ST.

MARY’S UNIVERSITY
SCHOOL OF GRADUATE STUDIES

EFFECTS OF WORKING ENVIRONMENT ON EMPLOYEES’

PERFORMANCE: THE CASE OF DASHEN BANK

Thesis submitted to St. Mary’s University school of graduate studies in partial

Fulfillment of the Requirements for the Degree of Master of Business
Administration

BY: SHEWAFRA KETSELA

JUNE 2022

ADDIS ABBAB ETHIOPA

 ST. MARY’S UNIVERSITY
SCHOOL OF GRADUATE STUDIES

THE EFFECT OF WORKING ENVIRONMENT ON WORKERS

PERFORMANCE: IN THE CASE OF DASHEN

BY: SHEWAFERA KETSELA

Thesis submitted to St. Mary’s University school of graduate

studies in partial Fulfillment of the Requirements for the Degree
of Master of Business Administration

ADVISOR: ASRES ABITE (PHD)

JUNE 2022
ADDIS ABABA, ETHIOPIA
 St. Mary’s University
School of Graduate Studies
Faculty of Business

EFFECTS OF WORKING ENVIRONMENT ON EMPLOYEES’

PERFORMANCE: THE CASE OF DASHEN BANK

By: Shewafera Ketsela

Approved by Board of Examiners

Chairman Signature Date

Asres Abite (PhD)
Advisor Signature Date
Sheo Jemal (Asst. Prof)
Internal Examiner Signature Date
Muluneh Hedeto (PhD)
External Examiner Signature Date
Declaration

This is to certify that, prepared by Shewafera Ketsela carried out this research work on the topic
entitled “The effect of working environment on employee performance, in the case of Dashen
Bank”. And submitted in partial fulfillment of the requirement for the degree of Master of Business
Administration in the Department of business administration complies with the regulations of the
university and meets the accepted standards concerning originality and quality.

Name: Shewafera Ketsela Signature: __________________

St. Mary’s University, Addis Ababa

Date of Submission: _____________________

Statement of Declaration

I the undersigned, declare that this thesis titled “The effect of working environment on the
employee performance in the case of Dashen Bank” is my original work and has not been presented
for a degree in any degree in other university and that all sources of material used for the thesis
have been punctually acknowledged.

Declared by

Name: - Shewafera Ketsela

Signature: --------------------------

Date: --------------------------
Statement of Certification

This is to certify that Shewafera Ketsela carried out this research work on the topic entitled “The
effect of working environment on employee performance, in the case of Dashen Bank”. The work
is original and it is suitable for submission for the award of the degree of Master of Business
Administration in the Department of business administration.

Advisor: -

Name: - Asres Abitie (Ph.D.)

Signature: -------------------------

Date: -------------------------
Table of Contents
List of Figures ................................................................................................................................ iv
List of Tables .................................................................................................................................. v
Acknowledgment ........................................................................................................................... vi
ABSTRACT .................................................................................................................................. vii
CHAPTER ONE: INTRODUCTION ............................................................................................. 1
1.1. Background of the Study ...................................................................................................... 1
1.2. Statement of the Research Problem ..................................................................................... 3
1.3. Research Objectives ............................................................................................................. 6
1.3.1 General Objective ........................................................................................................... 6
1.3.2 Specific Objectives ......................................................................................................... 6
1.3.3. Research Questions........................................................................................................ 7
1.4. Research Hypothesis ............................................................................................................ 7
1.5. Scope of the Study................................................................................................................ 7
1.6. Significance of the study ...................................................................................................... 8
1.9. Limitation of the study ......................................................................................................... 9
1.8. Organization of the Study .................................................................................................... 9
CHAPTER TWO: LITERATURE REVIEW ............................................................................... 10
2.1. Definition of working Environment ................................................................................... 10
2.2. Factors of working Environment that Affect Employee Performance ............................... 12
2.2.1 Physical Working Environment.................................................................................... 13
2.2.2 Reward .......................................................................................................................... 14
2.2.3 Work Life Balancer ...................................................................................................... 15
2.2.4 Training ........................................................................................................................ 15
2.2.5 Workload ...................................................................................................................... 16
2.2.6 Discrimination .............................................................................................................. 16
2.3. Employee Performance ...................................................................................................... 17
2.4. Theories Related to Employee Performance ...................................................................... 19

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 2.4.1 Adam’s Equity (fairness) Theory ................................................................................. 19
2.4.2 Herzberg Two Factor Theory ....................................................................................... 20
2.4.3 Affected Event Theory ................................................................................................. 21
2.5. Empirical Study .................................................................................................................. 21
2.6. Conceptual Framework of Study........................................................................................ 22
CHAPTER THREE: RESEARCH METHODOLOGY ............................................................... 23
3.1 Study of Area ...................................................................................................................... 24
3.2 Research Design .................................................................................................................. 24
3.3 Population of the Study ....................................................................................................... 24
3.4 Target Population of the Study and Sample Size ................................................................ 25
3.4.1 Target Population ......................................................................................................... 25
3.4.2 Sample Size Determination .......................................................................................... 25
3.4.3 Sampling Techniques ................................................................................................... 27
3.5 Data Collection Methods..................................................................................................... 27
3.6 Data collection tools ............................................................................................................ 27
3.7. Questionnaire ..................................................................................................................... 27
3.8 Method of Data Process and Analysis ................................................................................ 28
3.8.1 Data Processing ............................................................................................................ 28
3.8.2 Data Analysis ................................................................................................................ 28
3.9 Model Specification ............................................................................................................ 29
3.10 Factor Analysis .................................................................................................................. 30
3.11 Reliability and Validity of Instrument .............................................................................. 31
3.11.1 Reliability Test ........................................................................................................... 31
3.11.2 Validity Test ............................................................................................................... 32
3.12 Ethical Considerations....................................................................................................... 33
CHAPTER FOUR: DATA ANALYSIS, PRESENTATION AND INTERPRENTATIONS . 34
4.1 Questionnaire Response Rate .............................................................................................. 34
4.2 Descriptive Statistics ........................................................................................................... 34
4.2.1 Background Information of the Respondents ............................................................... 34
4.2.2 Descriptive Statistics of the Variables .......................................................................... 37
4.3 Inferential Statistics ............................................................................................................. 39

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 4.3.1 Correlation Analysis ..................................................................................................... 39
4.3.2 Test Assumption of Classical Linear Regression Model.............................................. 40
4.3.4 Result of Regression Analysis ...................................................................................... 45
4.3.5 Interpretation of R Square and Adjusted R Square ...................................................... 46
4.3.6 Interpretation of Regression and Hypothesis Test ........................................................ 47
CHAPTER FIVE: CONCLUSSIONS AND RECOMMEDATIONS .......................................... 51
5.1 Summary of Finding............................................................................................................ 51
5.2 Conclusions ......................................................................................................................... 52
5.3 Recommendations ............................................................................................................... 52
5.4 Suggestion for further Study ............................................................................................... 53
References ..................................................................................................................................... 55
Appendix ....................................................................................................................................... 60

iii
List of Figures
Figure 2.0.1 Source: Nduku (2015) .............................................................................................. 23
Figure 4.0.1 Sources survey SPSS output ..................................................................................... 41
Figure 4.0.2 Sources survey SPSS output ..................................................................................... 44

iv
List of Tables
Table 3.0.1: Number of Employees and Proportion of Samples taken from Head Office, Source:
internal report of Head office and own construction .................................................................... 26
Table 4.0-1 gender of the respondent, Source: Survey SPSS output ............................................ 35
Table 4.0-2 age category of the respondent, Source: Survey SPSS output .................................. 35
Table 4.0-3 Marital Status of the respondent, Source: Survey SPSS output ................................ 36
Table 4.0-4Level of Education of the respondent, Source: Survey SPSS output ......................... 36
Table 4.0-5Work Experience of the respondent, Source: Survey SPSS output............................ 37
Table 4.0-6 Level Employment of the respondent, Source: Survey SPSS output ........................ 37
Table 4.0-7 Descriptive Statistics of the Variables, Source: Survey SPSS output ....................... 38
Table 4.0-8 Descriptive Statistics of the Variables, Source: Survey SPSS output ....................... 40
Table 4.0-9Result of regression model summary, Sources SPSS output ..................................... 42
Table 4.0-10VIF and Tolerance multi collinearity Statistics, Sources SPSS output .................... 43
Table 4.0-11Analysis of variance, Sources SPSS output ............................................................. 45
Table 4.0-12Result of regression, Sources SPSS output .............................................................. 46
Table 4.13Result of regression model summary, Sources SPSS output ....................................... 46

v
 Acknowledgment
Firstly, I greatly want to thank God and his mother St. Virgin Marry for unrestricted
help, forgiveness, clarity, and strength have given to me. This paper never become real without
Gods will. Secondly, I would like to express my profound gratitude to colleagues, especially
Abraham Alemu, and Shiferaw Mekonnen for providing me with unfailing support and continuous
encouragement throughout my years of study.

I would like to express my sincere gratitude to my thesis advisor Asres Abitie (Ph.D.) for his
helpful guidance. Finally, my sincere thanks also go to Dashen Bank employees, especially the
branch managers who contribute to this paper by providing correct information that builds this
thesis into a valuable document.

vi
 ABSTRACT
The main goal of this study was to investigate the effects of the working environment on employee
performance in Dashen Bank. A descriptive research approach design in carried out this research.
Cross-sectional data were collected to address the research objectives of the study using a self-
administered questionnaire from 378 employees using a random probability sampling technique.
The collected data were analyzed using descriptive statistics, correlation, and regression analysis
through the statistical package for social science (SPSS) version 26. The study used six major
working environment factors including; physical environment, reward, work-life balance,
training, workload, and, discrimination as predictor/independent variables and employee
performance as the dependent variable. The finding of the research implicated that physical work
environment, reward, and, training have a positive and statistically significant impact on employee
performance while; workload and discrimination have negative and statistically significant
impacts on employee performance. On the other hand, work-life balance has shown a statistically
insignificant impact on employee performance. Pearson product moment correlation coefficient
results showed a significant positive relationship between physical working environment, reward
and training and employee performance while negative significant relationship is found between
work life balance, workload, discrimination and employee performance. Based on the findings of
the study, recommendations made for the management of the Dashen Bank are physical work
environment in terms of lighting, noise level, temperature, building orientation, building paint,
and ventilation should be made sure that they stay at an acceptable level, discrimination has to be
minimized at the workplace by encouraging employee irrespective of gender, age, ethnic group or
religious belief to participate in decision making as this will help to reduce discrimination in the
workplace.

Keywords: Dashen Bank, Employee performance, working environment

vii
 CHAPTER ONE: INTRODUCTION
1.1. Background of the Study
Employee performance is critical to the functioning of an organization as well as to the
advancement of employees. The Work environment plays an important role in an organization.
Most of the problems faced by employees are related to the working environment. The level of
productivity can be increased by developing a conducive working environment in the organization.
The workplace is an arranged area that is provided by the company to achieve its goal. The
arranged area can be described as the layout of a workspace that suits the nature of the job or task
that is to be performed. It can have an office layout with cubicles, desks, chairs, and cabinets, or
just a work table with a wall fitted with all types of hand tools that suits a workshop. The right
type of working environment is needed in order to attract users to feel comfortable and this would
enable them to work effectively. An environment is the immediate surroundings of a user which
is manipulated for their existence or use. Hence, a workplace gives an environment for the
employee to perform a given task. The working environment is a broad term and means all your
surroundings when working. Your physical working environment is, for example, your work tools
as well as air, noise, and light. But your working environment also includes the psychological
aspects of how your work is organized and your wellbeing at work (Ajala, 2012). Based on a
research done by Oswald (2012), there are two types of working environments which are the
physical component as well as the behavioral component. It is said that the physical environment
consists of elements which is related to the connectivity of the user with their office environment.
Meanwhile, the behavioral environment consists of elements which are related to the connectivity
between users in the same work environment as well as the effect of working environment on the
user's behavior

How well a workplace engages employees, effect their desire to learn skills and their level of
motivation to perform. In a state of increasingly competition among business companies good
performance of human resources is needed. A healthy work is a place where everyone works
together to achieve an agreed vision for the health and well-being of workers and the surrounding
community. It provides all members of the workforce with physical, psychological, social and
organizational conditions that protect and promote health and safety. It enables managers and

1
workers to increase Work-Life their atmosphere and improve it, and to become more
energetic, positive, and contented. In return, the workforce is more stable, committed and
productive. Workers are human beings and income-producing assets like fixed and non-fixed
assets. Nevertheless, unlike all other assets, human assets have thousands of questions and
complaints whenever their working environment failed to meet their complaints and expectation
(Subramariam and Saravanan, 2012). A foremost part of employee’s life is spent on work, which
is a social reality, and social expectations to which human beings seem to confirm. It is always of
great importance to explore why workers work, at which degree they perceive their work, and how
they satisfied with their career (Khalid and Irshad, 2010). Human resources were considered to be
the most vital and useful assets, as other assets, can be exploited with the proper use of human
resources. People the human resource are considered by many to be the key and most important
resources of an organization.

