The Role of Financial Incentives on Employees’ Performance in Tanzania: A Case of Iringa Municipal Council

Abstract

Employee motivation and reward are common concepts that are widely practised in many organisations. Among such rewards are financial incentives, rewards given to employees as part of an organization’s strategies to boost performance and motivation. While the role of financial incentives on employee performance has widely been investigated in many organisations, not as much research has been done on the same in Tanzania. The present study assessed the role of financial incentives on employees' performance at Iringa Municipal Council in Tanzania. The study employed a quantitative research approach and a randomly selected sample size of 339 employees out of a total population of 2,215 employees at the Council. The collected research data were analysed using descriptive and inferential statistics like multiple linear regression. The findings revealed a positive but insignificant contribution of financial incentives on employees’ performance in Iringa Municipal Council. For instance, financial incentives contributed to about 52% of the variations in employee performance (β = .529), but the contribution was statistically insignificant (p = .127). This demonstrates that there could be other factors that drive employee performance at Iringa Municipal Council, and different approaches are required to enhance the employee’s performance. The study recommends that further studies should focus on assessing the contribution of incentives to employees’ performance in other types of local government, such as rural and district councils, as well as central government institutions.

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