Pros and Cons of Using Financial Rewards to Motivate Employees

Student Name
INSTITUTIONAL AFFILIATION(S) |
Organizational
Behaviour
RESEARCH ESSAY

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Money and other financial rewards are a fundamental part of the employment
relationship and can be used effectively in motivating employees. Discuss
pros and cons of this argument.
Motivation is a complex and challenging, yet interesting area in organisational
behaviour studies that is rapidly changing in terms of functions, nature, purpose and
mode of application. It is usually agreed that employers need employees work in a
motivated and effective manner and when these employees do not meet the desired
expectations, they require to be motivated for enhancing employment relationship as
well as organisational performance (Zafar, et al., 2014). Motivation can be defined as
one of the driving forces that builds desire among people to act or perform without
undue manipulation or pressure. The concept behind money and other financial
rewards for employment relationship and for motivating employees is discussed
extensively by researchers and authors and thus this research essay will analyse
their view points concerning the above statement. After evaluating different
organisational behaviour theories, this essay will find pros and cons behind financial
rewards for motivating employees before giving recommendations for any cons
observed.
The existence of rewards is becoming an increasing issue within management
and business practitioners concerning what kind of reward system shall be
implemented in the organisational setting to fulfil the desired target (Kamugisha,
2017). This means, which kind of extrinsic, social or intrinsic rewards must be utilised
so that employment relationship is established along with enhancing workplace
performance. Where some authors argue that the most suitable way to motivate
employees is by considering extrinsic values others believe that non-monetary
values like job security, authority and ranking along with belongingness influences
employees the most (Dosenovic, 2016). Evaluating the argument from Maslow’s
theory, it is found that a person will act selflessly if all his/her basic requirements are
satisfied and thus Maslow called such motivations as ‘deficiency needs’. According
to his hierarchy of need model, it can be said that monetary rewards have positive
effects on employees as they help them in accomplishing primary goal in the

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hierarchy of need. If the employees show satisfaction in their initial cravings, they
tend to move forward towards other self-actualisation needs. Therefore, it is
recommended by Salah (2016) that organisational leaders must understand and
identify active human needs of every individual present in organisation.
Vroom’s initial idea about money as valence is because of his believe that
money is an instrument through which people can attain desired material needs.
Additionally, money have symbolic value and it further perceive relationships into
status, prestige and other factors. Therefore, monetary and other financial rewards
clearly have higher valence than other noncontingent incentives, depending upon
relative pay timings (Osabiya, 2015). However, Shahzadi, et al. (2014) argues that
monetary benefit is one way through which motivation among employees can be
boosted, but non-monetary rewards proves more effective motivator as these
rewards have intrinsic motivational impact over workforce. Employees who are
extrinsically motivated relishes their job while non-monetary rewards provide them
with those rewards that are associated with non-monetary benefits like training and
development, flexibility in duty hours and instant recognition. Since non-monetary
rewards provides employees with strong sense of stability and security, they remain
inspired and motivated from within. Therefore, organisational performance tends to
raise at its peak through offering non-monetary rewards more than monetary ones
(Waqas & Saleem, 2014).
Self-efficacy models considers those believes in which employees behaviour
finds out whether he/she can execute a given work or not that posits a significant
determinant of individual efforts. In other words, self-efficacy can act as another
variable than goal which effects key dimensions of employee efforts therefore
impacts personal goal and commitment towards organisation. In other words, self-
efficacy and social cognitive theories suggest that although monetary rewards fulfil
individual requirements, non-monetary goals increase organisational performance by
motivating workforce by fulfilling intrinsic needs ( Antoni, et al., 2017). According to
Salah (2016), though cash rewards are usually welcomed by employees, employers
must never use this as a primary tool of motivation or for improving organisational
performance. Should this happen, the essence behind reward might get forgotten
with time. In literature, a great deal of findings show that different people perceive
rewards in different way along with valuing them for their relationship with the