A good work environment is significant for work to sustain and attract workers. Dissatisfaction
with working life is a problem, which affects almost all workers regardless of position or status.
Many managers seek to reduce dissatisfaction at all work levels, including their own. This is a
complex problem, however, because it is difficult to isolate and identify all of the attributes, which
affect the work environment conditions (Walton, 2005). Workers are important parts of the
banking industry in Ethiopia. Currently, there is a huge development bustle yet to be carried out.
One of the key factors to ensure the desired level of economic growth in a developing country like
ours is achieving a significant amount of investment by the private as well as the public sector.
For that reason, this study assessed the effect of the working environment on workers’ performance
in the case of Dashen Bank.

Even if much the research is done on the concepts of the working environment in a different part
of the world however there is a lack of literature on Ethiopian cases. It is insufficient
literature that could help comprehend the relationship between the working environment and
employee performance among the bank industry. This study, therefore, investigated the effect of
working the environment on employee performance; in the case of dashen bank.

Dashen Bank was founded by eleven visionary shareholders and veteran bankers with an initial
capital of Birr 14.9 million in September 1995. Upon securing a license from the National Bank

2
of Ethiopia, Dashen opened its doors for service on the 1st of January 1996 with eleven fully-
fledged branches.
Dashen Bank coined its name from the highest peak in Ethiopia, mount Dashen, and aspires to be
unparalleled in banking services. Ras Dashen is Part of the Simien Mountains National Park, an
exotic setting with unique wildlife and breath-taking views of a landscape shaped by nature and
traditional agriculture.
The Simien Mountains are home to endemic wildlife including the Walia Ibex, Simien Fox or
Ethiopian Wolf, and the Gelada Baboon. Dashen aspires to set new heights in banking services
through the delivery of unique value propositions second to none.
Headquartered in Addis Ababa, the Bank is among the biggest private Banks in Ethiopia. It
operates through a network of more than 540 Branches, ten dedicated Forex Bureaus, 1000 ATMs,
and 850 plus Point-of-Sale (POS) terminals spread across the length and breadth of the nation. It
has established correspondent banking relationships with 462 banks covering 70 countries and 170
cities across the world. Wherever business takes customers around the world, Dashen Bank is
already there.
Dashen is the most reputable brand in the domestic banking market; a reputation earned through
consistent delivery of values and preeminence unmatched by its competitors. Apart from
conventional banking, Dashen Bank also offers Sharia Compliant Interest-free Banking dubbed
“SHARIK”. The Bank also works in partnership with leading brands in the electronic payments
industry (AMEX, VISA, MasterCard & Union Pay) and prominent money transfer operators
(Western Union, MoneyGram, Express Money & Dahabshiil, Ezremit, Transfast, World Remit,
and Ria).
Dashen Bank and its technology partner Moneta Technologies introduced “Amole” Digital Omni
channel payment platform that offers subscribers digital payment capacity and access to
aggregated digital products and services from Retailers, Entertainment Industries, Airtime Dealers,
Bill Payment Points, Airlines, social media Players, and Third-Party Service providers.
1.2. Statement of the Research Problem
A working environment is an environment where people work together for achieving
organizational objectives (M. Tanique Tahir, 2015). It means systems, processes, structures, tools,
and all those things which interact with employees and affect employees’ performance in positive
or negative ways. Work environment relationship with various aspects of employees’ attributes

3
such as work involvement, motivation, job satisfaction, productivity, etc. was studied. A work
environment condition has become one of the essential concerns among contemporary workers
and managers. Workers are the stimulus energy that is behind every successful work. The mere
use of technology and techniques cannot bring success to the work (Normala, 2010). This paper
was also initiated to understand how the work environment affects the productivity of employees
in the banking sector. Work environment conditions and work commitment are two of fundamental
subjects in management practices across the world.

In today’s highly competitive environment, there are many works, which provide integrated
systems of beneficial services, which include family benefits, to their staff. Individuals spend a
great part of their lives in adulthood trying to get higher education degrees, job, and success in life.
They have even delayed making a family. These individuals might be precious for their employers,
but trying to face work-family problems and concentrating on a profession at the same time can
reduce their efficiency at the work place. When workers are committed to the work, they get their
identity inside it and remain loyal to it (Asgari and Dadashi, 2011).

The banking sectors have undergone a structural change over the past decades, which have put
new stresses and legitimacies for its workers. Banking workers have perhaps felt the maximum
work pressure and have to deliver timely service in order to meet work goals and ensure client
satisfaction. Most working hours of banking is now increasing in order to cope up the increased
expectation of customers. Working environment is helpful increasing employees’ level of
productivity. Factors like supervisor support, good relation with co-workers, training and
development, attractive and fast incentives and recognition plans and adequate work load are
helpful in developing a working environment that has positive impact on employees’ level of
productivity in the organization. In the review of the literature, theoretical and empirical studies
like Sumra (2005), Brenner (2004), Sekar (2011), Harter et al., (2002), Njenga et al., (2015),
Nanzushi, (2015), have been addressed especially on how working environment relate and affect
employee performance as it is practiced in various areas in the world. It is the quality of the
employee’s workplace environment that most impacts on their level of motivation and subsequent
performance. How well they engage within the organization, especially with their immediate
environment, influences to a great extent their error rate, level of innovation and collaboration with
other employees and absenteeism.

4
However, the effect of working environment on employee’s performance identified from
theoretical and empirical analysis is that, management must take an active role in not only defining
the physical environment of the workplace and making it conducive for workers but also alter the
management style to suit the employees. This refers to changing aspects like ethics, behavior,
commitment, professionalism, drive, and interpersonal relations in employees for the better
performance. Also, principals of management that dictate how, exactly, to maximize employee
productivity center around two major areas of focus: personal motivation and the infrastructure of
the work environment.

Therefore, from the above descriptions, this study has tried to determine the effect of working
environment on employees’ performance in the case of Dashen Bank.

This study is designed to examine the effect of working environment on employee’s performance
at the Dashen Bank share company which operates at the center Addis Ababa with about 6,969
permanent employees. The problem six identified which made to undergo this research is based
on the physical work environment which mostly affect employee’s productivity. The company is
located in throughout the country doing business. Through this study the employer will get to know
how its work environment affects greatly on the employee’s level of motivation and productivity.
A well-designed office signals the values and objectives of the organization and the use of design
in office interior communicates an organization values and identity. Office design therefore should
be one of the factors in affecting employee’s productivity. Employee’s morale is often interrelated
when it comes to productivity in the work environment. It is therefore important to find out the
impact of working environment on employee’s productivity at this company which will provide
knowledge and measures to other organization in Banking industry.

Even though, significant amount of research has been undertaken to add their own contribution
to the concept of working environment, employee performance and effects of working
environment on employee performance; most of these studies were however, carried out in
developed countries and few developing countries. The finding of the study in one country may
not serve to another. More clearly, there is a gap on the area that is done in Banking industry
regarding to the effect of working environment on employee performance. As far as
concerned the researcher knowledge, the researcher cannot find research studies conducted using
the working environment factors physical working environment, workplace reward, work life

5
balance, training, workload and discrimination and its effect on employee performance in Banking
industry. Due to shortage of performing research in this field particularly in Ethiopia and also
special importance of maximizing employee performance; the researcher was interested to fill this
research gap in banking industry by conducting this study. In addition, the researcher was also
interested to know about the effect of working environment on employee performance in detail.
Therefore, the current study examines the effect of working environment on employee
performance the case of dashen bank.

1.3. Research Objectives

This research was being guided by the following study objectives

1.3.1 General Objective

The general objective this study is to assess effect of working environment on employees’
performance, the case of Dashen Bank.

1.3.2 Specific Objectives

More specifically, with the above general objective, this thesis has the following specific
objectives;

1. Assessing the effect of physical work place environment aspects on the performance of
employees in the case of Dashen Bank.
2. Examine the effect of reward aspects of the job on the performance of employees in the
case of Dashen Bank.
3. Assess the effect of training and development opportunities in the work place on the
performance of employees in the case of Dashen Bank.
4. To address factors, work life balance on the performance of employees in Dashen Bank.
5. Examine the effect work load on employee performance in the case of Dashen bank
6. Examine the effect discrimination on employee performance in the case of Dashen bank

6
 1.3.3. Research Questions
This study has tried to answer the following research questions

1. To what extent working environment affect worker’s performance Dashen Bank?

2. How physical workplace environment aspect affect the performance of employees in the
case of Dashen Bank?
3. In what manner reward aspects of the job affect the performance of employees in the case
of Dashen bank?
4. In what degree training and development opportunities in the work place affect the
performance of employees in the case of in Dashen Bank?
5. Does work life balance affect the performance of employees in Dashen Bank?
6. What is the effect of workload on employee performance in Dashen Bank?

1.4. Research Hypothesis

In order to find out the relation the relationship and effect of working environment on
employee’s performance, the following hypothesis was developed based on theoretical and
empirical review.

H1: 1. Physical environment has positive and significant effect on employee performance.

H2: 2. Reward has positive and positive and significant effect on employee performance.

H4: 3. Training has positive and positive and significant effect on employee performance.

H4: 4. Work life balance has positive and significant effect on employee.

H5: 5. Workload has negative and significant effect on employee performance.

H6: 6. Discrimination has negative and significant effect on employee performance.

1.5. Scope of the Study

The scope of the study covers the effect working environment on employee performance in the
case of dashen bank. Among more than 14 private commercial banks in Ethiopia the reason why
the researcher selected dashen bank is first, dashen bank was one of the leader private commercial
banks up to two years ago but not now. Secondly, it’s difficult to conduct research across all bank
as it requires much time and money. From the theoretical perspective only physical work

7
environment, reward, work life balance, training, workload, and discrimination are considered as
factor of working environment and employee work performance as dependent variable.
Methodology this study used simple random sampling probability technique method in to achieve
its objective.

1.6. Significance of the study

The importance of the findings of this study was that it crystallizes the extent of working
environment conditions of the banking industry and its relation to work performance. Therefore,
the outcome of this study mainly benefits dashen bank, another bank, another researcher, and the
researcher itself.

 Findings of this study would assist to make a concrete recommendation to dashen bank
about the effect of working environment on employee performance, which helps the dashen
bank to achieve its doing business goal at maximum effort.
 When the bank industry come into existence the primary objective is to make a profit and
to be competitive in the industry and this is done through the mental and physical ability
of their employee. However, according to a preliminary study, there is different physical
working environment condition in district and branches. To solve the above issues making
the working environment suitable plays a great role in inspiring employees to perform their
assigned work.
 In line with the above facts, primarily hope that the result of this study provides adequate
information for banks regarding the effect of working environment on employee
performance.
 The finding of this study will serve as reference material for the other researcher who wants
to conduct research in this area.
 The finding of the study serves as input for the bank to assist in decision making,
identifying key workplace issues develop strategies to address and improve the quality of
working condition, and increase staff commitments to their work.
 Lastly, the study would benefit to enhance and practice the ability and creativity of research
in the area of its field.

