Rewarding Performance: Comparison of Alternative Reward Systems - Research Paper Example

Rewarding performance - comparison of alternative reward systems Organizations are structure with a ‘collage’ of humans doing their allocated work under the supervision of a leader. These humans or workers will be apportioned different roles according to their educational qualifications, experience, skill, knowledge etc. After the recruitment and apportionment is over, it is the duty of the organization to provide the managers and employees an optimal working environment and an optimum reward program as part of that environment to retain them maximally. In that environment only, employees will show optimum excellence. But, sometimes the organization will not be able to provide a best working environment due to various factors. This will surely bring down the level of excellence among the managers and employees to bare minimum. With less than effective reward program and less motivation, the employees will be hard-pressed to use his/hers physical and mental part, and could even consider exodus. So, the important aspect is, the motivation levels of the employees have to be kept at optimal levels with the aid of reward program, so that the employees exhibit optimum excellence and retention. So, this paper will compare the various reward systems, focusing how each system should be fine tuned so that motivation, excellence and importantly retention levels can be optimized by developing an optimal reward program for the managers and the employees. The paper will also discuss how the optimal reward system goes through different stages. Background The mind of the worker is the crucial thing that will make an organization work. Biologically, it is mind of the worker, which will make the worker ‘work’. That is, only if the mind of the worker is filled with positive thought process, it will get motivated and make mental as well physical organs work for the benefit of the organization. The motivated mind will only ‘configure’ the mind as well as the physical body, to function in an optimum way or even ‘push’ them in a maximum way to derive beneficial outputs for the workers themselves as well as the organization. Importantly, the motivated mind will only make the employee stick to the organization. And the useful strategy which will optimize the motivation levels and thereby retain them is an effective reward program. This strategy plus reward program can be implemented by the leader in any environment with good results. Employee motivation and thereby retention is an essential and crucial priority for survival and success in todays competitive marketplace. Implementation of an effective Appraisal system before the introduction of an optimal reward program When one thinks about an industry or an office or an organization, the ‘picture’, one gets is of infrastructure, machines, etc (in case of industries) and papers, computers, cabins, etc, (in case of offices). But, the crucial thing that the mind leaves out is the picture of a working employee. Employees only form the crucial part in the running of the organization. If these crucial employees are recruited optimally, then appraised optimally and finally rewarded optimally, the organization can achieve optimum success by retaining the core group of employees. Employees can put an organization in an effective state in terms of production, sales, profits, etc. After recruiting the apt workers, organization have to appraise them aptly. Performance appraisal or employee appraisal is a method, in which the performance of an employee is evaluated, particularly in terms of productivity, time factor in productivity, quality of the work, etc. Based on this appraisal results only, employees will be given promotions, rewards and salary hikes - in case of positive results, training, coaching and mentored – in case of positive and negative results, and finally cut in salary, suspension or even dismissal in case of very negative results. “Appraisals are used for determining pay increases, who gets let go, who gets promoted. Often they are used to focus on what people have done wrong. The most important purpose or goal of the appraisal is to improve performance in the future...and not just for the employee. (Bacal 2004). So, an employees’ career and to an extent his/her survival hinges on these performance appraisals. Because of this cruciality, it should be conducted without any favoritism and bias, otherwise it could wreck the career of promising employees and even cause failure to the organization. So, performance appraisal should be carried out effectively before the introduction of the reward program. Objectivity in deciding who receives rewards and recognition as part of reward program The key factor that could bring down the excellence of managers and employees and thereby cause exodus from the organization is appointing, promoting and importantly rewarding individuals who do not deserve it. If any organization, overriding tried and trusted individuals; give important posts, promotions and recognitions along with other incentives and rewards to individuals who might be family members, friends, and persons with negative influence on the leader etc, it will create negative effects. For example, if least experienced or least qualified persons in different sections of the organization are promoted and rewarded as part of the reward program, it will lead to a lot of problems within the workforce, disturbing impact on the high performing workers, leading to loss of motivation, excellence and importantly problems in retention. Equity theory of motivation states “that people have to believe that their pay is equitable with others. If they believe their compensation is not equitable, they become very de-motivated and their work performance suffers” (Stockley). So, if this practice of giving rewards as part of the reward program to the non-performing employees and employees with negative influence is followed, it will create de-motivation and de-excellence among workers and will show the organization in poor light. Reward is another form of power which speaks of the ability of the manager to reward a certain employee for his deeds but can lead to serious problems for the employee if there is a conflict between the two and hence the power of reward can take a back seat in this whole equation. Example of optimal reward power is when the manager gives a bonus or a raise to an employee and the employee happily accepts it with an open mind, and thereby forming a psychological connection with the manager or leader. In many organizations, because of the ritual of awarding plum posts to the undeserving managers and employees, and shielding them when they committed mistakes, other members of the organization would band together in a kind of mutual protection ‘society’ that developed a culture of its own. They were more loyal to each other than to the organizations without any focus on the company’s goals. And in extreme cases and in cases of other options existing, the employees will leave the organization. So, implementing a logically and ethically correct reward program is the key to retaining the employees and making them productive. Providing rewards for the successful attainment of specific performance goals, enhances intrinsic motivation (Marzano et. al.) Rewarding managers and employees purely on merit should be the main criteria of the Incentive program Optimum and unbiased reward program or