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IMPACT OF EMPLOYEE MOTIVATION ON JOB PERFORMANCE IN TANZANIA BANKING SECTOR. A CASE STUDY OF TANZANIA POSTAL BANK HEAD OFFICE AND METROPOLITAN BRANCH

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IMPACT OF EMPLOYEE MOTIVATION ON JOB PERFORMANCE IN TANZANIA BANKING SECTOR. A CASE STUDY OF TANZANIA POSTAL BANK HEAD OFFICE AND METROPOLITAN BRANCH BUGUZA MASSUDI MOHAMEDI A DISSERTATION IN PARTIAL FULFILLMENT
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IMPACT OF EMPLOYEE MOTIVATION ON JOB PERFORMANCE IN TANZANIA BANKING SECTOR. A CASE STUDY OF TANZANIA POSTAL BANK HEAD OFFICE AND METROPOLITAN BRANCH BUGUZA MASSUDI MOHAMEDI A DISSERTATION IN PARTIAL FULFILLMENT OF TE REQUIREMENTS FOR A MASTER DEGREE IN HUMAN RESOURCES MANAGEMENT OF THE OPEN UNIVERSITY OF TANZANIA 2013 ii CERTIFICATION The undersigned certifies that he red and here by recommends for acceptance by the Open University of Tanzania, Dissertation entitled impact of employee motivation on job performance in banking sector. A case study of Tanzania Postal Bank for the Partial fulfillment of the Requirement for the Award of the Degree of Masters of Human Resources Management.... Supervisor.. Date iii DECLARATION I, BUGUZA MASSUDI, do hereby declare that this thesis/dissertation is my original work and that it has not been presented and will not be presented to any other university for a similar or any other degree award.... Signature. Date iv COPYRIGHT This dissertation is a copyright material protected under the Berne convention, the copyright ACT 1999 and other intentional and national enactments, in that behalf, on intellectual property. It may not be reproduced by any means in full or in part, except for short extracts in fair dealings, for research, or private study, critical scholarly review or discourse with an acknowledgement without the written permission of the author or Open University of Tanzania in that behalf. v ACKNOWLEDGEMENTS It is long journey to accomplish this dissertation, but with support of my mother, special people and my lovely family I have been able to reach my goal. I would like to convey my gratitude and thanks to my supervisor DK. Salum Mohamed who was always been there to guide me through this work from the initial stage of formulating the topic and proposal. His valuable and critical guidance, sincere supervision and intellectual support kept me focused in right direction towards the success of this work. In a very special way, I thank my mother Mrs. Esha Massudi for the tireless kind of moral and financial support she extended to me especially after my father s death. I would like to give special thanks to the following people; Mr. Stephen N. Safe, Chief Manager Human Resource Management in TPB Head office, Mrs. Marcella Chanda, Branch Manager TPB Metropolitan Branch, Grace Kimambi, Senior Hr officer in Tanzania postal Bank Head office, Lawrence Munisi, TPB Branch Finance officer and all the respondents for their support and cooperation in leading to various source of information needed for my dissertation. A special thanks also goes to all my lecturers in the faculty of Business Management whose exceptional advice, guidance and genuity will never be supplemented. I also pay gratitude to my sisters Tabia and Farida and my brother Alhaj Juma for giving me all the assistances that I needed to make my studies in Open University easier. Lastly I would like to thanks the almighty God for making everything possible for the completion of this study. vi DEDICATION This piece of work is dedicated to my late Father Massudi M. Massudi. vii ABSTRACT Currently, Human Resource Management is becoming more important because employees and their knowledge are the most important aspect affecting productivity of the organization. Motivation is one of the most important tools of Human Resource Management. Organizations are designing motivation systems in order to encourage employees to perform as well as to attract and retain potential candidates. The main purpose of this study was to assess the impact of employee motivation on job performance in Tanzania banking sector. A qualitative case study methodology was used to interview key informants as well as questionnaires were distributed to the sample of 100 respondents from Tanzania Postal Bank Metropolitan branch and head office. The findings indicated that salary increment, promotion and recognition were important motivational factors for employees of Tanzania Postal Bank. Majority of respondents sees money as what they worked for. The study observes that TPB does not offer any kind of housing loan scheme to its employees as well as customers since itself is a financial institution. The study recommends that managers and supervisors should avoid being bias when measuring employee s job performance. Management of TPB should invest more on staff trainings. The study further recommends that the bank should provide/offer a housing loan scheme to its employees as one of motivating factor to their job performance. Moreover, the study recommends that in order to motivate and show consideration to its staffs the management should lower bank charges to its staffs transfer services. The bank cans also an updated performances measurement tools like Balance Score cards. viii TABLE OF CONTENTS CERTIFICATION... ii DECLARATION... iii COPYRIGHT... iv ACKNOWLEDGEMENTS... v ABSTRACT... vii TABLE OF CONTENTS... viii LIST OF TABLES... xii LIST OF FIGURES... xiii LIST OF ABBREVIATIONS... xiv CHAPTER ONE INTRODUCTION Background to the Problem Statement of the Research Problem Objective of the Study General Objective Specific Objectives Research Questions Significance of the Study Scope of the Study Organization of the Study... 