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1.9. Limitation of the study
In undertaking the study, there was some limitation against achieving it objectives effectively.
Those are firstly, lack of accessing records of employee performance and previous studies in this
area. Secondly since this study only includes some branches and districts and generalization of the
finding for other branches will be done with consideration. Thirdly, there was lack of cooperation
in some respondents and management bodies during distribution the questionnaire. Fourthly
distributing questionnaires not being cover due to internal war of country one district totally
shutdown and some branches not stable, there are also time and money constraint.

1.8. Organization of the Study

The study will be structured into five chapters. Chapter one were deal with introduction, statement
of research problem, research objectives and significance of the study. Chapter two were consisting
of literature review which were comprise of conceptual definitions, theoretical review, empirical
analysis and conceptual frame work. Chapter three were containing the research methodology
which comprise of the research design, study area, research population, sampling design, and data
collection methods. Chapter four were highlight the presentation and interpretation of data as well
as discussing of findings. Chapter five were containing the summary of the study, conclusions, and
recommendations.

9
 CHAPTER TWO: LITERATURE REVIEW
This chapter presents a comprehensive review of relevant literature in an attempt to position the
study in an appropriate theoretical framework. It reviews theoretical, conceptual, and empirical
literature related to the study it comprises theories related to factor of workplace environment
that affect the performance of employee, such as physical environment, reward, work life balance
work load and discrimination. It furthers discuses findings of related researches.

This literature review attempts to discuss the various literature related to working environment
which has effect on employee performance. The discussion also identifies gaps left by other
researchers of similar studies. However, this study attempts to fill those gaps so that the write up
can contribute to a new body of knowledge in the academic world. Through this review, literature
is repackaged and analyzed as a way of bringing new insights into the problem studying.

2.1. Definition of working Environment

Kohun (1992) defines the working environment as the totality of forces, actions, and alternatives
prestigious factors that are presently and probably competitive with the employee performance (as
cited in Taiwo, 2010). Working environment is the sum of the interrelationship that exists within
the staff and also the environment during which employee work. Brenner (2004) was of the opinion
that the ability to share knowledge throughout the organizations depends on how the working
environment is designed to enable organizations to utilize work environment as if it were an asset.
This helps organizations to improve effectiveness and allow employees to benefit from collective
knowledge. In addition, he argued that working environment designed to suit employee’s
satisfaction and free flow of exchange of ideas is a better medium of motivating employees towards
higher productivity.

The physical working environment is the overall health and safety of employees, layout and design
of the offices and work stations, available technologies, lighting, temperature, air circulation etc.
It deals therefore with the physical or tangibles at the setting where job is performed. It includes
things like machinery, office layout, temperature, ventilation, and lighting. It also includes noise
level and space. Aspects of work such as heat, noise, and lighting have been shown to affect a
number of psychological processes in both direct and indirect ways. Noise, for example, may
impair the cognitive performance of certain kinds of tasks (Banbury and Berry, 1998).

10
Accordingly, there is the need for managers to play the role of facilitators to help address work
barriers to improve productivity. The physical working environment of the employee includes the
overall health and safety of the employee including the identifiable workplace, causes of accidents
and illness.

The psychological work environment can be considered particularly as those elements of the
workplace which are pertinent to worker conduct. The psychosocial working environment of the
employee includes, among other things, a set of job factors related to the interaction between
people, their work and the organization. By behavior, the three related types of psychological
phenomena are considered: affect (e.g. emotions, mood, psychological symptoms, affective
disorders); cognitions (e.g. attitudes, perception, decision-making); and behaviors (e.g.
effectiveness, absence, motivation). The psychological work environment is therefore the set of
those characteristics of work environment that affect how the worker feels. The psychological
work environment provides a good description of the mental activities that a worker undertakes
during working hours or at post. The psychosocial work environment is an important factor in any
business organization, and knowing more of its correlates might open up new paths for future
workplace interventions.

The social work environment deals with relationships at job settings. It includes communication
styles, relationship between superiors and subordinates. It also includes relationship among
coworkers, the readiness of others to assist and team work. To achieve a progressive work
environment, personal respect for personnel at every levels of an establishment is vital in
operations. Personal respect in the workplace includes but not limited to such issues as
discrimination and segregation based on age, gender or racial background, sexual harassment and
the role of personal politics in forming workplace relationships.

Briner, (2000) Elaborated working environment as awfully broad class that encompasses the
physical setting (e.g. heat, equipment’s etc.), characteristics of the work itself (e.g. workload, task
complexity),broader structure options (e.g. culture, history) and even aspects of the additional
organizational setting (e.g. native marketplace conditions, trade sector, work life balance) It means
that work environment is the sum of the interrelationship that exists among the employees and the

11
employers and the environment in which the employees work which includes the technical, the
human and the organizational environment.

Opperman (2002) defines working environment could be a composite of three major sub
environments: the technical environment, the human environment, and the organizational
environment. The technical environment refers to tools, equipment, technology, infrastructure, and
alternative physical parts. The technical environment creates elements that enable employees
perform their respective responsibilities and activities. The human environment refers to peers,
others within whom workers relates, team and work teams, mutual problems, the leadership, and
management. These environments are meant in such some way that encourages informal
interaction within the work place so the chance to share data and exchange ideas may well be
increased. This can be a basis to achieve the most productivity. Organizational environment
embodies systems, procedures, practices, values, and philosophies. Measurement system wherever
employees are rewarded on amount, therefore employees can have very little interest in serving to
those workers who try to boost quality. Thus, problems with organizational environment influence
employee’s productivity. Management has control over organizational environment. Measurement
system where people are rewarded on quantity, hence workers will have little interest in helping
those workers who are trying to improve quality. Thus, issues of organizational environment
influence employee’s productivity and performance.

2.2. Factors of working Environment that Affect Employee Performance

Work environments have many properties, components or factors that may affect both physical
and psychological well-being of workers (Briner, 2000). How well employees engage with factors
in their working environments influences to a great extent in their error rate, level of innovation
and collaboration with other employees, absenteeism and ultimately, how long they stay in the job
which is a function of their commitment towards work (Chandrasekar, 2011). Chandrasekar
identified twelve factors in workplace environment which either lead to engagement or
disengagement of workers. These factors include: goal-setting, performance feedback, role
congruity, defined processes, workplace incentives, supervisor support, mentoring/coaching,
opportunity to apply new skills, job aids, environmental factors, and physical factors.

12
Arsalani et al (2011) also pointed out that factors of working environments are divided in to two
parts physical and psychosocial. The physical includes the lighting, noise and poor ergonomics
while psychosocial includes, influence at work, meaning of work, quality leadership and insecurity
at work. Many other researchers have also showed various factors of working environment which
include two broader dimensions such as work and context. Work includes different characteristics
of the job like job carried out and completed, task activities training, job autonomy and
achievement. Context comprises of physical working condition and social working conditions
(Sousa-Poza & Sousa-Poza, 2000; Gazioglu & Tanselb, 2006; Skalli, Theodosius, & Vasileiou,
2008).

From several working environment factors presented in previous studies, the present study
however, takes; physical environment, reward, work life balance, training, workload and
discrimination as a major working environment factors.

2.2.1 Physical Working Environment

Ismail et al. (2010) state that physical environment in which employee performs has an impact on
their performance as well as it limits the prosperity of the organization. And also, they state that
the physical work environment consists of internal and external office layout, temperature, comfort
zone and also the work setting or arrangement.

According to vischer (2007) the spatial layouts, noise, furniture, and lightning are included under
physical working condition factor. The physical work atmosphere includes comfort level,
ventilation, and lighting. This option assists on practical and aesthetic facet, the interior decoration
and style of the work atmosphere that ultimately improves employee expertise and necessitates
higher performance. The comfort level and temperature additionally well influence health of
workers. Niemela et al. (2002) revealed that if there is high temperature the performance of the
employee is reduced, and low temperature has relation to performance of manual tasks. Office
style encourages staff to figure in a very bound manner by the way their work stations are designed.
Spatial layout contributes plenty towards however the workers perform their tasks (Al Anzi, 2009).
Closed workplace plan, which can carry with it every worker having a separate workplace of their
own or some individuals in each office, permits workers a larger quantity of privacy than open

13
arrange work place layout. It permits staff to figure in peace and quiet, keeping them centered on
their tasks while not plenty of distraction. It additionally offers staff a thinking frame and ability
while not a lot of distraction.

According to McCoy and Evans (2005) the weather of physical work setting has to be correct so
the workers wouldn't be stressed whereas doing their job. Physical components play a vital role in
developing the network and relationships at work. All in all, the physical work atmosphere ought
to support the specified performance. Vischer (2008) stressed that contributing geographical point
setting ought to be prioritized because it provides support to the staff in closing their jobs. It should
be conducive enough to enable performance of tasks by employees. For the purpose of this study
the researcher identified five dimensions of physical work environment including: lighting,
ventilation, noise, ergonomics, and spatial layout.

2.2.2 Reward

According to luthans (2000), Rewards may be financial and non-financial and that they can be
utilized completely to boost performance of staff. According to McCormick and Tifflin (1979),
rewards are classified in to two those are intrinsic reward (non-financial) and extrinsic reward
(financial). Intrinsic rewards are inherent within the job itself together with what the workers enjoy
as a result of finishing tasks successfully or attaining his goals. They are intangible benefits
comprise of autonomy, feedback, achievement and recognition. Employees are experience satisfy
when they have carried out something well worth in work and orally liked through the
organization.

On the other hand, extrinsic reward comes from external and it is tangible in order to appreciate
the task performed by employee. Extrinsic rewards are external to the task of the job, including
pay, work condition, fringe benefits, security, and promotion, contract of service, salary,
incentives, bonuses, payments and job security the work environment and conditions of work
(Akanbi, 2008). A reward package will influence worker performance; it can facilitate to extend
employee performance by enhancing employee skills, information and talents so as to realize
structure objectives (Ajila and Abiola, 2004).

14
Studies have revealed that if a corporation fails to reward staff, it'll decrease worker performance
which Associate in Nursing economical reward system may be an honest inducement however
inefficient reward system will result in demotivation of staff in terms of low performance, internal
conflicts, absence, high turnover, lack of commitment and loyalty and timing (Heng, et al.,2012).
For the purpose of this study the researcher identified both extrinsic and intrinsic dimensions of
reward.

2.2.3 Work Life Balancer

Work life balance might talk over with one among the following: structure support for dependent
care, versatile work choices and family or personal leave (Estes and Michael, 2005). Work life
balance employment practices are involved with providing scope for workers to balance what they
are doing at work with the responsibilities and interests they need outside work (Armstrong, 2006).
By thus doing, they reconcile the competitive claims of labor and residential by their own desires
yet as those of employers. Work life balance policies can lower absence and facilitate tackle the
low morale and high degrees of stress which will result in underperformance since the staff get
uninterested in moving work and life responsibilities. Several researchers have united on necessary
role of labor life balance because it is expounded with employee’s psychological wellbeing and
overall sense of harmony in life (Clark, 2000). Balanced work-life is related to magnified job
satisfaction and structure commitment. Employee’s work life experiences deepen their role-related
engagement that is expounded to structure performance improvement.

2.2.4 Training

Nassazi (2013) remarks that employee training has an important role in the improvement and
increasing productivity. It takes the shape of learning activities that prepare employee to exercise
wider or magnified responsibilities. Tzafrir (2005) asserts that training is a vital part generating
the human capital. It provides staff with the abilities, skills and data needed by the post. The target
of training is to realize a modification within the behavior of these trained. This implies that the
trainees shall acquire new artful skills, technical data and skills on the duty in such the simplest
way on aid within the accomplishment of structure goals.

