due to absence of promotion in
organization.
 The general implication Implies that Even Several Factors for high rate turnover is identified less
payment (42.4%) was major factors for reason turnover of the respondents’ responds reward is
directly related with performance. Therefore, the Result of the table 17 Indicated that majority
of the respondents needs Salary Increment and others benefits to Minimize Rate of turnover.
About 26 (23.2%) of the total respondent disagree that the company clearly communicates its
Satisfaction with reward system. Contrary to this, 21(18.8%) of respondents are agreed on that
The company clearly communicates its Satisfaction with reward system. However, 43 (38.4%) of
Employees do not know neutral) about the issue at all. So the reward systems not satisfy the
employee.

Table 18.When compared to similar organization ?

Valid Frequency Percent Valid Percent Cumulative

Percent
HIGH 25 20.0 22.5 22.5

SAME 41 32.8 36.9 59.5

LESS 45 36.0 40.5 100.0

Total 111 88.8 100.0

5555 14 11.2
Missing
Total 125 100.0
Source: survey 2022

About 45 (40.5%) of the total respondent agree that the Compensation system Either pay equal
for equal jobs or pay fair for the job done toward others organization was less, about
41(%36.9 )respondents responds same , while the remaining 25(%22.5) the same when compare
to others.

The general implication of the response is more than 40.5% of the respondents responds not
satisfied with compensation system toward either Pay equal for Equal Jobs Or Pay fair for job
done. Therefore, the result of the Table 18. Indicated that majority of the respondents needs
more Fair and Similar Compensation with other similar organization to increase their
Competency and Effectiveness of Employee and organization.

In general, results in the organization Fair and Similar Compensation system call the attention of
the organization to review the system. As we have seen it even though majority of respondents
agree on the existence of Less Payment toward similar organization. All in all, employees who
do not see any value in the Fair and Similar Compensation will not be motivated through it.
Implication of the above result of the study is that employees of the organization are not
motivated by the reward system especially with financial reward/ Fair and Similar
Compensation/ of the company.

Valid Frequency Percent Valid Cumulative

Percent Percent
bonus 3 2.4 2.7 2.7

promotion 17 13.6 15.2 17.9

recognition 22 17.6 19.6 37.5

no 70 56.0 62.5 100.0

Total 112 89.6 100.0

Missing 5555 13 10.4

Total 125 100.0

Source: survey 2022

In MOR medium tax payer Different types Rewards and Incentives to keep employees in
organization Such as Bonus, Recognition and Promotion According to Source from organization.
From total respondents About 3 (2.7%) of the total respondent they obtained Bonus, About
17(13.6%) respondents obtained promotion, 22(17.6%) obtained recognition While remaining
70(62.5%) are don’t got any rewards and Incentives.

The general implication implies that Even Different types Rewards and Incentives applied in
organization (62.5 %) was not obtained any Incentives and rewards the respondents respond
reward is directly related with performance. Therefore, the Result of the table 19 indicated that
majority of the Respondents needs Different types of Reward and Incentives Salary with current
market system to keep employees.

It is known that companies the organization investment of human assets toward employee morale
indicated on above table. However, as indicated in the literature review part, their proportion
May vary due to various reasons. Previously we have noted that the organization compensation
system based on employee experience However. from total respondents dis satisfied 50(44.6%)
neutral is 42(37.5%) while Respondents of interview had similarly responded that they are
satisfied with the existing employee composition system .

As we will discuss later on, each employee has his/her own unique characteristics. What is
valued more by one individual will not be valued similarly by others. Hence, being strong at one
aspect could hurt the level of motivation of employees. As a result, the company should evaluate
its rewarding practice and try to adjust its reward composition.

When we come back to the respondents’ view on employee /composition/motivation of the

organization employee reward system, we find that 77 (68.8%) of the respondent claim that the
organization employee /composition/motivation is not satisfied. Contrary to this, 6 (5.4%) of the
respondent satisfied on the employee /composition/motivation. Whereas, 29 (25.9%) of the
employees do not have any idea/neutral on the point .The result on this table also shows that
majority of the respondents disagree/not satisfied/ on the company’s Employee
compensation/Motivation system..
 It is vital for a company to know what its competitors are rewarding their employees motivation.
The above response calls the organization once again to look what its reward package is and to
compare it with other similar companies within the industry.

