Impact of Reward System on Employee Performance

The provided assignment investigates the effectiveness of a reward system in improving employee performance and stimulating company growth. It discusses the importance of gathering data in a qualitative manner to avoid vague outcomes and provides references from various books and journals that support the concept of a well-defined reward system. The assignment title is 'Impact of Reward System on Employee Performance', and it suggests that a reward system can have a positive impact on employee performance and company growth.

Business Report

Table of Contents
INTRODUCTION...........................................................................................................................1
Overview and background of research........................................................................................1
Research aim...............................................................................................................................1
Research Objective......................................................................................................................1
Research Questions.....................................................................................................................2
Rationale of Study.......................................................................................................................2
Literature Review.............................................................................................................................2
Concept of reward system...........................................................................................................2
Main issues that impacts upon employee’s performance level...................................................3
Benefits of financial reward system on the performance of LEGO employees..........................4
RESEARCH METHODOLOGY.....................................................................................................5
RESEARCH OUTCOME..............................................................................................................18
Alternative methods:......................................................................................................................19
CONCLUSION..............................................................................................................................19
REFEENCES.................................................................................................................................21

INTRODUCTION
Overview and background of research
Reward systems are mainly used by business organisations in order to improve
employees performance. This system is mainly concerned with effective implementation of
strategies and formative policies with the help of which performance of employees is enhanced.
It is important for an organisation to frame strategies relating to reward system in their
management in a highly equitable and fair manner (Zatorre, 2015). Reward system consists
evaluating and giving compensations, remuneration and benefits to employees that can be in
monetary and non monetary form. These system mainly include, practices, payroll
administration, executive pay, team reward and minimum wage. Present case study has been
conducted on, LEGO which is a construction set company in Denmark and patented in United
Kingdom. Company expanded its business by producing plastic toys. Organisation is currently
looking forward to expand their area of servicing for this it is essential for company to strengthen
their labour base. This objective of company can be easy be fulfilled with the formative
implementation of reward system technology and strategies. In context with this, top level
management team of company is planning to formulate and effective research on the concept of
reward system that will effectively benefit them to maximise their command on the operational
activities in an international market.
In context with this, aims and objectives of this present research is developed by
researcher. With help of this, researcher will effectively able to understand present trends,
challenges and benefits of reward system that will benefit company to stimulate their growth.
With references to this, mentioned below there aims and objectives of research of LEGO is
described below in descriptive way:
Research aim
The research aim for present investigation is “Investigating the potential effect of reward
on employees' performance. A case on LEGO”
Research Objective
 To identify the concept of reward system.
 To analyse the issues which occurs that impacts upon employee’s performance level.
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 To examine the benefits of financial reward system on overall LEGO's performance level
of staff members.
Research Questions
 What is the concept of reward system?
 What are main issues that impacts upon employee’s performance level?
 What are the benefits of financial reward system on overall LEGO's performance level of
staff members?
Rationale of Study
Main motive of this research for LEGO is to maximise company profitability through the process
of improving its organisational activities in a global market along with having moderate amount
of knowledge on the subject of reward system and its influence on business. Next purpose of
present company is to analyse estimated number of population having knowledge about company
. In the section of academic sector, this research will benefit learner to expand future study scope
and enhance their skills and knowledge base. In addition to this, research will aid learner to
identify various opportunities along with developing professional skills. This will lead towards
high end career growth for company. In relation with researcher, major purpose of investigator is
to increase knowledge about LEGO and their activities and operations in international
marketplace. This will benefit researcher to work with same company in future as per accordance
to expertise zone.
Literature Review
Concept of reward system
As per the thought given by Al-shaibah and Habtoor, 2015 reward system is formative
procedure and regulation which is mainly associated with systematic allocation of compensations
and benefits to workers. This is one of the most important system as each and every organisation
wants to extract best out of their employees. For this it is required to recognize employee
productivity and effectiveness. Therefore, reward system acts as an one of the most affective
motivating factor that will lead towards both organisational and workers high end growth. In this,
LEGO which is an construction set company motivate their staff by giving them attractive
reward base and rank them as per according to their efficiency and output. Reward system aid
employees to gain recognisance which ensure their high level of performance. This system can
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be in financial and non-financial way which is offered to employees who render their services in
best effective way. All these schemes that are provided to employees efficiently influence their
behaviour and strengthen their engagement in organisational activities. Reward system is mainly
a process in which effective formulation of strategies and policies are done with a aim to treat
and reward employees in fair, equatable and constant way (Rolls, 2016). This system not only
ensure employee high growth but also strengthen organisation, individual and team performance
level. Along with this, LEGO by taking advantage of different types of motivational tools can
effectively appreciate their employees and increase their contribution towards organisation
functions. There are different types of reward system measure including, intrinsic and extrinsic
which is used by company to appreciate performance level of their employees. This system of
reward and benefits generate feeling of respect among employees. In the section of intrinsic
reward system there are certain basic things include that are, recognisance, achievement, job
satisfaction, job enrichment, empowerment, job enlargement, personal growth and status and
team working. While in Extrinsic reward factors certain factors included in this are, work
environment, social relationship, fringe, incentives, base wage, promotion and benefits. All these
rewards system is effectively use by LEGO to increase productivity level of their employees.
Main issues that impacts upon employee’s performance level
Performance management is considered as bureaucratic process by HR which gives no
value or add little value to organisation (Anitha, 2014). If Lego do not have performance
management within their working structure then they need to improve their working structure.
There are different issues which affect performance of employees are mentioned below:
 Lack of strategic focus: Goals and strategies of organisation must be merged in
performance management process for delivering real value business. Lego needs to be
focused and should not have lots of goal as this create confusion, unalignment and
inefficiency of employees. Performance management must focus on critical goals by
which employees can understand day to day objectives of work.
 Lack of meaningful and timely feedback: Employees should not wait for feedback of
