The Impact of Compensation on Employee Performance in Commercial Banks in Kigali City, Rwanda
Abstract
This study investigates the impact of compensation on employee performance in commercial banks in Kigali City, Rwanda. The banking sector plays a crucial role in Rwanda's economy, but there are concerns about employee motivation and high turnover intentions. The study aims to examine the relationship between various compensation components (monetary incentives, health insurance benefits, transportation benefits, and professional development opportunities) and employee performance. The research employs a descriptive research design with both descriptive and explanatory components, using a quantitative approach. A sample of 180 employees from 10 commercial banks in Kigali City was selected using stratified random sampling. Data was collected through a structured questionnaire and analyzed using descriptive and inferential statistics. The findings reveal that monetary incentives and health insurance benefits have the strongest positive correlations with employee performance, while professional development opportunities are rated poorly and have the weakest impact. Overall compensation significantly influences employee performance, with the multiple regression model explaining 69.4% of the variance. The results align with Maslow's Hierarchy of Needs and Herzberg's Two-Factor Theory, emphasizing the importance of addressing both basic and growth needs. The study concludes that compensation plays a crucial role in driving employee performance in Rwandan commercial banks and recommends that banks implement balanced compensation strategies, regularly review and adjust packages, and improve professional development programs. Policy makers are advised to develop guidelines for minimum compensation standards, create incentives for employee development, and promote transparency in compensation practices. The findings contribute to the understanding of compensation's impact on employee performance in the Rwandan banking sector and provide valuable insights for banks and policy makers to enhance motivation and retention strategies.
Keywords
Compensation, Employee Performance, Commercial Banks, Rwanda, Motivation
Citations
IRE Journals:
Celestin Havyarimana , Kadian Wanyonyi Wanyama , Leunita Makutsa Makila
"The Impact of Compensation on Employee Performance in Commercial Banks in Kigali City, Rwanda" Iconic Research And Engineering Journals Volume 8 Issue 2 2024 Page 43-50
IEEE:
Celestin Havyarimana , Kadian Wanyonyi Wanyama , Leunita Makutsa Makila
"The Impact of Compensation on Employee Performance in Commercial Banks in Kigali City, Rwanda" Iconic Research And Engineering Journals, 8(2)
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