Impact of Rewards on Organisational Performance - Business Report 2018

This business report investigates the impact of rewards on organizational performance, examining how rewards and recognition influence employee motivation and engagement. It critically analyzes various articles to understand the significance of rewards and compensation structures, distinguishing between intrinsic and extrinsic rewards and their respective effects on employee performance. The report discusses the importance of both monetary and non-monetary rewards, highlighting the role of compensation packages and the need for clear communication regarding reward systems. Ultimately, it concludes that a well-designed reward system significantly contributes to enhanced employee performance and overall organizational success, emphasizing the direct proportionality between rewards and employee commitment. Desklib provides a platform for students to access similar solved assignments and past papers for further study.

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BUSINESS COMMUNICATION
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Executive Summary
The aim this study is to analyse the impact of rewards on the performance of the
organisation. The objective of this study is to determine whether rewards given to the
employees in an organisation helps in the motivation of the employees and thereby
their performance in the organisation. The study takes into account different articles
to understand the importance that rewards and compensations have on the
performance of the employees and the different types of rewards are present which
helps in the performance and the motivation of the employees. The critical analysis
of the articles is done in the study based on which the report is prepared containing a
full discussion about the different impact of rewards. The study also contains certain
recommendations which are given based on the discussion which will help
organisations to form reward systems and compensation structures for the benefit of
the employees and the organisation.
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Table of Contents
1. Introduction...............................................................................................................4
2. Discussion................................................................................................................4
3. Conclusion................................................................................................................9
4. Recommendation......................................................................................................9
5. References.............................................................................................................10
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1. Introduction
Rewards and recognitions in the workplace are a major contribution to the
performance of the organisation and the employees. They are associated with
motivating the employees to perform better. Rewards are also a way to increase the
engagement of employees in the organisation. Organisations have been searching
for different ways to reward their employees which would lead them to contribute
better to the performance of the organisation by elevating their own performance.
The productivity of the employee is a major contributing factor to the expansion of
the organisation and therefore the organisation focused on the better performance of
the employees. Organisations manage reward programs based on the performance
of their employees which motivates them to work harder so that they can become a
part of the programme and achieve their desired rewards. The reward systems and
programs are formed so that they align with the organisational goals and can
contribute to their betterment. The report will discuss about the impact of rewards on
the performance of the organisation. The study will critically analyse the statement
and determine the different ways that rewards and recognitions have created an
impact on the performance of the employees and in turn the organisation’s
performance.
2. Discussion
As stated by Terera and Ngirande (2014), rewards are an important feature of
an organisation and their Human Resource Management. The reward system that is
present in the organisation and the compensation that they provide to their
employees will be helpful in determining the level of commitment of the employees
towards the organisation. Edirisooriyaa (2014) further state that in the competitive
times it is necessary for every organisation to build strategies which will help them to
acquire a workforce which is competent in nature and contribute to the fulfilment of
their goals. Motivation is determined to be one of the factors which contributes to the
competent nature of every workforce in any organisation. It helps the employees to
direct their attention and focus to the fulfilment of the organisational goals. To
establish this organisations take the help of many processes and strategies which
might make their wok easier. One of the most common ways is to develop a reward
system which can cause satisfaction to the employees. The author states that
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rewards are a form of benefit that is presented to an employee in exchange for
responsibility rendering a service within the organisation. Moreover, as discussed by
Asim (2013) rewards mainly monetary rewards help in the motivation of the
employees more than any other form of rewards. This is because monetary
compensation is seen as more valuable as compared to any other non-monetary
form of compensation. Khan, Shahid, Nawab and Wali (2013) derive that the
difference that exists in an employee regarding the satisfaction and the
dissatisfaction of their job, at most times, lies in the reward system and the rewards
that are being received by the employee from the organisation and also the type of
reward that they receive. In most cases, employees have a perception regarding the
reward that they might receive for the work that they have been outing in the
organisation. The satisfaction of their job lies in the fact that they get the desired
reward from the organisation for their hard work and performance that they have
been conducting for the organisation.
According to Ajmal, Bashir, Abrar, Khan and Saqib (2015) rewards are of two
types which are intrinsic and extrinsic rewards. Intrinsic rewards are cashless
rewards or those rewards which do not have a physical existence. These rewards
come in the form of appreciation, acknowledgement, respect, recognition and
professional growth. On the other hand, extrinsic rewards have a physical existence
and are monetary rewards. These rewards are presented in the form of bonuses,
salary and other forms of monetary payment which is given to the employees on the
basis of their performance and contribution towards the organisation. Extrinsic
rewards are seen to be more effectively in maximizing the performance of the
employees in an organisation as compared to intrinsic rewards. Uzonna (2013)
argues that intrinsic awards also play a very important in the motivation and the job
satisfaction of the employees. Many employees prefer appreciation and recognition
in their job and are motivated by it since they feel that the hard work that they put for
the organisation would not just be rewarded with monetary benefits but should also
receive the desired value from the management and the other employees of the
organisation (Schlechter, Thompson & Bussin, 2015). Moreover, there are several
employees who prefer challenges and hard jobs in their workplace so that they can
showcase their talent to the management. Such employees prefer recognition for the
challenges that they have taken up for the growth and the betterment of the
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organisation. The author state that there were several surveys which were
conducted on the workforce of several organisations. As in the case of Credit West
Bank Cyprus, 50% of the employees who responded to the survey said that they
prefer recognition with a higher position in the organisation for their hard work, 6%
said that they would prefer to be recognised by the organisation by them being given
more responsibility and 20% of the respondents said that they would prefer cash
rewards for their hard work as opposed to recognition (Uzonna, 2013). On the other
hand, monetary rewards also have a huge impact on the performance of the
employee and this goes for the majority of the employees in majority of the
organisations. This form of reward is seen to be more appreciative than words and
show the employees that the management value the employee for their hard work.