performance review. As this will make employees of Lego blindsided which can lead to
disengagement, frustration, confusion and disappointment. This will disengagement will
demotivate employees and they will be less productive. For this management of Lego
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must ensure that their employees are provided with timely and meaningful feedback by
which they can review their performance.
 Lack of proper communication and training: Without effective training employees will
not understand working structure of Lego. For this it is essential for managers and leaders
of Lego to provide their employees with necessary training. It is necessary that
employees have good communication skills by which they can communicate effectively
with their clients and other employees or management of Lego. This will also have
significant and positive impact on their performance.
All these issues affect LEGO in both positive and negative manner and hamper its
growth. This will also lead towards lowering down of employees performance which
automatically create numerous obstacles in company developmental path. These issue impact on
company performance and decrease their ratio of growth for this, it is important for company to
frame effective strategies and policies to improve their reward management section. This will not
only aid employees to increase their performance but also help company to increase their overall
rate of productivity and profitability.
Benefits of financial reward system on the performance of LEGO employees
Financial reward system is concerned with rewarding employees with monetary
incentives. This method is adopted by the organisation for the purpose of positively impacting
performance level of employees . It is one of the vital factor that helps in motivating individual
to work more effectively (Bassous, 2015.). This system comprises of monetary factors such as
compensation, bonus, commissions etc. One of the psychological aspect of human's is attached
with that, they feel the need to satisfy their Ego. Due to this reason they linked their success with
their financial achievement hence this method helps in boosting self esteem. Awarding workers
with appropriate salary which is particular amount given at the end of particular period is very
important, as money is essential for the survival and every individual work for living. Providing
effective compensation for performing certain task has led to the improvement in the
performance level of LEGO's staff members. It can be seen from the fact that organisation has
achieved profits and growth and the employees are performing expectationally well. Due to the
time rate pay factor of Financial reward system, has provided benefits of getting paid for
working every hour. This has led to increased satisfaction level in the staff members of LEGO
and as a result they have become more committed towards the company. When employees feel
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that they are being underpaid or undervalued, this creates frustration amongst the workforce
which ultimately affects the performance level of business entity. Increased loyalty and
commitment provides benefits of low turnover and growth in the productivity of every
individual. Management does not have to spend too much time on hiring new people. There are
people in the organisation who may not feel satisfied with monetary incentives thus rewarding
them on financial basis will not be enough. Therefore the first and foremost responsibility of
managers is to understand what are the expectations of employees and whether they should be
provided with financial incentives or non financial incentives. The major difference that lies
between monetary and non monetary factor is involvement of money as under non monetary
incentives employees are often rewarded with medical benefits like health insurance etc. Another
main advantage associated with this system is that if the people working in the organisation will
portray good picture in the eyes of public this will help in attracting large number of talented
candidates to apply for the company. In this way competitive spirit amongst the staff members
will generate, that will push them to work harder in order to retain their position. The
management should ensure that as per this system everyone are given equal compensation based
on their contribution. Different business entities have different policies of compensation
according to the criteria which best suits the structure of company. Adopting this system has
influenced LEGO's workers way of working. They are able to meet their personal goals and
higher productivity. The Main aim of enterprises is to efficiently achieve organisational goals
therefore using this method is beneficial to fulfil that requirement.
RESEARCH METHODOLOGY
Primary Research:
It is a methodology that a researcher use in order to gather data and information in a
direct way rather than to depend on collecting data from other sources such as previous research.
In this form of research method data can be collected form, observations, face to face interview,
focus on groups and more. It is one of the most important way through which data can be
collected from first hand (Murayama and Kitagami, 2014). Therefore, it is the easiest method to
make report in good and effective manner. Therefore, this method will prove effective for
researcher to formulate a good report.
Secondary Research:
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In this methodology, information and data is collected from already existing data. It is
collected in order to maximise research effectiveness. In secondary research data can be gathered
form, websites, libraries and form already published reports. This form of data collection method
is one of the cost effective and does not take much time. In addition to this, with the help of
internet sources, educational institution, non government agencies and public libraries also
benefit to acquire informations and related data. Hence, secondary research will prove to be
effective in order to effectively identify research topic along with determining effective result
for research.
In the present research, researcher is taking advantage of primary and secondary research
mode in order to collect data as to complete research in best effective way.
Quantitative Research:
It is systematic method in order to conduct an investigation. This is done by getting data
and statistics in quantifiable manner (Ginane and Revell, 2015). Along with this, this mode of
research also can be done with the help of mathematical and computational techniques. In this
information is extracted from already existing consumers as to conduct research by using online
surveys, questionnaire and sampling method. Quantitative research is conducted with the help of
cross-sectional surveys and survey research that will benefit in formulating research in best
effective way while taking advantage of various research methods.
Qualitative Research:
It is a market research in which more focus in on gathering information through open-
ended and conversational communication. There are different types of methods that are framed
in an effective manner. This is done by taking advantage of perception and behaviour of
consumer in a target market for a particular topic. There are different mode of qualitative
research such as, in-depth interview, ethnographic research, content analysis, and case study
which is used in research. With the help of this research method researcher can effectively able
to draw data in a descriptive way.
Sampling:
Random sampling method is used in this research by the investigator in order to finalise
co-defendant from wide are of population. In order to conduct this research in best effective
manner estimated number of 30 respondents are selected. These respondents are also the
stakeholders of LEGO.
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DATA ANALYSIS AND INTERPRETATIONS
QESTIONNAIRE
Q1) Are you aware with the concept of reward system?
a) Yes
b) No
Q2) What are the most attractive method of reward system?
a) Monetary
b) Non-monetary
Q3) What are the main benefits of reward system for LEGO?
a) Increase in profitability
b) Increase in number of opportunities
c) Increase in performance of Employees
Q4) Do you think, reward system concept is helpful for small scale companies?
a) Agree
b) Disagree
Q5) In which manner Reward System encourage operational activities of LEGO?
a) Positive
B) Negative
Q6) Are you aware about different type of rewards that has been provided by LEGO?
a) Agree
b) Disagree
Q7) As per your perception, reward will provide benefits to LEGO in terms of business
expansion at international market?
a) Yes
b) No
Q8) What are the drawbacks of Reward System that has been faced by LEGO?
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a) Short Term Motivation
b) Increase in Competition
c) Resentment
Q9) Do you think, providence of reward is the only method through which LEGO can sustain
its employees for longer period of time?
a) Yes
b) No
Q 10) Provide some effective recommendation to LEGO through which profitability of
company can be increased.
Theme 1. Concept of Reward System
Q1) Are you aware with the concept of reward system? Frequency
a) Yes 22
b) No 8
8
a) Yes b) No
0
5
10
15
20
25

