Reward System
Reward System
Introduction
An essential attribute of the work organization is the ability to providing rewards to its employees. The success of an organization usually depends on the ability of the managers to provide employees with a motivating and a rewarding environment. The reward system in the organization can help in improving the performance of the organization. It usually motivates the employees more to achieving the organization goals. However, it is necessary for employees to first identify the objectives that require to be achieved before the development of an intangible and a tangible reward system (Griffin 2007). When employees are fairly rewarded, it is likely for them to perform better. When they tend to feel that they are rewarded unfairly as compared to their colleagues, they get the feeling of de motivation and dissatisfaction that normally affects the whole performance of the organization. Employee reward can include recognition, financial bonuses, opportunity for professional development, and increased role in decision making (Griffin 2007).
Reward
A reward refers to all the non monetary, monetary, and psychological payment that is provided to the employees by an organization. Rewards that are offered by organizations can be in the form of recognition, money, and promotions (Paine et al 2008). It can also consist of feelings for work that is performed properly. Organizations usually require various performances from the employees in order to be successful. Employees are supposed to be active members of the organization. Employees should do work as explained by the organization so that they can improve their performance (Paine et al 2008). There are different types of reward including intrinsic rewards and extrinsic rewards.
Intrinsic rewards
Intrinsic rewards are the most essential forms of rewards which probably cause job satisfaction, enjoyments, social interaction that arise from the work place, and a feeling of completing challenges competently. These are intangible awards of a sense of achievement and recognition in any enterprise (Paine et al 2008). This is the knowledge that one has done something right. These are psychological rewards that are given to employees because of performing well or doing meaningful work.
Intrinsic rewards are predictors of retention as the organization is able to keep employees who are self managing and energized than those who cannot afford to leave. Those employees who have high levels of intrinsic rewards usually become informal marketers and recruiters for the organization. These are employees who recommend the organization to their friends as a place where they can work, and they also recommend their products to customers. Organizations usually provide intrinsic rewards because it is a sustainable and healthy source of motivation for the employees. With this form of motivation, there is little chance of burnout. Those employees who have high levels of rewards usually experience positive feelings and few negative one regarding the job. The level of job satisfaction for these employees is high with few reports of stress (Paine et al 2008). They also have a feeling that they are developing professionally.
Extrinsic rewards
Extrinsic rewards are the rewards that cover the basic needs of income to survive. It leads to the feeling of consistency and stability that the job is secure and recognition. These rewards can also be referred to as financial rewards. This is physical or tangible award that is given to a person for accomplishing something as a way of recognition of ones endeavors. Extrinsic rewards include bonuses, pay rise, and benefits (Paine et al 2008). These rewards are referred to as extrinsic because they are external to work, and there are people who control their size whether or not they are granted.
Today, extrinsic rewards are significant to workers. Pay is an essential consideration for most workers when they are accepting a job. Rewards are also essential as they help in ensuring that the organization maintains the best talents in the business (Paine et al 2008). Unfair pay can be a strong de motivator to employees. Nevertheless, when people take jobs and issues relating to unfairness is settled, extrinsic rewards are found to be less essential. This is because day to day motivation is strongly driven by intrinsic rewards.
Role of reward system
The main objective of reward systems is to attract new employees into the organization, to maintain a commitment in the organization, and to elicit good work performance. Organization usually uses the reward system to retain and attract suitable employees. Any employer who retains a cheap reputation is not likely to be desirable in the job market. This is because the employees may think that it does not reward effort. An organization that does not offer rewards to its employees or one that has a poor reputation is likely to end up with employees who are no longer needed by anybody.
Rewards are also intended to improve and maintain performance. Employee motivation usually comes from within. However, having a pay rise or a bonus usually encourages employees to be motivated so that they can reap the rewards (Whiddett & Hollyforde 2002). The objective of the reward system as a commitment is that it serves to strengthen and maintain psychological contract. This is an indication of behavior that the organization values. An example is that an organization that values teamwork will probably provide some kind of team bonus. Psychological contract determine what employees perceive as being fair in respect to reward for the work that they are doing.
