6. Effects of Rewards on Employee Motivation

6.1 Effects of Rewards 

Introduction

There are various kinds of rewards and non can be said to be the best in motivating employees. According to the need theories and the different kinds of individuals at the workplace, people are motivated by varying and different rewards. Thus the challenge to the manager is to establish what works for whom. For this to happen, the manager has to understand and appreciate the different needs that employees try to meet. (Kreitner and Kinicki, 2010). 

Rewards are among the “most powerful motivational tools managers have at their disposal”, adding that for one to accept a job offer and decide how much effort to exert, the rewards being offered play a big role in the final decision (Phillips and Gully 2012, p. 230). According to Kinicki and Fugate (2012), the perspective of total rewards include as follows:

·       Compensation – Pay increases, Base pay, Promotions, Incentives and Merit pay.

·       Benefits - Health, Welfare, Retirement and Paid time off benefits.

·       Personal Growth - Career development and Training.

The following video1 will explain the total rewards in the workplace.

Video1: Let's Talk Total Rewards for Employees

 Source: (Willis Towers Watson, 2012).

Identified effects of rewards in the workplace are elucidated below.

6.2 Improved Performance and Productivity

Employee performance refers to the behaviors that are relevant to the goals of the organization and that can be controlled by the individual employees (Phillips and Gully, 2012). According to Achua and Lussier (2010), rewards affect performance expectations. Further managers should use incentives such as pay raises and bonuses as positive reinforcements to influence and motivate employee behavior as authors note that rewarding jobs well done motivates employees to continue doing the same. According to Luthans (2011), organizations give rewards to their employees in a bid to try and motivate them to perform better. Furthermore there is enough evidence to show that money as one form of reward can positively effect on personnel, group, and organizational performance.

The Expectancy (VIE) Theory of motivation by Victor Vroom, shows that employee motivation is usually enhanced when they perform well and expect a higher pay as a result (Phillips and Gully, 2012). In addition, managers need to be familiar with Stacy Adams’ Equity Theory in order to eliminate feelings of unfair or unequal treatment of employees at the workplace which may lead to demotivation (McShane and Von Glinow, 2011). As stated by Cole and Kelly (2011), the Equity Theory of motivation focuses on “people’s feelings of how fairly they have been treated in comparison with the treatment received by others” (p. 61). Further People therefore expect their input to reflect equally on the outcomes and be similar in comparison to those of others of the same ranking, and this includes the rewards they receive. 

Productivity is a main point for measuring personal, team, and organizational effectiveness. Although measuring productivity in today’s economy is often controversial and complicated, further that employees who are hardworking, empowered, committed and motivated are often more productive and therefore are highly essential as part of winning organizations (Quinn et al., 2010). Performance and productivity goals are necessary for each employee and are part of operative goals which are important as measures of employee performance and productivity respectively (Daft, 2010). organizations can make use of rewards such as promotions and merit increases, as well as intrinsic rewards such as goal accomplishment, to encourage con­tinued high levels of performance from employees (Bussin, 2012).

6.3 Employee Commitment and Retention

Employee commitment is defined as, an employee emotional attachment on organization due to the experiences that indicates the level of faithfulness, trust and engagement among employees (Mullins, 2010). Further stated one of the underlying influences and strength of employee commitment is the environment of reward structure and the fulfillment of needs and expectations at employment in terms of economic rewards. Moreover points out that companies have to come up with new ways of increasing employee faithfulness and commitment such as paying attention to and implementing reward strategies. A research done by Lardner (2015) on a UK based company called Gemserv which is a specialist market design, governance and assurance service provider within the utilities and environmental sectors showed that after the company reviewed its reward and benefits strategy, they were able to retain talented employees. Likewise, Luthans (2011) states that, organizations give their personnel rewards as a way of trying to motivate and encourage employee loyalty as well as to retain them.

