Abstract:
In today’s aviation industry motivated and well performer employees are mandatory to survive
intense global competition. Realizing this, the main aim of this research is to identify the effect of
reward system on employee’s performance in the case of Ethiopian airlines with the reward
dimensions of base pay/salary, performance based bonus, benefits, recognition, work condition
and career development. The study used qualitative and quantitative approach based on primary
and secondary data sources. A self-administered questionnaire was designed to collect relevant
information from a sample of 303 participants. Out of this 287 were collected from pilots and
hostesses. The collected data was analyzed by SPSS version 20. Results from descriptive analysis
showed that base pay/salary, career development and benefits were found most or strong
determinate factor that able to affect employee’s performance as well as their motivation in
Ethiopian airline. Results from inferential analysis particularly from Pearson’s Product Moment
Correlation Coefficient showed that there is statistically significant relationship exist between all
variables of rewards and employee performance. The strongly correlated variables were
identified. Thus are base payment (r=.727**, p<0.05), benefit (r=.426*, p<0.01) and career
development(r= .749**). From an open ended analysis the policy and procedure issues and
management treatment were poor in implementation as well as treatment. Since the relation
between reward, motivation and performance are interlinked in Ethiopian airline exist the
management of Ethiopian airline should clearly state well-articulated reward policy by involving
employees in the process of developing it in order to increase the employee’s motivations as well
as performance to achieve its own goal
