How to Inspire Employees to Greater Levels of Achievement For the Benefit of the Company - Assignment Example

Reward Practices in Business - How to Inspire Employees to Greater Levels of Achievement For the Benefit of the Company Table of Contents Executive Summary 3 1. Introduction 4 2. Human Resource Management 5 3. Rewards 6 3.1 Leadership and Recognition 6 3.2 Team Building 8 3.3 The Manipulation Trap 9 4. Reward Theories 11 4.1 Rewarding Performance 12 4.2 The Intrinsic-Extrinsic Approach to Rewards Management 13 4.3 Expectancy Theory 13 4.4 Equity Theory 14 4.5 Content Theory 15 4.6 Process Theory 16 5. Reward Systems 16 5.1 Person/Job Based versus Performance Based 17 5.2 Basic Rewards within an Organization 17 5.3 Feedback 18 5.4 Recession Based Rewards 18 6. Conclusion 19 References 23 Executive Summary Employee rewards are defined by compensatory acknowledgement of providing work. Rewards can take the form of wages and salary, of benefits, or of simple relational engagement such as acknowledgement of a job well done or recognition at a company-wide level. Reward theory provides a framework within which to provide proper incentives that will cause sustained achievement and motivation, rather than intense momentary achievement and motivation, followed by lethargy. Manipulation is a danger in creating a situation that will actually lower employee motivation through misuse of rewards in order to push an agenda that may not otherwise benefit the employee. Creating a perception of purpose and providing a framework in which an employee can find belief will provide the best course of reward systems in order to promote sustained motivation and achievement. Reward practices in business: How to inspire employees to greater levels of achievement for the benefit of the company 1. Introduction The power of a reward system in a business can create an atmosphere of achievement and incentive. However, the one problem with a reward system is that it can also be a form of manipulation and create an adverse reaction from employees. The system of rewards must show respect and appreciation without appearing to try to fool the employee into performing. Some reward systems leave the employees feeling devalued and patronized. In all efforts to create rewards for employees within a business, the intent must be to create an atmosphere of respect and prosperity towards increasing the overall rewards of the company as a team. Team building requires leadership that has the goal of creating a solid relational set of employees that can effectively achieve goals. In the process of team building, rewards can be both highly motivational and devastating to the group dynamic. A well built team will not be in competition with each other, but with other teams in order to succeed. Therefore, reward systems must be constructed in such a way to not promote hard feelings within the group, but in order to provide the group dynamic with incentives. There are many different theories upon which reward systems can be created. In looking at the way in which an employee experiences their work life, desires and needs can play a part in creating effective rewards with the intent of providing satisfaction within the workplace. Rewards are a good way in which to build relationships and trust, however, they also have the ability to break down the relationships and trust that have been built within the organization. Creating rewards that have a sense of equity and provide career oriented satisfaction will most often be the most beneficial There are a great number of ways in which rewards can be viewed within a company. Basic rewards are defined through expected compensation. Rewards that are based on the needs of the employee in regard to advancing their perception of their position, both through acknowledgement and through actual promotion, can provide a great sense of satisfaction. Creating rewards that satisfy the individual in regard to the way in which they perceive their value to the organization has a far greater impact than simple rewards of a non-related form. People need to feel purpose and this need, through the aspect of self-actualization will have the greatest impact on employee performance when it is satisfied through a reward. 2. Human Resource Management Strategies for rewards are often developed and administered through the human resource department of an organization. According to Bratten and Gold (2001, 238), reward systems are one of the top four responsibilities of the human resource department. In order to pursue organization goals, reward systems, most often starting with pay and ending with incentive programs, are implemented and administered through this area of the company. The most frequently challenging source of impact on the reward end of administering an organization is the economic impact that will change how the rewards can be distributed. This will effect pay, benefits, and incentive programs, creating deficits even when jobs are being performed well. Not all factors that relate to the economic stability of a company can be attributed to poor performance by the employees. This is most often the area in which economic impact is least created. This lack of control creates a void through which the human resources department must find a path in order to continue employee satisfaction. In an economy where the stability of every business is in question, regardless of employee performance, employers are having to come up with innovative methods of creating rewards that have less impact on the financial stability of the company. Blyth (2008, 20) quotes Steve Miller who suggests that business cut their rewards packages by 15% in order to help stabilize their business. This suggests that employees will have to assist by taking on sacrifices in order to promote survival in a harsh economy. This will create dissatisfaction and promote dissent. However, if other needs are fulfilled by compromises that allow for advantages that cost the company less, then higher levels of satisfaction can be achieved. It is the human resources department that will have the responsibility of finding ways to stabilize satisfaction when a company must make compromises in compensation. The human resources department is the center of the relationship between leadership and employees. Through the efforts of this department, the creation of and administration of programs, benefits, and incentives are achieved. Without a well organized human resources department, an organization will fail to successfully balance the needs of the employees with the needs of the company. According to Mathis and Jackson (2008, 360), the human resources department is responsible for synthesizing the rewards system with the needs of the organization in order to promote success. 