15
According to (Armstrong, 2006) training is helpful in order to fill the gap between what ought to
happen and what's happening between desired targets or standards and actual levels of labor
performance. Training would like is any inadequacy in worker performance, or potential
performance which might be remediated by acceptable coaching. There are some ways of
overcoming deficiencies in human performance at work, and coaching is one amongst them.
Worker performance is also seen because the results of harmony between coaching and
development and structure goal.

2.2.5 Workload

Workload in a very work setting is delineated as wherever tasks and responsibilities taken on will
be accomplished with success among the time offered. Didomenico and Nassbaum, (2008) state
that workload is set by the link between task demands, the circumstances beneath that task takes
place and therefore the perceptions, actions, skills and information of the individual playacting the
task. The task demands could embrace physical actions, psychological feature tasks and/or a spread
of different factors. Hart &Stave land (1988) the expenditure incurred by someone, given their
capacities (resources), whereas achieving a selected level of performance on a particular task with
bound demands. These definitions imply that employment is that the attribute of labor that may be
known because the personal set of skills staff have and the way they execute task demands inside
the given time.

Rizzo et al., 1970 described Work overload as mismatch between the role requirements and the
amount of time and resources available to meet the duty (As cited by Orly Michael, 2009). More
clearly, Work overload is happening when employees perceive the time and resource available as
not enough to complete the existing duty. Two types of Work over load are identified by
researcher: qualitative and quantitative. Qualitative overload happen when people feel they lack
the ability required to complete their jobs or that performance standards have been set too high.
On the other hand, quantitative overload results from having too many things to do or insufficient
time to complete a job (Ivancevic et al., 2012).

2.2.6 Discrimination
The United Nation’s International Labor Organization (2015) defines Work place discrimination
refers to a working environment that exhibits bias in the treatment of employees based on gender,

16
ethnicity, religion, age, disability and belief. It occurs. It occurs in hiring, promotion, job
assignment, and composition. This conceptualization reflects world recognition of the persistence
of unfair employment experience of individuals from spread of social group. Workplace
discrimination not only hurts those who are discriminated against, it can also damage the entire
organization. Companies may have trouble retaining employees, and those who stay may be
dissatisfied with their jobs and distrustful of each other and of company management.

Discrimination in workplace could be direct or indirect. It is direct discrimination when an

employer treats an employee less favorably than someone else. But indirect discrimination happens
when a working conditions or rule disadvantages one group of people more than another.
According to Hassan and Ali (2014); and Fatima and Omar (2014), the different dimensions of
workplace discrimination are; gender discrimination, religion discrimination and ethnic
discrimination. Other scholars identified six main types of discrimination which are; disabilities
discrimination, sexual harassment, ethnic discrimination, age discrimination, sexual orientation
discrimination and gender discrimination (Hemphill and Haines 1997). For the purpose of this
study the researcher identified four dimensions of discrimination such as; age, gender, religion and
ethnicity discrimination.

2.3. Employee Performance

Organizations are undergoing a transformation for coping against the changing needs of the
environment and excelling in the business by building up their adaptive capabilities for managing
change proactively. Sustainability of business organization is depending on talent, skill,
knowledge and experience of employees and on their performance (Armstrong Michael, 2009).
Performance is the accomplishment of a given task measured against preset known standards of
accuracy, completeness, cost, and speed. Employee’s performance is the contribution of
employees for the achievement of organization objective. Employees expected to perform
acceptable level of the standard and managers follow up, and evaluate the performance of
employees to attain the stated objective of an organization (Armstrong Michael, 2009). According
to Cooke (2001) performance can be defined as the achievement of specified task measured against
predetermined or identified standards of accuracy, completeness, cost and speed. In an
employment contract, performance is deemed to be the accomplishment of a commitment in such
a manner that releases the performer from all liabilities laid down under the contract.

17
Employee performance is generally checked out in terms of outcomes. However, it can even be
checked out in terms of behavior (Armstrong 2000). Kenney et al. (1992) declared that employee's
performance is measured against the performance standards set by the organization. There are
varieties of measures which will be taken into thought once measure performance for instance
exploitation of productivity, efficiency, effectiveness, quality and gain measures (Ahuja, 1992) as
in brief explained hereafter. Profitability is that the ability to earn profits systematically over
amount of your time. It’s expressed because the quantitative relation of profits to sales or come on
capital utilized (Wood &Stangster 2002). Potency and effectiveness - efficiency is that the ability
to provide the required outcomes by exploitation as bottom resources as do able whereas
effectiveness is the ability of workers to satisfy the desired objectives or target (Stoner 1996).
Productivity is expressed as a quantitative relation of output to it of input (Stoner, freewoman and
Gilbert, 1995). It is a measure of how the individual, organization and industry converts input
resources into goods and services. The measure of how much output is produced per unit of
resources employed (Lipsey, 1989). Quality is the characteristic of products or services that bear
an ability to satisfy the stated or implied needs (Kotler& Armstrong 2002). It is increasingly
achieving better products and services at a progressively more competitive price (Stoner 1996).

As noted by Daft (1988), it's the responsibility of the corporate managers to confirm that the
organizations attempt to and so bring home the bacon high performance levels. This thus implies
that managers need to set the specified levels of performance for any periods in question. This they
will interact as an example setting goals and standards against that individual performance is
measured. Corporations make sure that their workers are contributive to manufacturing top quality
product and/or services through the method of worker performance management. This
management method encourages workers to induce concerned in coming up with for the corporate,
and thus participates by having a job within the entire method thus making motivation for top
performance levels. It is necessary to notice that performance management includes activities that
make sure that structure goals are being systematically met in a good and efficient manner.
Performance management will concentrate on performance of the staff, a department, processes to
make a product or service, etc. Earlier analysis on productivity of employees has showed that
workers who are glad with their job can have higher job performance, and therefore supreme job
retention, than those that aren't proud of their jobs (Landy, 1985). Any still, Kinicki & Kreitner

18
(2007) document that worker performance is higher in happy and glad employees and therefore
the management realize it straightforward to inspire high performers to realize firm targets.

2.4. Theories Related to Employee Performance

Many theories have been advanced to explain the link between workplace environment and
employee performance. Maslow (1943) said that people work to survive and live through financial
compensation, to make new friends, to have job security, for a sense of achievement and to feel
important in the society, to have a sense of identity, and most specially to have job satisfaction.
All employees that have job satisfaction are high performers in their respective workplaces. On
the other hand, Taylor (1911) opined that the most important motivator of workers is salary and
wages when he said that "non-incentive wage system encourages low productivity". He said that
if employees receive the same wage irrespective of their individual contribution to the goal, they
will work less and that employees think working at a higher rate means fewer employees may be
needed which discourages employees to work more (Gardner and Lambert 1972). Basing on this,
the following theories are reviewed to indicate the relationship between workplace environment
factors and employee performance.

2.4.1 Adam’s Equity (fairness) Theory

Equity theory is a concept in industrial psychology that focuses on individual’s perceptions of how
equitably they are being treated in their work organization. The theory based on an individual’s
subjective judgments about the fairness of the reward she or he got, relative to the inputs (which
may include many factors such as effort, experience, education, and so on), in comparison with
the rewards of others.

According to Muchinsky & Culbertson (2015) in order to understand equity theory, there must be
an understanding of its different components including; person (the individual for whom equity or
inequity is perceived), comparison (any group or person used by person as a referent regarding the
ratio of inputs and outcomes), inputs (the individual characteristics brought by person to the job),
and outcomes (what person received from the job (e.g., recognition, fringe benefits, pay).
According to this theory if workers perceive that their output/input ration is less than the referent
they feel inequity. An employee who feels they are being treated inequitably may become absent
more, steal from their organization, or may give the same effort they were giving before.

19
Generally, from this theory we can understand that, directly related to employee performance.
Unfair workplace rewards reduce employee performance. On the other hand, fair work place
rewards boost employee performance. This makes it important to understand the concepts that
makeup equity theory, and put mechanisms in place to create the perception of more equitable
work place environment.

2.4.2 Herzberg Two Factor Theory

The Two Factor Theory was advanced by Frederick Herzberg in 1959. This study is grounded on
this theory that has been explored by various scholars to explain the relation between workplace
environment and employee performance. Herzberg defined two sets of factors in deciding
employees‘ working attitudes and levels of performance, named motivation and hygiene factors
(Robbins and Judge, 2007). He stated that motivation factors are intrinsic factors that will increase
employees job satisfaction; wile hygiene factors are extrinsic factors to prevent any employee’s
dissatisfaction. The theory pointed out that improving the environment in which the job is
performed motivates employees to perform better. Herzberg’s theory concentrates on the
importance of internal job factors as motivating forces for employees. He wanted to create the
opportunity for employees to take part in planning, performing, and evaluating their work (Schultz
et al., 2010). The content of the theory has been widely accepted as relevant in motivating
employees to give their best in organizations. Further research has proved that the employee is
more motivated by intrinsic factors as captured by Herzberg’s motivator needs than anything else.

There are however other schools of thought that share a different opinion from Herzberg’s. One
such scholar is King (2005) who sought to eradicate and evaluate five distinct versions of the Two
Factor theory. He concluded that two versions are invalid as they are not supported by any
empirical studies. However, the two-factor theory can be said to be a truly outstanding specimen
for it to last a long period of time without disapproval. It has been a great influence on the body
knowledge about workplace motivation and performance. It has generated a great amount of
further research by many scholars. It draws its thought from Maslow’s famous hierarchy of needs
theory and human behavior. However due to changes in organizational environment and the
advancement in technology, it is necessary to develop new methods of analysis. This will provide
new ways of conducting research and revaluating the results of existing findings.

20
2.4.3 Affected Event Theory
The theory was advanced by Howard M. Weiss and Russel Cropanzano in 1996 (Phua, 2012). The
Affective Events Theory explains the link between employee’s internal influences and their
reactions to incidents that occur in their work environment that affect their performance,
organizational commitment, and job satisfaction. It proposes that positive-inducing as well as
negative emotional incidents at work have significant psychological impact on employee’s job
satisfaction. The impact results into lasting reactions exhibited through job satisfaction,
organizational commitment, and job performance. According to Ashton-James and Ashkenazy
(2005) research to date has supported the central tenets of AET that workplace events trigger
affective responses in employees and that these affective responses influence workplace
cognition and behavior. They assert that AET is both empirically and theoretically, restricted to
events that are internal to the organization. The theory also considers how specific events at work
other than job characteristics lead to specific emotional and behavioral responses (Briner, 2000).
He posits that these events or things that actually happen at work affect the well-being of
employees thus affecting their performance.

2.5. Empirical Study

In this Part, the researcher was tried to analyzed and discuss different finding or studies regarding
to the effect of working condition on employee performance the case of dashen bank. Lablebic
(2012) studied on the impact of workplace quality on employee productivity a case study of foreign
private bank in turkey. The result of the study showed that employees are inspired while working
in a modernized office, well decorated and well-arranged and good storage facilities.

Razziq et al, (2015) studied on the impact of working environment in job satisfaction from banking
sector, education institute and telecommunication industry in Quetta, Pakistan. The study
employee a quantitative methodology, the target population consist of education institutes.
Banking sector and telecommunication industry operating in city Quetta, Pakistan. Simple random
sampling was used for collection of data from 210 employees. Finally, the result of the study
showed that there is positive relationship between working environment and job satisfaction.

Al-Omari et al, (2017) conducted research on the influence of work environment on job
performance the case study of engineering company Jordan. The study takes 85 employees as a
sample size and quantitative methodology implying cross sectional survey was used. Different

21
dimensions were examined in relation to the work environment factors, including noise;
temperature; air; light and color; space and employer’s satisfaction. Finally, the Findings revealed
that noise, office furniture, ventilation and light have a negative impact on job performance.