Hence, the organization should take timely correction or revision of the total reward system
toward employee /composition/motivation. Lack of motivating reward package and inadequate
incentives in the organization have recently Increasing employees turn over as experienced staffs
are shifting to private companies .

However, this has indirectly been affecting the organization productivity as well experienced
employees are leaving for other private companies in search of better Compensation and reward
package.” In order to be competitive enough in the industry, the researcher recommends that the
organization has to improve its current Compensation/Motivation system.

Table20. Summary of Cases Survey in the study

Items Strongly Dis Agree Neutral Agree Strongly

agree disagree
Fre %ag Freq. %ag Freq. %ag Freq %age Fre %age
q e e e q
1 Mgt gives attention on reward mgt 4 3.6 28 25 41 36.6 18 16.1 21 18.8
practice
2 Reward system consider all 8 7.1 25 22.3 36 32.1 13 11.6 30 26.8
employees and policy organization
3 Investment of human asset toward 6 5.4 25 22.3 42 37.5 14 12.5 25 22.3
employee morale
4 Respondent on both financial and 6 5.4 42 37.5 20 17.9 19 17 25 22.3
non financial reward system

5 Reward practices in MOR 19 17.0 8 7.1 35 31.3 42 37.5 8 7.1

6 Employee motivation/composition 1 .9 34 30.4 29 25.9 5 4.5 43 38.4
in organization
7 Satisfaction with reward system 3 2.7 26 23.2 43 38.4 21 18.8 19 17
The researcher use Strong Agree and Agree as Satisfied, While Strong agree and Disagree as
Dissatisfied for above survey. Based on Above Survey Collected from respondents on the
Management gives attention on reward management practice implies that 26 (26%) of the
respondents satisfied, About 40 (41.7%) of the respondents Dissatisfied, While the remaining
respondents do not know (neutral) about the issue. In case of strength of the existing reward
system consider all employees and Policy organization about 33 (34.4%) of the respondent
Satisfied on the capability of the company’s reward system to retain its best performers. Contrary
to this, 42 (43.8%) respondents dissatisfied on the capability of the reward system consider all
employees and Policy organization system to retain best performers, While the remaining do
not know (neutral) about the issue.

In case of Investment of human asset toward morale about 27(28.1%) respondents satisfied
where as about 40(41.6%) respondents dissatisfied while remaining respondents become neutral.

About 35 (36.5%) of the respondents Satisfied that the organizations reward system incorporates
both financial and non-financial rewards. Contrary to this, 40 (41.7%) of respondents dissatisfied
on the incorporation of the financial and non-financial rewards in the company’s reward system.

However, the remaining Respondents do not know about the issue raised. About 27 (28.1%) of
the total respondent Satisfied that the company clearly communicates its Reward practice in
MOR. Contrary to this, 51(52.3%) of respondents are Dissatisfied on that the company clearly
communicates its Reward practice in MOR. However, the remaining of Employees does not
know (neutral) about the issue at all. About 26 (27.1%) of the total respondent Satisfied that the
company clearly communicates its Employee motivation/composition in MOR. Contrary to this,
42(43.7%) of respondents are Dissatisfied on that the company clearly communicates its
Employee motivation/composition in MOR. However, the remaining of Employees do not know
(neutral) about the issue at all. About 31(31.3%) of the total respondent Satisfied that the
company Satisfaction with reward system in MOR. Contrary to this, 41(42.7%) of respondents
are Dissatisfied on that the company Satisfaction with reward system in MOR. However, the
remaining of Employees does not know (neutral) about the issue at all.

The general implication of the response respondents have Dissatisfied Inclusion of Management
Gives Attention on Reward Practice, Reward system consider all employees
Motivation/Compensation in the organization, Investment of human asset toward employee
morale of financial and non-financial reward, Satisfaction level of employees and Policy
Organization in reward system.

