Pros and Cons: Monetary and Other Financial Rewards

This essay critically evaluates the role of monetary rewards in building strong relationships with employees and motivating them. It discusses both pros and cons of financial rewards by analyzing different organizational behavior theories. The essay concludes that while monetary rewards are a fundamental part of motivating and building strong relationships with employees, organizations cannot rely on them as the only source of motivation. They should provide intrinsic rewards as well to ensure that employees feel valued in the organization.

Organisational
Behaviour
2018

PROS AND CONS: MONETARY AND OTHER FINANCIAL REWARDS
Most employers are looking for finding new ways to maximise employee productivity and
efficiency. Building strong relationship with them and motivating them are two key ways in
which they can maximise the performance of their workforce. However, it is difficult for
employers to motivate their employees because motivation is intrinsic element which is
difficult to influence through external means (Graves, Sarkis and Zhu, 2013). Many theories
argue that there are various ways to motivate employees by finding what employee values
are, whereas, others argue that monetary rewards are the fundamental way to improve
employee motivation. Monetary and other financial rewards are one of the most common
ways for employer to motivate their employees’ performance because everyone needs
money and people work to afford basic necessities and fulfil their desires. Although it is the
most common way of motivating employees, however, it does not mean that it is the most
effective way to motive every employee. As per organisational behaviour theories, there are
different elements which affect the motivation level of employees which cannot always be
fulfilled by monetary rewards (Hau et al., 2013). Similarly, the key to build strong
relationship is not monetary rewards; instead, employees must feel like a part of the
organisations. This essay will critically evaluate the role of monetary rewards in building
strong relationships with employees and motivating them. Both pros and cons of financial
rewards will be discussed in the essay by analysing different organisational behaviour
theories.
The use of monetary rewards is a universal way of motivating employees and building
strong relationship with them. Well paid employees are happy employees, and they like to
work for their organisation. Similarly, employees are more likely to strive and achieve their
goals if it provides them financial benefits. It is a universal concept because most employees
work to get paid so that they are able to afford basic necessities along with their luxury
desires (Aktar, Sachu and Ali, 2012). The biggest advantage of financial rewards is that it
appeals to a larger audience globally. However, many organisational behaviour theories
provide a contradicting approach. For example, Abraham Maslow argued in his theory that
motivation of employees is based on the fact whether achieving organisational targets will
result in fulfilling their needs (Cao et al., 2013). He provided the ‘hierarchy of needs’ theory
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which provides that there are five types of employee needs. After fulfilment of one need,
the employee move to another need, and he/she can no longer be motivated by such need.
It has been found that the employees who fall into the category of physiological and safety
needs get easily motivated by satiating their financial needs, examples of which are salary
hike, incentives and bonuses. However, employees who belong to middle-level or senior-
level positions belongs to belongingness, esteem or self-actualisation needs category, and
they are motivated by non-financial rewards example of which include appreciation,
recognition and sense of achievement (Milheim, 2012). It shows that monetary rewards
might be a fundamental part of motivating employees; however, they are not suitable for
every employee.
There are various advantages of monetary rewards and one of them being its ability to
appeal to a wider audience since everyone requires money to fulfil their needs. However, as
discussed in the hierarchy of needs theory, after fulfilment of one needs, the employer
cannot rely on such need again to motivate an employee. Thus, employees who did not
choose a job for money are less likely to be motivated by financial rewards. These
employees seek intrinsic rewards while doing a job such as collaborative and supporting co-
workers, positive environment, flexible management and others (Aguinis, Joo and
Gottfredson, 2013). Therefore, for these employees, job satisfaction is a priority rather than
money. In this context, the ‘Two-factor theory’ which was developed by Frederick Herzberg
is helpful. The theory provides that ‘motivators’ factors affect satisfaction of employees,
whereas, ‘hygiene’ factors are responsible for the dissatisfaction of employees. Hygiene
factors include base salary, working conditions, relationship with co-workers, flexible
management, and others. Presence of these factors results in decreasing job dissatisfaction
among employees. Motivator factors include the growth of the employee, recognition from
top management, achievement and others. Presence of these factors increases job
satisfaction of employees (Ghazi, Shahzada and Khan, 2013). Based on this theory, it can be