Asante (2012) conducted a research on the impact of office ergonomics in Ghana National
Petroleum Corporation (GNPC). The result of the study revealed that if there is incompleteness in
office ergonomics the performance of the employee is affected by 20-80 percent.

Nduku et al (2015) studied the impact of working condition on performance of employees of

Kenya commercial bank head office. A sample of 172 employees was subjected to stratified
random sampling. Primary data was collected by use of questionnaires. Finally, the result showed
that, working condition has a positive effect on employee performance. And the study
recommended that the bank should put effort in ensuring that working conditions are favorable
and focus more on the physical conditions which has the greatest effect on employee performance.

Omoh, et al., (2015) evaluated workplace discrimination and its influence on employee’s
performance in Ghana. Questionnaires were collected from 159 employees drawn from 5
different organizations in 5 different sectors on whether discrimination at the workplace has any
influence on employees‘ performance. Finally, the finding of the research indicates that
discrimination has significant negative impact on employee performance

2.6. Conceptual Framework of Study

The conceptual model formulates to show of working environment and employee performance. In
this study employee performance is dependent variable while working environment condition such
as physical working environment, training, reward, work life balance, workload and discrimination
are independent variable.

Oso (2009) note that an abstract framework could be delineate presentation of theory which it’s
presented as a whole once analysis variables and also the relationship between them are translated
to a visible image for instance the inner connection between independent and dependent variables.
The abstract framework is so theme of ideas that the study employee in order to realize the set of
objective. The subsequent figure shows the schematic diagram of the Conceptual framework for
the independent and dependent variables.

22
 Physical Working Environment

Reward

Training
Employee Performance
Work Life Balance

Work load
Dependent Variable
Discrimination

Independent Variables

Figure 2.1 Source: Nduku (2015) research Hypothesis

CHAPTER THREE: RESEARCH METHODOLOGY

This section basically describes how the study was undertaken, the data collection methods used
and its analysis and presentation techniques. It is a very essential portion as it provides reasons to

23
why a specific method of research, Sampling, data collection and data analysis is chosen, it also
gives the design of study, population, validity, and reliability test. Honestly speaking, this chapter
is deals with research methodology, which are contains the master plan research design,
population, sample size and sampling technique, sampling procedure and explains the method and
procedures for data collection, analysis, and interpretation of the research findings.

3.1 Study of Area

The study area of this research was at one of the biggest private commercial bank of Dashen Bank.
This study aimed to target human resource management officers who were the responsible on
employee’s performance management and the employees. The company of Dashen Bank was
selected due to its geographical location and the existed factors that employees are encounter in
attaining their job. Therefore, this study expects to get more useful information for the subject
matter to cover a way for the management on how to overcome those challenges so that to enhance
employees’ performance by improving their working environment.

3.2 Research Design

A research design is the arrangement of conditions for collections and analysis of data in a manner
that aims to combine relevance to the research purpose with economy in procedure (Kothari, 1990).
A research design is also a plan for study that provides specification of procedure to be followed
by the researcher in order to achieve the research objectives as well as to test the hypothesis
(McDaniel and Gates, 2006). For the purpose of this study, descriptive research design was
employed to explain effect of independent variable (working environment dimension) on
dependent variable (employee performance). The research is cross sectional type, in a sense that
data was collected at point of time due to limit cost and time.

3.3 Population of the Study

A population is any group of individuals that has one or more characteristics in common and that
are of interest to the researcher (Creswell, 2005). Therefore, the target population of this study
included human resources officers, head of departments, directors who manage human resources
and staff members. The total population size at Dashen bank is 6969 employees which only
permanent staffs not include outsource staffs.

24
3.4 Target Population of the Study and Sample Size

3.4.1 Target Population

Population is the total collection of individuals to be studied and from which sample is drawn
(Sekaran, 2016). Therefore, the target population for this study were operational workers of
Dashen bank. Accordingly, the target population of study was 6,969 permanent employees.

3.4.2 Sample Size Determination

The main emphasis of this was to identify the effect of working environment on employee
performance. The target population for this study were all of Dashen bank under study.

Kothari, (2004) defines sample as small group of respondents drawn from a population about
which a researcher is interested in getting the information so as to arrive at a conclusion. This study
selected respondents who are responsible on employee’s performance management and employees
themselves (staff members). The sample size was determined by using the statistical formula by
Yamane (1967). Based on the assumption of 95% confidence level and P = .05 and the estimated
population size more than 5000. The target population of this study was the employees of Dashen
Bank. Therefore;

sample size = Population size

1 + Population size(e)2

sample size = 6969

1 + 6969(0.05)2
Sample size = 378.287 ≈ 𝟑78

Therefore, based on sample size determination method, for this study of 378 respondents were
select from the total population of 6,969 employees of 13 districts according to the proportion to
district population of the basis of simple random sampling. The sample size selected here is
considered as representative of the population of target population and large enough to allow for
precision, confidence and generalization of the research findings. The sample taken from each
district was illustrated in table 3.0-1.

25
Sekaran (2010) stated that, in research investigations involving several hundreds or thousands of
elements, it would be practically impossible to collect data from, or test, or examine every element.
Even if it is possible, it would be performance in terms of time, cost and other human resources.

Item District Name Target Proportional sample size

No Population

1 Adama 385 [(385/6969)x378]=21

2 Bahir Dar 530 [(530/6969)x378]=29

3 Dessie 342 [(342/6969)x378]=19

4 Dire Dawa 317 [(317/6969)x378]=17

5 East Addis Ababa 559 [(559/6969)x378]=30

6 Hawassa 426 [(426/6969)x378]=23

7 Head Office 1745 [(17455/6969)x378]=95

8 Jimma 360 [(360/6969)x378]=20

9 Mekele 346 [(346/6969)x378]=19

10 North Addis 562 [(562/6969)x378]=31

11 South Addis 537 [(537/6969)x378]=29

12 West Addis 547 [(547/6969)x378]=30

13 Wolayita 313 [(313/6969)x378]=17

Table 3.1: Number of Employees and Proportion of Samples taken from Head Office, Source:
internal report of Head office and own construction

26
3.4.3 Sampling Techniques
Since the aim of this study is to get actual information about effects of working environment on
employee performance in Dashen bank, so that, the study was focused on operational
employee from each sector. The rationality of focusing on operational employee was to get
accurate and unbiased information about working environment factors. The study was applied
probability sampling techniques in order to give equal opportunity for the target population.
According to Kothari (2004), probability sampling is also known as random sampling ‘or chance
sampling‘. Under this sampling design, every item of the universe has an equal chance
of inclusion in the sample. It is, so to say, a lottery method in which individual units are picked up
from the whole group not deliberately but by some mechanical process. After having the
representative sample size from each districts, the researcher applied simple random sampling
techniques to select sample respondents from each districts according to their proportionate to
gather data about working environment and employee performance.

3.5 Data Collection Methods

The main emphasis of this research was to investigate the effect of working environment on
employee performance on Dashen bank. The principal source of data for this study was primary.
Primary source of data refers to information obtained first hand by the researcher on the variable
of interest for specific purpose of study (Sekaram, 2003). The primary source of data for this
research was collected from all operational workers of Dashen bank via self-administered
questionnaire.

3.6 Data collection tools

According to Creswell (2005) no single technique or instrument may be considered to adequate in
itself in collecting valid and reliable data. Therefore, two major tools are used to obtain adequate
and reliable information for this study. These include observation and questionnaires of both
structure and semi-structure nature. This study used data collection tools which involve
observation and questionnaires.

3.7. Questionnaire
According to Kothari (2004), a questionnaire is a method of collecting data which uses a set of
questions for collecting data. In this method data are collected with the help of questions. Through

27
this method, selected respondents of this study had to answer questions on their own and bring
back to the researcher. Both structured and semi structured questions were used in helping the
researcher to get answers and relevant information from respondent.

In order to gather data for this study, the researcher user a questionnaire as a method of data
collection instrument. The questionnaire has two section. With the first section contains
background and demographic information of the respondent and the second section contain
information about working environment and employee performance.

The researcher used self-administered question to gather information about background and
demographic information (regarding sex, age material status, working experience, education level,
and employee management level) and to gather information regarding with working environment
factors and employee performance. The questionnaire which has acceptable psychometric test
score for independent variable was adopted from the following previous studies (al-khonzondar,
2015, Buckingham, 2004, WES REP, 2011, Schwab, 1993, and nzewi et al, 2018). The
measurement of employee performance developed by Hakala was adopted with slight
modification. All section two items are measured in five point such as Strong Disagree (DS)=1,
Disagree(D)=2, Neutral(N)=3, Agree(A)=4, and Strong Agree(SA)=5. The use Likert scale is to
make it easier for respondent to answer question.

3.8 Method of Data Process and Analysis

3.8.1 Data Processing

The data collected from questionnaire was processed both in manual and computerized method. In
order to detect error and omission the raw materials were edited. In order to reduce the response
into limited of categories the raw materials were code by using numerical and other symbols. The
research also used tabulation in order to summarize the raw data and display in the compact from
for further analysis.

3.8.2 Data Analysis

The data collected from the respondents was analyzed by using descriptive statistics such as
mean, percentage and standard deviation and inferential statistics such as Pearson correlation and
regression analysis. In order to know the strength of relationship between independent and

28
dependent variable correlation test was employed. Finally, to test the hypothesis, regression and
analysis of variance was employed. In analyzing the data, the researcher used SPSS version 26
software package.

3.8.2.1 Descriptive Analysis

Descriptive analysis was used to interpret a variable deal with background or demographic of the
respondent and mean score of working environment dimension and employee of the performance.

The results are presented in tubular, frequency distribution and percentage. This was employed
through the computation of means and standard deviation of data gathered for the variables.

3.8.2.1 Inferential Statics

Inferential statistics was used to show the relationship between the variables and to analyze the
effect of working environment on employee performance. As stated in Kothari (1990), amongst
the measures of relationship, Karl Pearson’s coefficient of correlation is the frequently used
measure in case of statistics of variables. Field (2006), states that the output of correlation matrix
can be the correlation coefficient that lies between -1 and +1 within this framework, a
correlation coefficient of +1 indicates a perfect positive relationship, and a correlation coefficient
of -1 indicates a perfect negative relationship; whereas a coefficient of 0 indicates no linear
relationship at all. Therefore to find out the relationship between working environment
dimensions and employee performance Pearson product moment correlation was applied.
Multiple regression analysis refers to the analysis concerning relationship between the dependent
and independent variables; with the multiple regressions equation describing the relationship
(Kothari, 1990). This approach was used in this study to analyze effect of working environment
on employee performance.

3.9 Model Specification

It could be inferred from the works reviewed in the previous sections; that employee performance
is determined by some factors of working environment. Thus, in respect of the hypotheses stated
above, the main issue is an investigation of relationship that exists between employee performance
and each of explanatory variables that had been identified through literature and theories i.e.,
physical work environments, reward, work life balance, training, workload, and discrimination.
Other factors that are not explicitly included in the model were captured by the error term in the

29
model. Therefore, the general model which incorporates all of the variables to test hypotheses of
the study was;

EP=β0+β1(PE)+β2(R)+β3(TR)+ β4(WLB)+ β5(WL)+ β6(DS)+E

Where;

EP=Employee Performance (Dependent Variable)

β0= constant term

PE=Physical Environment

R= Reward

WLB= work life balance

TR= training

WL= workload

E= error term

β: coefficients associated with each independent variable which measures the change in value of
EP, per unit change in their respective independent variables.

3.10 Factor Analysis

Factor analysis was first conducted on a pre-selected set of measures derived. Factor analysis help
in revealing underlying factors and assist in identifying what the factors represent conceptually.
The analysis was performed using SPSS 26 based on the principal components factoring method
with varix-max rotation on the correlations of the observed variables. The following criteria were
used in making decisions about inclusion or exclusion of items in scales and sub scales. Items with
loading less than 0.40 were excluded from further analysis as they were considered to be weak
(Hair, Black, Babin, & Anderson, 2010). In case of an item cross loaded on two different factors
with a loading of less than 0.40 on the second factor, it was also excluding.