3. Rewards In creating a healthy environment within a business, a manager may choose to create reward systems that can build incentive and create motivation. However, rewards must be used in such a way as to inspire, rather than diminish the motivation to succeed. In order to provide proper motivation, a leader must be able to influence his employees towards positive goals. This is predicated by effective leadership that is driven towards creating solid teams in order to achieve goals that support the needs of the business. The act of being a good leader is the first step in effective management that can support creating a good reward system. Creating recognition for work that is accomplished well and effectively achieved is the first step in rewarding the efforts of an employee. Simply acknowledging work that is superior and innovative can lead to increased motivation. Building teams based on trust and relationships is vital in creating an effective organization. Tangible rewards must not create competition within a team or the competitive resentments can create rifts that will diminish the capacity of a team to work in tandem. Therefore, finding reward systems that build relationships and trust are the most effective types of systems. 3.1 Leadership and Recognition According to Zhou and Shalley (2008, 96), there are four levels of leadership, followed by three spheres of potential leadership influence that must be considered as a manager creates relationships within his employees. The four levels are individual, dyadic, group, and organizational. The three spheres of influence are through cognition, motivation, and capacity. A good leader will look at the individual, then look at relationships of between sets of two people, then at the overall group dynamic, and up to the overall organizational level in order to assess the effectiveness and success of his team. Once relationships are established and effectively managed, influence is then generated through the three spheres of influence. Furthermore, the leaders in a large organization are given status according to a level of leadership, thus creating a chain of influence that reaches down through the organization (Zhou and Shalley 2008, 97). Therefore, the cognitive influence that a leader has is limited to his experience and level of managerial position that he or she has attained. The capacity of the leader to accomplish goals will also be affected by his or her status within the company. The one sphere of influence that is not limited by status within the hierarchal chain is the capacity for motivation. Part of the influence that a leader will have over motivation is in creating reward systems that can acknowledge the work of an employee. These reward systems can be instigated at the highest level of management, or designed specifically for a single team of a lower level manager. Simple recognition is a powerful reward that can be achieved without the influence or directives of upper management. According to Davila, Epstein, and Shelton (2007, 18), a company that provides recognition to its employees will inspire more innovation in creating solutions to problems for the company. Recognition takes effort without draining resources, thus is an effective reward from the standpoint of both the company and the employees. According to Harrington-Mackin (1994, 118), the purpose of evaluation within an organization is to assess if the values of the company are being effectively utilized and achieved. The evaluation must judge the functioning of a team in regard to task completion and relationship building. Both of these functions are crucial to overall performance. Recognition for accomplishing the needs of the company through team work and contribution that supports the overall effort should be rewarded with recognition for these efforts. Therefore, the concept of the team must be taken into consideration when a reward system that is beyond simple recognition is created. 3.2 Team Building The first step in being able to appropriately reward employees is in creating an effective team in which to promote innovative and creative approaches to their respective positions. The team should have goals that run in unison, supporting overall organizational goals. According to Jones, Steffy, and Bray (1991, 588), there are eight comprehensive definitions of qualities for a good team. These definitions are: 1. Clear, engaging direction. Team members understand and mutually agree with the goals and primary tasks of the team. In addition they are engaged by the task. That is, they personally find it meaningful, important, and consistent with their own goals and values. 2. Open communication and mutual trust. Team members are candid about their ideas, opinions, and feelings regarding the task and its accomplishment. No serious obstacles to team performance are taboo. Openness is supported by mutual trust and respect, and members are allowed to influence each other, including the team leader. 3. Supportive team environment. The team provides a supportive environment, where concerns are aired and respected, and assistance is offered to fellow team members as needed. Differences among group members are not only allowed, but encouraged to help bring new perspectives to the issues faced by the group. 4. Supportive organizational environment. The organization recognizes and rewards excellence in team performance. It also makes the necessary resources and information available to the team. 5. Appropriate team mix. Collectively, the team members possess the required skill, knowledge, and abilities to achieve their goal, with minimum redundancy in talent. 