Reward System and Employees Performance - Essay Example

Reward System - A Motivational factor in Developing and Managing Employee's Performance - A Case Study based on a UK Company Introduction: Thisstudy is based on examining the role of reward systems within businesses to improve employee motivation and general company performance. Rewards and incentives could facilitate in improving motivation of employees and improved motivation would lead to better work performance and collectively aid in boosting company profits. This proposed research would focus on a particular case study within a major UK superstore to understand the impact of rewards, incentives and performance appraisal on employee motivation and performance. The organization chosen here is Marks and Spencer, a leading name in retailing within UK. The organization is a reputed UK group with a chain of supermarkets across the country and sells clothes, food and household products. Between 2004 and 2005, the company employed around 70,000 people with 65,000 for UK operations of which 78% are female and 13% are from ethnic minority groups (MarksandSpencer.com, 2006). Along with a commitment towards equality and diversity, the group is also committed towards providing the right levels of rewards and incentives to its employees. According to Marks and Spencer workplace facts as claimed by the company, pay and benefits to employees are an important part of human resource management as retailers compete to provide the best remuneration for the best people (MarksandSpencer.com, 2006). The company maintains that the rewards package given to its employees is flexible, competitive, focused on superior results and is aimed to support personal choices of personal lifestyles. The elements of the reward packages of the company include fixed and competitive pay rates, variable performance related pay and a wide range of other benefits. In this study we would prepare a detailed questionnaire to understand the impact of these benefits, payment and reward systems on employees and we would also determine whether these rewards actually help in improving motivation and how this would relate to improved company performance. Marks and Spencer has boasted of 73% employee retention over 2004-2005 and retention may be considered as an important indicator of employee satisfaction and motivation (MarksandSpencer.com, 2006). Questionnaires would be distributed to employees of Marks and Spencer to determine whether rewards systems given to them have a positive impact on their motivation and performance levels. Aims of Research: The aim of the research is to determine the relationship between reward systems and benefits given to employees and levels of motivation that affect work performance and overall company performance. This study would determine whether increased rewards help in providing job satisfaction and whether reward systems also aid in staff retention and work performance. Research Objectives: The objectives of the research are given as follows: To determine whether rewards and benefits help in improving motivation in employees To determine the reasons for differences in employee retention within companies To determine the performance levels of employees with and without rewards To evaluate whether improved employee motivation and job satisfaction can also lead to improved company performance To evaluate whether rewards, incentives and benefits are effective tools in human resource management Background/Literature Review: Companies use different means of rewarding employees and Brody et al (2001) discuss merit pay plans used by companies to motivate and reward employees. The theory of motivation would highlight that rewards and reinforcement for individual accomplishments should produce positive results although there may also be negative outcomes (Brody et al, 2001). Brody et al suggest in their study that when individuals are involved in hiring and merit allocation for employees, their prior commitments have significant effects on rewards allocated to the employees. This shows that a manager's personal involvement with employees can lead to increased merit allocation and rewards. This study highlights the factors that determine merit allocation and rewards which may not be completely dependent on employee performance and also large depends on interpersonal relationships within the workplace. Rewards could be largely based on performance ratings and it would be important to understand how employees perceive these ratings of their performance. Smith and Rupp (2004) state that a major purpose of having performance appraisals of employees is to determine individual merit which in turn help in determining whether merit pay or benefits would be given to some employees. However our research study is based not on the reward process itself but on the general effects of rewards. Expectancy theory would suggest that high performance ratings would lead to high merit increases and low performance ratings can lead to low merit increases. Smith and Rupp used a survey on actual performance and reviews as well as pay raises, management reviews, employee motivation, attitudes, years of service and educational levels and related performance ratings with merit allocations (2004). The negative aspects of reward systems have also been discussed. Smith and Rupp suggest that the management should maintain performance evaluations to implement motivational and incentive pay systems that can enhance training, employee retention, and performance metrics and also provide an indication of company goals and employee expectations. Employee retention is one of the major determinants of company performance and suggests the general levels of employee satisfaction in a company. Glen (2006) examines the human resource strategies used by companies to address the issues of key skills, employee retention, employee engagement, employee motivation, organization costs, productivity and business performance. The uses of employee assessment and feedback are important in determining the reasons of retention and show how employee development initiatives could be used. The