rewarding system should be part of any organization or performance management system because it can only motivate the employees by imbuing in their mind that their performance will surely be recognized and feted. It can only optimize the performance of the workers. “…build the psychological contract, in which employees feel valued by their employer, and the employer values (and is seen to value) employees’ contributions” (Cannell, 2009). But, if this rewarding system is biased, illogical, un-genuine as mentioned above, it could affect the performance. So, to keep the core group of good workers in a motivated state, the organization needs to award the right individuals with correct inputs from the HRD The excellence levels of the employees and thereby retention levels can be kept at optimal levels, only if the managers and other employees are rightly and ethically rewarded. That is, allocation of rewards, incentives, promotions and also recognition to the deserving and apt managers and employees is an important strategy to keep the motivation and excellence at higher plane. “Provide appropriate financial rewards and rewards, and non-financial praise for the employees’ achievement” (Armstrong, 2004). That is, rewarding the deserving and ‘success achieved’ employees especially high-performing managers and employees, will stick them to the organization, thereby increase their motivation. In an organization, the workers do their duties for personal motivations like money (salary), flexibility, career development, culture or the working environment, but their motivation and excellence will get a great boost if they receive additional financial rewards, promotions and recognitions. This perspective is fully supported by Herzberg theory. That is, according to Herzbergs two-factor theory, good wages are good motivational factor, which can accentuate the excellence level. If a goal is set and the rewards part of the job is revealed before hand, then the workers will motivate themselves and will surely work in cohesion and importantly with excellence to achieve success. Also, rewards, promotions and recognitions to deserving workers will motivate others also, to reach that status. That is, the unrewarded employees will feel isolated or ignored, and so would put in more optimal work to reach the status or performance of the rewarded employees, thereby getting rewards for himself/herself. If an employee gets good incentives or rewards for his/her performance, the fellow employees may get inspired by it and would work even harder to get the same incentives, without getting frustrated. The organization can make all the employees stick to the organization as a team and quickly get across their main goals and targets, by appropriately linking rewards and punishments to the activities of the employees. Along with reward program or financial praise, non-financial praise is also crucial ‘reward’ Even though, giving financial rewards will raise the motivational level, it is not the only motivating factor. Appreciation or praising can motivate the employees equal to the financial rewards and in a way retains the employees. “Praising staff had the same motivational kick as a 1 per cent pay rise. And while companies often offer bigger pay cheques as a reward for work well done, increasing employees salaries isnt always the best way to engage staff, he says”. (Budd, 2008). An appreciatory word, allocation of rewards and also recognition to the deserving employees is an important leadership strategy to keep the motivation and excellence at higher plane, and thereby retain them. In any organization, the leader or manager needs to give appreciation for the staffs, if they complete the given work successfully. Appreciatory words will do a world of good for these staffs’ confidence and it will surely motivate them to ‘elevate’ their functioning further and sticking them to the organization. Incentive Program could remove stress and thereby improve retention levels Stressed mind in the sense, due to the poor match between work load and the capabilities, resources etc of the worker, the mind of the worker could be become disoriented leading to the damaging of workers biological, psychological or social systems. So, the stress levels of the employees should be kept at bare minimum for the benefit of the employees. Also, with minimum stress levels, the motivation can be elevated to optimal levels, making employees work effectively bringing in profit for them as well as to the organization. On the other hand, according to the Perception and equity theories, individuals will get stressed out and could even leave the organization, if they perceive themselves as under rewarded or if don’t receive the benefits they are entitled to as part of the reward program. Here, the role of the management, particularly the leader or the manager is crucial. The other theory which is related to low motivation and retention level and the correlated stress is the Vroom’s expectancy theory. This theory of Vroom is the “perceived value of a reward for accomplishing a goal. If the person perceives the reward to be high, then they will give more effort. If they perceive the reward to be low, then they will give forth minimal effort. If the reward seems undesirable, it could be an example of a de-motivator. So, to prevent employees from getting higher stress levels due to under rewarding, employers and its leaders should have an effective appraisal system and reward the employees, without any bias or mistakes or oversight. This way, the retention levels of the employees and organization can be maintained, without any problem. Conclusion The organized or planned human activity under the structure of organization has to be carried out with precision for it to succeed and thereby retain its employees. But, precision in organizing or planning cannot be done without the initiatives and the fullest co-operation of the managers and the employees, without giving the chance for exodus. If a goal is set and the motivation level is heightened with the help of an effective reward program reward, promotion and recognition system, then the managers and the employees can work in cohesion to achieve success. If the reward program and the recognition system is optimized by incorporating all the above mentioned aspects, the excellence of the manager and the employees will also be optimized. When the employees’ excellence is optimized, the organization will show great success and profits, a portion of which will be rewarded as part of the reward program, making the employees mentally happy and motivated, thereby continuing and sticking to the organization. References Armstrong, M (2004). How to Be an Even Better Manager: A Complete A-Z of Proven Techniques, 6th Ed. London: Kogan Page Bacal, R. (2004). Management File - What IS The Point Of Performance Appraisal. Retrieved November 13, 2009 from http://work911.com/performance/particles/perfpoint.htm Budd, H. (2008). Pat on Back beats Pay Rise. Retrieved November 13, 2009 from http://www.news.com.au/business/story/0,,23433504-5012428,00.html Cannell, M. (2009, January). Employee communication. Retrieved November 13, 2009 from http://www.cipd.co.uk/subjects/empreltns/comconslt/empcomm.htm?Is SrchRes=1 Marzano, R.J et. al. Classroom instruction that works. ASCD Stockley, D. Motivation and financial and non-financial rewards. Retrieved November 13, 2009 from http://derekstockley.com.au/newsletters-05/025-motivation-reward.html Read More