Using Rewards to Motivate Employees

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Table of Contents

Introduction
The Role of Motivation in the Workplace
Rewards as a Tool to Raise Employees’ Motivation
Conclusion
Reference List

Introduction

The question of motivation strategies is very complex and contradictive. There are different opinions regarding the elements that comprise an effective motivation policy. The paper at hand is aimed at elucidating one of such elements – a reward technique. It is assumed that a reward plays an important role in terms of the motivation elevation. As a result, it is considered critical to examine the mechanisms that underpin the interconnection between rewards and motivation, the approaches to the generation of reward policies, the main types of rewards, and other related aspects. It is expected that a detailed analysis of the reward method will help to get a better idea of the motivation techniques and provide some useful guideline for generating an effective motivation strategy.

The Role of Motivation in the Workplace

Nowadays, the fact that motivation plays an important role in the employees’ performance seems to be undoubted. A large scope of scientific research is devoted to the examination of the positive effect that high employees’ motivation produces on the job commitment and satisfactions. Hence, for instance, recent studies provide empirical evidence for the fact that there is a close interconnection between the level of employees’ motivation and the organizational effectiveness (Manzoor, 2012).

Speaking more specifically, every employer is sure to receive practical benefits from the motivated workforce: low turnover and absenteeism, increased job commitment, and the determination to achieve better results.

Therefore, it is not surprising that organizations try to work out such management strategies that would assist considerably in raising the employees’ motivation. These strategies might imply the implementation of different techniques. One of the most commonly applied motivation tools is a reward, the mechanisms and the impact of which will be discussed below.

Rewards as a Tool to Raise Employees’ Motivation

The Mechanism of the Reward Method

First and foremost, it should be noted that there is a consistent scientific grounding that allows considering a reward to be an efficient motivation tool. Hence, the need for being appraised or rewarded is included in the “esteem” section of the Maslow’s Hierarchy of Needs (Lauby, 2005, p. 2). Therefore, the idea of using rewards in order to elevate motivation refers to the psychological theories rather than to the managerial inventory.

The mechanism of a rewarding method is rather simple. Once an employee receives a reward, he or she satisfies the natural need for an appraisal and seeks another chance to experience it. As a result, the performance is either improved or carried out at the same level. Most importantly, it does not go back as the employee realizes that in this case, the need for appraisal will not be satisfied. Kressler (2003) notes that it is a beneficial scenario for both an employer and an employee: the former “buys” a sort of a guarantee for a high-quality performance, whereas the latter has a clear idea of what he or she is expected to do to receive the desired outcomes (p.117).

The Reward-Motivation Relation

The mechanism of the impact that a reward has over the motivation level has been described above. At this point, it is evident that a reward serves to be a powerful motivation trigger. In the meantime, the question naturally comes up whether this impact is positive. In other words, the motivation that is entirely based on the anticipation of the relevant appraisal might turn out to be rather unstable.

The problem resides in the fact that the final goal of an employer is to create such motivation that would be capable of a self-regeneration. Hence, for instance, an employee that is sincerely interested in the job he or she performs is motivated by this keenness. This type of motivation is problematic to shatter as it is relatively independent of the external factors. The reward-based motivation is less endurable. In his description of the cognitive evaluation theory, Armstrong (2015) notes that “extrinsic rewards have a negative effect on intrinsic rewards and therefore performance” (p.91). Thus, for instance, an employee that is motivated exclusively by a particular reward is more likely to change the workplace in case another employee makes a more beneficial offer.

In the meantime, the speculations represented above are not aimed at showing the inefficacy of the reward method. They rather show that this method should be used not as the basis but as a supplementary technique that helps to elevate motivation.

Reward Policies

The reward-based motivation has become such a commonly applied strategy that numerous companies consider it rational to work out detailed reward policies that serve to be their guidelines in assigning appraisals.

Reward policies are designed to perform a series of critical functions. First and foremost, they are essential to define the level of rewards. Hence, a company targets the level of pay it is capable of suggesting: high, medium, and, in some cases, below average. As soon as the level of reward is publicly acclaimed, it can be used as a powerful tool to gain the competitive advantage in the relevant market.

