Extrinsic Motivation and Employee Performance of Commercial Banks in Kigali City, Rwanda

Thesis Title: Extrinsic Motivation and Employee Performance of Commercial Banks in Kigali City, Rwanda

 Student’s Name: Celestin Havyarimana

Supervisors’ Names:

1. Dr. Kadian Wanyonyi Wanyama
2. Dr. Leunita Makutsa Makila

Abstract

The performance of commercial banks heavily relies on motivated employees. Motivation is a key factor in managing people at organizational interfaces. However, employees have various competing needs driven by different motivators, and there is limited research on the impact of extrinsic motivation on employee performance in the context of Rwandan commercial banks. The aim of this study was to explore the impact of extrinsic motivation on employee performance in commercial banks in Kigali, Rwanda. The specific objectives were to determine the influence of compensation, rewards, and promotion on employee performance, and to examine the moderating role of management support. The study employed a descriptive research design using quantitative approaches. Stratified random sampling was used to select a sample of 180 employees from ten commercial banks in Kigali City. Data was collected using self-administered structured questionnaires. Pearson’s product-moment correlation coefficient and regression analysis were used to analyze the data. The study established that compensation (r=0.784, p<0.05), rewards (r=0.674, p<0.05), and promotion (r=0.864, p<0.05) have significant positive relationships with employee performance in commercial banks in Kigali City. Compensation accounted for 56.5% of the variation in performance, rewards accounted for 62.4%, and promotion accounted for 61.5%. Management support was found to moderate the relationship between extrinsic motivation and employee performance (?=-0.192, p<0.05). The study concludes that extrinsic motivation factors, including compensation, rewards, and promotion opportunities, play a crucial role in driving employee performance in the Rwandan banking sector. Management support strengthens the impact of extrinsic motivation on performance. Commercial banks should prioritize competitive compensation strategies, effective reward systems, and merit-based promotion processes. Policymakers should encourage fair compensation practices and provide incentives for employee development initiatives in the banking sector. The findings contribute to the development of effective human resource management practices aligned with Rwanda’s economic goals.