employee engagement predictors given by Glen are process, management, values, challenge in the role; information; balance between work and life; stake/leverage/reward/recognition; work environment; and product (Glen, 2006).An organization's people management strategy is largely based on these identified factors (Glen, 2006). Glen suggests that the workplace being a key context in developing these factors, the issues of team engagement, motivation, attendance and retention would be important determinants of a successful business. Identifying these factors of retention and motivation would be important in developing a strategy for employee engagement and skills retention and could be used by HR professionals. London and Higgot (1997) suggest that reward and recognition of employees in a company is a controversial issue within human resource management. Rewards are an important part of quality management and show how far a system and its method of implementation could contribute to general management of a company. London and Higgot discuss a case study in which a company has attempted to introduce several employee reward and recognition schemes but failed in implementation so a new scheme was developed with the help of unbiased assessment of managers, employees and customers. This study suggests the importance of developing a reward system based on management, customer and employee expectations and unless all parties are consulted, reward systems may fail. It is important to define the concept of reward, delineate who should be rewarded, match these with the general expectations of consumers and employees and examine the reward process against employee performance and satisfaction. Overall company performance and staff retention are then reflected in the annual report of the company. Fisher and Yuan (1998) highlight that managers and senior officials must understand the general needs and preferences of their employees. They used a case study of employees at an international hotel in China and compared this with employee expectations in the west. Chinese employees place importance on good pay, good working conditions, and loyalty from boss and organizations and Chinese managers are in general aware of their employees' preferences. However general perceptions of employee preferences seem to be low or incorrect among managers in the west. For increasing motivation among employees and for enhancing employee and company performance, it would be important to understand what the employees really want and what kind of rewards would satisfy them. Providing rewards in accordance with expectations and preferences of employees could largely enhance quality management within any business organization. This study would thus highlight the issues or factors that determine rewards and the importance of providing rewards in accordance with expectations to get positive outcomes in terms of increased motivation and performance. Methodology: The methodology that would be used for this study would be based on primary data obtained with the help of questionnaires and completed surveys and secondary data obtained from published reports and papers. We will use data from the Marks and Spencer annual reports to determine levels of company performance and employee retention. We will use surveys and completed questionnaires to determine aspects of employee expectations, employee motivation and job satisfaction. The pay rates and benefits offered to the employees of Marks and Spencer would also be given and compared with other retail stores to suggest whether benefit schemes are effective in retention of employees and in providing them job satisfaction. Apart from primary data obtained from the employees of Marks and Spencer Plc, secondary data would be collected from review of existing literature on the subject matter. A search would be done on journal databases such as ingentaconnect, sciencedirect, and JSTOR using search terms such as employee motivation, employee performance, rewards, employee retention and job satisfaction. The articles and papers on the relevant areas would be short listed and selected studies would be reviewed and critically analyzed to determine the relationship between reward schemes and employee motivation as found from existing literature. The details of the methodology are given here: Questionnaire: A questionnaire would be constructed with 20 questions that would aid in determining employee expectations, rewards offered to them, years of service, motivation and job satisfaction. Among the several questionnaires that will be distributed for data collection, we expect at least 100 returned completed questionnaires that would provide data from 100 employees of Marks and Spencer. Participants: Questionnaires would be distributed to more than 100 employees of Marks and Spencer. These employees can be of any gender and age and would be of non management levels, working mostly in customer service divisions of the company. This study being conducted in the UK, all questionnaires are distributed to UK employees of Marks and Spencer Data Analysis: The data analysis would involve some amount of quantitative and qualitative research and analysis. Qualitative analysis could provide a comparative analysis of the features of rewards systems and how they are expected or perceived by the employees and the company in general. Quantitative analysis would be based on statistical data and would tabulate the expectations, motivation or job satisfaction aspects in terms of measured, quantified data. Conclusion: This study would be based on determining how employee motivation and job satisfaction levels may vary with reward schemes and benefits offered by companies. This in turn also helps in determining employee performance and staff retention levels in a company and in this case, within Marks and Spencer. Conclusions could be drawn from the results of the study providing insights on employee expectations, employee retention, employee motivation and job satisfaction and recommendations would be given on improving human resource management practice. 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