Figure 1: Impact of monetary motivation on employee performance
Source: (Uzonna, 2013)
Osibanjo, Adeniji, Olubusayo and Falola (2014) focuses on the importance of
compensation packages in the organisation that is develop for the employees. These
packages are developed in such a way that they are able to satisfy the employees
according to their current performance. The packages are complied with both
intrinsic and extrinsic rewards such as salaries, bonuses, promotion, allowances,
recognition and such so that they are able to appeal to the employees in both ways
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and show the value that they have for the organisation. These compensation
packages work better at motivating the employees at performing better and harder
for the organisation since they receiver both monetary reward and recognition for
their work in the organisation (Snelgar, Renard & Venter, 2013). However, the
compensation packages should be communicated clearly to the employees based
on the work that they do and the position that they hold in the organisation. Not every
employee would receive similar compensation packages and this could create a
controversy and dissatisfaction among the employees if the extent of the
compensation packages are not explained properly to the employees of every
position. Employee performance being an independent variable can be influenced by
rewards which are given by the organisation since every employee needs a
motivating factor for their hard work so that they can push themselves to work harder
and better when they feel that their work contribution is being valued by the
organisation (Osabiya, 2015). Awards are given to the employees due to their ability
to accomplish the goals that have been pre-determined and set by the organisation
and hence their work should be appreciated by the organisation.
As further stated by Yousaf, Latif, Aslam and Saddiqui (2014) the lack of
financial and no financial rewards from the part of the organisation often leads to
poor performance and even lack of performance from the employees since they feel
that their hard work is not being valued by the organisation. The benefits that the
employees pre determine for themselves during their wok process motivates them to
work harder and derive good results so that they may be able to receive the reward,
however the lack of presentation of those rewards makes them dissatisfied. In such
cases rewards become an important factor since along with the motivation of the
employees for better performance they aim to create a healthy relationship along the
employees and the management of the organisation (Kwenin, Muathe & Nzulwa,
2013). As determined earlier in the study, monetary rewards are derived to be more
useful than non-financial rewards, however, there is always a level to the
organisation providing monetary rewards to their employees. Once the level is
reached the organisation takes the help of non-financial rewards such as recognition,
continued appreciation to motivate the employees to perform better for the
organisation since they would be unable to provide further monetary reward to the
employee. Other form of non-financial reward which would be better able to motivate
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the performance of the employees would be promotion or performance appraisal
which states that the organisation is interested in the professional development and
growth of the employees (Kuranchie-Mensah & Amponsah-Tawiah, 2016). This is
also an important reward which is appreciated by the employees since other than
monetary incentive employees also wish to grow within the organisation and get
promoted to higher positions so that they could climb the corporate ladder efficiently
and with their merit and productivity.
Figure 2: Classification of rewards or incentives in an organisation
Source: (Olubusayo, 2016)
Sajuyigbe, Olaoye and Adeyemi (2013) proposes that rewards play a very
important role in the performance of the organisation since they succeed in
motivating the employees of every organisation. A motivated employee is an
important factor for the organisation since they would be more efficient and
productive and will be more willing to work for the fulfilment of the goals of the
organisation as opposed to the employee who have low level of motivation in the
organisation. Moreover, the ability of an organisation to reward an employee directly
depends on the ability of an employee to perform to the best of their potential (Caza,
McCarter & Northcraft, 2015). This is because the organisation will only reward those
employee who would be able to show their potential and talent and would be
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deemed important for the organisation so that they can be motivated to perform
better. Employees who show low level of commitment towards the organisation and
do not perform efficiently with the full extent of their potential will not be rewarded by
the organisation and hence would always face low level of motivation (Olubusayo,
2016). Therefore, it can also be said that reward given by the organisations is
directly proportional to the performance of the employee and vice versa and also that
the reward system developed by organisations have a great impact on the better
performance of the employees and thereby the organisation as a whole.
3. Conclusion
Hence, it can be concluded that rewards have a great impact on the
performance of the employees and the organisation. This is because they have the
ability to motivate the employees into performing better by making them understand
that their contribution is being valued by the organisation. Both intrinsic and extrinsic
rewards fulfil the aim of motivating the employees but the importance of each award
lies on the kind of employee and their desire of the type of award that they see fit for
their given performance. The right choice of reward by the organisation would help in
the better motivation and the performance of the employees and therefore, the
growth of the organisation.
