Impact of monetary rewards on employee relationship and motivation

This essay discusses the impact of monetary rewards on employee relationship and motivation. It evaluates various organisational behaviour theories to determine the pros and cons of monetary rewards. Recommendations are given to the management to use organisational behaviour theories while giving intrinsic and extrinsic rewards to employees in order to achieve corporate targets and improve their performance.

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Organisational Behaviour
Impact of monetary rewards of employee motivation

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Impact of monetary rewards on employee relationship and
motivation
Motivated employees are highly productive, and they focus on achieving their targets in the
organisation. The senior level executives in a corporation focus on building a strong
relationship with employees in order to motivate them to perform better. Strong
relationships with talented employees also assist in retaining talented workforce in the
company which is crucial for its success. While motivating and building relationship with
employees, the senior level executives rely on organisational behaviour theories.
Organisational behaviour is the study of individuals or groups in an organisation setting. The
theories of organisational behaviour assist the management in evaluating various factors
which affect job satisfaction, relationships, conflict and performance of employees and
establishing a working environment which fosters employees’ growth (Wagner III and
Hollenbeck, 2014). Successful organisations are those who are able to retain talented and
experienced staff in their organisations and motivate them to achieve common corporate
objectives and to achieve this target, they rely on both intrinsic and extrinsic rewards.
Extrinsic rewards including money and other financial benefits which are given by the
management to employees in order to encourage them to improve their performance and
achieve common organisational objectives (Morgeson et al., 2013). In this essay, various
organisational behaviour theories will be discussed to evaluate how monetary rewards
influence employee relationship and motivation to evaluate their pros and cons. Lastly,
recommendations will be given to the management to use organisational behaviour
theories while giving intrinsic and extrinsic rewards to employees in order to achieve
corporate targets and improve their performance.
Developing and building strong relationship with employees is important for the
management since it assists them in retaining highly talented staff members who contribute
to the success of an enterprise. While building strong relationship with employees their
personality and attitude plays a significant role. In order to evaluate the personality of
employees, the management can implement an organisational behaviour theory called
‘Personality Types A and B’. In this theory, two theorists provided two different behaviour
syndromes which are extreme and allow the management to look into different stress levels

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of employees (Naylor, Pritchard and Ilgen, 2013). Both of these personality types are split
into two different spectrums which are referred as Type A and Type B personality. The
theory provides that Type 'A' personality employees are more likely to work better for long
hours, tight deadlines and larger amount of work. Employees who belong to Type 'A'
category are quite competitive, therefore, they are motivated to improve their performance
continuously, and they always strive to perform better (Barrick, Mount and Li, 2013). On the
other hand, Type B personality employees include completely opposite of Type 'A'
personality. These employees are able to sit down and relax, and they meet provided
deadlines without rushing the work or doing any overtime. These employees are able to
effectively cope with pressure which allows them to turn their decisions around. However,
due to a relaxed approach, these employees are less likely to strive for perfection and
perform their work as planned (Judge et al., 2013). Thus, to build strong relationships, the
management should ensure that employees with similar personality types belong to similar
groups which avoid conflicts and build strong and positive relationships between employees
and the management. In this context, money or other financial rewards did not play a
crucial role since the management cannot earn someone loyalty by giving them monetary
rewards which is their biggest disadvantage.
Only building strong relationships is not enough to improve the performance of employees,
motivation is a key aspect as well. In order to motivate employees, monetary and other
financial rewards play a crucial role. For example, Equity Theory of motivation was
developed by John Stacey Adams which is focused towards motivating employees. The
theory assists the management in explaining the conditions which do and do not motivate
employees (Luthans, Luthans and Luthans, 2015). This theory also evaluates why giving one
person a promotion or monetary benefits will result in demotivating others. The theory
provides that when employees feel advantageously or fairly than they are more likely to be
motivated to better themselves and achieve organisational goals. On the other hand,
employees who feel disadvantageously or unfairly treated are likely to be demotivated and
less likely to perform better. Adams argued in this theory that employees seek to maintain
equity between the inputs which they put in their work and the output which they receive
(Juneja, 2018). Thus, as per this theory, monetary rewards are a significant factor which can
result in motivating employees and building strong relationships which is their biggest