6 CHAPTER TWO LITERATURE REVIEW... 7 ix 2.1 Introduction Conceptual Definitions Motivation Types of Motivation Techniques of Motivation Job Performance Theoretical Literature Review The Hierarchy of Need Theory Herzberg Two factor Theory McClelland s Achievement Theory Vroom s Expectance Theory Equity Theory Reinforcement Theory Empirical Literature Review Empirical Studies in the World Africa Related Studies Tanzania Related Studies Research Gap Conceptual Framework Theoretical Framework CHAPTER THREE RESEARCH METHODOLOGY Introduction Research Design Area of the Study... 32 x 3.4 Study Population Sample size and Sampling Procedures Data Collection Methods Data Collection Tools Questionnaires Interview Reliability and Validity of the Data Data Presentation and Analysis Expected Result of the Study CHAPTER FOUR DATA ANALYSIS AND DISCUSSION Introduction Demographic and Social Economic Characteristics of Respondents Age of Respondents Sex of Respondents Marital Status Level of Education Occupation Influence of Salary Increment for Improving Job Performance in TPB Role of Team work for Enhancing job Performance Motivational Packages for Employees of TPB Adequacy of Motivational Packages to Employees of TPB Ways in which Motivational Packages Influence Employees of TPB Effects of Motivational Packages on Work output Effects of Motivational Packages on TPB Performance... 49 xi 4.10 Job Training in TPB CHAPTER FIVE SUMMARY, CONCLUSION AND RECOMMENDATIONS Introduction Summary of Major Findings Implications of the Findings Conclusion Recommendations Effect of Motivation Packages on Employee Performance Limitation of the Study Suggestion for Further Studies REFERENCES APPENDICES... 65 xii LIST OF TABLES Figure 2.1 Maslow s Hierarchy of need Figure 2.2 Conceptual framework of the study Table 4.1 Age of Respondents Table 4.2 Sex of Respondents Table 4.3 Education Level Table 4.4 Occupation Table 4.5 Influence of Salary Increments for Improving job Performance in TPB Table 4.6 Motivational Packages for Employees of TPB Table 4.7 Ways in which Motivational Packages Influence Employees of TPB Table 4.8 Effects of Motivational Packages on TPB Performance... 50 xiii LIST OF FIGURES Figure 2.1 Maslow s Hierarchy of need Figure 2.2 Conceptual framework of the study Figure 4.1 Marital Status Figure 4.2 Years of Respondents Working with TPB Figure 4.3 Role of Team Work for Enhancing job Performance Figure 4.4 Adequacy of Motivational Packages to Motive Employees at TPB Figure 4.5 Effect of Motivational Packages on Work output Figure 4.6 Training in TPB... 52 xiv LIST OF ABBREVIATIONS CEO DSM FBM HRM HRS MNH No. TPB TPOSB TPTC TZS UK WA Chief Executive Officer Dar es Salaam Faculty of Business Management Human Resources Management Human Resources Maternal and Neonatal Health Number Tanzania Postal Bank Tanganyika Post Office and Telecommunication Corporation Tanzania Posts and Telecommunication Corporation Tanzanian Shillings United Kingdom West Africa 1 CHAPTER ONE 1.0 INTRODUCTION 1.1 Background to the Problem Tanzania Postal Bank is one of the old and largest bank in terms of market share in the banking industry in Tanzania. As part of the Financial Sector Reform Programme, Tanzania Postal Bank (TPB) was established by the Tanzania Postal Bank Act No.11/1991 as amended by Act No.12 of This bank became operational as a separate entity from the then Tanzania Posts and Telecommunications Corporation (TP&TC) from 1st March 1992 with its own Board of Directors and Management. It was established as a successor to the Tanganyika Post Office Savings Bank (TPOSB), which was established by the Post Office Savings Bank Ordinance of 1925 and became operational in 1979 (Tanzania Postal Bank Act, 1992). In accordance with the TPB Act, the bank's objectives and functions are, to mobilize local savings and to promote the savings habits of the population, to provide in accordance with the provisions of the Banking and Financial Institutions Act of 1991 adequate and proper banking services and facilities throughout the United Republic, to mobilize resources by accepting deposits, floating bonds, debenture and other monetary instruments. Subject to the provisions of the Act, to administer such special funds as may from time to time be placed at the disposal of the bank, to undertake any other functions performed by commercial banks. The bank has its own Board of Directors representing the shareholders. This is responsible for policy formulation, whereas