6. Leadership. In effective teams, the leader ensures that the characteristics required for effectiveness are identified and integrated into the norms and dynamics of the team. The ongoing maintenance and compliance of these group norms is the responsibility of all the group members. 7. High energy level. Team members appear motivated, committed and supportive of the team’s goals and for each other. There is a high degree of creativity and enjoyment in working together. 8. Availability of process support. Expert task and process support are available if needed to help member maximize team potential and minimize decrements due to team process variables. Through the use of these defining attributes, a leader can build a team that can then be further motivated through reward systems and incentives. Without a solid team, however, no reward or incentive will repair the lack of organizational effectiveness that may not be available. In creating a team experience for a department or section of an organization, creating reward systems can be utilized to help motivate and inspire the individuals and the team as an entity into higher levels of achievement. Through the use of proper rewards, the team can remain at peak performance. Intrinsic motivators are considered a powerful set of rewards that can be used by the management team in order to keep members motivated. Intrinsic motivators are defined by non-monetary rewards in the way of notes of memos of acknowledgment, positive feedback, mention of achievements in company literature, and other acknowledgements within the company can go a long way in creating motivation through rewards (Topchik 2007, 89). However, monetary valued rewards can also go a long way in creating individual and team motivation. 3.3 The Manipulation Trap The problem with many reward systems is that they do more harm than good. A good reward system will inspire an employee to do excellent work and feel motivated to perform for the good of the company, as well as for their own good. When an employee works only toward their own needs, the company needs are not always prioritized. However, an employee that is motivated through reward systems that acknowledge their efforts, reward their outstanding performances, and help them to achieve each goal, provides continued incentives for the employee to continue forward and pursue outstanding work. However, the way in which many companies go about creating incentives for employees often times creates situations where employees feel manipulated and used, rather than inspired. If a reward system is intended to push employees to achieve goals that require an unusual amount of work, this will also ultimately be counterproductive to the organization. Rewards should be systemic and continual, although they can rotate and be specific at times. Contests are not the most effective form of reward system available to a company. A company can discover that by offering rewards based on a contest, the immediate achievement may be great, but after the contest is over, that level of motivation will no longer be sustained (Bruce 2003, 4). Another pitfall may be found when the contest appears to condescend to the employee. Some contests are designed to meet the goals of the manager through the use of extra efforts by the employee with nothing but the potential of reward to the employee, where the manager will achieve more success through the hard work of the employees. When the overall needs of the employee are sold off in exchange for an immediate gratification reward, the employee may feel as if their career goals and achievements are not part of the team, but rather a tool for the manager to achieve his own ends (Bruce 2003, 5). As shown in the list of definitions for team building, a good team will support mutual goals and provide rewards that are long term. Condescending to the needs of an employee suggests that a leader is not in touch with his or her workers, creating a gap in trust and in their relationship. According to Chewning, Eby, and Roels (1990, 166), business motivations are defined by two terms. Satisfiers and dissatisfiers can be classified by the aspects of a job which create overall connection to the job. Dissatisfying factors can be found within salary and leadership methodologies, which will then decrease motivation. Responsibility and opportunity within the company can create a great level of satisfaction which will lead to greater performance. If this simple division of concepts, the idea of what will be the most satisfactory over the most dissatisfactory outcome is used to judge a reward system, then greater job performance should be achieved. 4. Reward Theories Because of a series of changes in the way that humans work, the concept of rewards has developed as a way to assert some control over the amount of effort that a worker will put into his or her job. Jobs are no longer efforts that are made in order to learn a craft through which a rewarding experience is guaranteed. A great number of the work force today is driven only toward getting their paycheck, the work being without personal reward and the efforts without real conclusion. Therefore, a system of rewards has been routinely used within companies in order to inspire motivation and create an environment that produces harder efforts by the workers. Reward systems can work. The way in which a reward system works best varies between the theories, however, the one reward system that often is a failure is one that has a beginning and a conclusion, which leaves the worker without incentive once the reward is no longer there. Systems that work allow for acknowledgement and respect throughout the process. The work itself must be first appreciated before the reward system can be affective. Without this initial respect, the reward becomes more like a prize that defines the limit by which an employee can be motivated to work efficiently and effectively. 