A reward system is an official or informal program that organizations utilize in recognizing the achievements of workers, including successful completion of corporation’s aims or missions. Additionally, an organization might decide to recognize a member of staff for submitting an ingenious idea that contributes to the development of a new product. Through the system, the organization is expected to set principles, regulations, and measures related to reparation and distribution of benefits or rewards to workers for a job well done.
In the modern organizational culture, the reward system is viewed as the process of gathering brain structures that attempt to manage and standardize behavior through induction of gratification. Several theories of motivation exist, but a number of them are outdated since they insist on the financial rewards yet research shows that not all employees are money oriented meaning that they prefer other forms of incentives other than money.
If a holistic view of motivation is to be developed, researchers should engage in extensive studies to develop a theory that explains the impacts of non-financial rewards on the performance of workers in various organizations at different levels. As Tidd and Bessant (2009) observe, many organizations share an important aspect, which is the respect of employees since they came to the realization that they cannot achieve their objectives without the human resources.
Boxal and Purcell (2003) noted that the performance of any employee in the organization is partly reliant on his or her ability, motivation, and available opportunities, something confirming that the reward system plays an important role towards employee effectiveness1. From this perspective, motivation is defined as the force that provides impetus to employee behavior since it stimulates, sustains, and directs the worker towards goal achievement.
Several theorists have come up with ideas through which an employee can be motivated to produce the best results. Maslow’s hierarchy of needs, Mc Gregory’s theory XY, and Herzberg’s theory are some of the ideas that modern managers apply in encouraging their members of staff to deliver the much-needed results2.
Unfortunately, a number of these theories are defective in the sense that they only insist on financial rewards and as Wilson observe, they are inapplicable in the modern organizations. The ideas of Vroom seem to be valid as far as non-financial rewards are concerned given the fact that it is based on the assumption motivation is reliant on different variable. Unfortunately, such theories are not clear since they do not consider important interrelationships that take place in the work set up3.
The company is one of the multinational giants that operate in various economies, having managed to outshine its competitors. The organization is known to attract top class employees because of its reward system that mainly stresses on non-financial benefits. Fortune conducted a study in 2009 to establish what really attracts employees to remain or join the company and his analysis confirmed that the reward system, which is based on non-financial rewards, is the main reason, even though other factors contributed as well.
For instance, the organization allows its employees to obtain products at a discount meaning that they pay less for goods and any other service received from the organization. Each employee is allowed to run an insurance policy of his or her choice without chipping in something, irrespective of the cost. Recently, life insurance was introduced whereby employees are entitled to quality healthcare4.
Many organizations encourage its employees to join the health insurance plan run by the government since such programs might be cheaper as compared to those offered by the world’s leading insurance companies. Apart from providing insurance plans and offering discounts, the organization has an attractive and creative culture that allows each employee to conduct his or her activities without much interruption.
As Burrow observed, the CEO once argued that the creative culture in the organization is the gravitational force that pulls all the bright and creative people together. Apple is the only company that facilitates imaginative thinking and sustains high inspiration through non-financial rewards. The management of Apple appreciates the ideas of Gilmore noting that the management of the reward system is a critical element as far as encouragement of flexibility, leveraging performance, and targeting a knowledgeable workforce is concerned, particularly in the competitive market.
The company came to the realization that money is an important incentive since it facilitate the satisfaction of human needs as suggested by Maslow, but it later realized that this type of motivation is short-lived since employees would not reach the self-actualization stage. Based on this, it is observed that monetary rewards are unsustainable in the competitive market. In the first year of operation, Apple rewarded its executives with a 3-5 percent bonus of their salary, even though the organizational targets had not been met.
This was aimed at retaining the best performance workforce having understood that fundamental attribution error exists and this could have contributed in missing the target. Consequently, many employees renewed their contracts, as they had been motivated to commit their future with the organization. In the subsequent year, the organization realized that the promise of financial rewards was one of the reasons why the targets were not being met. Consequently, a new reward system that was non-financial was adopted having observed that money does not have a symbolic value given the fact that an employee would have nothing to boost of after consuming the money.
The company is the leading chain supermarket in the world, with an approximated employee base of two million. Globally, the organization runs at least nine-thousand stores, including departmental stores, warehouses, and retail stores. The company runs its operations in at least twenty-seven countries with fifty-five different names. Studies show that the company is among the largest private employers in the world.
Many people think its global financial reputation attracts peopled to join, but the secrete lies with the reward system that the management employees in motivating employees. The company has a lengthy list of employee benefits, which are mainly non-financial, which have propelled it to where it is now. All Wal-Mart employees are expected to join a unique program under the title Wal-Mart Associate.