Therefore, it is recommended that the MOR has given big attention towards Cases above
Dissatisfied Employees in order to maximizing the current reward system consider all employees
and Policy organization so that it could retain its skilled manpower. The above table 4.10
indicates that majority of the respondents’ disagreement.

CHAPTER FIVE

5.0 SUMMARY, CONCLUSION AND RECOMMENDATIONS

In this chapter, Summary of the Major Findings, Conclusions and Recommendations Originated
from the Analysis, Discussion and Interpretation of the data that collected through questionnaire
and interview based on opinion of clerical employees performance in MOR selected Medium tax
payer office
5.1 Summary of Major Findings
The demographic characteristics implied that: Age of respondents’ comprises about 6(5.4%),
fall below age category of 25, 64(66.7) fall under age category of 25-35, (65%) fall under age
category of 35-45, (29%) fall under age category of 45-55, 4 (3.6%) and fall under the age
categories of The remaining has above 45-55 4(3.6%)Years and respectively .

We can clearly understand that majority of respondents in the organization are youngsters.
Besides, it warns the company the reward package it designs should accommodate its workforce
age composition. Since, youngsters are more volatile for turnover for cash and other differentials
the organization has to craft its reward according to the industry’s pace.

About 77 (68.8%) of them are holders of first degree, 21 (18.8%) of the respondents are holders
of MA Degree, 12 (10.7%) of the respondents are holders of diploma and the remaining (1.8) are
composed holder of Hi school complete. The table 5 implies that the work forces of the company
are fairly educated.

This implies that they are able to understand and respond to questions distributed to them
through the questionnaire. 17% of them have worked in the company between 1-3 years, 48% of
them between 4-6 years, 23.2% between 7-10 years, 14.8% and the remaining 17% of them
above 10 years. From this, we can infer that more than half of the respondents have served the
organization less than 6 years.

5.2 General questions on the MOR reward system

About 22.8 % of respondents indicated that the MOR has incorporated both financial and
nonfinancial rewards in its reward system. Besides, 59.8% of them disagree that the financial
reward type is greater than the non-financial reward types. However, 77.8% disagree on the
competitiveness of the company’s reward with other similar organization. Moreover, the
company did not communicate its reward system to all employees as revealed by 62% response
rate. In addition 74 % of the respondents have agreed that the company’s reward system is
capable to retain best performers. Further it does not even differentiate between high and low
performers as indicated by 41.4 % of response rate.
Respondent’s perception towards the company’s employees’ performance evaluation system.
About 55.4% of respondents have agreed that the company conducts periodic employees’
performance evaluation program. However 72.4% of them agreed on the inclusion of job related
items in the performance evaluation form. On the other hand, they do not agree on the
performance evaluation report reflects their true performance and its dependability. About 43.7%
of them do not agree that there are clear standards to be called high performer. But, 83.1% of
them agree that even if someone gets the highest evaluation score he/she may not be entitled for
additional pay. This clearly he/she negative perception on the performance evaluation program
of the organization.

Reward Composition
As discussed above, from the reward system of the organization the non-financial rewards are
greater than the financial reward types. However, 59.8% of the respondents do not agree that the
existing financial rewards are sufficient. On the other hand, about 74.4% agree that best
performers get additional pay. The organization mainly promotes the entitlement orientation in
rewarding its employees. As per the information obtained from the respondents i.e.

On the other hand, 53.2% of respondents agree on the existence of conducive work environment
for high performers. Besides, 70.2% respondents also claim that there is no clear career
development opportunity in the company. In addition 54.4% of them have agreed that
organization were communicated clearly about the promotion policy. But 75.6% agreed the
organization fills vacant position internally. However, as revealed by mean result by (58.4%) of
respondents agree about provision of training to develop employees’ future career.

Employee’s perception
The 51% , 50.6% and 54% of the respondents responded that the employees are disagree
regarding the company’s reward system considers their level of performance, educational status
and the reward they get are equivalent with the level of their contribution respectively.