30
3.11 Reliability and Validity of Instrument

3.11.1 Reliability Test

Aimed at the point that even if the research were repeated they would end up with similar results
or the consistency or dependability of a measurement technique, and it‘s concerned with the
consistency or stability of the score obtained from a measure or assessment overtime and across
settings or conditions. If the measurement is reliable, then there is less chance that the obtained
score is due to random factors and measurement error (Marczyh, et al., 2005). According to
George and Mallery (2003, as cited in Joseph & Rosemary, 2003) Cronbach‘s alpha is a coefficient
of reliability. It is commonly used as a measure of the internal consistence or reliability of a
psychometric test score for a sample of examinees. Cronbach’s alpha reliability coefficient
normally ranges between 0 and 1.

Cronbach’s Alpha Description

>=0.9 Excellent

>=0.8 but < 0.9 Good

>=0.9 but < 0.8 Acceptable

>=0.9 but < 0.7 Questionable

>=0.9 but < 0.6 Poor

<= 0.5 Unacceptable

Table 3.2: Rule of Thumb of Cronbach’s Alpha, Source: Zikmund, et al, 2010.

Based on this to ensure the reliability this study used self-administered questionnaire .then the
questionnaires are pre-tested based on pilot study, to guarantee a common understating of
questions among respondents. The alpha results for the items of the questionnaire and their alpha
values have met an acceptable figure (which is >0.75) in relation to the aforementioned
requirement range.

31
 Variable Cronbach’s Alpha No. of Items

Physical Environment 0.877 7

Reward 0.779 6

Training 0.882 6

Work life Balance 0.810 4

Work Load 0.776 4

Discrimination 0.578 6

Employee Performance 0.919 6

Table 3.3: Reliability, Source: Zikmund, et al, 2010.

3.11.2 Validity Test

Refers to the extent to which the concept one wishes to measure is actually being measured by a
particular scale or index. According to Kothari (2004), validity aims at establishing the results
which are linked with the condition. It is concerned with the extent that the scale accurately
represents the construct of interest. In order to assure the validity of the measurement instrument
of the study is conducted based on the literally accepted conceptual framework that clearly
indicate the theoretical construct and associated with the measurements valid to evaluate the
effects of working environment (independent variables) on employee performance (dependent
variable). Where possible this should be supported and consideration given to practical things.
So that pre-questionnaire were distributed to the managers of district managers and branch
managers HR partnership to check the validity of questions to further data collection process. As
per the comments and the discussion with district managers and branch managers HR partnership
experts the question prepared to primary data collection for the research objective
is found valid by researcher. Further, this instruments or variables of working environment and
employee performance were tested by previous studies for content validation.

32
3.12 Ethical Considerations
Mugenda (2008) underlines that participation of the respondents should be in voluntary bases
and they have right not to give response without researcher obligation. Therefore, the researcher
was contacted and received informed consent from the respondent. The respondents are not
forced to take part in the study, thus the principle of volunteerism was practiced all through data
collection method. Furthermore, the respondents were informed that information obtained is only
for academic purpose and remain confidential.

33
 CHAPTER FOUR: DATA ANALYSIS, PRESENTATION AND
INTERPRENTATIONS
In the previous chapters, important literatures related to the topic that may give enough
understanding about the subject matter and the methodology selected to meet research
hypotheses had been discussed. In this chapter, detail analysis about the descriptive statistics and
regression results has been made. Specifically, the chapter has included four sections. The first
section presented descriptive analysis of variables. The second section deals with the correlation
analysis and shows the degree of association between the study variables. Section three presented
the classical linear regression model assumption diagnostic test results. Finally, the fourth section
has presented the results of the regression analysis and discussions on regression analysis.

4.1 Questionnaire Response Rate

The researcher distributes 378 questionnaires for twelve district and head quarter in dashen bank
out of which 357 were completed and returned. The response rate for this study is 94.4% which is
consider as a very good response rate as described by babies (2010).

4.2 Descriptive Statistics

4.2.1 Background Information of the Respondents

The demographic characteristic includes, gender, age, material status, level of education, work
experience and level of management. This aspect of the analysis deals with the personal data on
the respondents of the questionnaire given to then. Therefore, in order to validate the reliability
of data collection it mandatory to analyze the demographic profile of respondent.

Gender Frequency Percent

Male 184 51.5

Female 173 48.5

Total 357 100%

34
Table 4.0-1 gender of the respondent, Source: Survey SPSS output

As indicated in the above table 4.1 the gender proportion of male respondents represented 51.5%
on the other hand 48.5% were females. The survey showed that there were more female as
compared to males.

Age Range Frequency Percent

Below 25 year 28 7.8%

25 up 35 222 62.2%

36 up 55 104 29.1%

Above 55 year 3 0.8%

Total 357 100%

Table 4.0-2 age category of the respondent, Source: Survey SPSS output

In the above table 4.2 the age distribution of the respondents who participated in this study is
proved. From the table we can observed that 7.8% of the respondent lies within below 25 age
group, 62.2% of the respondent are in the range of 25 up 35 age group, of the respondent are in
the range of 36 up 55 age group 29.1% and 0.8% the of respondent above 55 age group. From this
we say that most of dashen bank employee are middle age.

Marital Status Frequency Percent

Married 252 70.6%

Windowed 2 0.6%

Divorced 4 1.1%

Single 99 27.7%

Total 357 100%

35
Table 4.0-3 Marital Status of the respondent, Source: Survey SPSS output

As far as composition of marital status is concerned 27.7% of the respondents are single, 70.6%
are married, 0.6% is windowed and 1.1% is divorced. From this, it can be understood that
employee working in dashen bank consist of all types of married status with majority of married
people with 70.6%.

Education Level Frequency Percent

Certificate and below 7 2%

Diploma 12 3.4%

BA/ BSC Degree 227 63.6%

Master’s degree and above 111 31.1%

Total 357 100%

Table 4.0-4Level of Education of the respondent, Source: Survey SPSS output

As far as composition of level of education is concerned 2% of the respondents are Certificate and
below, 3.4 % respondents are in diploma, 63.6% respondents are in BA/ BSC Degree and 31.1%
respondents are in Master’s Degree. From this it can be understood that employees working in
dashen bank consist of all level of educated people with majority BA/ BSC Degree holders.

Work Experience Frequency Percent

Below one year 2 0.6%

1-5 years 126 35.3%

6-10 years 175 49.0%

11-15 years 45 12.6%

16 years and above 9 2.5%

36
 Total 357 100%

Table 4.0-5Work Experience of the respondent, Source: Survey SPSS output

As far as composition of Work Experience is concerned 0.6% of the respondents are below one
year, 35.1% respondents are in 1-5 years, 49.0% respondents are in 6-10 years, 12.6% respondents
are in 11-15 years and 2.6% respondents are in 16 years and above. From this it can be understood
that employees working in dashen bank consist of all level of educated people with majority 6-10
years’ work experience.

Level Employment Frequency Percent

Top Level Management 2 0.6%

Middle level management 100 28.0%

Low level management 255 71.4%

Total 357 100%

Table 4.0-6 Level Employment of the respondent, Source: Survey SPSS output

As far as composition of work experience is concerned 0.6% of the respondents are top level
management, 28.0% respondents are in middle level management and 71.4% respondents are in
low level management. From this it can be understood that employees working in dashen bank
consist of all level of employment people with majority low level management.

4.2.2 Descriptive Statistics of the Variables

The computed summary of descriptive statistics for independent (physical environment, reward,
training, work life balance, workload and discrimination) variable and dependent (employment
performance) variable that were included in the questionnaire were indicate in this part. The mean
and standard deviation of variable collection from the respondents were discussed.

37
 Variables Minimum Maximum Mean Standard deviation

Employee performance 7.00 30.00 22.000 5.130

Physical Environment 7.00 35.00 24.067 5.904

Reward 7.00 27.00 18.462 3.745

Training 6.00 30.00 16.920 4.961

Work life balance 5.00 20.00 12.538 3.010

Work load 5.00 25.00 16.003 3.620

Discrimination 9.00 90.00 20.882 6.443

Valid N (357)

Table 4.0-7 Descriptive Statistics of the Variables, Source: Survey SPSS output

From the result of table 4.7 depicted the overall arithmetic mean and standard deviation of
dependent and independent variable as responded by the respondents. The finding of this study
indicates that most of employees were sufficient agreed with physical working environment with
mean value 24.067 and 5.904 standard deviation, discrimination with cumulative mean value
20.882 and 6.443 standard deviation, reward with cumulative value 18.462 and 3.745 standard
deviation. This indicate that, dashen bank should maintain its strength work on physical working
environment, discrimination and reward.in order to competent employee and improved employees
performance.

Meanwhile, employee on the other variables such as training and work load agree with a
cumulative mean value 16.920 and 4.961 standard deviation, reward with cumulative value 16.002
and 3.620 standard deviation. This implies that dashen bank have to give attention to give
reasonable work load, sufficient breaks for its employee and to give attention to give reasonable,
sufficient training especially lower level management for its employees.

38
On the other hand, work life balance cumulative mean value 12.538 and 3.010 standard deviation.
This implies that dashen bank has to work in balancing work personal life of the employees and
avoid repeated absent from workplace.

4.3 Inferential Statistics

In this section the result of inferential statistics employed in the study supported on Pearson
correlation coefficient and multiple regression.

4.3.1 Correlation Analysis

Correlation indicate the strength of association between all independents and dependent variables.
According to brook (2008), correlation analysis measures the degree of linear association between
dependent and independent variables. The value of correlation coefficient ranges from -1 to 1. A
correlation coefficient of 1 indicate that perfect positive relationship between the variables,
however, -1 indicates that perfect negative relationship between variables. On the other hand, a
correlation coefficient of zero indicates no relationship between variables.

Other scholar According to McDaniel and gates (2006), a value of correlation coefficient between
0.1and 0.29 indicates the association among the items is poor. A correlation coefficient between
0.3 and 0.49 implies there is moderate relationship correlation coefficient greater than 0.5 implies
strong relationship between two variables. Based on this as noted by gujarati,2004, most generally
used bi-variant correlation coefficient, normally known as Pearson correlation were utilized in
order to find out the relationship between working environment dimensions and employee
performance. Table below 4.8 presents the result of Pearson correlation between variables.

EP PE R TR WLB WL DS

EP 1

PE 0.609** 1

R 0.344** 0.331 1

TR 0.360** 0.235 0.515 1

WLB -0.267** 0.160 0.267 0.279 1

39
 LW -0.388** 0.232 0.432 0.262 0.510 1

DS -0.217** 0.420 0.240 0.287 0.435 0.361 1

Table 4.0-8 Descriptive Statistics of the Variables, Source: Survey SPSS output

**. Correlation is significant at the 0.01level (2-tailed)

*. Correlation is significant at the 0.05 level (2-tailed)

From the result in table 4.8 indicates that, there is significant positive correlation between physical
environment and employee performance with a Pearson correlation coefficient r=0.609 and sig.
(2-tailed) is 0.000, which is <0.05. Therefore, there is strong and statistically significant
relationship at 5% significant level. Reward is positively related to employee performance with a
Pearson correlation coefficient r=0.334 and sig. (2-tailed) is .004, which is <0.05. Therefore, there
is strong and statistically significant relationship at 5% significant level. Training is positively
related to employee performance with a Pearson correlation coefficient r=0.360 and sig. (2-tailed)
is 0.000, which is <0.05. Therefore, there is strong and statistically significant relationship at 5%
significant level. Discrimination is negative related to employee performance with a Pearson
correlation coefficient r=0.217 and sig. (2-tailed) is 0.007, which is <0.05. Therefore, there is
moderate and statistically significant relationship at 5% significant level.