The reward system is a very critical aspect in the design of the organization. The reward system usually put the self interest of employees with that of the objectives of the organization. For any reward system that the organization is planning to use to motivate the employees, it must catch the attention of the employees. Organizations usually use the reward system to emphasize on the parameters that the employees are supposed to exert more effort through including them in the reward program (Whiddett & Hollyforde 2002). This is a way of emphasizing and convincing the employees about the performance areas which are essential. The second control benefit for the reward system is to motivate. Sometimes, people usually require an incentive so that to work hard and perform tasks well.
The other control benefit is personnel related. There are many different reasons as to why organizations give rewards. It can be to improve retention and recruitment through offering compensation package, which is competitive in the market. The reward systems refer to things that employees usually value. It is necessary for the organization to know that the reward system that it is going to use has both negative and positive rewards (Whiddett & Hollyforde 2002). The negative rewards are seen like punishment. They usually manifest themselves by an absence of the positive rewards. The negative rewards can include zero increase in salary, no promotion, and interference in the job from the superiors. Positive rewards can be bonuses, increase in salary, autonomy, and power.
Principles for effective reward system
An effective reward system in an organization should be able to give value to the reward system. The employees should be able to have a preference of the reward type that is being offered. Most employees prefer plaques and cash rewards while others prefer public recognition. Another principle is that the reward system should be simple to understand. It should elaborate the procedure for evaluating the performance, filling forms, and reviewing some levels of management lead to a conclusion. If the system is to be effective, it should be easy to understand. The reward system should be fair and effective, ensure participations in the system, and involve people in the reward process.
Approaches to rewards
When an organization is planning to involve employees, the following reward approach should be used.
Rewards for business performance
If the employees are going to be concerned with the success of the business, then the reward for the employees should be driven by the business success. Therefore, an organization is supposed to have a system that rewards the business and organization unit performance. Organizations are supposed to be riddled with reward systems that are based on performance. This will make sure that the pay of employees is driven by their own performance, performance of the business, and also the total corporate performance. Rewards that are based on business performance are likely to influence motivation, and it also creates a team culture (Wilson 2003).
Choice oriented
Having a fixed package of cash, benefits, and perquisites is not consistent with the individual differences that exist in the place of work and the idea that an individual should and is able to make a decision concerning their lives. Organizations should provide employees with greater choices where they can choose from. The choice of an individual should not be limited to the hours of work and fringe benefit (Griffins 2008). When organization is considering employee involvement in the business, they are supposed to allow them to have tremendous flexibility in determining their reward package. Flexibility has the potential of benefit the organization and the individual since it helps individuals in getting the rewards that they value. It also assures the organization that the amount of money being spent is done in ways that produce maximum impact.
Skill based
When ensuring employee involvement organizations are advised to pay employees for the skills they have. Skill based pays usually represents a change in the nature of compensation. Some of the significance of the approach is it can mean that a person promoted may not receive a pay rise for the promotion. The employee has to first demonstrate the skills that are associated with the job. After this is demonstrated, an increase in pay may be awarded. This approach also means that those individuals at lower levels can be paid more than those on higher levels. Skills are effective in most of the organizations that are emphasizing on employee involvement (Wilson 2003). Today most organizations are emphasizing on the need to have skills as it helps in the growth of the business. Knowledge is very essential in organizations and skills should be spread all through the organization. Skill based pay usually motivate acquisition of skills and reinforcing it.
Types of reward systems
Incentives and rewards
Organizations can provide incentives and rewards that are designed to provide motivation. This is provided when one accomplishes a certain objective. Financial rewards usually provide a tangible form of recognition and serve as indirect motivators. Incentives usually aim at motivating people to achieve their objectives and improving their performance. Financial rewards provide employees with financial recognition for achievement of exceeding or attaining their performance targets (Moorhead & Griffin 2010).