4. Recommendation
For better results regarding the system of rewards in an organisation there are
certain recommendation that could help them to motivate the employees in a better
way. The organisation should extensively evaluate the performance of the
employees and align them with the needs of the employees with the help of a
feedback that could be derived from them regarding the importance of rewards in
their work performance. This feedback will help the organisation to determine the
type of reward that the employees value more, based on which the management
could develop a reward system which would be beneficial for both the employees
and the management. The management should also try to motivate the employees
who have low level of motivation by giving them a chance to receive rewards based
on certain challenges and tasks that they would have to complete to get the reward.
This would be beneficial in two ways as it will help the employees to use their
unused potential and engage in a healthy competition for the completion of the task
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and the management would have a full active workforce who would be working for
the fulfilment of the organisational goals.
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5. References
Ajmal, A., Bashir, M., Abrar, M., Khan, M. M., & Saqib, S. (2015). The effects of
intrinsic and extrinsic rewards on employee attitudes; mediating role of
perceived organizational support. Journal of Service Science and
Management, 8(04), 461. DOI: 10.4236/jssm.2015.84047
Asim, M. (2013). Impact of Motivation on Employee Performance with effect of
training: Specific to Education Sector of Pakistan. International journal of
scientific and research publications, 3(9), 1-9. DOI: 10.1.1.412.8956
Caza, A., McCarter, M. W., & Northcraft, G. B. (2015). Performance benefits of
reward choice: A procedural justice perspective. Human Resource
Management Journal, 25(2), 184-199. DOI: 10.1111/1748-8583.12073
Edirisooriyaa, W. A. (2014, February). Impact of rewards on employee performance:
With special reference to ElectriCo. In Proceedings of the 3rd International
Conference on Management and Economics (Vol. 26, p. 27). DOI:
10.1.1.703.9382
Khan, I., Shahid, M., Nawab, S., & Wali, S. S. (2013). Influence of intrinsic and
extrinsic rewards on employee performance: The banking sector of
Pakistan. Academic Research International, 4(1), 282. DOI:
http://www.savap.org.pk/journals/ARInt./Vol.4(1)/2013(4.1-29).pdf
Kuranchie-Mensah, E. B., & Amponsah-Tawiah, K. (2016). Employee motivation and
work performance: A comparative study of mining companies in
Ghana. Journal of industrial Engineering and Management, 9(2), 255-309.
DOI: http://dx.doi.org/10.3926/jiem.1530
Kwenin, D. O., Muathe, S., & Nzulwa, R. (2013). The influence of employee rewards,
human resource policies and job satisfaction on the retention of employees in
Vodafone Ghana Limited. European Journal of Business and
Management, 5(12), 13-20. DOI: 10.1.1.1024.5407
Olubusayo, H. (2016). Incentives packages and employees’ attitudes to work: a
study of selected government parastatals in Ogun State, South-West,
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Nigeria. International Journal of Research in Business and Social Science
(2147-4478), 3(1), 63-74. DOI: http://dx.doi.org/10.20525/ijrbs.v3i1.87
Osabiya, B. J. (2015). The effect of employees motivation on organizational
performance. Journal of public administration and policy research, 7(4), 62-
75. DOI: https://doi.org/10.5897/JPAPR2014.0300
Osibanjo, O. A., Adeniji, A. A., Olubusayo, H., & Falola, P. T. H. (2014).
Compensation packages: a strategic tool for employees’ performance and
retention. Leonardo Journal of Sciences, (25), 65-84. DOI:
https://images.template.net/wp-content/uploads/2018/02/065_0848.pdf
Sajuyigbe, A. S., Olaoye, B. O., & Adeyemi, M. A. (2013). Impact of reward on
employees performance in a selected manufacturing companies in Ibadan,
Oyo state, Nigeria. International Journal of Arts and Commerce, 2(2), 27-32.
DOI: https://www.ijac.org.uk/images/frontImages/gallery/Vol._2_No._2/4.pdf
Schlechter, A., Thompson, N. C., & Bussin, M. (2015). Attractiveness of non-financial
rewards for prospective knowledge workers: An experimental
investigation. Employee Relations, 37(3), 274-295. DOI 10.1108/ER-06-2014-
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Snelgar, R. J., Renard, M., & Venter, D. (2013). An empirical study of the reward
preferences of South African employees. SA Journal of Human Resource
Management, 11(1), 14. DOI: http://dx.doi.org/10.4102/
sajhrm.v11i1.351
Terera, S. R., & Ngirande, H. (2014). The impact of rewards on job satisfaction and
employee retention. Mediterranean Journal of Social Sciences, 5(1), 481.
DOI:10.5901/mjss.2014.v5n1p481.
Uzonna, U. R. (2013). Impact of motivation on employees performance: A case
study of CreditWest Bank Cyprus. Journal of Economics and International
Finance, 5(5), 199-211. DOI: 10.5897/JEIF12.086
Yousaf, S., Latif, M., Aslam, S., & Saddiqui, A. (2014). Impact of financial and non-
financial rewards on employee motivation. Middle-East journal of scientific
research, 21(10), 1776-1786. DOI: 10.5829/idosi.mejsr.2014.21.10.21756
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