As Robbins and Judge (2010) point out, once an organization pays more, the result may be better qualified and highly motivated employees who stay in the organization for a longer time. Organizations expect their employees to be committed to the employer by being faithful, keeping company secrets and working hard towards the good of the organization (Hayes, 2010). Further points out, employee in return expect that their employer should have honored their part of a psychological contract one of which should be receiving an equitable remuneration. As a result, employees will most likely respond by displaying high levels of organizational commitment. An organization needs to know which steps to take in order to ensure that the incentives and pay given to employees is enough to not only attract and encourage but to also retain them (Cole and Kelly, 2011). Research by Coetzee, Mitonga and Swart (2014) revealed that one of the indicators of high performance practices which was also seen to reduce intentions of employee turnover was rewards in addition to other factors such as teamwork, job security as well as training (Karatepe and Vatankhah, 2014).

However, McShane and Von Glinow (2010) point out that organizational or affective commitment which is an employee’s feelings of attachment, faithfulness to the organization is different from ‘continuance commitment’. Further states that employees with high continuance commitment feel bound to stay in the organization not because employees identify with it but since the financial implications of working elsewhere are much lower than in the current organization. Continuance commitment is the awareness of the costs which are associated with leaving an organization (Kreitner and Kinicki, 2010). Affective commitment can be a competitive advantage in an organization as loyal employees are bound to stay at their jobs (McShane and Von Glinow 2012). Kreitner and Kinicki (2010) introduce a third component of organizational commitment called ‘normative commitment’ which is the feeling of obligation that an employee has to continue employment at the organization adding that the three components influence employee turnover consequences.

Based on studies and results presented, this article concludes that the reward system has a positive effect on employee commitment and retention. 

6.4 List of Reference

Achua, C. and Lussier, R., 2010. Effective Leadership. 4th ed. South-Western Cengage Learning. 

Coetzee, M., Mitonga-Monga, J. and Swart, B., 2014. Human resource practices as predictors of engineering staff’s organisational commitment. SA Journal of Human Resource Management, [online] 12(1), pp.1-9. Available at: <https://sajhrm.co.za/index.php/sajhrm/article/view/604/819> [Accessed 28 May 2020]. 

Cole, G. and Kelly, P., 2011. Management Theory And Practice. 7th ed. Andover: Cengage Learning.

Hayes, J., 2011. The Theory And Practice Of Change Management. 3rd ed. Hampshire, UK: Palgrave Macmillan.

Karatepe, O. and Vatankhah, S., 2014. The Effects of High-Performance Work Practices on Perceived Organizational Support and Turnover Intentions: Evidence from the Airline Industry. Journal of Human Resources in Hospitality & Tourism, [online] 13(2), pp.103-119. Available at: <https://www.academia.edu/24453332/Effects_of_High-Performance_Work_Practices_on_Perceived_Organizational_Support_and_Turnover_Intentions_Evidence_from_the_Airline_Industry> [Accessed 28 May 2020].

Kinicki, A. and Fugate, M., 2012. Organizational Behavior: Key Concepts, Skills & Best Practices.  5th ed. New York: McGraw-Hill Irwin.

Kreitner, R. and Kinicki, A., 2010. Organizational Behaviour. 9th ed. New York: McGraw-Hill Irwin Inc.

Lardner, S., 2015. Effective reward ensures effective engagement. Strategic HR Review, [online] 14(4), pp.131-134. Available at: <https://www.researchgate.net/publication/282241557_Effective_reward_ensures_effective_engagement> [Accessed 27 May 2020].

Luthans, F., 2011. Organizational Behaviour: An Evidence Based Approach. 12th ed. Boston: McGraw-Hill Companies Inc.

McShane, S. and Von Glinow, M., 2011. Organizational Behaviour. 5th ed. New York: McGraw-Hill Irwin Inc.

Phillips, J. and Gully, S., 2012. Organizational Behavior. Mason, OH: South-Western Cengage Learning.

Robbins, S. and Judge, T., 2010. Essentials Of Organizational Behavior. 10th ed. Upper Saddle River, NJ: Prentice Hall.

Willis Towers Watson, 2012. Let's Talk Total Rewards For Employees. [video] Available at: <https://www.youtube.com/watch?v=fGfemoNZUIc> [Accessed 27 May 2020].