4.1 Rewarding Performance Rewards for excellent performance within a job are important. According to Quick (1992, 96), rewards within a team are very important in continuing the process towards achieving goals. However, it is important to reward the team as a whole, rather than individual members. In order to effectively reward a team, the leader should: 1. Reward soon after the accomplishment. Don’t wait. When people have done well and are feeling good about what they’ve done, reinforcing their success with a valued reward has great impact on future actions. 2. Be specific about what you are rewarding. Let them know what accomplishments you’re rewarding them for. General compliments such as “Great job!” don’t convey useful information. What made it great? 3. Be consistent. When you get the results you asked for, recognize the team’s success. Never take for granted the team members know how great your appreciation is. (Quick 1992, 96). Through following these outlined concepts, a team will feel the appreciation of management and will continue to do good work for the company. Without consistency, specifity, and timely efforts, rewards will not support the overall morale of the team, creating a series of inconsistent results from the teamwork. 4.2 The Intrinsic-Extrinsic Approach to Rewards Management According to Kanungo and Mandonca (Fall 1988, 24), Karl Marx predicted that as the worker lost more control over their job and participated less in the overall job, there would be increasing dissatisfaction that would lower job performance. The idea that a monetary reward is enough to keep motivation at its optimum is just not proving true. Therefore, such intrinsic rewards such as pay and benefits have become part of the expenses of business that did not provide incentives for performance. The central problem with pay and benefits as the only reward for work is that despite how tangible they may seem, they do not necessarily affect the worker as tangible rewards for good work. According to Ahmed, Lim, and Loh (2001, 93), there is a pervading experience in business where companies that depend heavily on intrinsic rewards are more successful than companies that depend primarily on extrinsic rewards. When individuals and groups are inspired by intrinsic rewards, the company sees higher levels of performance. Extrinsic value must exist as the base salary must be adequate, but intrinsic rewards create motivation that extrinsic rewards most often do not accomplish. 4.3 Expectancy Theory According to Kanungo and Mandonca (Fall 1988, 25), expectancy theory suggests that employees will be motivated to achieve if a series of conditions exist. First, the employee must feel that they are equipped with the knowledge and skill to achieve within their position. Without the feeling of competence, no reward will effectively inspire the employee. The second condition is that the employee must believe that the rewards that are offered will not be given unless success is achieved. If the reward will be given no matter what the performance level, the employee will not be motivated to work harder. The third condition is defined by the value of the reward to the employee. If the employee has little or no use for the reward offered, then motivation will not be achieved. Lastly, the reward must be real and tangible to the employee, being communicated and reinforced so that the reward remains foremost in the minds of the employees. According to Green (1992, 1), expectancy theory is based on belief. If there is no belief that the reward will be given or in its value, then the reward will have no effect on performance. Creating belief in all three areas of expectancy is necessary for the reward system to work. Perception is the most powerful tool to a good leader who creates and defines his team by the perception of very real rewards that can be achieved. Thus, rewards that are not attainable have no affect and neither do rewards that have no tangible effect. If the value of the reward cannot be desired, the expectancy will be limited as will the results of the incentive. 4.4 Equity Theory According to Jones, Steffy, and Bray (1991, 384), equity theory can be applied to rewards systems. Equity theory is based on the belief that the value of someone’s skills are compensated accordingly. In other words, having a college education allows for a higher income than having a lower education only. This theory indicates that rewards are best accepted when they are based on actual achievement. Inequity exists when the perception of the employee is that despite their qualifications and achievements, they are not being compensated at the level of other employees of equal or less qualifications and achievements. In this regard, a rewards system must be assessed for the way in which it compensates actual achievement without leaving equal achievers without reward. When this happens, employees find themselves in a position to feel inadequately appreciated and without acknowledgement. Through the lens of equity theory, the needs and desires of the employees must be taken into consideration in order to offer equal incentive for hard work. As an example, a single ‘winner’ of a contest will not help the rest of the employees feel acknowledged for their hard work. When rewards are based on performance and the availability of the reward is possible for anyone who performs at a given rate, motivation is far more easily and successfully achieved. Motivation cannot be centered on one ‘lucky’ person who happened to scoot out slightly above the rest. If there is one winner amongst ten, there are nine who will most likely experience a disheartened feeling that will affect their performance. 