On the other hand, the Pearson correlation coefficient between work life balance, work load and
employee’s performance negative relationship.

4.3.2 Test Assumption of Classical Linear Regression Model

To estimation the parameters in the multiple linear regression model and minimize the sum of
squared error or the different between observed value and predicted value ordinary least square
method were employed for this study. However, using ordinary least square method in order to
have correct estimator value the five key underlying assumption should be satisfied. When the
assumption is violated ordinary least square method estimator produce biased, inconsistent and in
efficient result. Therefore, tests of hypothesis are longer valid, since the standard errors are wrong.
Hence, in order to protect against the chance of getting and interpreting wrong regression results
the researcher conducted a diagnostic test. To make sure that the model is unbiased, consistent,
and valid the following test are conducted.
40
4.3.2.1 Test for Residual Zero Mean
According classical linear regression models assume that the error terms zero mean value. In fact,
if a constant term is included in regression model equation this assumption will never be violated
(brooks, 2008). In this study the researcher included the constant term in the regression equation.
Therefore, it’s expected that the error terms have zero mean value and the assumption is not
violated.

4.3.2.2 Test for Heteroscedasticity

According classical linear regression model assume the variance of the error term is constant, this
is known as homoscedasticity. If the variance of the error term is not the same, they are said to be
heteroscedastic. In order to check the violation of this assumption the research used scatter plot
technique. The result plots the standardized residual, against standardized predicted value. If the
plots have a pattern it implies the presence of heteroscedasticity. Conversely if the plots depict a
pattern there is no evidence for the presence of heteroscedasticity. As illustrated in the figure, 4.1
below the graph looks like a random array dots or the plots have no pattern. So, homoscedasticity
assumption is not violated.

Figure 4.0.1Sources survey SPSS output

41
4.3.2.3 Test for Autocorrelation
From classical linear regression model assume cross sectional the covariance between the error
term is zero. In other word it assumes there is no serial correlation among error terms. The research
applied Durbin Watson test, which is most commonly used techniques of detecting autocorrelation.
Thus, if the value of DW test is between 1.5 and 2.5 there is no evidence for the presence serial
correlation among error terms (Hassen et al, 2017). As illustrated in table 4.9 the
DW test falls in the acceptable range, which implies absence of serial correlation among errors.

Model R R Square Adjusted R Std. Error of Durbin-

Square the Estimate Watson

1 0.670a 0.439 0.439 3.84175 1.705

a. Dependent Variable: Employee performance

Predictors: (Constant), DS, TR, PE, WL, WLB, R).

Table 4.0-9Result of regression model summary, Sources SPSS output

4.3.2.4 Test for Multi-collinearity

According multi-collinearity model assume no correlation between explanatory variable. Multi-

collinearity refers to the situation were some or all explanatory variables are highly inter-connected
or the existence of exact linear association. According to Guajarati (2004), if multi collinearity is
ideal the regression coefficients of independent variables are undetermined and difficult to
measure their standard error. In order to test the multi collinearity problem the researcher applied
variance inflation factor (VIF) and correlation coefficient of explanatory variables. If the VIF of
the variables exceed 10%, multi collinearity can be a potential problem (Hair et al., 2013). As
illustrated in table 4.10 the value of variance inflation factor for all explanatory variables is less
than 10%. Therefore, it implies that there is no multi collinearity between explanatory variables.

42
 Model Collinearity Statistics

Tolerance(1/VIF) VIF(%)

1 Physical Environment 0.867 1.153

2 Reward 0.606 1.649

3 Training 0.682 1.467

4 Work life balance 0.666 1.502

5 Work load 0.682 1.466

6 Discrimination 0.895 1.117

Table 4.0-10VIF and Tolerance multi collinearity Statistics, Sources SPSS output

4.3.2.5 Test for Normality

Assume that the distribution of the error term is normally distributed. As field (2009),
noted, that normality assumption is important while using regression and worthwhile, if we want
to make inference about the population parameter from the sample parameters. If the mean of the
residual is zero and constant variance the error is normally distributed. Thus, the result in figure
4.2 Illustrates that the mean of the residual is zero and approximately its variance is 1, which
implies that the distribution of the error is normally distributed.

43
Figure 4.0.2Sources survey SPSS output

4.3.3 Analysis of Variance

In according to the analysis of variance was also done to establish the overall significance of the
model. Analysis of variance also tells whether the overall effect of the six independent variables
on employee performance is significant. As depicted in table 4.11, at 95%confidence interval,
significant P-value of 0.000 and F-value of 47.410 was recorded. This implies the regression model
is a suitable prediction for explaining the effect of working environment on employee performance
in dashen bank.

Analysis of Variance (ANOVA)

Model Sum of square Df. Mean of square F Sign.

1 Regression 4,198.340 6 699.723 47.410 0.000b

2 Residual 5,165.660 350 14.759

3 Total 9,364.00 356

44
 b. Dependent Variable: Employee performance
c. Predictors: (Constant), DS, TR, PE, WL, WLB, R).

Table 4.0-11Analysis of variance, Sources SPSS output

4.3.4 Result of Regression Analysis

Accordance to with classical linear regression model, the model has satisfied the five diagnostic
tests. Based on this, multiple regression analysis was determined in order to reveal the value of
coefficient included in the model. Accordingly, table below depicts, the result of regression model
that examine the effect of explanatory variables on employee performance. Hence, employee
performance is explained variable whereas physical environment, reward, work life balance,
training, workload and discrimination are explanatory variable.

Model Standardized Standardized T Sign.

Coefficients Coefficients
Beta(β)

Beta(β) Std. Beta(β)

Error

Constant 7.330 1.507 4.864. 0.000

1 Physical Environment 0.583 0.037 671 15.740 0.000

2 Reward 0.280 0.070 0.205 4.018 0.000

3 Training 0.202 0.050 0.195 4.065 0.000

4 Work life balance -0.077 0.083 -0.045 -0.928 0.354

5 Work load -0.050 0.068 -0.035 -0.736 0.462

6 Discrimination -0.199 0.033 -0.250 -5.970 0.000

a. dependent variables: Employee performance

45
Table 4.0-12Result of regression, Sources SPSS output

Therefore, the model applied in this study was ordinary least square method. The regression
equation can be stated as:

EP= β0+ β1PE+ β2R + β3TR + β4WLB + β5WL + β6DS +E

Now substitute each coefficient and β value

EP= 7.330 + 0.583PE + 0.280R + 0.202TR- 0.077WLB -0.050WL-0.199DS +1.507

Model R R Adjusted Std. Error of R Square Change Statistics Sign

Square R Square the Estimate Change
F Df1 DF2
Chang

1 0.670a 0.448 0.439 3.84175 0.448 47.410 6 350 0.00

a. Predictors/independent variable: (Constant), DS, TR, PE, WL, WLB, R

b. Dependent variable: employee performance

Table 4.13Result of regression model summary, Sources SPSS output

4.3.5 Interpretation of R Square and Adjusted R Square

From R-square is statistical measure that tells the proportion of the variance for a dependent
variable that is explained by an independent variable or variables included in regression model.
Not only R squared also explains to what extent the variance of one variable explains the variance
of other variable. R squared value range from 0 to 1and commonly stated as a percentage from
0%to100%. An R square of 100% indicates that, dependent variable is completely explained by
independent variable of the model. 0% shows the model explains none of the variability of the
response data around its mean. The value of R-square in this study was found to be 0.448. This
indicates that, 44.8% of variation in employee performance is explained by selected explanatory
variables and other factors captured by the constant.

However, according to Brooks (2008), R square has some problems; the first one is when we add
predictor variables in the model, every time, even if its irrelevant R-square never decreases.
Consequently, a model with more variable may appear to have high R square. Second, if the

46
model rearranged and the dependent variable changes, R square will change in order to get
around these problems, a modification is often made that takes in to account the loss of degree of
freedom associated with adding extra variables, this is known as adjusted R square‖. Adjusted R
square is a modified version of R squared that has been adjusted for the number of predictor in
the model. Therefore, adjusted R square compares the explanatory power of regression models
that contain different number of predictors. The value of adjusted R square in this study found to
be 43.9%. This implies that, 43.9% of changes that occur in employee performance are attributable
to independent variables.

Therefore, the other factors such as, harassment, violence, Welfare Facilities, Association and
bargaining power and other remaining factors that were not included in the model but could help
in explaining employee performance account the remaining 57.1%.

4.3.6 Interpretation of Regression and Hypothesis Test

In this section of the study the relationship between the dependent variable and independent
variables were discussed. The dependent variable was employee performance whereas
independent variables were physical environment, reward, work life balance, training, work load
and discrimination.

From regression output, the Unstandardized coefficients of determination were used to replace the
unknown beta value of the regression model. Beta indicates that the level of influence of each
predictor variable on dependent variable: as well it indicates the direction of relationship. Positive
beta coefficient indicates the variable has positive effect on dependent variable whereas negative
beta coefficient the variable has negative effect on dependent variable and it tells us on average
when mean score value of independent variable increase by one unit mean score value of
dependent variable increase or decrease by beta amount if the variable is statistically significant.
The significance value (p-value) implies the statistical significance of the relationship. The
constant term of the model indicates the value of employee performance if all explanatory variables
held constant.

As described in table 4.12 the coefficient of regression analysis indicates physical environment,
reward, training showed positive effect whereas discrimination showed negative effect and
statistically significant at 5% significance level. Conversely, work life balance and work load

47
showed a negative effect but statistically significant. Therefore, in the next section the researcher
present and discuss the effect of independent variables on employee performance.

Hypothesis 1

H1: physical environment has positive and significant effect on employee performance.
Results discussion; The result of multiple regressions as illustrated in table 4.12 above revealed
that physical environment has positive and statistically significant effect on employee
performance with a beta value of 0.583 and p-value of 0.000 which is less than 0.05. This implies
that, other explanatory variable remain constant, if the mean score value of physical environment
increase by 1 unit, on average the mean score value of employee performance increase by 0.583
unit and statistically significant at 5% significance level.

Decision; From view of the researcher rejects the null hypothesis and accepted alternative
hypothesis; that means physical environment has significant effect on employee performance. This
indicates that, an improvement of physical environment elements (sound, lighting, temperature, work
space, design and layout, paint colure of building, building orientation, equipment and tools) will lead to
a correspondent increase on employee performance.

Hypothesis 2

H2: - Reward has positive and significant effect on employee performance

Results discussion; The result of table 4.12 showed that reward has positive and statistically
significant effect on employee performance with a beta coefficient of 0.280 and p-value of 0.000,
which is less than 0.05. This implies that, other explanatory variable remain constant, if the mean
score value of reward increase by 1 unit, on average the mean score value of employee
performance increase by 0.280 unit and statistically significant at 5% significance level.

Decision; From view of the researcher rejects the null hypothesis and accepted alternative
hypothesis; that means reward has significant effect on employee performance. This shows that an
increase in reward elements like; payment, benefits, promotion and recognition will lead to
correspondent increase on employee performance.

48
Hypothesis 3

H3: - Training has positive and significant effect on employee performance

Results discussion; as table 4.12 depicts that, training has positive and significant effect on
employee performance with a beta value of 0.202 and p-value 0.000 which is less than 0.05. This
implies that, other explanatory variable remain constant, if the mean score value of training
increase by 1 unit on average the mean score value of employee performance increase by 0.202
unit and the relationship is statistically significant at 5% significance level.

Decision; From view of the researcher rejects the null hypothesis and accepted directional
hypothesis that means; training has significant effect on employee performance. This shows that
when employee get on the job as well as off the job training, identified based on skill gap and
evaluated after and before training this will lead to equivalent improvement in their job
performance.

Hypothesis 4

H4: - Work life balance has Negative and significant effect on employee performance.

