Motivation and Reward Systems - Research Paper Example

Motivation and Reward Systems Introduction Reward system is an organization’s most essential instrument for building and sustaining motivation in the workplace. A reward system is defined as the informal and formal processes by which performance of the members of the organization is identified, assessed, and rewarded. Obviously, rewards that are connected particularly to performance have the strongest effect on improving employee performance and motivation. Performance-based rewards fulfill numerous functions and objectives in organizations. The main principles comprise the correlation between motivation and rewards (Griffin & Moorhead, 2011). In particular, organizations would like their members to perform well and, consequently, have to motivate them to do so. When the reward system is related to greater performance, employees will most likely be driven to exert greater effort to get those rewards. When that happens, employee motivation becomes strongly tied to the organization’s goals. Types of Reward System Proponents of behavioral sciences have long promoted the value of reward systems, the methods by which managers distribute rewards based on performance, tenure, or other aspects (Yukl, 2009). Obviously, reward systems are essential because employees accomplish the tasks they are rewarded for and poorly perform those which do not have any reward. However, before initiating organizational change, the reward system must be examined to identify whether it will positively or negatively contribute. If it will negatively affect change, the reward system should be restructured before putting the process into practice. In order to evaluate reward systems, it is important to fully appreciate their characteristics. Rewards are classified into two groups, namely, extrinsic (e.g. promotions, salary increases) and intrinsic (e.g. job satisfaction, enhanced self-confidence). Intrinsic rewards arise from the interplay between the job and the individual. Fundamental intrinsic aspects involve knowledge of outcomes, accountability, and meaningfulness (Rothwell & Kazanas, 2003, 234). Knowledge of outcomes is associated with feedback on employee performance. Accountability is related to the extent employees feel responsible for the outcomes of their performance. Meaningfulness refers to the extent employees see their job as valuable. In order to build employee motivation, a job should substantially possess all three aspects. It must involve a variety of tasks, generate concrete outcomes, and affect others (Rothwell & Kazanas, 2003). These aspects are associated with meaningfulness. The work must also result in self-reliance. This aspect is associated with accountability. Ultimately, the job must give way to feedback on performance. This aspect is associated with knowledge of outcomes. Extrinsic rewards must satisfy five conditions, namely, significance, flexibility, frequency, visibility, and expense. In terms of significance, members of the organization should give importance to the possible rewards arising from their performance. With regard flexibility, because individuals differ in the forms of rewards they want, an effective reward system should accommodate individual differences (Griffin & Moorhead, 2011). As regards frequency, the more frequently rewards are granted and the more immediate they follow performance, the more successful they are expected to be. However, several rewards become ineffective when granted habitually. In terms of visibility, rewards are boosted when other individuals are aware of them. And lastly, as regards expense, the organization should be capable of giving out rewards (Rothwell & Kazanas, 2003). The Truth about Money as a Motivator and a Type of Reward Monetary rewards can raise motivation. Individuals need financial resources and hence desire money. Financial incentives can build motivation but it is not the sole driver of motivation. Wallace and Szilagyi explained that financial aspects can fulfill several reward purposes (Armstrong, 2007, 127): it can function as an objective that individuals usually attempt to achieve even though at varying levels; it can function as a tool that generates important results; it can function as a symbol that represents the importance of an individual to the organization; and it can function as a common motivator because it is related to esteemed rewards quite frequently that it assumes the form of reward itself (Armstrong, 2007, 127). Financial incentives motivate because it is related indirectly or directly to the fulfillment of numerous needs. It meets the fundamental need for assurance, security, and survival. It can also fulfill the need for status and self-worth. Money fulfils the less preferred but still a common catalyst of materialism and self-centeredness. Hence money may possess no intrinsic value, but it gains strong motivating capability because it signifies a large number of intangible needs and aspirations (Armstrong, 2007, 127-128). Compensation is usually a leading aspect in the decision of employer, and compensation is a vital concern when individuals are making a decision whether or not to remain in the organization. However, uncertainties have been raised on the value of money as a driver of motivation by Herzberg and colleagues. They explained that while the absence of it may bring about discontent, money