The non-financial benefits are mainly given in form of health while financial benefits are given out in cash. Since the company is listed in the major stock exchange markets globally, an employee has the privilege of acquiring shares without going through a broker. This makes an employee proud to an extent that he or she associates him or herself with the organization at an individual level. Once an employee makes payment for a certain amount of shares, the company chips in by adding at least fifteen percent of the first $1800 share bought. Another benefit is shopping allowance whereby an employee receives some discount upon shopping in any of the stores5.
Regarding non-financial benefits, the organization runs a health reimbursement account (HRA) and Health Savings Account (HAS) that allows employees to contribute at a minimum charge. The company supports the two programs by dedicating certain funds to its management. Whenever an employee is in need of preventive care, he receives it at the company’s cost since the organization enters into agreement with healthcare providers to offer quality medical services at reduced costs.
All dependents of the employee are provided with healthcare services until they attain the age of twenty-six. At the same time, the company offers insurance covers on accidents and serious illnesses. For female employees, they are entitled to Life with Baby Maternity Program that seeks to offer support to mothers after they give birth.
|The Reward system||Attractiveness||Target||Qualification||Value/benefit||Issues-real/imagined|
|Education /training||Benefits employees in the sense that it improves their productivity given the fact that they acquire new skills and knowledge as regards to handling assignments. In many organizations, employees are left to develop skills and gain knowledge at their own expense, but offering them with educational opportunities would be one way of ensuring they remain in the organization for many years.||The junior employees who joined the organization with little knowledge, with no work experience. This gives them the much-needed confidence to accomplish the organizational tasks||Only employees showing the potential to develop have to be offered this opportunity. When an employee proves that he or she can generate something new in form of an idea, the organization should consider taking him or her for further training to enhance the capacity.||Results in efficiency in the work place because less time is taken in undertaking the task a opposed to untrained employees who keep on guessing what needs to be done.||Research shows that the employee will demand a pay rise once he or she undergoes the training program successfully without considering the fact that the organization invested heavily in his education. If the organization does nothing to improve the perks of the employee, there is a high likelihood that they will quit the organization given the fact that the newly acquired skills and knowledge will boost their employability in other organizations.|
|Striking a balance between work and family life||Many organizations, especially manufacturing companies, should consider employing this system because it ensures relaxation of mind. Many employees are encourage to continue working until late hours, but this does not benefit the organization because it reduces worker productivity||Juniors employees who are always motivated to take up overtime to boost their financial positions||All workers in the organization who are fond of waiting for overtime to produce the best results while relaxing during the normal working hours.||Once the organization clarifies that no overtime will be allowed, employees will work hard to meet the targets during the normal working hours knowing that they will spend some time with their loved ones.||For employees without families, this reward system would translate into something different since they will engage in antisocial behavior, such as heavy drinking, drug abuse, and prostitution owing to the fact that they have enough time and resources, but they do not have people to entertain.|
|Professional development||If an employee is aware of the organization’s objective of developing his or her career, chances are high that he or she will do the best to satisfy the management6.||Middle-level executives, especially young graduates, are likely to be motivated by this reward system because they always wish to be beyond their colleagues as far as professional life is concerned||Only committed young executives who follow the company rules and regulations are to be considered when implementing this reward system||Ensures efficiency and eliminates all forms of human error since employees will be seeking new challenges in the professional life.||The organization might fail to develop the careers of all workers, especially if a majority of employees is middle-level managers. For instance, young professionals joining the banking organization as graduate trainees are likely to fight for this chance and the organization might fail to come up with criteria for selection.|
|Non-financial recognition||This reward system boosts the morale of employees since it encourages self-evaluation. An employee would be proud of the organization, which boosts his or her self-esteem7||Best performing managers who contribute new ideas towards product development or value addition||Departmental managers who are recognized in annual general meetings or any other organization, including weekly, monthly, and quarterly meetings.||Boost the desire for success, competence, self-reliance, and autonomy.||Recognition might be problematic since the management might give credit to a manager that does not deserve since organizational goals are achieved in a group. This might lead to conflict in the sense that only one employee is appreciated, yet many workers took part in the task accomplishment.|
