THE IMPACT OF REMUNERATION POLICY ON EMPLOYEE’S PERFORMANCE: EVIDENCE FROM DASHEN BANK IN ETHIOPIA

The Ethiopian financial sector is in agony of formulating a proper remuneration plan which keeps balance between internal equity and external competitiveness since companies that compensate their workers effectively are likely to achieve maximum productivity. The study examines the impact of remuneration policy on employees’ performance with particular reference to Dashen bank Dessie town branch offices. One hundred eight employees of Dashen bank were selected through census sampling technique. The sample handed likert scale questionnaire to gather data on the bank’s remuneration policy and performance. From the distributed 108 questionnaire 94 of them are filled and returned that gave 87% of response rate. The dependent variable was employees’ performance while the independent variable was remuneration. The study adopted descriptive and explanatory research design to attain the objectives. Data analysis was done using descriptive statistics and simple linear regression model using statistical package for social science (SPSS Version 20) to predict the findings. The findings suggest that there is a strong and positive relationship between remuneration and employees’ performance. Further the findings suggest that the bank’s remuneration policy do not based on performance rather it is rigid to monthly salary and lack ensuring equity among employees for some benefit packages like mortgage besides the policy do not evaluated periodically for its effectiveness. Therefore the study concludes and recommends to the financial industry to make sure implementing remuneration policy that is competitive, performance based, and ensures equity among employees’.