Abstract:
Reward systems are important management tools that contribute to the effectiveness of a firm. The fundamental goal of the organization is to trade profitably and for it to achieve its ultimate goal, it needs motivated employees. It is quite a common phenomenon that majority of the banks have youthful employees, a fact that raises fundamental questions regarding where bank staff exit to after attaining a certain age. This further raises questions on the employee retention and motivation strategies adopted by commercial banks in Kenya. In view of this, this study aimed to determine the role played or ought to be played by various reward systems in enhancing the motivation of employees working with commercial banks in Kenya. The study particularly examined the role performance-based, membership-based, career, and social reward systems on employee motivation. Both goal setting theory and Alderfer’s ERG theory are reviewed. A descriptive survey research design was adopted. The study targeted all 662 employees working with commercial banks in Nakuru town. The sample constituted 95 respondents who were obtained from the target population through stratified random sampling method. A structured questionnaire was used to collect data. The questionnaire was pilot tested before its use in data collection for the main study. The aim of the pilot study was to determine the validity and reliability of the questionnaire. Data were collected from the sampled respondents after getting the necessary approval from relevant authorities. Data processing and analysis were facilitated by the use of Statistical Package for Social Sciences. Both descriptive statistics and inferential statistics were used in the analysis. The results of the study were presented in tables. The study revealed that both performance-based and career reward systems significantly influenced employee motivation. However, membership-based and social reward systems did not have a significant effect on employee motivation. Career reward system was found to be the most important form of reward system in enhancing employee motivation in commercial banks. The study concluded that commercial banks had performance based reward system in place and regularly evaluated performance of employees. It was inferred that banks offered paid leave, catered for employee training and development and offered life insurance. It was deduced that career based rewards are one of the most valued rewards by employees. Social rewards were inferred to marginally enhance employee motivation. It was recommended that commercial banks ought to uphold and enhance their performance based rewards. The study recommends that the banks without clear member-based reward systems should introduce such a system in order to motivate their employees. The study recommends that commercial banks and other financial institutions ought to embrace with zeal career-based reward system. Commercial banks are advised to introduce social-based reward system.