|Satisfying work||Employees show what they are capable of doing, which has a positive impact on the performance of the company||All young workers in the organization, irrespective of their job titles, tasks, and positions should be considered for this reward.||Each young employee is always interested in proving that he or she has the capability of realizing the organizational objective and this reward system does not target the old employees because they are always reluctant to change||Many young employees are usually underutilized because the work assigned to them might be insufficient. Younger employees should not be denied the opportunity to go beyond the scope of their work, as this will facilitate better performance||If employees are allowed to go beyond the scope of their work, conflicts might easily arise since some will complain of intrusion leading to disorganization|
|Autonomy||Attracts the attention of the employee because he or she is left to perform duties without disturbance8||Older employees have never wanted other people to follow them up since they believe they understand the work.||An employee is left to work alone if he or she has proved that he can produce the best results without being followed up||Encourages innovativeness s give the fact that creativity is allowed||An employee might engage in behaviors that hurt the image of the organization|
|Influence||Having control over something, be it people or events, is the aim of any employee||The longest-serving employees who are given the permission to guide the junior workers who joined the organization recently||Well-mannered employers who are considered role-models||Allows interaction between the old and the young , which plays a role in cultural transmission||Might bring conflicts in case the management does not come up with sufficient measures aiming at drawing the boundaries|
|Growth opportunity||An employee is assured of becoming the boss in the future and this motivates him or her to produce the best results||Young executives in their early late twenties and early thirties are the potential targets.||Employees meeting and surpassing the targets||Instills disciple and adoption of organizational culture||Identifying talent might be problematic|
|Quality of work||The roles of all employees matter and organization of company tasks might act as rewarding system to employees||Employees known to be proud of their work||Must have utilized the available resources effectively||Allows workers to reorganize work||The process might be tiresome and time-consuming|
|Core values||Particularly when the values match with those of the employee||All employees||Following company rules strictly||Ensures that workers focus on achieving the missions and the visions||Discrimination is the major threat|
|Relaxed environment||Working in a secure environment ensures efficiency since the chances of error are eliminated and this attracts employees||Employees working in the machines rooms are to be considered when awarding this incentive because they are always in danger||Employees who know how to organize work should be given the opportunity to win this award||The organization avoids all forms of conflicts with the regulatory institutions when it observes working rules as set up in various manuals.||The organization face the challenge of being penalized in case it implements the policy inappropriately|
|Free food/drinks||Drinks allow workers to be more productive in the sense that it gives them energy to thing. An employee is attracted to engage in extra work knowing that food will be provided9||Employees willing to sign for overtime are to be considered for this reward||Workers have to prove that the work they are doing is energy consuming to ensure that food is not provided to lazy workers||Employees are not exhausted because the energy they consume is replaced||The incentive does not offer a long-term solution to the problem of motivation|
|Team formation||Teams enable workers to triangulate meaning that they help each other whenever they are faced with a complex task||All employees whereby teams should be made up of both the old and the young||Each employee should have a special skill to be included in the team||Idea development is one of the major benefits of teams||Teams always suffer from leadership leading to underperformance|
|Challenging job||An employee is motivated to achieve personal goals||Ambitious employees who are in need of new tasks and responsibilities||Skilful workers with the ability of developing a new system or methods||Allows the organization to introduce new products because an idea of the employee can be developed||The employee might be overwhelmed yet he or she fails to concede defeat|
|Flexing time||Gives the employee an opportunity to finish up his or her private work||Top managers who have private businesses in various parts of the city||Only employees who are known to spend extra time doing organizational work are considered for this reward||The manager does not rush doing the task because he or she knows that the work can be done at a later date|
|Hand written communication||Gives employees the freedom of expression||Junior workers in different departments who might be suffering secretly||Employees who deliver their work in time||Enables problem-solving, which is known to threaten the existence of the organization||Employees might misuse the reward|
|Business coaching||Gives tactics to employees on how to perform a task||New employees in the organization||Employees showing the signs of improvement||Facilitates efficiency and tackling the task with a tact||Employees might misuse the reward to develop their private businesses|
|Spread the love||Employees feel valued in the sense that they are called beautiful names||Employees suffering from emotional stress, as this will ease pressure||Workers who are never happy with the way the organization treats them||Promotes togetherness||Might be misused to solicit sexual favors|
|Offering a swap||Entails allowing an employing to select the project to work on, which promotes confidence||Best performing employees||Producing results||Development of new projects||Might lead to losses if the project is not assessed carefully|
|Applauding efforts||Appreciation of employee efforts||Top performers||Results||Hard work||Reluctance on the side of the employee|
