The Role of Reward System - Assignment Example

Introduction Performance management is a very important function of the human resource department. It is very important for organisations to manage the performance of their employees. Managing employee performances allows the organisation to become successful and profitable. Employee performances tend to improve highly if the organisation reward their employee on a constant basis and provide them with all the necessary resources that may allow the employee to be motivated (Foot and Hook 2002). Performance appraisals are conducted on a regular mode in majority of the organisations and through the reviews attained from the performance appraisals the performance status of the employees are denoted. Those employees with good performances are given rewards and other types of bonuses so that they continually keep o performing well in the organisation. Rewards are a very important tool to retain talented employees in the organisations and acts as a strong motivating tool for employees for them to give in their best performance while at work in their respective organisations. Therefore, reward is considered a very important element in the performance management system of any organisation (Robbins et al 2004). Rewards & Employee satisfaction Rewarding employees is one of the major difficult tasks that have to be conducted by the human resource department. Organisations have to rewards their employees according to the market demands so that their employees feel that they are being given importance. Employee satisfaction is highly important so that employees keep on performing their duties and work towards the goals and objectives to be attained by the organisation (Jones et al 2000). Also, it is extremely important for the organisation that their goals and objectives should have some alignment with the goals and objectives of the employees so that employees have the feeling that their personal goals and objectives are also being met by the organisation (Agrawal 2007). Organisations have to constantly go through the phases of innovation and keep on modifying their reward systems so that the motivation level of the employee can be maintained at all times (Williams 2004). Rewards are very crucial for the organisation to provide to their employees because the human resources are the main assets for the organisation and the success and failure of the organisation depends upon the way the employees perform their jobs (Gordon 2001). Employees have a strong tendency of switching to other job perspectives if they find it more attractive than the current one. It is the organisations duty to make sure that they retain the talented employees by providing many attractive rewards and compensation packages so that it attracts the employee to continue working in the organisation (Lansiluoto and Eklund 2008). The higher the satisfaction level of the employee from the rewards they earn in the organisation the greater the intrinsic level enthusiasm has been observed in the employees at work. The role of the managers is to provide a positive and motivating environment for the employees so that employees take the initiative of coming up with new ideas and also at times are ready to do some voluntary work for the organisation. Motivation Theories There are many motivation theories, three of them are discussed below. They are the motivation-hygiene theory, the Vroom’s expectancy theory, and the Hawthorne studies by Elton Mayo. Motivator –Hygiene Theory The motivator-hygiene theory is one of the motivation theories that have been developed by Frederick Herzberg. This particular theory has strong links with Maslow’s Hierarchy but has more emphasis on the motivation and hygiene factors that are available in the organisation to attract and retain their talented employees. Frederick Herzberg has researched that the needs at the lower level of the hierarchy are the hygiene factors for the employee and they may not be enough to keep the employee satisfied, the organisation need to focus on the higher level needs that are the motivator factors for them to satisfy their employees. The hygiene factors for this theory are the pay scale of the employees, the benefits they receive, their safety and security, and other such contextual factors for the employees (Porter et al 2002). The motivator factors according to the theory of Frederick Herzberg are that managers need to enrich the jobs for the employees so that it interests the employees, the employees need to be designated some amount of autonomy of their work, the employees need to be given recognition on their good performances in the organisation, managers need to focus on the employees skills and the career of the employee once they are working in the organisation. Rewarding employees in one way or the other tends to keep the concentration level of the employee towards the right direction (Willey 1997). Vroom’s Expectancy theory The expectancy theory has been developed by Victor Vroom and this theory has been developed on the basis of behavioral research conducted by Victor Vroom. The main elements that Victor Vroom suggests for the motivation level for the individuals working in the organisation are that they have expectancy from the organisation for the performances they have while working in the organisation. The individuals believe that their outcomes will lead to some value from the end of the organisation’s side. Vroom has given the following suggestions that are usually considered by the individuals: The expectancy level of the individual for portraying an effort for the job task will decide their level of performance The instrumentality level of the individual, this means the individual considers that the level or height of their performance will cause them to have some rewards or positive outcomes for their performance The valence level