The Impact of Effective Organizational Reward System on Corporate Performance: Literature Review

Running Head: LITERATURE REVIEW
Intermediate Literature Review: The Impact of Effective Organizational
Reward System on Corporate Performance
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1LITERATURE REVIEW
The Impact of Effective Organizational Reward System on Corporate
Performance: Literature Review
According to the researchers Eccles, Ioannou and Serafeim (2014), corporate
performance of a business or commercial organization is driven by the efforts and work outputs
of the employees working in the organization. While the management board emphasizes on
monitoring of the internal and external operations, the employees are responsible for executing
all the operational and marketing works for the organization. Hence, it is important to motivate
the employees from time to time such that they enhance their performances and in turn help to
enhance the corporate performance of the organization.
According to Epstein (2018), the primary target of business organizations is to enhance
corporate performance on a constant basis. Most of the business organizations have identified
that corporate performance is enhanced based on two main factors – technology and employee
productivity.
Lee and Steers (2017) said that in addition to the upgradation of technology, it is
important to keep the employees happy and motivated in order to maintain or enhance their
productivity. The authors have found that one of the major steps taken by most of the business
organization to ensure the employees are motivated to work is incentive or reward i.e. the
employees are rewarded with bonus or other rewards in addition to their regular salary. Most
organizations think this is an effective method to keep the employees happy and motivated and
they also get more competitive to earn more rewards based on their performance.

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On the other hand, Valmohammadi and Ahmadi (2015) said that organizational reward
may not always be effective to motivate the employees to increase their productivity. This is
because, some employees may have the mindset to perform only a fixed amount of work per day
and earn their fixed salaries only as well as they do not feel the need to earn any additional
rewards. Again, there are some employees who get overconfident after received one or two
rewards and they slowly start to reduce their productivity. In these cases, the corporate
performance of the organization does not increase at the expected rate and the reward system
fails.
Paillé et al. (2014) argued that while motivating the employees of the organization is
important, it does not necessarily mean the company needs to pay rewards to the employees with
vision to enhance the overall corporate performance. The authors said that employee motivation
can also be done through regular friendly interactions, allowing scope for interactive sessions,
indoor games, fun activities, breaks during holidays and others. These occasional activities allow
the employees to be more refreshed and motivated to work. Thus, the authors want to make a
point that the companies need to pay rewards financially to motivate the employees and enhance
the corporate performances.
Story and Neves (2015) on the other hand expressed a different opinion regarding
organizational rewards. According to the authors, while occasional recreational activities do
freshen up the employees before they go back to their regular duties, it is important to reward
them financially in order to motivate them to enhance their capabilities of providing work output.
This is mainly because the employees are working for the organization for financial gain only
and additional financial rewards will motivate them to work harder and earn more rewards from
the company. The authors also said that the companies should have specific strategies for

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designing and rolling out rewards and incentives for the employees that will not impact the
companies financially but at the same time will allow the employees to be rewarded and
motivated to enhance their performances.
Wang and Hou (2015) made a detailed research on the performances of the employees in
an organization and how the performances are affected by various inputs from the organization
itself. The authors also showed the interrelationship between the various organizational attributes
related to performance that is shown in the following diagram.
Figure 1: Performance Relationship in an Organization
(Source: Wang and Hou 2015)
The author described that behaviour and performance are two interrelated attributes for
both employee and the organization that ultimately affect the overall organizational performance.