seen that although monetary rewards are a fundamental part of employee motivation,
however, they are not enough for satisfying employees which is crucial for building a
relationship and motivating them.
In recent years, the competition between enterprises has increased along with the demand
of a talented workforce. Corporations pay high salary packages to talented and experienced
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employees still they find it difficult to retain them in the organisation. Generally, these
employees are looking for intrinsic factors which contribute to their job satisfaction level;
they wanted to work for something valuable along with supporting workforce, and they
attract towards positive organisational environment (Dysvik and Kuvaas, 2013). Therefore,
world’s biggest companies such as Apple and Google are known for providing positive
workforce environment for their employees to attract talented employees through the
world. In this aspect, monetary rewards are not suitable to attract talents workers, and they
are more likely to work for an enterprise which is paying less but has a positive working
environment. In many cases, bonus or other incentives are considered as an entitlement
rather than a motivator for employees. The advantage of monetary rewards is that it is
easier for employees to understand financial schemes, and they are more likely to be
engaged in them. However, if monetary rewards are paid based on the performance of
employees, then it creates a negative working culture in the enterprise where employees
are constantly trying to outperform their co-workers (Fang and Gerhart, 2012). Another key
disadvantage of monetary incentives is that they become less effective over time and
employees are less likely to be motivated by them for a long period of time.
Based on the above discussion, it can be seen that monetary rewards are a fundamental
part of building a relationship with employees and motivating them, however, corporations
cannot rely on them as only source to motivate employees. There are various disadvantages
of relying only on monetary rewards to motivate employees which lead to a highly
dissatisfied workforce. In order to address these issues, employers can rely on
organisational behaviour theories (Ozutku, 2012). While building a strong relationship with
employees, employers should also evaluate various social, cultural and ethical factors. For
example, in Japan, employees are expected to work harder and for longer period of time as
it is a part of their culture. On the other hand, employees working in western countries
prefer to work for limited hours to engage in their personal life. Thus, these factors should
be evaluated by employers in order to build strong relationship with their workers.
Furthermore, for motivating employees, organisations can rely on various organisational
behaviour theories such as Goal setting theory. There are four key propositions given by this
theory which assist in explaining employee behaviour to understand why employees strive
to meet their targets and why they are not working harder as they should. This theory
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provides that the employers should create challenging and specific goals for employees to
achieve, and they should be rewarded for achieving such goals (Locke and Latham, 2015).
However, they should not always provide monetary rewards to employees. They should
evaluate their needs and rely on intrinsic rewards as well to ensure that employees feel
valued in the organisation. The theory provides that commitment of employees is necessary
which also build strong relationship with employees and knowing the result of the last
objects motive employees to increase performance and strive to beat their record (Latham
and Locke, 2012).
To conclude, monetary and other financial rewards can be considered as a fundamental part
of motivating and building strong relationship with employees because people work to fulfil
their needs. However, organisations cannot just rely on monetary rewards to motivate
employees, and they have to provide them intrinsic rewards as well. As discussed in the
hierarchy of needs theory, each employee has different needs which cannot be satisfied by
financial rewards only. Furthermore, in recent years, the importance of job satisfaction has
increased based and people prefer to work in the positive working environment rather than
a hostile environment for more money. The two-factor theory is discussed in the essay to
understand how various factors affect job satisfaction of employees. Thus, there are both
advantages and disadvantages of using financial rewards in an organisation to build strong
relationship with employees and motivating them however it is not a sustainable option. For
longer period time, most people prefer intrinsic rewards over financial rewards such as
positive organisational environment, flexible management, collaborative workforce and
others. Thus, for effective motivation and strong employee relationship, organisations
should rely on both intrinsic and extrinsic rewards rather than just financial rewards. It will
result in building strong relationship with employees along with motivating them to achieve
common organisations goals.
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REFERENCES
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