Analyzing the Impact of Reward System on Employee Motivation

This report examines the impact of reward systems on employee motivation, focusing on a study conducted among Walmart employees. The research investigates the relationship between employee perception of the reward system and their motivation levels. The study uses a questionnaire to gather data, followed by the construction of reward and motivation scores. Simple random sampling was used to select 25 employees. The analysis employs correlation and t-tests to determine if a significant positive relationship exists between the reward system and employee motivation. The findings suggest a strong positive correlation, indicating that Walmart's reward system effectively boosts employee motivation. The report also includes discussions on the sampling method, experimental design, data analysis, results, and potential areas for future research, such as improving measurement instruments and exploring structural models. The study concludes that the reward system has a positive effect on employee motivation.

Running head: IMPACT OF REWARD SYSTEM ON EMPLOYEE MOTIVATION
IMPACT OF REWARD SYSTEM ON EMPLOYEE MOTIVATION
Name of Student
Name of University
Author Note

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IMPACT OF REWARD SYSTEM ON EMPLOYEE MOTIVATION
Table of Contents
Background................................................................................................................................2
Sampling and Experimental Design...........................................................................................3
Analysis......................................................................................................................................5
Results........................................................................................................................................7
Future Research..........................................................................................................................8
Reference....................................................................................................................................9
Appendix..................................................................................................................................10

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IMPACT OF REWARD SYSTEM ON EMPLOYEE MOTIVATION
Background
Motivation is the innate force drive of individuals to accomplish personal goals and
organizational targets. Motivation in workplace works the same way. There is a lot of
literature that addresses exactly how well employee motivation could impact organizational
performance. The key question then arises that how can one invoke such a response. Reward
management come to mind which facilitates organizations for attracting and retaining
suitable employees as well as boosting motivation and improving performance (Njanja et al.,
2013).
Aguinis, Joo & Gottfredson (2013) had investigated the impact that monetary reward
has on the motivation of the employees. They reviewed existing literature on the subject and
went on to assert that systems rewarding employee performance using monetary
compensation are one of the most powerful tools for influencing employee motivation and
thereby employee performance, although it is not enough alone. They further asserted that in
addition, scope of skills training to facilitate growth and fair policy of rewarding performers
is imperative to achieve the end goal.
Agwu (2013) carried out a primary data analysis of employee job performance at
Nigerian Agip Oil Company limited, after the implementation of their reward system to study
whether and how it has been impacted. The cross-sectional survey study using stratified
sampling was conducted from October 2011 to September 2012 whereby it analysed
responses from managers, supervisors and workmen using chi-squared test and it concluded
that the implementation had indeed increased job performance by 82.05% while reducing
industrial action by 80.77%.

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IMPACT OF REWARD SYSTEM ON EMPLOYEE MOTIVATION
Kullgren & Norton (2013) had approached the subject in a different light by studying
whether and how group based incentives worked better than individual incentives to motivate
employees. The motivation of weight loss among employees of a firm was tested and the
authors had concluded that group based incentive group had lost more weight that the
individual ones.
Njanja et al.(2013), discusses the results of a study conducted to understand the
impact of the reward system in an energy company in Kenya on employee motivation. The
authors analysed the association between cash bonus and employee performance using
frequency data from a survey. The study however could not g=find any significant
association between the two and suggests that performance which is an indicator or
motivation is perhaps dependent on other inner behavioural patterns of the organization and
employee engagement which ought to be studied further.
The bottom line of this study is to gauge how effective the reward system of Walmart
in particular is to boost and drive employee motivation. The study takes into account
recognition as an additional reward parameter in defining the reward system. It rather takes
into account employee perception of reward rather than quantifying the reward as earnings
unlike the other approaches discussed and tries to find association between motivation and
effectiveness of reward system as perceived by the employees themselves.
Sampling and Experimental Design
The data relevant to this study consists of employees of Walmart. The employees of
Walmart were asked a set of questions regarding their experience in working at Walmart. A
questionnaire was distributed among employees of Walmart and a sample of size 25 was
selected using simple random sampling technique from the responses that came back. The
questionnaire distributed among the employees is given below:

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IMPACT OF REWARD SYSTEM ON EMPLOYEE MOTIVATION
Figure 1: Survey Questionnaire for Walmart Employees
The study collected data on how the reward system in Walmart is perceived by its
employees and in turn tried to capture their motivation as workers. The study then
constructed two scores, one that quantifies how well the reward system at Walmart is being
perceived by its employees and the other that quantifies the motivation of the employees
themselves.
The participants were asked to rate their agreement to the questions on an ordinal
scale of 1 to 5. The first three items were on the reward system of Walmart. The mean of
these three was taken to be the reward score of Walmart. The last three items tried to capture
how motivated the employees are while working at the company. The mean score of these
three was taken as the motivation score.
Simple random sampling is a robust and simple method of sampling. It is a
probability sampling method and it ensures that each individual member or unit in the
population has an equal probability of being included into the sample. It therefore ensures
that the sample is unbiased. The experiment takes into considerations employees from all
backgrounds irrespective of gender or age. However the sample size being small, the study
might be limited to the group of individuals being studied.

