Mediating Effect of Job Satisfaction in the Relationship between Reward System and Employees’ Work Performance of Commercial Banks in Kenya

Victor Ondolla  Jesse; Charles Katua Kithandi

doi:10.59413/eafj/v3.i2.15

Authors

Victor Ondolla Jesse School of Business and Economics, Daystar University, Kenya Author
Charles Katua Kithandi Daystar University, Kenya Author https://orcid.org/0000-0003-3495-9220 (unauthenticated)

DOI:

https://doi.org/10.59413/eafj/v3.i2.15

Keywords:

Reward System, Job Satisfaction, Employee Work Performance

Abstract

Employee work performance is the key driver to organizational success. An organization with a poor employee reward system is likely to be on a pathway of organizational failure. The purpose of this study is to examine the mediating effect of job satisfaction in the relationship between reward system and employees’ work performance. The target population was 11 banks listed in the Nairobi Securities Exchange. A random sampling method integrating qualitative and quantitative design methods was employed in this study. A random sample of 383 employees was selected from the 11 banks. The study used a Partial Least Squares structural equation modeling (PLS-SEM) to assess the magnitude and relationship and thus come up with a finding of the relationship of independent and dependent variables. Using bootstrapping to evaluate indirect effects, the results showed significant mediation: β = 0.711, t = 7.663, p < 0.001, with employee performance R² = 0.803, f² = 0.004. Since the confidence interval (0.530, 0.895) did not include zero, the mediation is statistically significant. Bootstrapping also revealed that the direct effect of the reward system on performance was not significant when job satisfaction was included (β = 0.053, t = 0.520, p = 0.603). However, the total effect (excluding the mediator) remained significant: β = 0.764, t = 11.214, p < 0.001. VAF confirmed full mediation with a value of 0.996. According to agency theory, HR departments play a critical role in aligning organizational goals with employee interests. Well-designed reward systems enhance job satisfaction, which subsequently improves performance. This creates synergy between employees (agents) and shareholders (principals), ultimately boosting firm value. The findings confirm that job satisfaction components like training, fair compensation, conducive work environments, and fringe benefits mediate the effect of reward systems on performance.

Downloads

Download data is not yet available.

References

Alrazehi, H. A. A.-W., Amirah, N. A., & Emam, A. S. M. (2021). The mediation effect of job satisfaction between reward system and training and development on employee retention in Yemen’s banking sector. International Journal of Innovative Research and Scientific Studies, 4(4), 215–228. DOI: https://doi.org/10.53894/ijirss.v4i4.100

Ansori, A., Aprianto, I., Yusup, M., Ansori, K., & Marzani, M. (2022a). The influence of intrinsic and extrinsic rewards on middle school teachers’ job satisfaction. AL-ISHLAH: Jurnal Pendidikan, 14(4), 6335–6346.

Ansori, A., Aprianto, I., Yusup, M., Ansori, K., & Marzani, M. (2022b). The influence of intrinsic and extrinsic rewards on middle school teachers’ job satisfaction. AL-ISHLAH: Jurnal Pendidikan, 14(4), Article 4. DOI: https://doi.org/10.35445/alishlah.v14i4.2162

Asasira, B. (2021). Reward systems, organizational commitment and job satisfaction among employees on National Environment Management Authority (NEMA) [Doctoral dissertation]. Makerere University.

Azainil, A., Komariyah, L., & Yan, Y. (2021). The effect of principals’ managerial competence and teacher discipline on teacher productivity. Cypriot Journal of Educational Sciences, 16(2), 563–579. DOI: https://doi.org/10.18844/cjes.v16i2.5634

Baker, P., & Sutner, S. (2022). What is employee retention? Everything you need to know. HR Software. https://www.techtarget.com/searchhrsoftware/definition/employee-retention

Baroudi, S., Tamim, R., & Hojeij, Z. (2022). A quantitative investigation of intrinsic and extrinsic factors influencing teachers’ job satisfaction in Lebanon. Leadership and Policy in Schools, 21(2), 127–146. DOI: https://doi.org/10.1080/15700763.2020.1734210

Bell, E., Bryman, A., & Harley, B. (2018). Business research methods. Oxford University Press.

Biason, R. S. (2020). The effect of job satisfaction on employee retention. 8(3), 405–413.

Bourne, J. (2020). What is job satisfaction and why is it important? Positive Psychology.

