Organizational rewards and employee commitment in the banking industry in Uganda: case study united bank for Africa, central region

Abstract

The main objective of this study was to assess the effect of organizational rewards on employee commitment in the banking industry in Uganda. Strong commitment is correlated with high productivity, low employee turnover, pride in the organization, loyalty and low absenteeism, while weak commitment operates in reverse. Organizational rewards were explored using financial, non financial and social rewards. The specific objectives of this research were to assess the effect of financial, non-financial and social rewards on employee commitment in the banking industry in Uganda. To achieve these objectives a survey was conducted to canvas the opinions of respondents in the Ugandan banking industry, using a case study of United Bank of Africa, Uganda ltd. The Social Exchange theory by Goerge Hommans was considered as the main theory that guided this study, although theories like Expectancy theory by Vroom, Herzbergs’ two factor theory by Fredrick Herzberg and Equity theory were also thought of for purposes of enriching and better understanding of the study. A cross-sectional research design incorporating both qualitative and quantitative aspects was used. Data was collected by use of self-administered structured questionnaires and an interview guide. A sample size of 92 respondents were selected from a population frame of 120 employees as guided by Krejcie and Morgan table, (1970). Further analysis using Pearson correlation coefficient test revealed a strong, positive and significant relationship between financial rewards and Employee commitment given (r = 0.791) and significance p< 0.01 (0.000). A moderate positive relationship between Non-financial rewards and Employee commitment given by Pearson correlation coefficient r = 0.559 and significance p< 0.01 (0.000). A moderate, positive and significant relationship between social rewards and Employee commitment given by Pearson correlation coefficient r = 0.662 and significance p< 0.01(0.000). Furthermore, the findings revealed that 44.8% of variations in employee commitment is predicted by organizational rewards as represented by the Adjusted R Square (0.448). The researcher recommended that there is a great need to evaluate financial rewards and ensure that they are commensurate. Where possible, benchmarking financial rewards can help minimize the frequency of employees moving from one organization to the other. According to the findings, Non-financial rewards had an average influence on employee commitment of the lower level category, but management staff attached more value on this type of category, therefore, the researcher recommended the need to have different reward systems to cater for the needs of different staff categories, for example a conversion of most of the non-financial rewards into financial and social rewards to satisfy the largest group of employees. Social rewards were the second most influencing variable of Employee commitment according to the study. Therefore, special attention should be given to issues like supervisory support, respect, empathy and creation of more staff interaction opportunities among others. This study has implications for management of banks in Uganda since they can influence employees to achieve optimized motivation and commitment, by designing a good reward that is perceived as fair, equitable and consistent.