below it is the Chief Executive Officer (CEO) assisted by Head of Banking Operations, Finance, Internal Audit, Marketing and Business 2 Development, Risk Management, Research and Planning, Human Resource Administration and Procurement, Credit, Information Communication Technology, Compliance, Legal Services and Secretary to the Bank. According to Mnaku (2011), currently, Tanzania postal bank has a total of 28 fully fledged branches, 5 agencies and 115 Tanzania Postal Corporation agencies spread across Tanzania. The banks plays an important role in world wide economies and their employees are the best source of delivering good services to their customer. Excellent services provided by employees can create a positive perception and ever lasting image in the eyes of banks customers. The motivation of banks employee plays a major role in achieving high level of satisfaction among its customers. Tanzania Postal Bank like other Banks and financial institutions is struggling to earn as large market share as possible, by providing excellent banking service to its customers to retain them despite of fierce competition of about forty five licensed commercial banks and financial institution available in the Tanzania market (www.bot.go.tz). The Bank has designed Products and services to meet the demands of different types of customers like children(minor accounts),students (platinum accounts), employees ( salary accounts), sole proprietors accounts, company accounts, corporation accounts, non business accounts, partnership accounts and general account for others who do not fall under any specified group ( quick account). Having good products alone is not enough to attract more customers to join and transact with the bank unless skilled and motivated human resource is available. Tanzania postal bank is committed to have skilled and motivated staff in order to attain its objectives. 3 1.2 Statement of the Research Problem Management of Tanzania Postal Bank does take initiatives to motivate its employees in order to attain Strategic Plan of financial performance, capital growth, operational excellence and staff talents and skills. Before adoption of a performance based management system, whereby bonuses, salary increment, promotions introduced to be solely factors of performance, it was observed an average to low productivity which resulted none achieving of previous plans (TPB APPROVED PLAN AND BUDGET ). Performance in terms of customer satisfaction, number of customer deposits, number of performing loans and the end result which is profit was very low compared to number of resources available. For example after tax profit generated by the whole bank was less than 500 million in four consecutive years. Two years after motivation of employees things have changed as evidenced by increased number of deposits, assets, income, customer satisfaction and profits shoot from as low as 400 million to 3.8 billion and 5.4 Billion in two consecutive financial years (Statement of comprehensive income for the year ended 31 December 2011and 2012). This was accelerated by bonus provided to all staff after meeting and exceeding set targets for 2011 and 2012, promotion of employees to various positions have based on achievement of performance objectives agreed between respective employee and a line manager. Also salary increment to employees is now being done depending on the level of performance one has achieved in recent past financial years (www.postalbank.co.tz). Initially, there was salary scales where all employees having the same educational level and experience had the same salary regardless of whether one perform better than the 4 other. But currently, the bank introduced performance management system where every employee has been given specific targets to be achieved in a year (Sabasaba Moshingi, CEO of the TPB interview with Man magazine, 2012), hence salary increment depends of the level of employee performance and as a result many employees have been struggling to perform to earn more salary. Therefore, this study aimed at finding out the impact of employee motivation on job performance. 1.3 Objective of the Study General Objective The general objective of this study is to assess the impact of employee motivation on job performance in Tanzania Postal Bank Specific Objectives 1. To examine how salary increment influence the performance of employees in TPB. 2. To assess the roles of team work in enhancing job performance. 3. To find out whether motivational packages has an impact in job performance. 4. To identify the most packages for improving job performance in TPB. 1.4 Research Questions 1. How salary increments influence the performance of employees in TPB? 2. What is the role of team work in enhancing job performance? 3. What are the motivational packages for employees in TPB? 4. Which of motivational package is most important for improving job performance? 