Deel, D. G. (2023, March 30). Competency-Based Pay: Ensuring Fairness and Consistency. Edge. https://apuedge.com/competency-based-pay-ensuring-fairness-and-consistency/

Dunmade, E., & Asa, K. (2022). Organizational reward system and workers’ satisfaction in Vista International Limited, Lagos, Nigeria. LASU Journal of Employment Relations and Human Resource Management, 3(1), 152–165. DOI: https://doi.org/10.36108/ljerhrm/2202.03.0121

Elrayah, M., & Semlali, Y. (2023). Sustainable total reward strategies for talented employees’ sustainable performance, satisfaction, and motivation: Evidence from the educational sector. Sustainability, 15(2), 1605. DOI: https://doi.org/10.3390/su15021605

Frost, J. (2022, July 7). Cronbach’s alpha: Definition, calculations & example. Statistics By Jim. https://statisticsbyjim.com/basics/cronbachs-alpha/

Gaël, D. C. T., & Charles, M. (2022). The devalorization of education in Congo stakes and realities. American Journal of Educational Research, 10(8), 476–483. DOI: https://doi.org/10.12691/education-10-8-1

Ginbar, E. (2021). The effect of reward management system on employee performance. The case of EI network solutions plc. GRIN Verlag. https://www.grin.com/document/986244

Hawthorne, H. (2021, October 11). Teacher recruitment and retention: Importance and strategies. The Hub | High Speed Training. https://www.highspeedtraining.co.uk/hub/teacher-recruitment-and-retention/

Huguette, S. B., & Kite, Z. (2021). Teacher management, key challenge in the democratic republic of congo (2010-2016). European Journal of Social Sciences Studies, 6(4), 140–167.

Johnson, S. (2023, August 2). What Is the Connection between Job Satisfaction and Absenteeism? http://www.wise-geek.com/what-is-the-connection-between-job-satisfaction-and-absenteeism.htm

Kainga, J. M. (2021). Relationship between reward management practices and job satisfaction among teachers in selected public secondary schools in Igembe north sub county, Kenya [Master’s Thesis]. Kenya Methodist University.

Khan, A. J., Bashir, F., Nasim, I., & Ahmad, R. (2021). Understanding affective, normative & continuance commitment through the lens of training & development. iRASD Journal of Management, 3(2), 105–113. DOI: https://doi.org/10.52131/jom.2021.0302.0030

Khan, A. J., Bhatti, M. A., Hussain, A., Ahmad, R., & Iqbal, J. (2021). Employee job satisfaction in higher educational institutes: A review of theories. Journal of South Asian Studies, 9(3), 257–266. DOI: https://doi.org/10.33687/jsas.009.03.3940

Koko, N., & Ozichi, K. (2021). Sources of teachers’ job satisfaction for quality service delivery in schools. International Journal of Education and Evaluation, 7(3), 131–141.

Leitão, M., Correia, R. J., Teixeira, M. S., & Campos, S. (2022). Effects of leadership and reward systems on employees’ motivation and job satisfaction: An application to the Portuguese textile industry. Journal of Strategy and Management, 15(4), 590–610. DOI: https://doi.org/10.1108/JSMA-07-2021-0158

Luneghe, M. K. (2022, July 22). “I have to work in a field":300,000 teachers in DRC going unpaid. African Arguments.

Mahmood, A., Akhtar, M. N., Talat, U., Shuai, C., & Hyatt, J. C. (2019). Specific HR practices and employee commitment: The mediating role of job satisfaction. Employee Relations: The International Journal, 41(3), 420–435. DOI: https://doi.org/10.1108/ER-03-2018-0074

Maini, R. (2020). Health workers in the Democratic Republic of Congo: An exploration of their motivation, incentives, and the effects of an intervention to improve their remuneration by government [Doctoral dissertation]. University of London.

Manzoor, F., Wei, L., & Asif, M. (2021). Intrinsic Rewards and Employee’s Performance with the Mediating Mechanism of Employee’s Motivation. Frontiers in Psychology, 12, 563070. DOI: https://doi.org/10.3389/fpsyg.2021.563070

Maslow, A. H. (1981). Motivation And Personality. Prabhat Prakashan.

Matveev, V. (2021). Teachers’ Job Satisfaction And Desire To Leave The Profession. European Proceedings of Social and Behavioural Sciences, Education in a Changing World: Global Challenges and National Priorities. DOI: https://doi.org/10.15405/epsbs.2021.07.02.75

McCombes, S. (2021, June 7). What is a research design, types, guide & examples. Scribbr.

Mediaofficer. (2023, January 11). Why teaching is a rewarding career—The Education Hub. https://educationhub.blog.gov.uk/2023/01/11/why-teaching-is-a-rewarding-career/

Menda, P. B. (2020). Help the teacher give the best of himself critical analysis of teacher motivation policy in schools in the Democratic Republic of Congo. Global Journal of Management and Business Research, 20(2).

Mengesha, A., & Markos, S. (2019). The effect of reward management practice on employee motivation: The case of Giz office Ethiopia. 64.