4.5 Content Theory Content theory is based on the concept that people are motivated primarily by their inner needs. Content theory can be realized by an examination of Maslow’s Hierarchy of Needs in order to discover what is most motivational to an employee. Needs should be addressed through an understanding of the pyramidal system of the design that Maslow created. Basic need, such as food and shelter, are the first order of needs to be met. These needs are most often represented within the salary as the employee can support their need for basic survival. The order of the needs according to Maslow and Stephens (2000, 3) are physiological or basic, safety, love, esteem and self actualization. Using this system of needs can create a basis for understanding what will motivate an employee. Rewards that fulfill the employee have a greater chance of being successful than those that do not really fit into one of these aspects of need for the employee. Determining what will fulfill those needs successfully is the key to a successful reward program. According to Fiore (2004, 62), most employees will seek satisfaction from higher need fulfillment in regard to rewards. While lacking salary will create a problem with achieving lower needs, higher needs are most often the most effective for creating job satisfaction and promoting motivation in regard to rewards. 4.6 Process Theory Based on the idea that repetition of the way in which an outcome is achieved, process theory can be used toward creating reward systems. Process theory, for which expectancy theory is a part, suggests that when there are two choices, two values will determine the outcome. The first value is associated with achieving the outcome, while the second is in the probability of achieving the outcome (Perry 2007, 110). In considering a reward system, the employee will use these two values in order to assess their belief in what can be achieved. This theory is then associated with expectancy theory in that the belief in the outcome is core to the success of the incentive. 5. Reward System According to Bruce (2003, 4), the carrot and the stick theory of reward is not effective. As previously stated, the concept is that in holding out a reward that is just out of reach, an employee will push themselves at a much tougher pace to temporarily gain that reward, but once the carrot is achieved, or is no longer a part of the work experience, the achievement level will drop down, possibly lower than it was before the incentive was offered. This type of reward system is counterproductive and creates relationship problems within the organization. Therefore, the concept of a good reward system takes a great deal of effort on the part of a leader in an organization. It has been shown that contests are not effective, and neither are incentives that are not driven by the desires of the employee. According to Kerr (2009, 6), the objective of the reward system is to get the organization what it wants. This is a very simple concept. However, many reward systems do not aim for this goal, but they aim for a different goal in order to manipulate the outcome. Using clear rewards systems for achieving goals is far superior than using vague systems that are not associated with the objective of the organization. In other words, offering a ticket to Hawaii as a reward is good, while offering a ticket to a conference in Hawaii is better. The second is associated with the business and therefore satisfies a great many more needs within the employee than does a rewards that is nice, but not reflective of their efforts. 5.1 Person/Job Based versus Performance Based The most common form of reward systems are based on the creation of a job description and the rewards of the job predetermined. Pay is based on the value that is attributed to the job. However, according to Cummings and Worley (2009, 434), this is being determined more often by the person who is hired, their education, skills, and abilities. Jobs created around the skills a person brings to a job creates a more efficient system where the job is created around the person, rather than the person trying to conform to the job. As well, performance based compensation is becoming more common. Employees are compensated according to the way in which they do their job and the success with which they accomplish their goals. This puts more pressure on the employee, but reaps more rewards based on purpose and fulfillment as well as in compensation. 5.2 Basic Rewards Within an Organization There are a great deal of rewards that are common within an organization. The most obvious form of reward is the base salary. This is the initial reward that is offered in exchange for work. The second common system of rewards is based on the concept of performance review and pay increases. In addition to these to rewards for work can be a variety of benefits which include health care, financial security systems, and shares in the company. The next type of rewards that are common are promotions, career advancement, and educational opportunities. These appeal to the self-actualization needs of an employee. Chapman (2003, 90) states that motivators that are most effective are achievement, pride in workmanship, growth, and recognition. The key to creating proper motivation is in providing recognition and fulfillment. Therefore, as Latham states (2007, 127) “At the dawn of this new millennia, it would appear that cognitive theories of motivation will likely be integrated with personality as well as affective processes”. Cognitive theories of motivation are designed with the idea that motivation must be provided through recognized systems of rewards that will contribute to the career of the employee through fulfillment. 5.3 Feedback As stated earlier, the most important reward that can be given is acknowledgement of excellent performance. Feedback, however, is a two way street. In order to understand how leadership is doing in their job, employee feedback can be invaluable in discovering gaps in the relationship that can be closed. Reward systems are basically built on relationships. This is why job satisfaction is founded within acknowledgement and fueled by belief. According to Geber (Nov. 1989, 36), feedback can help to maximize employee potential through both leadership assessment and the assessment of employee performance. As the relationships that the employees have with management are more clearly defined, the ways in which rewards can be utilized can be assessed and implemented. 