Secondly, companies try to formulate their core payment strategies with the help of reward policies. The key point they need to decide upon resides in whether the company’s level of payment will mainly depend on its inner strategy and philosophy or will be susceptible to the competitors’ behavior and the market changes. There is no need to explain that the companies that prefer to rely on their internal principals appear to be more attractive to the employees than those the behavior of which is hard to predict.

In addition, a reward policy is aimed at registering all the payments that the employees can expect including the timely delivered wages and the additional bonuses they might account for under some special conditions. From this perspective, a reward policy serves to be the guarantee for equal pay – it describes the size of the rewards, their regularity, and the spread correlation. In order to avoid ambiguity, a company needs to decide in advance whether it intends to assign special rewards for particular skills and knowledge as well as extra working hours and overloads.

Finally, a reward policy is necessary to define the role and the responsibilities of a line manager that is in charge of assigning rewards to the team members. Thus, it should describe the methods and techniques a manager can use in order to evaluate the quality of performance and perform consistent decision making (Armstrong, 2015).

Types of Rewards

Broadly speaking, a reward, whatever form it takes, is initially aimed at encouraging a better performance. Hence, Podmoroff (2005) points out that a reward method is based on the three main actions: thanking the employee, appreciating his or her contribution, and acknowledging the progress (p.106).

In the meantime, companies seek to invent different forms of rewards that would be beneficial for them and their employees. Thus, it is considered rational to overview the most commonly applied forms of rewards that exist in the modern managerial practice. Griffin and Moorhead (2011) suggest differentiating between the five main types of rewards: pay-based, incentive prospects, awards, perquisites, and benefits (p.160).

The pay-based reward is considered to be so natural that it is commonly missed out while speaking about the types of rewards. In the meantime, this type is likely to be the most important to the employees. Unlike other rewards, a regular payment is equally expected by all the employees invariably.

Incentive prospects, in their turn, might be represented by different bonus systems. Generally speaking, this type implies a particular reward pattern within which an employee can account for a particular bonus under certain conditions (profit-sharing, quarterly emoluments for outstanding achievements, etc.).

Award-based rewards are commonly assigned to those employees who perform their work perfectly or almost perfectly. Most frequently, awards are represented by some financial dividends, although there might be some other rewards as well – extra days off, special offers from the company, etc.

Perquisites are the most narrowly-focused rewards. Thus, Griffin and Moorhead (2011) point out that this type of reward is commonly assigned to a certain group of employees such as top managers, for example (p. 162). Perquisites might be provided in a form of an exclusive offer: corporate apartment, transport, etc. This type of reward is rather costly and has the least powerful impact on the general motivation. Quite the opposite, such form of a reward is apt to have a reversed impact – the employees might experience irritation seeing that their top management receives exclusive benefits.

The last but not the least is the so-called “benefit” type. This reward is normally used under certain circumstances: disability and unemployment compensation, safety insurances, etc. The presence of such rewards in the company’s reward policy is not likely to contribute significantly to elevating the corporate motivation. Meanwhile, its absence might cause an overall discontent.

Empirical evidence

As long as the problem of motivation is acute for any organizational management, numerous studies have been carried out in order to examine the factors that determine high motivation, the efficient methods that particular companies employ, and the key problems that are associated with elevating the motivation level.

First and foremost, it is essential to discuss a study that threw light on the character of reward that employees expect. Thus, two years ago, Indian researchers decided to evaluate the efficacy of the motivation program applied to the management in Oracle India. A particular emphasis was put on determining the aspects that the employees wanted to improve. Whatever paradoxical it might seem the research findings showed that a large part of the participants (49%) wanted their management to be more encouraging from the emotional perspective (Manwani & Bharadwaj, 2014). In other words, the research revealed the employees’ need not only for the financial rewards and guarantees but the emotional appraisal as well.

In the meantime, it would be unfair to claim that emotional rewards have larger significance to employees than financial dividends. There is a wide scope of the scientific evidence for the employees’ need to be financially rewarded. It is assumed that financial rewards are particularly appreciated by the employees in the developing countries where standard wages are considerably lower than those the employees in the developed states earn.