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advantage. For example, employees who are performing at their highest capacity and
achieving organisational goals should be treated fairly by the management by giving them
monetary rewards. It enables them to feel advantageous which would also encourage
others to improve their performance to receive same benefits as them. However, in case the
management failed to determine the efforts of employees to perform better, and they are
not rewarded appropriately, then it can make them feel unfairly treated, and they are likely
to be demotivated (Bell and Martin, 2012). Thus, the management should provide monetary
rewards to employees who perform exceptionally well to motivate them.
Other than monetary rewards, the management also provides various intrinsic rewards to
employees in order to motivate them and build strong relationship with them. Not all
employees want to get monetary rewards, and they prefer to get intrinsic rewards such as
recognition of their good work by the top-level management or appreciation in front of their
team or the entire company (Cho and Perry, 2012). These employees generally work at the
mid or top-level managerial positions, and they are financially secured. Money is not priority
for them, and they seek other valuable factors such as strong relationships with peers,
positive working environment, appreciation from senior executive and others. The top-level
management cannot rely on monetary and other financial rewards to keep them motivated
or build strong relationship with them (Cerasoli, Nicklin and Ford, 2014). Thus, intrinsic
rewards have their pros and cons as well. As per the ‘Expectancy theory’, the motivation of
employees depends on the outcome of their performance. This theory is developed by
Vroom who argued that people are motivated to perform better if they like the result for
meeting such target. For example, if the management is giving monetary rewards to
employees for achieving organisational goals, then mid and top-level managerial personnel
are less likely to be motivated to engage in the process and improve their performance
(Lazaroiu, 2015). Since they did not want monetary rewards, they did not like the result of
achieving corporate targets which is a disadvantage of monetary rewards. Thus, they are not
motivated to improve their performance and achieve common organisational goals.
By using appropriate organisational behaviour theories, the management can motivate
employees to perform better along with building strong relationship with them. For
example, in order to decide whether to provide intrinsic or extrinsic rewards to employees,
the management should implement Maslow Hierarchy of Needs theory. This is one of the

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most popular theories of motivation which is used by corporations across the globe. The
theory categorised needs of employees into five categories based on which management
can evaluate the needs and provide them appropriate rewards. For example, lower level
employees have physiological or safety needs which can be satisfied with monetary or other
financial rewards (Jerome, 2013). On the other hand, mid and top-level employees have
belongingness, esteem or self-actualisation needs which are satisfied by intrinsic rewards.
Based on this theory, the management can evaluate employees who are likely to be
motivated by monetary rewards, and they can fulfil their needs to build strong relationship
with them. Based on this organisational behaviour theory, corporations are able to create
and reinforce a positive workplace environment which supports and sustain strong co-
worker relationships (Kaur, 2013). Thus, the use of organisational behaviour theories is
relevant for modern organisations to sustain their future growth since it enables them to
achieve corporate objectives by retaining a workforce of highly motivated workers.
From the above observations, it can be concluded that there are a number of factors which
are used by enterprises to build strong relationship and motivate their employees.
Monetary rewards are one of the most common ways for the management to motivate
their employees; however, they have both pros and cons. As per personality theory, strong
relationships at the workplace are created by personality of employees rather than
monetary rewards. Furthermore, equity theory provides that employees who receive
monetary rewards as per their performance are more likely to perform better and achieve
common organisational goals which is advantage of monetary rewards. When it comes to
motivating employees, both intrinsic and extrinsic rewards play a crucial role. They
encourage employees of all levels to achieve their respective targets while contributing to
the overall success of the enterprise. Moreover, recommendations are given in the essay for
the management to use hierarchy of needs theory in order to motivate their employees by
assessing their needs. The theory provides that employees from all levels have separate
needs which cannot be fulfilled by either intrinsic or extrinsic rewards, thus, the
management should not solely rely on monetary and other financial rewards while
motivating employees and building strong relationship with them.

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