5.4 Recession Based Rewards As the economy has torn its way across the world, the rewards for employees have diminished as jobs are scarce and employers have a broad number of choices in order to create needed teams. As well, the employers are having to sacrifice crucial players in order trim their staff down to its bare bones. This provides an opportunity to create lean, effective teams who have top performance potential. However, without the proper incentive, teams will become less effective and performance will be diminished. As well, in a world where cutbacks are putting jobs at risk, it is important for existing employees to work with employers to find ways in which rewards can cost the employer less, while not having too harsh an impact on the employee. According to Blyth (Dec. 2008, 21), compensation that means more to the employee, but costs the company less is one way that a company can save money during the difficult economic times. Things such as the company car, introduced as a concept during the wage freezes of the 1960’s, allow for a perk that can be rewarding to the employee, but cost less overall to the company through deals with car manufacturers. Salary sacrifice schemes allow for a benefit that provides a service to the employee in exchange for income that would have otherwise been subject to taxes that might not affect the incentive. Blyth (Dec. 2008, 21) states that childcare vouchers are a very popular example of this type of benefit in lieu of salary or wages. In a list of the top ways in which to provide benefits to employees while having to cut salaries, Blyth states that childcare is the most popular incentive, providing a needed service that cuts deeply into the wallets of employees However, there are other incentives that can contribute to cutting back while providing a service to the employee. Breaks on services such as insurance can be negotiated on behalf of employees, as well as cash-back schemes for healthcare services. By doing these types of things, providing services that end up costing less and creating less of a burden on employees, wages can be lower and companies can have a fighting chance to survive during the current economic crisis. 6. Conclusion The way in which an employer creates a relationship with his or her employee is founded in rewards for work. Initially, the concept of the worker was defined by the idea that financial compensation in exchange for work was all that was required. However, employers have discovered that creating motivation through incentives allows for a more efficient and goal oriented work force. Through team building and need fulfillment, purpose and direction has been put back into the lives of employees. Where once fulfillment was found through the learning of a skill and the implementation of that skill, it is on the employer to fill that gap for self-actualization. As the craftsmen before the industrial revolution most often had control over their job and the way in which they would accomplish their goals, the workers of today have found themselves to be lost in a larger machine, relegated to the position of a cog in the machine, a piece of the puzzle where they may not ever see that sense of completion. This dissatisfaction was foretold by Karl Marx (Kanungo and Mandonca Fall 1988, 24), and has been realized in today’s society. Through the use of acknowledgement, awareness of the needs of the employee to advance, and through looking at the needs of the employee in regard to creating a sense of purpose, the employer can create a sense of what is missing in the performance of many jobs that exist today. As well, in creating systems of tangible rewards that provide incentives that are designed to promote achievement through recognition of the importance that a job, even one where someone seems dissatisfied, holds in the employees life, the employee will be encouraged to engage and excel in his or her duties. Rewards do not have to be expensive to a company. Some of the best rewards are simple in that an employee is acknowledged in a company newsletter or a photo is placed for employee of the month rewards. Creating rewards that inspire the employee within their position can create goodwill and better working relationships between leadership and their teams. However, the worst kind of rewards are seen when a company pits team members against one another. This form of incentive has adverse effects on the company as a whole. Team members should never seek to outdo each other, but to outdo their mutual competition. While there are some exceptions to this, most often teams that compete within themselves do not have the efficiency that teams who are more supportive and work together towards goals. In creating a team, using guidelines that promote healthy relationships will provide for a successful team. This type of team will have the most success. In this economy, finding unique ways to compensate employees can provide a way to lower labor costs while promoting good relationships with employees. If this is done, the full knowledge of the employee will help to provide a foundation from which to create this type of savings. In providing lowered costs and services that can reduce the costs of the employee, the lowered wages are most often compensated, while taxable income has been reduced. There is a great need to find new ways in which to provide for employees in a world where finances have become untenable. Through innovative rewards and compensations, a company can find ways to navigate the perils of the current financial worldwide troubles. Rewards are a solid way in which to create motivated employees. Rewards implemented wisely will create a sustained motivation, while poorly implemented rewards will have only an immediate effect, risking a lowered level of achievement once the reward has been achieved. Human resources must utilize resources that can provide motivation while promoting the goals o the organization. Through the intelligent use of reward theory, a human resource department can create a program that will sustain motivation and create a harmonious atmosphere. Rewards are important for creating a successful work environment. ~word count 5664 References Ahmed, Pervaiz K., K. K. Lim, and Ann Y. E. Loh. 2001. Learning through knowledge management. Boston: Butterworth-Heinemann. Blyth, Alex. 2 Dec. 2008. Rewarding in a recession. Personnel Today. pp. 20-22. 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