Advantages and Disadvantages of Using Money and Other Financial Rewards to Motivate Employees - Coursework Example

Student: Tutor: Course title: Course code: Institutional affiliation: Date of submission: Advantages and disadvantages of using money and other financial rewards to motivate employees Introduction Human resource management in the 21st century is moving more towards behavioral management as opposed to the traditional mode of management which was centered on the perception that employees are simply factors of production (Aswanthappa, 2005). The modern concept of managing human resource recognizes that employees are humans whose productivity largely depends on how motivated they are to work and deliver maximum efficiency at the workplace (Briscoe, Schuler, & Claus, 2008). Many practitioners may be of the opinion that money and other financial rewards are not necessarily very instrumental in motivating employees to deliver but rather job satisfaction and non-cash benefits are what motivates the modern employee in many workplaces. However, it is not right to state so since the salary scale is used by many employees especially high achieving top talents as a tool to gauge their importance in the organization and also rank themselves amongst their peers (Edvinson & Camp, 2005; Marescaux, Winne, & Sels, 2013). In light of this understanding, this paper seeks to shed more light into the debate on whether cash and other financial benefits are indeed effective in motivating employees and what are the benefits and disadvantages of using such instruments to motivate employees. Arguments for using cash and monetary rewards to motivate employees Need for achievement According to Maslow’s hierarchy of needs, the fourth level indicates that humans need to feel appreciated and respected. This boosts their self esteem and they hold themselves in high regard once they have fulfilled these needs. After an employee has received enough remuneration to solve his/her immediate needs such as food, housing, mobility and others, the focus then shift to achieving benefits that boosts his/her ego amongst peers. Remuneration is one factor that has been used to describe just how worthy an employee is (Latham, 2007). Longenecker (2013) observed that well paid employees are regarded as highly qualified and very essential employees to the organization. The employees also know this and are always enquiring to know how much their peers are getting so that they can compare with it. if an employee feels they are being underpaid not because they cant take care of their personal expenses but rather because their peers receive more, they are likely to feel less motivated to work and may consider moving to another place that appreciates their qualification and competence. Universality of money as a reward Many things in society are valued within the context of monetary value today. What someone receives from the employer seems only important when its value can be quantified in financial terms. Some employees feel shortchanged when non-cash benefits replaces monetary and financial benefits when companies want to motivate their employees. This is true mostly for employees that receive just above average pay in different industries. Such employees may be still in need of better remuneration to improve their lifestyle and take care of their immediate expenses (Briscoe, Schuler, & Claus, 2008). Cash increment is therefore a very important factor to motivate them apart from job satisfaction and other issues such as work-life balance. For these employees the only high impact strategy will be to increase their pay and is almost certain that their morale will be boosted. Easy to implement Money and monetary benefits is the easiest form of employee motivation strategy to implement as it requires little time and knowledge to understand how to do it. Other forms of motivation may take time to understand and actually ascertain whether they have nay positive impact on employee motivation, whereas money has been proven to have profound impact on the level of motivation amongst many employees. This option may also come out as cheap in the long run as it only involves an action such as salary hike and avoids other costs with other motivation strategies such as restructuring of management structures or review of working hours which might ultimately cost the company indirectly but significantly (Pravin, 2004; Longenecker, 2013). Everybody knows what they want to do with extra money, some want to buy property, others want a vacation, and others need a new car, while others want to save up for the future. It is then a tricky situation to try to understand what motivates someone and get it right. It is only simple to give a bonus or a pay rise and leave the employee to decide what to do with the money to be happy and appreciate working for the organization (Latham, 2007). Money is the unspoken need Employees don’t mean what they say when it comes to pay and motivation. It is common for employers to ask the question whether money is so paramount an issue when it comes to their motivation at the work place. What many employees will say is that it is not so much an issue while in reality it is actually one of the major factors they consider when looking for a job or deciding whether they are gong to stay at their current job. The reason as to why employees and prospective employees do this is because of the idea that the society has adopted that monetary motivation is not ethical and as such should not be used. The more there is need to appear socially appealing the less likely the possibility of getting a correct answer to such a question but in reality employees would love to be well compensated and have their pay reviewed from time to time as they get a sense of being appreciated by their employer and also they enjoy the extra pay that comes their way as a result of increasing their remuneration (Rynes, Gerhart, & Minette, 2004). Maybe less costly in some instances For some organizations, motivating employees, means supporting the employees in training and development so that they can derive value from the time they spend to the organization. They appreciate that it is not only to the benefit of the organization but to their careers as well. Many top organizations spend a lot of money in developing