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IMPACT OF REWARD SYSTEM ON EMPLOYEE MOTIVATION
Analysis
The aim is to see whether the perception of reward system has a positive effect on the
motivation levels of the employees in the organization.
The hypothesis of interest and the null hypothesis can therefore be written as follows:
H0 : Employee motivation is not related to reward system (Null hypothesis)
H1: Employee motivation is positively related to reward system (Alternate hypothesis)
The primary assumption that is made in reference to this pair of conjectures is that the
relationship between the two aspects is linear. Then the hypothesis can be re-phrased in terms
of the correlation between the two scores M_score which is the motivation score and R_score
which is the perception score of the rewards system. The R_score is deemed as the
independent variable upon and the dependent variable is M_score. The hypothesis can then
be tested on the basis of the population correlation coefficient (ρ) and re-written as:
H0 : ρ=0 (Null hypothesis)
H1: ρ > 0 (Alternate hypothesis)
The conjectures can then be tested using the t-test for correlation. The test is a one-
tailed or specifically a right tailed test. The level of significance was assumed to be 0.05 or
5%. The test statistic is given by, r √( n−2)
√(1−r2) , which follows the t-distribution with degrees of
freedom n-2, which is 23 and where r is the sample correlation coefficient. The null is to be
rejected if the test statistic assumes a value greater than the critical value t0.95,23 (Abbott,
2014).

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IMPACT OF REWARD SYSTEM ON EMPLOYEE MOTIVATION
The first assumption for the test to be valid is that the data is from a randomized
sample which is satisfied by design in this case. The second assumption is that the conditional
distribution of the dependent variable given a particular R_Score value ought to be normal.
Hence the dependent variable ought to be normal. Again the regression of M-score on Y-
score ought to yield residuals which are random and close to zero (Howell, 2016).
The quantile-quantile plot maps the observed quantile values of the data against the
theoretical quantiles of the normal distribution was used to check the normality of the data. If
the scatter points are found to lie close to the 45 degree line then its deemed to be close to
normal. The chart was thus constructed using Excel and it was found that the M_Score
followed normality.
1.5 2 2.5 3 3.5 4 4.5 5 5.5
0
1
2
3
4
5
6
Q-Q Plot
Observed quantiles
Theoretical Quantiles
Figure 2: Q-Q Plot for Normality
Using the Data analysis Tool pack, the regression tool could be used to obtain the
residual error plot of the regression of M_score on R-score. The plot was found to have
values which are random and close to the zero line (Abbott, 2014).

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IMPACT OF REWARD SYSTEM ON EMPLOYEE MOTIVATION
1.5 2 2.5 3 3.5 4 4.5 5
-1.5
-1
-0.5
0
0.5
1
1.5
2
Residual Plot
R_score
Residuals
Figure 3: Residual Error Plot for regression of M_score on R_Score
Results
The scatter plot of M_Score against the R_Score was obtained as follows:
1.5 2 2.5 3 3.5 4 4.5 5
0
1
2
3
4
5
6
f(x) = 0.688919476944252 x + 1.09382885983024
R² = 0.346188954026705
Scatter Plot
R_Score
M_Score
Figure 4: Scatter Plot of M_Score on R_Score
The plot shows that the data is positively correlated. The correlation coefficient was
0.5883 and the test statistic was observed to be 3.489. The critical value was found to be
0.063 which is less than the observed statistic. The null was thus rejected at 5% level of

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IMPACT OF REWARD SYSTEM ON EMPLOYEE MOTIVATION
significance and it is concluded that the reward system at Walmart has a strong positive effect
on the motivation of its employees. Hence the reward system at Walmart is inferred to be
effective in rousing employee motivation.
Future Research
The study only addresses whether there is any association between motivation and
reward perception. The study may be augmented by improving upon the instrument of
measuring motivation and reward more thoroughly by digging deeper into the factors that
define motivation and using a larger data . There is also scope of trying to model how
different aspects of the reward system can augment motivation through structural models.

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IMPACT OF REWARD SYSTEM ON EMPLOYEE MOTIVATION
Reference
Abbott, M. L. (2014). Understanding educational statistics using Microsoft Excel and SPSS.
John Wiley & Sons.
Aguinis, H., Joo, H., & Gottfredson, R. K. (2013). What monetary rewards can and cannot
do: How to show employees the money. Business Horizons, 56(2), 241-249.
Agwu, M. O. (2013). Impact of fair reward system on employees‟ job performance in
Nigerian Agip Oil Company Limited, Port Harcourt. British Journal of Education,
Society and Behavioral Science, 3(1), 47-64.
Howell, D. C. (2016). Fundamental statistics for the behavioral sciences. Nelson Education.
Kullgren, J. T., & Norton, L. A. (2013). Individual- versus group-based financial incentives
for weight loss: A randomized, controlled trial. Annals of Internal Medicine, 158,
505–514.
Njanja, L. W., Maina, R. N., Kibet, L. K., & Njagi, K. (2013). Effect of reward on employee
performance: A case of Kenya Power and Lighting Company Ltd., Nakuru,
Kenya. International Journal of Business and Management, 8(21), 41.

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IMPACT OF REWARD SYSTEM ON EMPLOYEE MOTIVATION
Appendix
Table: Collected Primary Data from Wal-mart Employees
The company
appraisal scheme
is satisfactory?
The management
recognizes high performers
and duly rewards them?
The
incentive
policy is
good?
Compe
titiven
ess?
DO you
expect a
promotion
soon?
Do you
like
your
job?
3 3 4 4 3 4
4 3 3 5 4 5
2 3 3 3 2 4
4 2 4 3 4 3
2 2 3 2 1 3
3 4 4 5 5 5
3 4 5 2 3 4
4 2 3 3 2 3
3 2 3 4 1 3
5 5 3 5 4 4
3 1 3 2 1 2
3 5 4 5 3 4
3 4 4 5 2 4
2 2 2 3 1 2
3 2 4 4 1 2
3 2 4 4 3 3
4 3 4 4 3 3
5 4 5 5 4 4
4 2 3 3 2 3
4 3 4 3 3 3
4 3 4 4 3 5
1 5 5 4 5 1
3 4 1 5 4 1
1 4 2 4 1 3
3 1 4 4 4 1