of the individual, this means the level of attractiveness that has been fulfilled by the outcomes that they received for their performance All the above three factors mentioned in the expectancy model is considered to be highly important for the employees to remain motivated while at work, if any of the three factors that are discussed in the Vroom expectancy model appears to be zero or low then it is highly possible that then the person may not be motivated to perform their tasks (Price 2007). Therefore, it is the utmost responsibility of the manager to ensure that they give the impression on their valuable employees that the larger the amount of effort the employees put into any task then the more valuable rewards will be attained by the employee. Effort leads to higher rewards is the message that should be delivered by the managers and the top management throughout the entire organisation (Fairbank and Williams 2001). Hawthorne Studies- Elton Mayo The Hawthorne studies has been designed by Elton Mayo and he has researched that when employees are monitored while working then they tend to perform well and if the necessary resources along with some additional resources are provided then the employees perform extremely well. With this good performance, if employees are rewarded then their motivation level tend to increase highly and they keep on improving their performance further more (Storey 2007). The top management needs to focus on motivating employees by giving them a positive environment to work in so that all the goals and objectives of the organisation become easily available for them. Types of employee rewards As we have discussed above, it is highly essential to reward employees on their good performance in the organisations so that they feel that they are valuable for the organisation. Rewards can be of many types, there can be monetary rewards as well as non-monetary rewards. The most important thing to consider while rewarding employees is that, the rewards should be given on a fair basis to all the employees and according to standards of work performance by all employees of the organisation. The reward policies of the organisation should explicitly be mentioned to the employees so that they have no doubts remaining about the type of rewards that is provided by the organisation (Janssen 2004). Monetary Rewards The type of monetary rewards that are given to employees can be on situations such as increasing the sales for the organisation, providing quality services and brilliant performance while performing the job roles. Some specific types of monetary rewards are providing bonuses to employees, sponsoring trips for the employees by the organisation, providing certain types of gifts, giving a new cell phone, giving bills, increasing the liters on free petrol and other such types of monetary rewards (Price 2007). Non-Monetary Rewards The non-monetary rewards that are provided to employees are on situations such as performing well in team work, having full attendance for the year, have learnt new skills and training for the job and other such types of similar situations. The different types of non-monetary rewards can be providing tickets to the employees for any movie, providing free coupons for restaurant dine outs or shopping discount coupons in retail stores, the boss giving a thank you letter to employees, making the schedule of the employee more flexible, providing some days off as a reward, providing picnics to employees, giving them free lunch and other such types of monetary rewards are provided to employees (Fairbank and Williams 2001). Other Rewards Apart from the monetary and non-monetary rewards, there are also some other types of rewards that are provided to employees such as providing them with a free parking space as parking is a huge problem for many of the employees, employee plaque can be given, office space for the employee can be enhanced, some personal office items can be provided to employees, some types of employee discounts can be offered and other similar things can be done for rewarding employees (Golding 2010). The rewards can be of different types as discussed above, but it should be strongly noted by the organisations that whatever rewards they give to the employees should be fair for all the employees and no biasness should take place while rewarding employees (Janssen 2010). Analysis of role of rewards The analysis of the above theories depicts that the element of receiving rewards for the employee is extremely important to motivate the employees to perform well in the organisation. Employee motivation is an extreme challenge that has to be tackled by the organisation at the right time so that they can reap the huge benefits that is attained from motivating employees and then viewing the organisational results that have been attained by the performance of motivated employees (Lansiluoto and Eklund 2008). Motivated employees tend to put an extra level of effort in the firm so that they can get more recognition and achievements from their respective organisations. Organisation’s success is highly dependent upon the satisfaction level of the employees from their organisation. The more the organisation value their employees the better the performance of the employees (Storey 2007). It can be deduced from the literature available about rewarding employees that organisations need to play a vital role in implementing the reward systems in their organisations. The way the organisation work towards influencing their employees tend to impact the performance level of the employees to a very large extent. Highly motivated employees may tend to bring in some innovative performances while working in the organisations and this may prove to be profitable for the organisation (Edwards 2000). It is very important for organisations to provide rewards and recognition to their valuable