|Offering gifts in form of flowers||Boosting self-esteem||Women||Best performing||Improvement||Might play a negative role of promoting laziness|
|Leading as example||Best leadership||Line managers||Best performing department||High results||Promotes conflicts|
|Sharing the memories||Inviting best performing individuals to talk to employees10||Highly motivated employees||Hard working||Promotes morale||Criteria for selection might be problematic|
|Setting up the walls of fame||Makes the employee feel he or she is a hero since the picture or the portrait will forever remain the wall. An employee associates him or herself with the organization and considers success as part of him while at the same time admitting the failures11.||The top most managers are the only ones to be considered for this reward. In fact, only the managing directors, Chief Executive Officers, and the best chairmen are to be considered because of the limited space||The top executive should have really done something special to be included in the list. For instance, he or she should have surpassed the targets||Might result in the development of an organizational culture that is based on ethics and industry||Since the board is to determine the people to be rewarded, the best manager who is not in good terms with the board might not be rewarded.|
|Creating a club med||Allows an employee top release pressure, especially when the task is too demanding 12||Senior mangers that are often faced with the challenge of meeting the targets||Result oriented employees are encouraged to take some free time to figure out on the best option||Gives employees time to develop new ideas while being alone||The reward system might be misused, especially when the employee is an addict, as this time will be used to smoke and drink|
|Reserved parking||If the organization appreciates the efforts of the employee by reserving the best parking for him, chances are high that others will be motivated to do work extremely hard.||Senior employees should be the target because rewarding a junior employee with the best parking might bring conflicts between him or her and the top management||The employee should have represented the organization well externally to receive this reward||The employee is motivated to work extra hard because he or she is tempted to believe that rising to the highest position possible is inevitable.||Since the worker might be parking near the CEO’s car, other employees might fear interacting with him or her with claims that the employee might report them to the boss anytime.|
|Birthday parties||One of the systems that Cisco, one of the leading companies in the electronics market, applies. An employee feels appreciated to an extent of acting as a custodian of organizational resources13||Middle-level managers in charge of direct supervision of junior employees are awarded this reward||Any employee qualifies for the reward, but he or she should not be a notorious absentee with various scandals of lateness.||Since employees are given an opportunity to interact with the top management, including the CEO, chances are high that minor issues would not escalate into bigger conflicts that might threaten the survival of the organization. An employee holding the party feels appreciated and honored to be dining with the company’s CEO in the same table.||Employees might feel scared to celebrate their important days because of the presence of the bosses. In fact, some will prefer conducting the parties privately to ensure maximum enjoyment. It is suggested that the organization sponsors the party, but top officials are not requested to attend.|
|Stoke their passion||Employees are not simply interested in working, but they also desire to be passionate of what they do. This reward system is effective in the sense that it controls the behavior of workers14||Younger employees aspiring to capture high positions in the organization||Only performing employees are given an opportunity to work without much supervision||Employees act as supervisors of their work, which helps the management in focusing on other important issues||It calls on the organization to set standards, which might result to infringement|
|Enhancing interactions||Linking up members of staff to other professionals by providing free trips abroad||Top executives||Well performing members only||Facilitates understanding and cooperation, which are critical in objective realization|
|Remembering the spouses||Value of the reward is extended to familymembers, which shows care||Married members of staff||Result oriented only members||Commitment|
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- Boxall, Peter and John Purcell. Strategy and Human Resource Management. Houndmills, Basingstoke, Hampshire: Palgrave Macmillan, 2011.
- Herzberg, Fredrick. “One more time: how do you motivate employees?” Harvard Business Review, (2003): 87-96.
- Abraham Maslow, (Motivation and Personality. New Delhi, India: Pearson Education, 1987), p. 98.
- Adair, John. Leadership and Motivation: The Fifty-Fifty Rule and the Eight Key Principles of Motivating Others. London: Kogan Page, 2009.
- Armstrong, Michael. Managing Reward Systems. Buckingham: Open University Press, 1993.
- Phillips, Jean. Organizational Behavior: Tools for Success. Mason, OH: South-Western Cengage Learning, 2012.
- Armstrong, Michael. A Handbook of Employee Reward Management and Practice. Philadelphia: Kogan Page, 2007.
- Sims, Ronald. Human Resource Management: Contemporary Issues, Challenges, and Opportunities. Greenwich, Conn: Information Age Publication, 2007.
- Brooks, Ian. Organizational Behavior. Essex England: Pearson Education Limited, 2009.
- McGregor, Douglas. The Human Side of Enterprise. New York: McGraw-Hill, 2006.
- George, Jennifer. Understanding and Managing Organizational Behavior: George. Harlow: Pearson Education, 2011.
- Latham, Gary. Work Motivation: History, Theory, Research, and Practice. London: SAGE, 2011.
- Cole, Gerald. Management Theory and Practice. London: Thomson Learning, 2004.
- Hogg, Michael and Vaughan, Graham. Social Psychology. Harlow: Prentice Hall, 2007.