Interpretation: Reward system is one of the most effective measure with the help of which
performance of employees and productivity of company can be increased in best impressive way.
It is a formative process which result in raising performance and productivity of workers in order
to stimulate company growth. As per the above representative graph, it has been evaluated that
22 out of 30 respondents are in aware with the concept of reward system as it help employees to
increase their job performance and career opportunities which lead towards global expansion of
their growth. While, 8 out of 30 respondents are unaware with the former concept of reward
system as they are not much aware about organisational structure and culture.
Theme 2: Methods of Reward System
Q2) What are the most attractive method of reward system? Frequency
a) Monetary 14
b) Non-monetary 16
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Interpretation: With the help of reward system organisation can effectively maximise their
overall rate of profitability. This system not only aid employees to increase their job performance
but also benefits company to maximise their end outcome. As per the above representative graph,
it has been analysed that 14 out of 30 respondents think that monetary mode is most attractive
way in reward system as it is reward which can be seen and utilized. While on the other hand, 16
out of 30 co-defendant said that non-monetary form is best effective method in reward system as
in this there are different types of elements with the help of which reward can be offered to
employees such as, paid leaves, tour packages and more.
Theme 3: Benefits of Reward System for LEGO
Q3) What are the main benefits of reward system for LEGO? Frequency
a) Increase in profitability 8
b) Increase in number of opportunities 9
c) Increase in performance of Employees 13
10
a) Monetary b) Non-monetary
13
13.5
14
14.5
15
15.5
16