However greater part of respondents disagreed that employees in the MOR have an equal chance
of being promoted equally and the pay they receive were equal with their colleague with the
same educational status and experience on the same job level even theiy don’t now their job real
position.
5.2 Conclusion
Based on the data presented in the previous chapter, the following main conclusions are drawn.
This is mainly because of the fact that one type of reward system (i.e. financial reward) is not
satisfactory in the total reward system of the company. Besides, employees have felt that the
reward system is not competitive with other organizations not well communicated and it cannot
differentiate between high and low performers.

Moreover, the finding shows that there is poor linkage between reward system and individual
performance. Even though the company conducts periodic employees’ performance evaluation,
this performance evaluation system is targeted on the branch (department) level rather than
individual base that means high performers may not be rewarded based on their performance.

This will develop negative perception among employees. They may ask why they are evaluated
if they are not rewarded. Since the organization follows entitlement orientation there are no
special rewards in the form of bonus or salary increment for high performers. Rather all
employees will get the bonus and salary increment regardless of their performance. This may
develop thinking in the employees’ mind that performing better does not have associated reward.
Hence, they will do their job at their lowest potential just to meet the standards.

The finding also shows that there is a need assessment program in the company; however the
employees do not have the chance to choose the way they like to be rewarded.

On the other hand the respondents were happier if the company consults them what they need
most when they perform better and they like to be rewarded both financial and non-financial
reward types with appropriate mix than single type of reward. However, as inferred from the
result of this study, employees are more satisfied and motivated with direct financial rewards.

With regard to employee’s perception on the existing performance appraisal system, the
organization’s reward system does not consider their educational status and the reward system
they provided were not equivalent with the level of their contribution. On the other hand some of
the respondents agreed that the pay they receive is equal with their colleague with the same
educational status and experience but this pay were not equivalent with this industry.
Generally speaking, it can be concluded that there is poor implementation of employees
performance evaluation, employees are not satisfied with the current reward composition, broad
time gap between performance appraisal period and reward, lack of customized rewards and low
attention towards the level of educational qualification in the organization understudy.

5.3 Recommendations
Based on the findings of the study, the researcher has proposed the following
recommendations:-

As indicated in the study, the organization has implemented both types of the reward system, but
currently the financial reward being implemented is not attractive when compared to competitors
(other organization s). So the researcher recommends that the organization should modify the
existing reward system especially financial rewards.

As much as possible the organization should make available exceptional rewards systems to
retain skilled and high performing employees. No company works in a vacuum. Today’s market
is becoming more competitive than ever. Companies are fighting to get skilled and experienced
personnel. Service giving organizations, like organizations, mainly depend on the skills and
abilities of their human resources.One way of keeping and attracting skilled employees is by
designing a reward system that is competitive to the external market mainly to the industry.
Otherwise, employees will leave the organization in search of better pay and the remaining
employees’ motivation will be lower.

The organization should set reward criteria to differentiate high performers from low performers.
The main principle of performance management system is to reward top performers and penalize
under performers. When top performers are rewarded, they become motivated and contribute
more towards achieving the organizational goal. But if they are seen equally with under
performers they become unprovoked and will not be aligned with organizational overall target.
And this will have negative impact on the organization’s profitability.

The employee’s performance evaluation result should have some implication to employees in
terms of reward and promotion. Hence, the organization should devise a mechanism to attach
rewards with performance.
As indicated in the data presentation, the organization should work hard to conduct need
assessment program and identify the employee’s satisfaction in order to reverse the existing
adverse feelings of employees.

The organization should adopt clear reward procedure that could be applied consistently. In
relation to this, it should have to arrange an office or committee that can hear the voice of
employees when policies and procedures are violated and also should pave the way to
communicate with employees. The existing performance appraisal system is more depends on
the branch performance results. As the performance management guideline indicates, each
employee should be rewarded based on his/her performance result which is measured at each
fiscal year. Therefore, the organization should implement the individual based performance
appraisal system which is attached to individual reward system. In addition to these the
researcher recommends that the organization should improve (modify) the existing poor
rewarding system through both external market analysis and internal needs of reward. This will
help to design a competitive reward system in the market. Finally, the researcher recommends
the organization to keep its good qualities and improve its weak side.