Merga, H., & Fufa, T. (2019). Impacts of working environment and benefits packages on the health professionals’ job satisfaction in selected public health facilities in eastern Ethiopia: Using principal component analysis. BMC Health Services Research, 19(1), 494. DOI: https://doi.org/10.1186/s12913-019-4317-5

Milano, S. (2021). The Role of the Organization’s Policies. Chron.Com. https://smallbusiness.chron.com/role-organizations-policies-68191.html

Mizala, A., & Schneider, B. (2020). Promoting quality education in Chile: The politics of reforming teacher careers. Journal of Education Policy, 35(4), 529–555. DOI: https://doi.org/10.1080/02680939.2019.1585577

Moukouyou-Kouaka, G., & Awolusi, O. D. (2020). Factors affecting the performance of public sector practitioners in the republic of congo. Information Management and Business Review, 12(2(I)), 42–61. DOI: https://doi.org/10.22610/imbr.v12i2(I).3085

Nickerson, C. (2021, November 16). Herzberg’s motivation theory (two-factor theory). Simply Psychology.

Nikolopoulou, K. (2022, August 11). What is purposive sampling? | definition & examples. Scribbr. https://www.scribbr.com/methodology/purposive-sampling/

Niwlikar, B. (2020, October 16). Adam’s equity motivation theory & its interesting aspects. Careershodh.

Nnaji-Ihedinmah, N. C., & Egbunike, F. C. (2015). Effect of rewards on employee performance in organizations: A study of selected commercial banks in Awka metropolis. European Journal of Business and Management, 7(4), 80–88.

Nohria, N., Groysberg, B., & Lee, L.-E. (2008). Employee motivation: A powerful new model. Harvard Business Review, 86(7/8), 78.

Nordin, M. N. B., Mustafa, M. Z. B., & Razzaq, A. R. B. A. (2020). Relationship between headmasters; leadership, task load on special education integration programme teachers; job satisfaction. Universal Journal of Educational Research, 8(8), 3398. DOI: https://doi.org/10.13189/ujer.2020.080813

Nosike, C. J., & Nosike, O. N. (2022). The effect of extrinsic reward on employee performance in the public sector. International Journal of Innovative Research and Advanced Studies, 9(2), 5–20.

Ntimba, D. I., Frederick Lessing, K., & Swarts, I. (2021). Job satisfaction and dissatisfaction as outcomes of psychological contract: Evidence from the south african workplace. Journal of Human Resource and Sustainability Studies, 09(03), 484–502. DOI: https://doi.org/10.4236/jhrss.2021.93031

Ojwang, R. (2022). Factors influencing job satisfaction among public secondary school teachers [Master’s Thesis]. University of Nairobi.

Rashid, B. T. (2022). The impact of motivation factors on job satisfaction. International Journal of Early Childhood Special Education, 14(2), 19–23.

Sakwa, S. E., Mugwe, M. C., & Macharia, S. (2023). Principal’s Teacher Reward Strategies on Teacher Performance in Public Secondary Schools in Mumias East Sub-County, Kenya. East African Journal of Education Studies, 6(1), 38–55. DOI: https://doi.org/10.37284/eajes.6.1.1050

ScooNews, T. (2023, February 17). Why teacher training matters: The impact on teachers and students in india. ScooNews. https://scoonews.com/news/why-teacher-training-matters-the-impact-on-teachers-and-students-in-india/

Tanner, R. (2023). Applying Maslow’s hierarchy of needs theory. Management Is a Journey.

Tarafdar, P., Karmoker, K., & Akter, S. (2021). Effects of fringe benefits on employee loyalty: A study on university teachers in Khulna city of Bangladesh. Business and Management Research, 10(3), 1–10. DOI: https://doi.org/10.5430/bmr.v10n3p1

Thomas, L. (2020, August 28). Simple random sampling | definition, steps & examples. Scribbr. https://www.scribbr.com/methodology/simple-random-sampling/

Upadhyay, J., & Adhikari, P. (2021). Reward management strategies and employee satisfaction in the colleges of kathmandu valley. Indian Journal of Management and Language, 1(2), 52–56. DOI: https://doi.org/10.35940/ijml.B2007.101221

Vinz, S. (2022, October 14). What is a theoretical framework? | guide to organizing. Scribbr. https://www.scribbr.com/dissertation/theoretical-framework/

Wijayathunga, L. a. D. H. R., & Rathish, D. (2023). Non-financial rewards and job satisfaction among state university academics of Sri Lanka. Sri Lankan Journal of Human Resource Management, 13(1), 27–39. DOI: https://doi.org/10.4038/sljhrm.v13i1.5676