Interpretation: Reward System not only strengthen employees performance level but on the
same level it lead towards strengthening organisation overall culture and ensure its long term
sustainability. As per the above mentioned graph, it has been evaluated that, 8 out of 30
respondents believes that increase in profitability is the main benefit of reward system as in this,
reward benefit employees to encourage them towards more hard work which automatically result
in increase in organisation profitability. While, 9 out of 30 co-defendant said that increase in
number of opportunities is one the main factor of reward system as with the increase in
productivity and profitability company can effectively find various opportunities to grow. In
addition to this, 13 out of 30 respondents said that increase in employees performance is the
main factor in the reward system as it, encourage employees to perform their work with more
efficiency.
11
a) Increase in profitability
b) Increase in number of opportunities
c) Increase in performance of Employees
0
2
4
6
8
10
12
14

Theme 4: Concept of Reward System is helpful for small scale companies
Q4) Do you think, reward system concept is helpful for small
scale companies?
Frequency
a) Agree 25
b) Disagree 5
Interpretation: Positive aspects of reward system proves to be very beneficial for small scale
companies as it have magnificent impact on organisation employee performance. Reward system
effectively helps in strengthening organisation internal management which lead towards effective
achievement of goals and objectives. As per the above mentioned graph it has been evaluated
that, 25 out of 30 employees agreed with the fact that reward system is very helpful for small
companies as it benefits them to strengthen their workforce system which automatically increase
company overall productivity. While, 5 out of 30 co-defendant are not agree with the fact that
reward system is great for small companies as they don't have sufficient amount of
understanding on it.
12
a) Agree b) Disagree
0
5
10
15
20
25

Theme 5: Manner in which reward system encourage operational activities of LEGO
Q5) In which manner Reward System encourage operational
activities of LEGO?
Frequency
a) Positive 21
b) Negative 9
Interpretation: Reward system effectively influence operational activities of a company in both
negative and positive manner because reward system bring some remarkable changes within
organisation which can lead towards economic of scale, global sourcing, high end productivity
and more. As per the above mentioned graph it has been analysed that 21 out of 30 respondents
agreed with the positive as reward system put heavy impact on numerous operational activities of
LEGO in a great manner. Whereas, 9 out of 30 co-defendant disagreed with the fact that reward
system encourage operational activities as in this company have to face with many negativity
that lead towards decrease in performance margin of individual.
13
a) Positive b) Negative
0
5
10
15
20
25