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/http://www.combanketh.et /

NEW GLOBAL VISION COLLEGE

Master of Business Administration program
Questionnaire to be filled by employees of MOR
Researcher/student Name: HANNA SHIGUTE BEKASA
 General Guideline:
This questionnaire is prepared to collect information from randomly selected
respondents. The researcher is currently undertaking a Master thesis titled “An
Assessment of a Reward system on Ministry of revenue : A case of Medium tax
payer MTO” as part of requirement for fulfilling Master of Business Administration
(MBA) at New global college.
Please note that all your response will be kept confidential and do not write your name on
the questionnaire. Put ‘√’ sign on the box provided based on your level of agreement for
each statement for close-ended questions and write your response in brief on the space
provided for open-ended questions.
Thank you for participating in this questionnaire!
Part I Personal Details
1. Sex : Male Female
2. Age: Below 25 25-35 35-45 45-55 Above 55
3. Academic qualification:
Diploma First degree Master degree and above
4. Title of your job _______________
5. Years of experience 1-3 4-6 7-10 above 11 years

1. Questions directly related to the Study

Rating scale: (1) Strongly agree (2) Disagree (3) Neutral (4) Agree (5) Strongly disagree
Sr. Description 1 2 3 4 5
No
1 Reward practice exist in your organization

2 You are satisfied with the existing reward system

3 The reward system is fair in your organization
4 The reward system include both financial & non financial
Rewards
2.1. Questions related to integration of HRM & Rewards
 5. What type of payment system is applied in MOR?
Time rate system Pay for performance Skill based pay
Payment by result Company Wide incentive Specify if any other

Rating scale: (1) Strongly agree (2) Disagree (3) Neutral (4) Agree (5) Strongly disagree

Sr. No Description 1 2 3 4 5
6 You feel you are compensated enough in your organization

7 Your organization invests in human assets

8 Your organization builds a greater employee morale
9 Employees become more productive when productive
rewards are based on performance
2.2 Questions related Impact of the reward on employee motivation

Sr. No Description 1 2 3 4 5
10 There is a motivation on employees of the organization

11 The motivation has a positive impact for employees &

organization
12. Do you believe you are committed & engaged to your organization?
Yes No
13. If no please specify your reasons below
1.3 Questions Related Factors affecting the reward system
Sr. No Description 1 2 3 4 5

14 You are rewarded based on the reward policy

15 Does the management give due attention for reward

management practice?
16 The reward system considers all employees & the
organization
2.4. Questions related to challenges of the reward system 17 Is there a high rate of turnover?
Yes No
18. If you answer is yes, in your opinion what would be the reason for this high rate of turnover?
Less payment Less Compensation No Promotion

19. Based on what factors are you rewarded?

Seniority Contribution Performance

Good relationship with the management Effort

20. When compared to similar organizations, your compensation is?

High same less

21. Does the Organization pay equal for equal jobs?

Yes No less

22. Does the compensation is fair for the job done?

Yes No

23. Of the following, which reward or incentive you obtained?

Bonus Promotion Recognition No

24. Does the reward or incentive lead you for further commitment to stay in the organization
Yes No

25. If you answer is no please specify your reason.

Thank You For Time Devotion !!!

NEW GLOBAL VSION COLLEGE

Master of Business Administration program
Questionnaire for An Assessment of a Reward system on Ministry Of Revenue
A case of medium tax Payer office Brunch
Interview questions to managers of MOR
1. Does the Organization have Reward Management System?
2. How much fair the current Reward Management System?
3. How does the organization relate the Reward Policy with the Human Resource Policy?
4. What are the factors Considered in rewarding employee?
5. Does the current reward system motivate the employees of the organization?
6. What type of reward your organization mostly provide for employees?
7. What is the significance of rewarding employees?
8. What are the factors affecting the reward system in your organization?
9. How Much the current implementation of the reward system is effective in your
organization?
10. When you compare the reward system of your organization with other companies, is it
beneficial or not?

Thank you !!