Thus, for instance, recent research carried out in pharmaceutical firms in Nigeria showed that the employees’ motivation is mainly based on the money aspect. John, Francis, and Innocent (2012) note that it is “financial incentives in terms of salary, bonus and commission” that determine the employees’ motivation and thus, their productivity as well (p. 625).

Another peculiar study that needs to be elucidated was carried out three years ago, by a group of international researchers. The key aim of the study resided in examining the interconnection between poor reward policies and cheating in the workplace. Thus, the research showed that employees are more likely to cheat, in case they do not receive any official awards from the management (Pascual-Ezama, Prelec, & Dunfield, 2013). Otherwise stated, the research has revealed that the lack of effective reward policy creates a new type of motivation – the employees get motivated to deceive their management.

Finally, it should be pointed out that a reward method can have a varied impact on different kinds of employees. Practice shows that the efficiency of this method is not equally high for all the workers. Thus, Singh Satyendra Kumar has carried out a study aimed at determining the motivation triggers that are most meaningful to employees from different hierarchical levels. According to Kumar (2012), junior and senior executives are not especially interested in the reward motivation. Such factors as safety and dependence are more critical to the junior level, whereas senior management is more concerned about the company’s prestige and power. The research has showed that it is the middle-level executives that are mostly interested in receiving rewards and recognition.

It is assumed that all findings elucidated above throw light on different aspects of the reward method and can be used while working out an effective reward-based motivation strategy.

Conclusion

Basing on the analysis of the reward method of motivation, a series of conclusions might be drawn. First and foremost, it seems to be doubtless that a reward serves to be a powerful motivation trigger. Hence, numerous studies show that employees expect to be appraised either in an emotional or financial form. Secondly, a company that wants to carry out an effective motivation strategy needs to work out the relevant reward policy that would include the type and the size of the rewards it will assign. The lack of a reward policy is likely to have a negative impact on the organizational performance, motivating employees to cheat and neglect their responsibilities.

It is also critical to point out that despite all the benefits of the reward method, it should not be the only element of the corporate motivation basis. Thus, some executives might be better motivated by other methods such as prestige, prospects, etc. In addition, an employee that is motivated by rewards exclusively is more apt to give his or her preference to another employer in case the latter has better prospects to offer.

Therefore, a reward is an excellent method to elevate employees’ motivation. However, its implementation requires a thorough preliminary analysis of the employees’ expectations and the types of rewards they aspire to receive.

Reference List

Armstrong, M. (2015). Armstrong’s Handbook of Reward Management Practice: Improving Performance through Reward. Hong Kong: Kogan Page Publishers.

Griffin, R.W., & Moorhead, G. (2011). Organizational Behavior. Mason, Ohio: Cengage Learning.

John, A.G., Francis, A.I., & Innocent, C.I. (2012). Improving Sales Performance through Sales Force Motivation Strategies: A Study of Pharmaceutical Firms in Nigeria. International Journal of Scientific and Engineering Research, 3(5), 620-626.

Kressler, H. (2003). Motivate and Reward: Performance Appraisal and Incentive Systems for Business Success. New York, New York: Springer.

Lauby, S.J. (2005). Motivating Employees. Alexandria, Virginia: American Society for Training and Development.

Manwani, R.K., & Bharadwaj, P.K. (2014). Analyzing Employee Engagement and Motivation Programs: A Case Study in Oracle India’s Software Division. The IASMS Journal of Business Spectrum, 7(2), 47-57.

Manzoor, Q.A. (2012). Impact of Employees Motivation on Organizational Effectiveness. Business Management and Strategy, 3(1), 1-12.

Pascual-Ezama, D., Prelec, D., & Dunfield, D. (2013). Motivation, money, prestige and cheats. Journal of Economic Behavior & Organization, 93(1), 367-373.

Podmoroff, D. (2005). 365 Ways to Motivate and Reward Your Employees Every Day–with Little Or No Money. Ocala, Florida: Atlantic Publishing Company.

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