INFLUENCE OF SALARY ON EMPLOYEE PERFORMANCE IN SELECTED PUBLIC INSTITUTIONS IN RWANDA

Abstract

The purpose of this study was to examine the influence of rewards and incentives on employee performance in public institutions in Rwanda. The study was anchored on human capital theory and supported by agency theory. The study adopted a descriptive research design to establish the problem that is under investigation. It was appropriate because it explored and described the relationship between variables in their natural setting without manipulating them. The target population of the study was 4 Public Institutions located in Kigali Rwanda. Purposive sampling technique was adopted to select the sample of the study. Structured questionnaires were instruments of data collection due to their effectiveness of capturing respondent information in a structured manner and the opportunity of respondents giving their views freely without interference from the researchers. Primary data was collected using questionnaires and interviews while secondary data was collected through review of relevant literature. The questionnaires were coded and edited for completeness and consistency and entered into Statistical Package for Social Sciences (SPSS version 21). Analysis involved descriptive statistics and inferential analysis. Descriptive analysis technique gave simple summaries about the sample data in quantitative descriptions and included, mean, standard deviation, frequencies and percentages. Inferential statistics were used to determine the relationships and significance between independent and dependent variable. Correlation and linear regression were used to analyze the data with F-test being applied to the test hypothesis at 5% level of significance. Content analysis was used for the qualitative data. The data was presented using tables, graphs and charts. The study found that incentives and rewards had a positive significant influence on employee performance in Selected Public Institutions in Rwanda. In addition, positive significant relationship was found between recognition schemes on employee performance in Selected Public Institutions in Rwanda. All the sub variables had factor values more than 0.5 and therefore they were accepted and thus no sub variable was dropped. Specifically, the respondent agreed that every employee in their organization regardless of performance are all praised of performance (M=3.961, SD=1.476) and that their organization gives them incentives that motivates them to work hard (M=3.948, SD=1.263). The findings also showed that the respondents agreed that top management in their organization thanks employees whenever they perform well (M=3.915, SD=1.343); when their organization makes profit at the end of the year, they share it and this motivates them to work (M=3.863, SD=1.326); and that every year best performers in their organization get certificates of achievement (M=3.836, SD=1.22). The coefficient of determination R Square is 0.248 and R is 0.498 at 0.01 significance level. The model shows that Incentives and Rewards explain 24.8% of the variation in employee performance. This implied that there exists a positive significant relationship between Incentives and Rewards and employee performance. Based on the findings, the study concluded that when it comes to incentives and rewards, employees feel valued by their organization and thus work extra hard to enhance their performance, in order to be rewarded more. When employees are rewarded according to their qualifications and performance, they get satisfied with their job. This can be exhibited through low labor turnout and less absenteeism amongst employees. The study recommended the policy makers to formulate policies than embrace reward systems that could be implemented by existing banks to give them a competitive advantage and for the new banks in setting structures that support employee performance. Rewarded employees are strongly enthusiastic about their work and function as a critical source of inspiration for others. Rewards systems are critical for and important elements in the success of organizations.