1.
The impact of financial
incentives on employee
performance: a case of
Kabul university
Bachelor thesis defence
Submitted by:
Naqeeb Ahmad “Arian”
Kabul university
Faculty of Economics
Guided by:
Najeeb Ullah “Haddad”
Date:8 Dec, 2022

2.
2
Table of contents
 Introduction
 Problem statemen
 Research objectives
 Definitions of key terminologies
 Literature review
 Methodology
 Research design
 Data collection technique
 Research Population and Sampling
 Descriptive statistics
 Reliability and validity statistics
 Discussion and conclusion
 References
2

3.
3
Introduction
• Performance management system is the systematic approach to
measure the performance of employees. It is a process through
which the organization aligns their mission, goals and objectives
with available resources.
• The competency, skills and knowledge gaps are also identified
through this process which can be improved by providing
guidance, trainings, coaching and mentoring to employees or
teams at different levels and designations.
• In today’s competitive business scenario, organizations are called
up on to prepare the best market strategy to improve their
performance, and to come up with the way to keep their
employee motivation on the highest level so that the organization
as a whole can perform well within the competition
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4.
4
Introduction
• A financial incentive motivates actions which otherwise might not
occur without the monetary benefit.
• Four kinds of incentives are available for employers to use
• at work.
• Financial incentives may include items such as raises, bonuses,
profit sharing, signing bonus, and stock options.
• Recognition incentives include actions such as thanking
employees, praising employees, presenting employees with a
certificate of achievement, or announcing an accomplishment at
a company meeting.
• Rewards incentives include items such as gifts, monetary
rewards, service award presents, and items such as gift
certificates.
4

5.
5
Introduction
• Financial incentives in the world are regarded to positively affect
• employees’ commitment or loyalty.
• In this study an attempt has been made to see the impact of
financial incentive on employee performance in an educational
institution of Afghanistan.
• Financial incentive is the form of incentive given to the employee
to boost the performance of employees, in which better the
financial incentives scheme will increase the performance of
employees.
• So, this study focuses on the impact of financial incentives on the
performance of employees of this institution.
5

6.
Introduction
01
Problem statement
02
Research objectives
03
Definitions of key
Terminologies
6

7.
Problem Statement
7
Some relevant studies were conducted in
different industrial and organizational settings
that belonged to the private sector category
and none of them covered the educational
institutions. The aims of these studies were to
assess the impacts of financial incentives on
motivation. It was therefore important to fill the
knowledge gap specifically by assessing the
impact of financial incentives on employees’
performance in the educational institutions in
Afghanistan and is directed towards answering
the following two question:
01
What is the relationship between
financial incentives and employee
performance in Kabul university?
02
What is the impact of financial
incentives on employee performance
in the Kabul university?
03

8.
Research Objectives
The main purpose of this research is to study the impact of financial
incentives on the employee performance of Kabul university. The
specific objectives of the research are:
 To examine the relationship between financial incentives and employee
performance in Kabul university and,
To identify the impact of financial incentives on employee performance at the
Kabul university.
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9.
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Definitions of key
terminologies
Incentives
Something that encourages a
person to do something.
Financial incentive
financial incentives refer to
those incentives which are in
direct monetary form for
example; money or can be
measured in monetary terms.
01
02
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10.
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Definitions of key
terminologies
cont…
Bonus - is a sum of money
offered to an employee over and
above the salary or wages as a
reward for his good performance.
Pay and allowances Salary -
is the basic incentive for every
employee to work efficiently for
an organization. Salary includes
basic pay, dearness allowance,
house rent allowance, and
similar other allowances.
03
04
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11.
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Definitions of key
terminologies
cont…
Profit-sharing - Sometimes the
employees are given a share in
the profits of the organization.
This motivates them to perform
efficiently and give their best to
increase the profits of the
organization.
Productivity linked wage
incentives - Many wage incentives
are linked with the increase in
productivity at individual or at group
level. For example, an employee is
paid 200 AFN per piece if he produces
20 pieces a day but if he produces
more than 20 pieces a day, he is paid
50 AFN extra per piece. Thus, on the
21st piece, he will be paid 250 AFN.
05
06
11

12.
12
Definitions of key
terminologies
cont…
Retirement benefits - like
gratuity, pension, provident fund,
leave encashment, etc. provide
financial security to the
employees post their retirement.
Thus, they work properly when
they are in service.
Commission- Some
organizations offer a
commission in addition to the
salary to employees for fulfilling
the targets extremely well. This
incentive encourages the
employees to increase the
client base of the organization
07
08
12

13.
13
Definitions of key
terminologies
cont…
Stock options or co-
partnership - Under the
Employees Stock Option Plan,
the employee is offered the
ordinary shares of the company
at a price lower than its market
price for a specified period of
time.
Perquisites and fringe
benefits - Several
organizations offer perquisites
and fringe benefits such as
accommodation, car allowance,
medical facilities, education
facilities, recreational facilities,
etc.
09
10
13

14.
14
Definitions of key
terminologies
cont…
Employee performance - refers
to how employees behave in the
workplace and how well they
perform their job that is obligated
to them.
11
14

15.
Literature Review
This chapter reviews the work of previous researchers, articles, books, and
other sources relevant to the particular area of research.
Theoretical review:
It is important for the organizations to have information on performance, which will
enable organization to know whether they are improving, deteriorating or stagnant.
Employee performance is an important aspect of the organization, which determines
how much the organizational growth increases or decreases. Incentives is one of the
means through which organization motivates it employees to encourage them and
increase their performance. 15

16.
Literature Review
cont…
There are five underlying theories of employee performance which are
described below:
1.Maslow's hierarchy of needs
According to Maslow, these needs such as; Physiological, Love or belonging,
safety, Self-actualization and esteem can create internal pressures that can
influence a person's behavior.
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17.
Literature Review
cont…
2.Expectancy theory
It proposes that people will choose how to behave depending on the
outcomes they expect as a result of their behavior.
3.Hawthorne effect
It suggests that employees will work harder if they know they are being
observed. Showing employees that we care about them and their working
conditions may also motivate them to work harder.
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18.
Literature Review
cont…
4.Herzberg's two-factor theory
According to Herzberg, there are some job factors such as; motivator factors
and hygiene factors that result in satisfaction while there are other job
factors that prevent dissatisfaction.
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19.
Methodology
19
The research design adopted
in this research study was
based on the questionnaire
and descriptive cross-
sectional survey opinion of
the employees of the Kabul
university.
Research
design
Data collection
technique
Research
Population and
Sampling
The primary data was
collected from academic
and non-academic staff
of the university through
semi-structured
questionnaire which
included demographic
data and the structured
part consisting of the
impact of the financial
incentives on employee
performance.
The research population
was employees of the
university, chosen
randomly. The target
populations for this
research were 700
employees and their age
group ranging from 18 to
above 70 and simple
random sampling was
carried out to select
respondents.

20.
Findings

21.
Discussion and conclusions

22.
References

23.
The End