Limitations of Financial Rewards in Organizational Behavior

This article explores the limitations of financial rewards in organizational behavior and how it affects employee motivation, performance, and socio-cultural environment. It also suggests a strategic approach to compensation structure to reduce attrition.

Running head: ORGANIZATIONAL BEHAVIOR
Organizational Behavior
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1ORGANIZATIONAL BEHAVIOR
“Monetary benefits” is a debatable topic which according to a few scholars is beneficial
while disadvantageous according to the few others. As opined by Härtel and O’Connor (2014), a
monetary benefit is like a “hidden cost of reward” which can affect the employees’ intrinsic
motivation. It can do so by undermining their self-confidence in their own capabilities.
According to Nyberg, Pieper and Trevor (2016), despite having an impact on employees’
performance, “monetary benefits” is an undeniable issue. It continues as if an issue due to the
shortage of sufficient academic studies on identifying the disadvantages of implementing the
financial rewards. These facts just propose an argument that limitations of pay-for-performance
have not yet been studied extensively. The study is, therefore, aimed at providing evidence on
the proposed argument.
Thesis statement: “The limitations of financial rewards have not yet been explored”
The proposed argument can also be understood through a few relevant theories such as
the "Achievement Motivation Theory”. As stated by Shin et al. (2017), the achievement
motivation theory states that people have varying capabilities with respect to negative and
positive feelings for certain things which happen around them. They learn to relate to those
things as they grow in their maturity level. This is the moment of life when they are into the
‘achievement situation’ where the feeling to fear from challenging task get converted into
feelings of pleasure. These are situations when people can take risks and personal responsibilities
in dealing with unpleasing situations. It happens only when they are intrinsically satisfied.
In the opinion of Härtel and O’Connor (2014), the essence of organizational behavior is
to identify and implement the best practices to produce results. It means that relevant practices
can be applied to an organization set to influence the employees’ commitment to work. Such
practices include but not limited to, like an integrated work relationship between the human
resource professionals and the management. HR professionals can contribute to it by closely
monitoring employees for their performance, hidden skills and potential qualities. In this way,
Human professionals can have sufficient data which they can share with the management and
help to understand the employees’ behavior. Managers can then use a different motivating factor
variably meeting the distinguished data set. It also implies that a motivating factor designed this
way can expectedly have a bigger impact on employees' performance.

2ORGANIZATIONAL BEHAVIOR
As argued by Strauss, Parker and O'Shea (2017), motivation to work is composed of
three pillars such as concentration, direction and determination. It is important for managers to
learn organizational behaviors to apply settings to drive the employee motivation. However,
contemporary managers have misunderstood it and have found ‘pay-for-performance’ as their
only motivating weapon. It does make a difference and proves worthy in a few cases as well.
However, it can potentially harm the intrinsic motivation of most other employees. It can happen
because it misses on a motivational talk which is much more a motivating factor to many. On the
other hand, it can also affect the creativity in employees those who seem like being motivated by
financial rewards. It causes them to feel with limited capabilities when they are asked to think
beyond they constantly do. Monetary incentives did work in the 20th century when workers had
required doing a lot of physical works. The 21st century is more about intangible abilities and
creative thinking which is not possible through monetary benefits.
As argued by Guerci et al. (2015), monetary benefits can affect the socio-cultural
environment in the workplace and can also encourage an adherence to unethical practices. It is
indeed important that different cultures are integrated to attain one shared vision. It is also
important that employees are helpful to each other and are involved in social activities. There
should not be any obstacles like racism, workplace bullying, cyber-bullying and others.
According to Guerci et al. (2015), few people will desperately look to earn the incentives
whereas others will not be willing to go the extra mile. They are rather happy with what they
have been doing so far. Additionally, there will be unwanted competition between employees
and they can also try to out-do others. Such practices can never be good from the socio-cultural
perspective. Employees may lose their willingness to support the others and will always look to
compete with them. Probably, they may also find some other ways of doing better than the most.
They will be into the practices which are unethical as per the organizational policies of ethical
conduct. Hence, monetary benefits can create a platform where there is less respect for others
work. Work environment will be less friendly. They may not be able to work as a team.
Employees will become less creative. Ethical practices to leverage the incentive structure will
also be there.
According to Yousaf, Yang and Sanders (2015), a strong incentive structure can
encourage unethical practices and employees at the end of delivering the work will feel as if they