talented employees to gain the most important skills in the trade to improve their performance and knowledge base. To do this the company has to sacrifice a lot of man hours wasted when such an employee is out training and also resources to pay for such programs. Eventually the employee maybe poached by a rival in the industry of the employee decides to change careers. The result is a loss to the company which could have been avoided using money as the motivating item in the form of pay rise or financial benefits (Robbins, Judge, Millet, & Boyle, 2011). Arguments against using cash and monetary rewards to motivate employees Costly Using money to motivate employees and offering other bonuses and financial rewards as well means that you have to cut a certain percentage of profits to take care of the extra expenses for the company. It gets even expensive when there are a large number of employees and they all have to be motivated using this method of motivation. High ranking employees will most definitely have a very high pay rise or financial benefits advanced to them if the HRD department decides to use money to motivate them. This is expected since this group of employees receives a hefty pay package as compared to the rest; therefore, any rise in pay will definitely be huge enough for them to feel it has an impact on their current remuneration (Maiello & Randall, 2008). Maiello & Randall (2008) notes that to avoid the high cost of impressing everyone with financial rewards, companies will mostly adopt a pay regime in the work place where some employees have very good financial remuneration package while others have a very poor financial remuneration such that they feel shortchanged by the management. Having a wide salary of benefits gap between the management and the advisers is also another factor that indirectly impacts negatively on the productivity of employees as they view themselves as less important members of the organization and thus strive to leave the place and get a better deal. Fixing the salary structure to ensure the remuneration of all employees including the state manager does not have a wide gap will go a long away in fostering a feeling of fairness in the workplace. May not achieve desired results Financial rewards may not actually achieve the desired results by the management. It should be understood that employees as human beings have a certain need, for achievement that goes beyond monetary benefits. There is a caliber of employees who want to be given room to be creative and assertive enough to approach problems their own style and offer solutions. They feel that they are important human beings since they have achieved what they believe is their true purpose in life; to work passionately in doing what they love not for money but for personal satisfaction. Such employees cannot therefore be rewarded by money but rather by an opportunity to do what they love the way they love doing it. it then brings to the attention of human resource practitioners the need to study human behavior and understand what motivates different types of people and use the knowledge in designing jobs for their employees in the organization and thus not rely on monetary motivation to improve the productivity of employees which may be costly in the long run and achieve less than expected results (Bond, 2004). Clark (1994, 89) regrets that many human resource practitioners make the mistake of regarding human resource as factors of production which have to adapt to the institution’s way of doing things and not advance their own interests. While this may work for employees whose presence in the organization is not highly critical to the strategic objectives of the company, it is not the case with top talents. When it comes to recruiting top executives or top talents into an organization, salary is not really a consideration since the recruiter will most certainly have to meet the salary being paid to the person currently or possibly even more. It is more to do with non-cash benefits accommodated in the remuneration package (Maiello and Randall 2008; Edvinson and Camp, 113). Employees whose family lives are in chaos or whose work-life balance is not healthy perform poorly in their careers and it is a major reason why high employee turnover is common in the category of highly skilled workers who are in favorable position to negotiate contract terms (Bond 2004, 13). May be difficult to do a way with once established Once employees have been introduced to a system where their effort is recognized or rewarded through financial benefits or pay rise. It will be difficult for them to understand once a company reviews this strategy. The result may be reduced productivity due to reduced morale when employees feel that the new arrangement is suiting the employer and not them. If the company goes ahead to honour its initial way of motivating employees it may be expensive to sustain in the long run especially in periods when economic conditions are not favourable for businesses. In such periods companies cut on unnecessary expenditures such as pay hikes and financial benefits to employees. Employees who might be going through tough financial times themselves may feel short changed and perform to the extent that they think is worth their pay (Pablos, 2008). Conclusion Having adequate and qualified employees is not enough to ensure that a company achieves its objectives. There is the need to blend the needs and aspirations of an individual employee with those of the company in order to achieve a formula for success. Employees are human beings whose productivity is dependent on the attitude and approach they have towards work. Understanding what troubles employees and what excites them is a sure way of knowing how you can use the same to your advantage as a human resource practitioner. Money and financial benefits is vital in achieving this objective but then it is not prudent to peg the motivational strategy of an organization on money and monetary benefits alone. Allowing employees to achieve satisfaction at what they do and making them feel comfortable at the work place also goes a along way in ensuring that a work force is always motivated to give their best at the work place. References Aswanthappa, K. (2005). 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