1.5 Significance of the Study The study will be of immense benefit to the employees of TPB, management of TPB, 5 students and academicians in the FBM especially students of HRM in that it will highlight how the concept of motivation and job performance are valued and understood and the need for all to pay attention to a variety of motivation issues or financial incentives for employees. The research exposes the researcher to the practical issues of the subject. It enabled her to match theory and in this way that the researcher will better understand more the application of the motivation theories managing Hrs in Banks. Furthermore, the study will bring to light the different forms of motivation which will inform the design of appropriate measures aimed at bringing out the best in employees with regard to job performance. Again, the factors leading to high performance as well as causes of low performance will inform management in their decision making. Administrators will be helped through this study to be able to use motivation not just for the sake of it but to know how, when and what type of motivation to use so as to achieve maximum performance of staff. The findings of this study will assist in the development of effective managerial strategies and policies that can help in improving the administration and realization of TPB goals. Also, the findings will enable the TPB management and banking industry in general to identify the motivational factors and their problems and can use it in the improvement of management concerning employees needs, issues of welfare and motivation of employees and enhance their performance for a better and deliverance of good services. 1.6 Scope of the Study The study was carried out in TPB, Metropolitan Branch located in Dares Salaam. The 6 study ought to examine impact of employees motivation on job performance, what motivate employees to perform and suggest ways of enhancing motivation and job performance in TPB. 1.7 Organization of the Study The study was presented on five chapters. The first chapter was introduction which covers the background to the problem, statement of the research problem, objective of the study, research questions, and significance of the study, scope of the study and organization of study. Chapter two comprised of conceptual definitions, theoretical literature review, empirical literature review, research gap, conceptual framework and theoretical framework. Chapter three was focused on research methodology which includes research design, study area, population of the study, sample size and sampling procedures, data collection methods, data collection tools, reliability and validity of the data, data presentation and analysis and study expected result of the study. Chapter four covers data analysis, and discussions. Chapter five comprised of summary, conclusions and recommendations. 7 CHAPTER TWO 2.0 LITERATURE REVIEW 2.1 Introduction This chapter focused on definitions of relevant terms, types of motivation, techniques of motivation, determinants of job performance, theories of motivation, empirical literature reviews, research gap, conceptual framework, factors for motivation, strategies for motivation, and relationship between employees motivation and job performance. 2.2 Conceptual Definitions Motivation Motivation theory is concerned with what determines goal directed behavior. It is about, how behavior is initiated by needs and by expectations on the achievement of goals which will satisfy those needs, how the achievement of goals and /or feedback on their achievement reinforces successful behavior and how belief in one s ability to carry out a specific task will actuate behavior which is expected to achieve the successful performance of that task (Armstrong, et al., 2004). According to Hoy and Miskel (1987), employees motivation is the complex forces drives, needs, tension states or other mechanism that starts and maintains voluntary activity directed towards the achievement of personal goals. Mullin (1996), refers motivation to the forces within a person that affect his or her direction, intensity and persistence of voluntary behavior. He added that motivated employees are willing to exert a particular level of effort (intensity), for a certain amount of time (persistence) toward a particular goal or direction. 8 Motivation is a decision making process, through which the individual chooses the desired outcomes and sets in motion the behavior appropriate to them. Motivation can therefore be thought of as the degree to which an individual WANTS and CHOOSES to engage in certain behavior (Matoka, 2011) Types of Motivation Motivation at work can take place in two ways: Extrinsic motivation. This is refers to what is done to and for people to motivate them. It arises when management provides such rewards as increased pay, praise or promotions (Armstrong, 2006). Extrinsic motivation is a behavior that is influenced by external rewards. Praise or positive feedback, money, and the absence of punishment are examples of extrinsic motivation (Deci, 1980). Intrinsic Motivation. This is derived from the content of the job. It can be described as the process of motivation by the work itself in so far as it satisfies people s needs or at leas
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