Theme 6: Types of Reward
Q6) Are you aware about different type of rewards that has been
provided by LEGO?
Frequency
a) Agree 21
b) Disagree 9
Interpretation: Reward system effectively aid an organisation to increase its sustainability and
probability by ensuring high end increase in employee performance level. There are different
types of reward systems that can be provided by companies in order to influence their employees
towards more effective performance. As per the above mentioned graph it has been evaluated
that, 21 out of 30 respondents are aware about various types of rewards that has been provided
by LEGO to their employees in order to increase their performance in an effective manner.
While, 9 out of 30 co-defendant are not aware about different types of reward that has been
offered by LEGO as they don't have appropriate understanding of company structure.
14
a) Agree b) Disagree
0
5
10
15
20
25

Theme 7: Business expansion at international scale will maximise probability of LEGO
Q7) As per your perception, reward will provide benefits to
LEGO in terms of business expansion at international market?
Frequency
a) Yes 26
b) No 4
Interpretation: Reward system benefits an organisation to strengthen its overall working culture
while ensuring high end probability of employees. Strong reward system effectively aid
employees to increase their job performance which automatically result in high end outcome for
company. As per the above mentioned graph, it has been analysed that 26 out of 30 respondents
agreed with the fact that, reward system will benefit LEGO to expand their operations in
international marketplace as reward system encourage employees to work with more efficiency
which increases company productivity. While, 4 out of 30 employees did not agree with the fact
that reward system benefits company to expand their services at international market as they
think reward system bring negative competition within company internal structure.
15
a) Yes b) No
0
5
10
15
20
25
30

Theme 8: Drawbacks of Reward System
Q8) What are the drawbacks of Reward System that has been
faced by LEGO?
Frequency
a) Short Term Motivation 7
b) Increase in Competition 15
c) Resentment 8
Interpretation: As reward system provide many different benefits to organisation in many ways
but on the same hand, it have some certain drawbacks that hamper organisation performance.
There are some basic drawbacks that has been faced by LEGO which include, increase in
competition, resentment, short term motivation and more. As per the above mentioned graph, it
has been evaluated that 7 out of 30 respondents believes that short term motivation is the
drawback factor that affect LEGO performance as reward is only for a short period of time.
While, 15 out of 30 co-defendant increase in competition is one of the major drawback that has
16
a) Short Term Motivation
b) Increase in Competition
c) Resentment
0
2
4
6
8
10
12
14
16

been faced by LEGO as reward in a workplace bring negative competition in an organisational
workplace. In addition to this, 8 out of 30 respondents feel resentment is the major drawback that
has been faced by company which hamper its performance.
Theme 9: Reward system is the method through which LEGO can sustain its employees
for longer time
Q9) Do you think, providing of reward is the only method
through which LEGO can sustain its employees for longer period
of time?
Frequency
a) Yes 22
b) No 8
Interpretation: Reward system ensure effective functioning of an organisation while ensuring
ling term sustainability. With the help of reward system company not only can increase its
employees performance but also develop numerous set of opportunities for both entity and
17
a) Yes b) No
0
5
10
15
20
25

