The Significance of Financial Rewards in Employee Motivation and Organisational Performance

Running Head: ORGANIZATIONAL BEHAVIOUR 0
Organisational Behaviour
8/10/2018

ORGANIZATIONAL BEHAVIOUR 1
An organisation’s success depends upon the efficient human resource and the effective
employer-employee relationship. Employment is a legal link or an official arrangement
between the employee and employer. Employees are the valuable assets of every organisation
and the key to their success. Therefore, an organisation should focus on improving their
employment relationship by rewarding them with benefits (financial or non-financial), and
ensuring employee satisfaction. Satisfies and motivated employees have higher profitability
of contributing significantly to the organisation. Fundamentally, factors such as remuneration
and the designation are crucial which determines the longevity of an employee in an
organisation. Employee motivation is a management concern at every level in all the types of
organisation. Thus, an organisation must emphasize on ensuring maximum benefits to their
employees (Caruso, 2018).
In an approach to compete successfully in today’s scenario, of intense competition and the
worldwide economy, human capital needs to be motivated by the organisations. Employees
are the internal customers of an organisation; therefore their interests should not be
overlooked. As such organisations employ wide variety of methods to encourage and
motivate their employees to enhance their productivity in the long-run. These methods refer
to the rewards and benefits given to an employee that motivates them to work hard for
achieving their goals and organisational growth as a whole (De Gieter and Hofmans, 2015).
Employees must be aware about their performance level in the organisation and the rewards
given to them. This relationship creates awareness about the categorisation of rewards into
various types that explains that which kind of reward is more beneficial to them. Reward
management affects the performance by recognising and rewarding the good performance of
employees, and by providing incentives to them. Thus, reward is clearly central to employee
performance and employment relationship. These include the rewards and benefits, which
can be further categorised into two parts i.e. monetary and non-monetary (financial or non-
financial). Monetary benefits or incentives include wages, bonuses, profit sharing to
employees, or any other type of reward that increase employee compensation. Non-financial
rewards include pension-plans, paid-sick leave, and the purchase discount. In today’s
competitive environment, rewards play an important role on employee performance as they
describe the productivity of an employee and how well they are motivated in the organisation
(Rose, Brink, and Carolyn, 2018).

ORGANIZATIONAL BEHAVIOUR 2
Failure in financial rewards can influence the effectiveness of skilled and talented employees.
Motivation is defined as a process that arouses, direct, controls and maintains the employee
behaviour towards attaining some goal or objective. Motivated employees are more
productive and willing to work hard towards the attainment of organisational goals.
Employee performance in turn affects and enhances the organisational performance (Shields,
et.al, 2015).
A successful organisation is the one, which effectively exploits their employees’ skills, and
abilities. Incentives positively affect the employee performance. For an example, if an
employee in an organisation is compensated more than his basic salary because of his higher
performance, it will motivate him to work hard and increase his productivity in the future.
This ensures the employee contribution and helps to retain them for longer period in the
organisation. In addition, this is supplemented by giving performance bonus and the other
allowances (Du, Zhang, and Tekleab, 2018).
Employment relationship is relationship is created mutually agrees on the work to be
performed and the employees are paid for the work, under the supervision of the employer.
Thus, the statement money and other financial rewards are fundamental to the employment
relationship, and these can be effective towards enhancing the employee motivation.
Financial incentives means the amount paid to employees either lump sum or in monthly
form (Seng and Arumugam, 2017).
In context of an organisation, reward management is an important area to be analysed.
Organisational behaviour is related to the rewards and employee motivation. Organisational
behaviour is defined as the study that enables us to understand and analyse the individual and
group behaviour in an organisation. Therefore, organisational behaviour is a wide subject that
covers three areas i.e. individual, groups, and organisations as a whole (Perkins, White, and
Jones, 2016).
Extrinsic or the monetary rewards are the external or tangible factors that incorporates a
worker’s base that can be yearly pay, monthly, or the performance-based compensation.
Financial incentives to the employees make them feel ensured and satisfied regarding their
financial security, psychological wellbeing and their career development. Moreover, it is the
right of an employee to get paid for their work (Lepper and Greene, 2015).