ADDIS ABABA UNIVERSITY COLLEGE OF BUSINESS AND ECONOMICS, SCHOOL OF COMMECE, GRADUATE STUDIES DEPARTMENT OF HUMAN RESOURCE MANAGEMENT EFFECT OF REWARD MANAGEMENT PRACTICE ON EMPLOYEES’ PERFORMANCE A CASE STUDYON CATERING AND TOURISM TRAINING INSTITUTE By: Teferi Haile Mariam Advisor: Solomon Markos(PhD) THESIS SUBMITTED TO ADDIS ABABA UNIVERSITY, SCHOOL OFCOMMERCE IN PARTIAL FULFILMENT OF THE REQUIREMENTS FOR THE DEGREE OF MASTER OF ARTS IN HUMAN RESOURCE MANAGEMENT. May, 2017 Addis Ababa, Ethiopia i | P a g e Effect of Reward Management Practice on employees ‘Performance ADDIS ABABA UNIVERSITY COLLEGE OF BUSINESS AND ECONOMICS, SCHOOL OF COMMECE, GRADUATE STUDIES DEPARTMENT OFHUMAN RESOURCE MANAGEMENT EFFECT OF REWARD MANAGEMENT PRACTICE ON EMPLOYEES' PERFORMANCE A CASE OF CATERING AND TOURISM TRAINING INSTITUTE By Teferi H. Mariam Approved by The Board of Examiners: Solomon Markos (PHD) _______________ ________________ Advisor Signature Date Abeba Mengistu(PHD) _______________________ __________________ ______________ Internal Examiner Signature Date TesfayeDebela(PHD) ________________ __________________ _______________ External Examiner Signature Date ii | P a g e Effect of Reward Management Practice on employees ‘Performance Statement of Certification This is to certify that Teferi H. Mariam has carried out his research work on the topic entitled “Effect of Reward management practice on employees’ performance A case of Catering and tourism training institute”. The work is original in nature and is suitable for the award of Master Degree in Human Resource Management (MA in HRM). Advisor: Solomon Markos, PhD Signature_______________________ Date___________ iii | P a g e Effect of Reward Management Practice on employees ‘Performance Statement of Declaration I, Teferi Hailemariam, hereby declare that this thesis entitled “Impact of reward management practice on employees’ performance A case of catering and tourism institute submitted by me for the award of the degree of Master of Human Resource management, Addis Ababa University at Addis Ababa, Ethiopia, This is my original work and it has never been presented in any university. All sources and materials used for this thesis have been duly acknowledged. Name: Teferi Hailemariam woldeSelassie Signature: ___________________ Place: Addis Ababa Date of Submission: may, 2017 iv | P a g e Effect of Reward Management Practice on employees ‘Performance Dedication This research study is dedicated to my family and friends for their encouragement and support throughout MA Program and especially during this research project. v | P a g e Effect of Reward Management Practice on employees ‘Performance Table of Contents STATEMENT OF CERTIFICATION .............................................................................................................................. III STATEMENT OF DECLARATION ............................................................................................................................... IV ACKNOWLEDGEMENTS ........................................................................................................................................... IX LIST OF TABLES ........................................................................................................................................................ X LIST OF FIGURES ..................................................................................................................................................... XI LIST OF ACRONYM AND ABBREVIATION ................................................................................................................ XII ABSTRACT................................................................................................................................................................ 1 CHAPTER ONE .......................................................................................................................................................... 2 INTRODUCTION ....................................................................................................................................................... 2 1.1 BACK GROUND OF THE STUDY ....................................................................................................................................... 2 1.2 BACKGROUND OF THE ORGANIZATION ............................................................................................................................ 3 1.3 STATEMENT OF THE PROBLEM ...................................................................................................................................... 4 1.4 RESEARCH QUESTIONS ................................................................................................................................................ 6 1.5 OBJECTIVE OF THE STUDY ............................................................................................................................................ 6 1.5.1General objective ............................................................................................................................................ 6 1.5.2 Specific Objectives.......................................................................................................................................... 6 1.6 SIGNIFICANCE OF THE STUDY ........................................................................................................................................ 6 1.7 TERMS AND CONCEPTS ................................................................................................................................................ 7 1.8 SCOPE OF THE STUDY .................................................................................................................................................. 8 1.9 LIMITATIONS OF THE STUDY ......................................................................................................................................... 8 1.10 ORGANIZATION OF THE STUDY .................................................................................................................................... 8 CHAPTER TWO ....................................................................................................................................................... 10 REVIEW OF RELATED LITERATURE ......................................................................................................................... 10 INTRODUCTION ..................................................................................................................................................... 10 2.1 OVER VIEW OF EMPLOYEE PERFORMANCE .................................................................................................................... 10 2.2 REWARD................................................................................................................................................................. 12 2.3 REWARD MANAGEMENT ........................................................................................................................................... 13 2.3.1 Aims of Reward Management ..................................................................................................................... 13 2.3.2 Importance of Reward Management .......................................................................................................... 14 2.4 INTEGRATED REWARD MANAGEMENT .......................................................................................................................... 14 2.5. REWARD PHILOSOPHY .............................................................................................................................................. 15 2.6 TYPES OF REWARD ................................................................................................................................................... 15 2.6.1 Financial Rewards ........................................................................................................................................ 16 2.6.2 Non-financial Rewards ................................................................................................................................. 17 2.6.3 Intrinsic Rewards.......................................................................................................................................... 17 vi | P a g e Effect of Reward Management Practice on employees ‘Performance 2.6.4. Extrinsic rewards ......................................................................................................................................... 17 EXTRINSIC ANSWER THE QUESTION; .......................................................................................................................... 17 2.7 REWARD SYSTEMS .................................................................................................................................................... 18 2.7.1 Reward strategies ........................................................................................................................................ 19 2.7.2 Reward policies ............................................................................................................................................ 19 2.7.3 Reward practices ......................................................................................................................................... 19 2.7.4 Reward processes .......................................................................................................................................