workers. As per the graph, it has been evaluated that 22 out of 30 respondents agreed with the
fact that with the help of reward system LEGO can able to hold its employees for long period of
time as reward bring sense of motivation and encouragement among employee and stimulate
feeling of being valued. While 8 out of 30 co-defendant don't think that reward is the only factor
that can sustain employees for long period of time they believe company is required to provide
other beneficiaries to hold its workers.
RESEARCH OUTCOME
On the basis of above conducted research for LEGO, it has been analysed that concept of
reward system improved overall growth of a business along with economy. This research throws
a light on a fact that reward system can effectively able to provide various types of benefits to
employees (Burke and Noumair, 2015). In addition to this, it has been analysed that there are two
types of reward system such as, monetary and non-monetary reward structure in which benefits
like, paid leaves, official tours, bonuses and more are provided. By LEGO. Apart form this, it has
been evaluated that, with the help of reward system company can not only strengthen its labour
force but also can stimulate high end growth for company. Reward system not only brings
advanced career opportunities for employees but on the other hand, it also facilitates company to
evaluate their various development path. Thus, it is important for company to regularly keeps on
modifying their reward management strategies and policies and ensure high end growth.
Furthermore, it has been evaluated that reward system also lead towards bringing some certain
disadvantages to company such as, negative competition, resentment and more.
On the basis of that, there are some basic recommendations that are provided to LEGO
with the help of which company can effectively able to increase its productivity and profitability
both in simultaneous manner. There are some certain recommendations described below in
descriptive manner with the help of which company can effectively able to stimulate its growth
and can improve efficiencies of their employees:
 At first, it has been recommended to LEGO to modify their strategies can implement
some effective tools and techniques to encourage their employees in an efficient manner.
Along with this it is required for company to provide training and development programs
for their employees as to increase effectiveness of their all employees in order to increase
their efficiencies. This will offer company various opportunities to gain more growth at
international market.
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 At next, it is suggested to LEGO make their employees work in a team and bring
employee engagement culture in their workplace as to increase productivity of all of there
employees. This will benefit company to strengthen their workforce base stimulate
organisational growth.
 In addition to this, in order to remove negative sense of competition it is important for
LEGO to provide all deserving employees required amount of recognition and set up
various employee reward system programs to motivate their employees in an individual
or group level.
Alternative methods:
There is an possible alternative method for each and every situation this will aid in perform a
task without wasting time and complete it in defined manner (Ben-Shaanan, 2016). With the
help of alternative method company can effectively able to accomplish its goal within stipulated
period of time and get efficient end outcome. In the present research, it has been evaluated that,
researcher is taking advantage of questionnaire method in order to gather effective and sufficient
data and information as to conduct research in well effective manner and gain possible outcome.
This mode is an open ended method to collect information as in this researcher ask certain pre
decided questions from co-defendants and get required answers from that same asked question.
This method can be said effective but somehow it lacks in showing actual thought of
respondents. Thus, interview can be proves as an best effective method and benefit researcher to
conduct their research in more relevant and reflective manner. This method will allow researcher
to ask clear cut set of questions from sample of population this will allow researcher to get
completely fair and free answers form respondents in a direction of their choice. While, as this
method is time consuming method but it also benefits company is various different ways. With
the help of this method researcher can definitely able to get actual effective knowledge related to
the topic and conduct their research in well defined way.
CONCLUSION
As per the above mentioned report, it has been concluded that reward system is a wide
concept and is hard to covered in a single research. It has been evaluated that, present concept
provide different types of benefits to companies in order to run their activities in well defined as
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effective manner. Along with this reward system lead towards companies to strengthen its labour
force which automatically results in high end growth for company. With the help of sting and
effective workforce organisation can able to find various opportunities and stimulate their growth
in international market. In addition to this, it has been evaluated that formative concept of reward
system benefits a company in many different ways and impact upon its business activities in a
positive way. While on the other hand, it is analysed that reward system bring negative sense of
competition among employees which results in hampering company overall growth. Both of the
data collection method primary and secondary is used in this present research which aid
researcher to conduct their research in well defined and effective way within a stipulated period
of time. Along with this in order to complete this research in effective and relevant manner
researcher is taking advantage of questionnaire, primary method to investigate 9 questions in a
formative manner. While in secondary method, researcher is using books, online articles,
journals and many other mode to collect required amount of data and information. In order to
conduct research in well effective way it it is important to gather data in an qualitative manner in
order to avoid any such chances for vague outcome. As per the overall evaluation, it has been
analysed that reward system only only benefits individuals to improve their performance level
but also stimulate company overall growth prospective. This will benefit company to perform
their operations in well defined and structured way.
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REFEENCES
Books and Journals
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performance. International journal of productivity and performance management.
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Ben-Shaanan and et. al., 2016. Activation of the reward system boosts innate and adaptive
immunity. Nature medicine. 22(8), p.940.
Burke, W.W. and Noumair, D.A., 2015. Organization development: A process of learning and
changing. Pearson Education.
Ginane, C., Bonnet, M., Baumont, R. and Revell, D.K., 2015. Feeding behaviour in ruminants: a
consequence of interactions between a reward system and the regulation of metabolic
homeostasis. Animal Production Science. 55(3), pp.247-260.
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Journal of Industrial Psychology. 42(1), pp.1-14.
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Murayama, K. and Kitagami, S., 2014. Consolidation power of extrinsic rewards: Reward cues
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Reviews. 68, pp.47-58.
Rowland, C. and Hall, R., 2014. Management learning, performance and reward: theory and
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Slusar, M.V., Allstate Insurance Co, 2016. Reward system related to a vehicle-to-vehicle
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