employees so that this boosts the morale level of the employee and increases the motivation level towards work of the employee at a substantially high level. Employees should be treated well by their employers at all times so that work processes work according to the requirements by the organisation (Paauwe 2009). The success level of the organisation can highly increase its curve towards the upward direction if the organisation is able to make the employee use their full potential and talent towards performing the tasks of the job according to requirements (Mumford 2000). An organisational culture that promotes rewards in their organisation tends to give proper direction to their employees in their careers ahead. The employee may develop the willingness to move ahead in their career in the same organisation that is valuing them constantly and rewarding them on their high performances. Growth and development are highly important for employees and this is one of their personal goals that need to be taken care of for the employees (Lansiluoto and Eklund 2008). There are chances of a healthy level of competition arising once there are motivated employees working in the organisation. They may impact the other underperforming employees in the organisation and the results attained may be highly beneficial for the organisation. The underperforming employees may learn from the competitive employees that high performances will lead to favorable rewards by the organisation. So in all the reward systems of the organisation tend to impact all the employees and motivates them to perform better at all times. Conclusion The motivation theories discussed above leads to managing employees in an improved way by giving them rewards on their high performances. It is human nature to compare things with others. If some of the employees in the organisation are being rewarded due to their high performance then this may instigate the other employees to perform well and earn the same rewards, therefore, the organisations should implement a competitive reward system in their organisation to gain better work results and keep their employees motivated to perform well. Along with the company policies of rewarding high performing employees, there should be a proper implementation of the policy as well so that the desired results can be attained of motivating employees with all types of various rewards. Organisation should keep their focus on all types of rewards because employees need both monetary and non-monetary rewards for achieving their personal goals and objectives. For employees rewards act as a strong booster towards performing well and therefore attractive reward policies should be implemented by the organization so that they can be successful. References Agrawal, Kalpana (2007). Corporate Excellence as an Outcome of Corporate Governance: Rethinking the Role and Responsibility of HRM, the ICFAI Journal of Corporate Governance, Vol.VI (1): 6-16. Armstrong, M. (2004) Performance Management: key strategies and practical guidelines. U.K: Clays Ltd, St Ives plc. Edwards, T. (2000). Innovation and Organisation Change: Development towards an interactive process perspective. Technology Analysis & Strategic Management, 12(4): 445-464. Fairbank, J.F., and Williams, S.D. 2001. Motivating creativity and enhancing innovation through employee suggestion system technology. Creativity and Innovation Management, 10(2): 68-74. Foot, M. & Hook, C. (2002). Introducing Human Resource Management. Prentice Hall, UK. Golding, N. (2010) "Strategic Human Resource Management" in Beardwell, J. and Claydon, T. Human Resource Management A Contemporary Approach, FT Prentice Hall. Gordon, Judith R. (2001). Organizational Behavior: A Diagnostic Approach. 7th ed. Upper Saddle River, NJ: Prentice Hall. Janssen, O. 2000. Job demands, perceptions of effort-reward fairness and innovative work behaviour. Journal of Occupational and Organisational Psychology, 73(3): 287-302. Janssen, O. 2004. How fairness perceptions make innovative behaviour more or less stressful? Journal of Organizational Behaviour, 25(2): 201-215. Jones, Gareth R., Jennifer M. George, and Charles W.L. Hill (2000). Contemporary Management. 2nd ed. Boston: Irwin/McGraw-Hill. Lansiluoto, A. & Eklund, T. (2008). On the Suitability of the Self-Organizing Map for Analysis of the Macro and Firm Level Competitive Environment. Benchmarking: An International Journal. Vol. 15, No. 4, p. 402-419. Mumford, M.D. 2000. Managing Creative People: Strategies and tactics for innovation. Human Resource Management Review, 10(3): 313-351. Paauwe, J. (2009) 'HRM and Performance: Achievement, Methodological Issues and Prospects' Journal of Management Studies, 46 (1) Porter, Lyman W., Gregory Bigley, and Richard M. Steers (2002). Motivation and Work Behavior. 7th ed. New York: McGraw-Hill/Irwin. Price, A. (2007). Human Resource Management in a Business context. Third Edition. Thomson Learning, London. Robbins, Stephen P., and Mary Coulter (2004). Management. 8th ed. Upper Saddle River, NJ: Prentice Hall. Storey, J. (2007) "What is strategic HRM?" in Storey, J. Human Resource Management: A Critical Text, Thompson. Willey, C. (1997). What motivates employees according to over 40 years of motivation surveys? International Journal of Manpower, 18(3): 263-280. Williams, S.D. (2004). Personality, attitude, and leader influences on divergent thinking and creativity in organizations. European Journal of Innovation Management, 7(3): 187-204. Appendix A An Effective Performance Management Cycle Figure1. Performance Management System Cycle (Armstrong 2004: 17) Appendix B Employee Empowerment through rewards Source: http://sloanreview.mit.edu/the-magazine/articles/1995/summer/3646/empowering-service-employees/ Appendix C Rewards of Work Source: http://www.sibson.com/industries/sports-leagues/compensation-total-rewards/ Read More