Results discussion; the result of table 4.12 showed that work life balance has negative significant
effect on employee performance with a beta value of -0.077 and p-value 0.354 which is less than
0.05. This implies that, other explanatory variable remains constant, if the mean score value of
training decrease by 1 unit on average the mean score value of employee performance increase by
0.202 unit and the relationship is statistically significant at 5% significance level.

Decision; From view of the research fail to accept hypothesis four or directional hypothesis in
favor of null hypothesis that means; work life balance has significant effect on employee
performance.

Hypothesis 5

H5: - work load has negative and significant effect on employee performance.

Results discussion; the result of multiple regression as presented in table 4.12 above revealed that,
work load has negative significant effect on employee performance with a beta value of -0.05 and

49
p-value of 0.462 which is less than 0.05. This shows that, other explanatory variable remains
constant, if the mean score value of work over load increase by 1 unit, on average the mean score
value of employee performance decrease by -0.05 unit and the relationship is statistically
significant at 5% significance level.

Decision; the researcher rejects the null hypothesis and accepted the directional hypothesis that
means: work load has significant effect on employee performance. This implies that, when work
is evenly distributed, physically manageable and workers get sufficient break in their job, this will
lead to equivalent improvement in their performance.

Hypothesis 6

H6: - Discrimination has negative and significant effect on employee performance.

Results discussion: furthermore, the results of table 4.12 showed that discrimination has
significant negative effect on employee performance with a beta value of -0.199 and p- value 0.000
which is less than 0.05. This shows that, other explanatory variable remain constant, if
the mean score value of discrimination increase by 1 unit on average the mean score value of
employee performance decrease by 1 unit and the relationship is significant at 5% significance
level.

Decision; the researcher rejects the null hypothesis and accepted the directional hypothesis: this
implies that, when discrimination based on gender, age, religion and ethnicity increases, the
performance of employee reduces drastically.

50
CHAPTER FIVE: CONCLUSSIONS AND RECOMMEDATIONS
This chapter presents overall summary of main findings of the analysis part, followed by the
conclusion of the through which the research objective was addressed. Furthermore, this part also
includes possible recommendation and suggestion for studies.

5.1 Summary of Finding

The objective of the study was to investigate and analyze the effect of working environment on
employee performance using major factors of working environment physical environment, reward,
work life balance, training, work load and discrimination. The research was undertaken in Dashen
bank in 12 district including head quarter office. The study conducted using self-administered
questionnaire to the target population of 6,969 all level management employees out of 378 sampled
employees 357 of then responded properly. Then after, the research is analyzed by using statistical
package for social science version 26.

From the result in table 4.8 indicates that, there is significant positive correlation between physical
environment and employee performance with a Pearson correlation coefficient r=0.609 and sig.
(2-tailed) is .000, which is <0.05. Therefore, there is strong and statistically significant relationship
at 5% significant level. Reward is positively related to employee performance with a Pearson
correlation coefficient r=0.334 and sig. (2-tailed) is 0.004, which is <0.05. Therefore, there is
strong and statistically significant relationship at 5% significant level. Training is positively related
to employee performance with a Pearson correlation coefficient r=0.360 and sig. (2-tailed) is .000,
which is <0.05. Therefore, there is strong and statistically significant relationship at 5% significant
level. Discrimination is negative related to employee performance with a Pearson correlation
coefficient r=0.217 and sig. (2-tailed) is 0.007, which is <0.05. Therefore, there is moderate and
statistically significant relationship at 5% significant level.

Pearson product moment correlation coefficient results showed a significant positive relationship
between physical working environment, reward and training and employee performance while
negative significant relationship is found between work life balance, workload, discrimination and
employee performance.

51
5.2 Conclusions
This study has tried to assess the effect of working environment conditions on worker
performance in Dashen Bank. The following conclusion were list.

 The coefficient of reward variable in the model is positive and statistically significant at
below 5% significance level. Correlation analysis also reveals that, there is significant and
positive relationship between reward and employee performance. Thus, an increase in
reward result in dramatically increased employee performance.
 Work life balance found to have a negative and significant relationship with employee
performance. However, the coefficient table revealed it has negative impact and
statistically insignificant. Therefore, work life balance has a little impact on employee
performance.
 Regarding training, the coefficient table showed that, the performance of employee
increase when training increase. Thus, training has positive and statistically significant
impact at below 5% significance level. Correlation analysis also revealed positive and
significant relationship. The higher workers get training tends to have increased
performance.
 Regarding workload, the coefficient table showed that it has negative impact and
statistically significant at 5% significance level. The correlation analysis also reveals
negative and statistically significant relationship. From this, it was concluded that when
employees overworked, this result in poor performance of employees, as they take work
as burden and start losing interest.
 The regression output of discrimination showed that it has negative and significant
impact on employee performance. Correlation analysis also reveals negative and
significant relationship. Thus, higher discrimination at work place results in equivalent
decrease on employee performance.

5.3 Recommendations
On the basis of the above summary of finding and conclusions of the study, the following
recommendations are forwarded to the management of dashen bank.

1. Since physical working environment has strong relationship with employee performance;
suitable work environment allows workers to perform better, improve productivity, and
52
 maximize quality in their performance. Therefore, its recommended that physical
environment (in terms of lighting, noise level, temperature and ventilation) should be made
sure that they stay at an acceptable level so as employees don’t get distracted or bothered
by them on their job).
2. Since reward has strong relationship with employee performance; appropriate reward will
lead employee to be encourage at work which also helps to increase their performance.
Thus, the management needs to design a remuneration package fair salary, reasonable
overtime payment and managers should establish criteria for identifying employees who
are eligible for recognition, then recognize anyone who meets the criteria by being
consistently fair.
3. When employees get sufficient training related to their work, helps them to perform better,
improve productivity and maximize performance. Thus, the management within
organizations should realize the importance of providing on the job as well as off-the job
training and evaluating performance after training is conducted and this will bring a fruitful
change in their performance.
4. The more employees provided with work which is matched with their physical and mental
ability, the more likely to perform better and improve their performance. Therefore, the
management should make sure that workers are not burdened, to have sufficient breaks and
assigning the right skill at the right job.
5. When discrimination prevail in work place employee feel ignored because of their age,
gender, religion and ethnicity and this lead to significant decrease on their performance.
Therefore, the management should enact workplace policy to reduce discrimination and
such policy should be reviewed frequently to ensure that its effectiveness is maintained.
including, the culture of the organization should inspire employees irrespective of gender,
age, ethnic group or religious belief to participate in decision making as this will help to
reduce discrimination in the workplace.

5.4 Suggestion for further Study

This research was undertaken only in Dashen bank found throughout the country doing the
business, as such the finding of this study not represent the entire bank industry.in Ethiopia.
Therefore, using the finding of this research as a bench mark other mark other researchers need to
conduct research in this area. Besides the researcher recommends that this study only included six
53
working environment variables physical working environment, reward, work life balance, training,
work load and discrimination. There could be other relevant working environment factors that are
more important for the issue under study but excluded due to different reason. Therefore, it would
be better if the future researchers consider more factor of working environment that affect
employee performance like work place violence, leadership style, job security, job autonomy,
harassment, transportation problem, occupational health and safety.

54
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Appendix

St. Mary’s University

School of Graduate Studies MBA Program

Department of Business Administration

THE EFFECT OF WORKING ENVIRONMENT ON EMPLOYEES’

PERFORMANCE: THE CASE OF DASHEN BANK

Questionnaire for the Partial Fulfillment of the Requirement of Master of Business

Administration,

60
 The Effect of Working Environment on Employees’
Performance: The Case of Dashen Bank

Dear Respondents;

This questionnaire is prepared for a research purpose entitled “Effect of working environment on
employee performance”. The expected respondents for this questionnaire will be Operational
Employees of Dashen bank. The researcher asks respondents to give sincere and accurate data to
make proper analysis of. The researcher would like to note that data will be kept confidential and
will only be used for study purpose. I would like to thank you in advance for your honest
cooperation. Put a “√’’ on your choice of agreement.

St. Mary University: Questionnaire Sheet Page

Section One: Demographic Information

1. Sex
Male
Female
2. Age of the respondents
Below 25 year
25-35 years
36-55 years
55 and above years
3. Marital Status
Married
Widowed
Divorced
Single
4. Educational background
Certificate and below
Diploma
BA/ BSC Degree
Master’s degree and above
5. Your work experience in the banking Sector;
Below one year
1-5 years
6-10 years
11-15 years
16 and above years
6. What is your level of employment?
Top management
Middle management
Low level management
Section Two: For the following Likert scale questions: Tick (√) or check the appropriate cell by
expressing your opinion on the following 5-points scale shown below to the best of your

St. Mary University: Questionnaire Sheet Page

knowledge. Rating Scale: 1=Strongly Disagree (SD); 2= Disagree (DA); 3=Neutral (N); 4= Agree
(A); 5=Strongly Agree (SA).

No Questionnaire Description Response

Physical work place environment 5 4 3 2 1

1 PE I have the requisite equipment to perform my duties

2 PE My office space is well designed

3 PE The layout of my offices and workspaces here are

good

4 PE The surrounding of my work place is peaceful to work

5 PE My work place is devoid of unnecessary noise

6 PE My working environment is free from life threatening

dangers

7 PE My work environment is ordered and well organized

Reward aspects of work 5 4 3 2 1

1 R The benefit system of the organization treats

each employee reasonably.

2 R My work provides a great deal of promotional

opportunities

3 R Recognition are provided to me in the work place for

my good performance

4 R I’m satisfied by the work I do in the current work

5 R The financial rewards of my work place are satisfactory

St. Mary University: Questionnaire Sheet Page

 6 R Supervisor in my work place provides sufficient non-
financial rewards

Training 5 4 3 2 1

1 TR Enough training is provided for me before any job

2 TR Education opportunities are available in my work place

3 TR There is fair selection of employees for training

4 TR The training given in my work place are relevant to the

job that I perform

5 TR My organization helps me identify my training and

development needs through performance appraisals.

6 TR The organization ensures that training and development

plans are developed and monitored for all employees
thus helping manage employee performance.

Work life balance 5 4 3 2 1

1 WLB There is congruence between my work expectation and

my family life

2 WLB The demands of my work do not interfere with my

home and family life

3 WLB The amount of time my job takes up do not affect me to

fulfill family responsibilities

4 WLB My job doesn’t produce strain that makes it difficult to

fulfill family duties

Management/Leadership Style 5 4 3 2 1

St. Mary University: Questionnaire Sheet Page

 1 LS My manager role models high standards for quality
performance.

2 LS Senior management gives staff a clear picture of the

direction in which the organization is headed hence
motivating me to work.

3 LS Management involves staff decision making

4 LS I am able to contact senior management or work hand

in hand with my superior at the work place

Work Load 5 4 3 2 1

1 WL I didn‘t work long and difficult working hours and days

2 WL I am able to meet the dead line I have for my work

3 WL I didn’t feel over worked by the demand place on me

4 WL I didn’t feel tired by the demand placed on me

5 WL I am able to take sufficient breaks

Discrimination 5 4 3 2 1

1 DS The company hire employee regardless of their gender

2 DS Fair treatment is given to all employees, whether they

are male or female.

3 DS Discrimination based on age doesn‘t prevail

in work place.

4 DS My supervisor includes all members of different

ethnicity in problem solving and decision making.

5 DS The company provides equal opportunity for

St. Mary University: Questionnaire Sheet Page

 workers regardless of their race.

6 DS Discrimination based on religion doesn’t prevail in

work place.

Employees Performance 5 4 3 2 1

1 EP I am always able to deliver my work within the set

deadlines

2 EP I try my best to avoid absence from my job

3 EP I effectively work with other employees

4 EP I’m regularly motivated to work

5 EP I am eager to learn on ways of making myself more

productive

6 EP I am able to identify and give top attention to top

priorities in my work place

Lastly, what is your average annual work evaluation result (optional)

______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
_____________________________________________________.

St. Mary University: Questionnaire Sheet Page