Competency related pay
This is defined as a method of rewarding employees partly or wholly by reference to the competence level that they portray in performing their roles. Organizations usually promote this system because it uses competence in generating value. This system works through the process of competence analysis of the level of competence and individual competence (Moorhead & Griffin 2010).
Team based rewards
Team based rewards are a form of non financial rewards or payments that are provided to the members of an established team that is linked to the performance of the team. The rewards are usually shared among the team members in accordance with the scheme for exceptional achievement. The rewards for the individuals can be influenced by the assessment of their contribution to the results of the team (Heneman 2002). To manage and develop the rewards, it is essential to understand the nature and how the teams function. Designing and managing this form of reward system is not usually easy.
Employee benefit
Employee benefit is an element of remuneration that is given in addition to the different forms, of cash pay. Some of the employee benefits that organizations can provide to employees include insurance cover, sick pays, pension scheme, or an organization vehicle. This reward may include elements which are not strictly remuneration like annual holidays. The objective of employee benefits is to indicate that the organization is caring for the needs of employees, to increase employee commitment to the organization, to meet personal security and needs, and ensure that the benefits are cost effective in terms of improvement and commitment in retention rate (Kerr 2009).
Benefits usually compose a great share of the total compensation; therefore, they have a great potential of influencing the unit, organizational, and employee outcome variables. Benefits have an effect on retention, job choice, and attitude of employees. An individual preference plays a significant responsibility in the determination of an employee reaction to a benefit.
HR practice
The practice of human resource is related to the performance of the organization. Human resource practice operates through motivation, employee’s skills, and work design. It also results to behavioral outcomes like productivity, creativity, and discretionary effort. Human resource is usually responsible in ensuring that they motivate employees to perform effectively. This will help in improving the productivity of the organization. They have to ensure that they develop the right reward system for employees and reward employees fairly. The reward system for the employees is supposed to be fair. High performing organizations usually have effective reward system (Sims 2002). An effective reward system is that system that is consistent with the mission of the organization allowing employees to work together in order to achieve success.
An organization that aims at achieving success should ensure that the performance of the employees is high. The role of human resource is critical because the reward system is normally never perfect. Therefore, they must be changed and evolved with the organization. The leader in human resource should be responsible of ensuring that the reward system is clearly understood by everyone. HR should make sure that they have the knowledge of designing a reward system that is fair and safeguard the system to stay like that. HR should ensure that they reward employees for the effort and time that they put in work (Sims 2002). A reward system is a tool for human resource management that is used for rewarding employees in the organization. The rewards should be cost efficient for the organization. It refers to understanding the needs of the employees and organization and then allocating rewards accordingly.
Conclusion
Organization success depends on the ability of the managers to provide employees with a motivating and a rewarding environment. Organization usually uses the reward system to retain and attract suitable employees. In order for organizations to be successful, they must make sure that they retain the best employees in the organization. These are employees who will help in developing strategies that will increase in the growth and productivity of the organization; thus, leading to the success of the organization. An organization that does not offer rewards to its employees is likely to have employees who are not motivated. These employees have nothing to motivate them to perform better and also accomplish their responsibilities as required. Therefore, the organization will perform poorly and reducing its success.
Reference
Armstrong, M (2002). Employee reward CIPD Publishing
Griffin, R (2007). Fundamentals of management Cengage Learning
Griffins, R (2008). Management Cengage Learning
Heneman, R (2002). Strategic reward management Age Publishing
Kerr, S (2009). Reward systems Harvard Business Press
Moorhead, G & Griffin, R (2010). Organizational behavior Cengage Learning
Paine, J Lake, D & Burke, W (2008). Organization change John Wiley & Sons
Sims, R (2002). Organizational success through effective human resource managementGreenwood Publishing
Whiddett, S & Hollyforde, S (2002). The motivation handbook CIPD Publishing
Wilson, T (2003). Innovative reward systems for the changing workplace McGraw Hill
Is this your assignment or some part of it?
We can do it for you! Click to Order!