3ORGANIZATIONAL BEHAVIOR
did no wrong and the outcome is justifiable. They will develop a tendency to select the easiest
and shortest path to attain it. Their behaviors are so pervasive that they have an answer to every
escalation raised against their unethical practices. Unethical practices can include but not limited
to such as ‘not entirely meeting the quality parameters’, ‘using the alternative ways to do the
task', ‘taking the unethical assistance of outsiders’ and ‘focusing just on one parameter and that
to work fast’. Additionally, financial incentives can create an environment of pay inequality
which can lead to serious consequences like a turnover. Performance of a few employees can
also be affected by. A compensation benefit is not just a resource to financial needs but also
signifies the values and status. This is why there can be comparisons between benefits being
distributed between the managers and the employees. Employees will end up having frustration,
envy, jealousy, resentment and disappointment. They will feel overlooked and will simply look
for the better options. Therefore, monetary benefits create pay inequalities which demoralize
collaboration, performance and retention.
According to Gagné (2018), organizational behavior is undergoing a number of
developments currently; however, the level of developments is different in SMEs and
multinational firms. SMEs are hanging around things they have been doing such as recruitment
& retention, training and the incentives program. Despite implementing these strategies, they are
finding it difficult to reduce the attrition. They have continued to recruit fresh talents but have
failed to improve the rate of retention. They have become dependent on incentives program;
however, have failed to analyze its impact on employees and the workplace environment. There
is a need for integration between the management and the human resource towards the
attainment of goals. They should work in areas like the socio-cultural environment and ethical
practices at the workplace which are getting affected by the incentives program. On the other
hand, many big firms are trying to improve its compensation plans by including a list of new
benefits to employees like wellness program, leave policy and others. These policies are
definitely the few of the requirements which employees look to. However, they have other needs
and wants as well. When such needs and wants go unnoticed, attrition occurs. It is best to have
the regular feedback sessions where employees will be given to sharing their expectations from
the management. Implementing all the feedbacks can be difficult; however, those that are
feasible with organizational capacity should be implemented. Until and unless employees are
valued, they will not feel like being the part of the company in long-term.

4ORGANIZATIONAL BEHAVIOR
In the opinion of Elmishali, Stern, and Kalech (2018), few companies are adopting the
emerging technologies like artificial intelligence (AI). They are doing it to reduce the workload
which can be a good idea to improve the employee satisfaction level. Implementing (AI) in
appropriate areas will also enhance the work efficiency and speed up the process. Human
resource and the management will then have the option to shift from existing monetary policies
to a more strategically defined compensation structure. Strategies will help to redesign the
compensation structure and to make it more relevant with employees. Non-monetary benefits can
produce a relatively better impact not only on the performance but also on the quality of work.
This will promote adherence to the ethical code of conducts, attainment of culture to perform and
adaptability with social awareness.
In summary, it can be concluded that a strategic approach from the management and the
human resource will of high values in regards to improving the compensation structure.
Compensation structures have undergone and are undergoing the changes to make it much more
relevant to employees. However, attrition is still happening. Attrition is a big issue considering
the global shortage of skilled workforce and the investments made in the training & development
programs. A zero percent attrition is close to impossible; however, it can be reduced effectively
by using the strategically planned compensation system. In this regard, the role of management
and the human resource will of high values. They should integrate and try to collect as much data
as possible reflecting the needs and wants of employees.

5ORGANIZATIONAL BEHAVIOR
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