does not produce long-term satisfaction (Yukl, 2009). This is somewhat apparent, particularly for individuals on fixed compensations or compensation rates who do not gain directly from a reward system. They may feel satisfaction for a while when they receive extra pay because, besides the additional cash, it is a quite effective method of convincing people that they are given importance. However, this feeling of joy can quickly vanish (Armstrong, 2002). But it should be stressed that different individuals have different needs. Some are much more driven by financial incentives than others. What is difficult to determine is whether money motivates everybody similarly. On the other hand, Alfie Kohn believes that money does not motivate individuals. He questions what he refers to as the behaviorist doctrine about motivation and financial incentives. And he argues that “no controlled scientific study has ever found a long-term enhancement of the quality of work as a result of any reward system” (Armstrong, 2002, 63). According to Kohn, when you examine how individuals are motivated “It becomes disturbing clear that the more you use rewards to ‘motivate’ people, the more they tend to lose interest in whatever they had to do to get the rewards” (Armstrong, 2002, 63). Jeffrey Pfeffer substantiates this argument by claiming that individuals exert more effort in attaining meaningfulness than money. He believes that organizations that take this fact for granted are in effect corrupting their people and will suffer the consequences of the absence of commitment and allegiance. He states that money cannot surpass or replace a workplace “high on trust, fun and meaningful work” (Yukl, 2009, 422). On the contrary, Gupta and Shaw placed emphasis on the symbolic and instrumental value of financial incentives. The instrumental value of money denotes what individuals gain from it such as houses, cars, luxuries, and so on. The symbolic value of money refers to the way it is perceived by individuals—money represents an individual’s standing in and value to society (Armstrong, 2002, 63). They embrace the core assumption of behavioral scientists about money: when particular actions or behaviors are compensated by money, they are more likely to recur (Armstrong, 2002). This suggests that people will accomplish the tasks for which they are compensated for; and it implies that they pay no attention to the tasks for which they are not compensated for. The arguments of Kohn are compelling apart from the fact that he seems to believe that the sole forms of rewards to be taken into account in the discourse are monetary. He does not take into consideration the fact that non-monetary rewards can build motivation if managed correctly (Rothwell & Kazanas, 2003). Nevertheless, Pfeffer recognizes this fact when he mentions the value of meaningful work, self-esteem, and trust. Gupta and Shaw challenge their assumption by taking on a basic behaviorist perspective. To believe that money will consistently motivate individuals to perform well is as crude as to assume that they in no way motivate individuals to perform well. Some individuals will be more driven by financial incentives than others and, if managed correctly, a reward system can motivate them to perform more efficiently provided that they can relate their work to the reward. At times bonuses can be stronger rewards for they can be instantly exchanged for things that individuals need and desire (Rothwell & Kazanas, 2003). Yet other people may be less hooked on money and will value more non-monetary or intrinsic rewards. It appears probable that most people will respond constructively to a thoughtful or sensible combination of both non-monetary and monetary incentives, even though how successfully will rely on their personal objectives and needs. Conclusions What is obvious is that crude arguments about the capacity of money to motivate can force organizations to build crude performance-based compensation systems or other kinds of rewards. And it is definite that an array of interrelated aspects is present in the process of building and sustaining employee motivation. Money is simply one of those factors, which may be effective for some individuals in certain instances, but may not be effective for others in several instances. It must also be kept in mind that, while a reward or higher compensation resulting from a contingent compensation system may motivate the individuals who receive it, for some time maybe it will most likely disgruntle or de-motivate the people who do not receive it or think that they are not being compensated fairly. The possibility is that the number of individuals losing motivation in this manner will be bigger than the number of those who are motivated. For that reason, ironically, contingent compensation systems are at risk of raising the level of de-motivation present in the organization instead of boosting motivation. References Armstrong, M. (2002). Employee Reward 3/E. UK: CIPD Publishing. Armstrong, M. (2007). Employee Reward Management and Practice. UK: Kogan Page Publishers. Griffin, R.W. & Moorhead, G. (2011). Organizational Behavior: Managing People and Organizations. Mason, OH: Cengage Learning. Rothwell, W. & Kazanas, H.C. (2003). Strategic Development of Talent. Amherst, MA: Human Resource Development. Yukl, G. (2009). Leadership in Organizations. New York: Prentice Hall. Read More