HRM Strategies: Managing Employee Performance and Rewards Report

This report analyzes the human resource implications of employee performance and rewards, focusing on a news story about Samsung's bonus payments to its mobile division employees. It explores the role of rewards in motivating employees, examining reinforcement, expectancy, equity, and agency theories. The report discusses different types of rewards, both extrinsic and intrinsic, and emphasizes the importance of compensation in enhancing employee morale, job satisfaction, and performance quality. The analysis highlights the need for a fair and transparent reward system to retain employees and achieve organizational goals. Desklib offers a variety of resources, including solved assignments and past papers, to aid students in their studies.

Running head: MANAGING HUMAN RESOURCES
Managing human resources
Name of the Student
Name of the University
Author Note

1MANAGING HUMAN RESOURCES
Executive Summary
The aim of this report is to analyze an issue related to the Human Resource implications of
employee performance and rewards. To prepare this report a news report on the same topic will
be chosen and analyzed relating the topic with the HRM strategies and other human resource
management challenges faced by companies. The effects of rewarding the employees to motivate
them will be analyzed in the report.

2MANAGING HUMAN RESOURCES
Table of Contents
Introduction......................................................................................................................................3
The Issue Related To Performance and Rewards in the Story....................................................3
The Theories on Compensation or Rewards and the Performance of Employees......................4
Reinforcement Theory..................................................................................................................4
Expectancy Theory.......................................................................................................................5
Equity Theory...............................................................................................................................5
Agency Theory.............................................................................................................................5
The Different Types of Rewards.................................................................................................6
Importance of Rewards or Compensation...................................................................................9
Conclusion.......................................................................................................................................9
Reference list:................................................................................................................................11

3MANAGING HUMAN RESOURCES
Introduction
Employee performance and rewards management is a process of rewarding the
employees in terms of various benefits, compensations and wages to ensure that the employees
are satisfied with their job role, provide their best foot forward and give maximum productivity.
The reward management system was introduced after the psychologists studied the behavior of
the individuals how the people reacts to rewards and compensations and how it motivates them
to continue with their best performance. The psychologists have created certain motivational
theories, which are closely related with the ideas of motivational reward system. In this report
the article related to Samsung paying reward to the employees will be analyzed, the main issue
of rewards will be explored. The topic will also be discussed relating it with the employee
relations challenges, performance management, learning and development, motivation and
rewards, managing diversity, and employee turnover and retention.
Having an efficient system of reward, is compulsory so that the employees come to know in
details about their task sand display the skills to do it, they will have the level of motivation
required to work and provide best performance. The chief purpose of this report is to identify the
issue related to performance reward management, analyze the theories related to the topic and
finally to provide solutions to the problem.
The Issue Related To Performance and Rewards in the Story
The story provided in the article is about the company Samsung, the company has paid
special bonus to their employees belonging to their “mobile division” who were sincere in their
work (Haider et al., 2015). Despite of the poor performance of the company for that year, they
kept the division running and prevented any unnecessary ramp down in the company, as
Samsung was not doing well in business during the year. Samsung has taken up this initiative to

4MANAGING HUMAN RESOURCES
motivate their employees during such a trying time by paying them bonuses (Pepper & Gore,
2015). According to the words of a Samsung official, “Samsung will try to motivate workers
through proper compensation. The decision for maximum bonuses to mobile employees includes
the company management’s hopes to proceed on their given mission under new leadership.” The
chief issue to identify in this report is to find out the role of rewards and performance pays and
how that motivates the employees, whether financial compensation really motivates the
employees to continuing with their best performance, how is compensation related to employee
motivation (Joshi et al., 2015).
The Theories on Compensation or Rewards and the Performance of Employees
To understand which of the components of compensation are better in effectiveness, the
theories of remuneration of employees are required to be (Caza, McCarter& Northcraft, 2015).
There are three such theories of employee compensation Reinforcement and Expectancy
theories, Equity theory and Agency theory.
Reinforcement Theory
According to the Reinforcement theory, the action of a person which is rewarded or
appreciated is going to be repeated again(Malik, Butt & Choi, 2015). The effect of compensation
is that if an employee provides high quality of work and for that, if monetary rewards are given
to that employee then he/she will be more likely to continue producing such work again (Lee et
al., 2015). Following the same theory, if a high quality performance is not followed by respective
compensation then it is likely that such action will never be repeated again in the future (Terera
& Ngirande, 2014). The theory emphasizes the importance of a person actually experiencing the
reward.

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Expectancy Theory
Similar to the Reinforcement theory, Expectancy theory propounded by Victor H. Vroom
a professor in Yale School of Management, focuses on the connection between compensations or
rewards and behavior(Hameed, Ramzan& Zubair, 2014). According to the Expectancy theory,
motivation is the product of valence, assistance and individual expectancy. The systems of
remuneration can vary when these motivational components will be impacted. Valence of pay
and its outcomes remain the same within different remuneration systems. The Expectancy theory
deals more with the design of a job and training rather than pay framework.
Equity Theory
According to Equity theory, the employee who experiences inequity or unfairness in his/
her compensation always seeks to bring in equity(Kala, 2015). The theory proposes equality in
the remuneration framework of the employees.
The treatment of the employees by their firms holds utmost importance to them. The
statement which says “a fair day work for fair day pay ”brings about a sense of equity among the
employees. When employees experience inequality then it can result in decrease in productivity,
high number of absentees or decrease in revenue of the company.
Agency Theory
The agency theory emphasizes on the various goals and aims of the stakeholders oh an
organization and the ways in which remuneration of an employee can be modified to suit those
goals. In a business unit, the two stakeholders are the employees and the employers, employees
take upon the role of principals and the employees play the role of agents (Aslam et al., 2015). It
is natural that the employees expect high agency costs while the employers seek to minimize it.

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According to the agency theory the employer or the principle must pick a contracting plan that
can adjust the interests of the employees or the agents with the interests of the employer. These
agreements can be delegated either “behaviour oriented” (e.g. merit pay) or “outcome oriented”
(e.g. stock option schemes, profit sharing, and commission)
At the primary sight, “outcome oriented” contracts appear to be the most favourable
arrangement. The benefits enjoyed by the employees increase with the increase in the profits of
the company, and at the same time the rewards decrease if the employer experience loss of
revenue.
The Different Types of Rewards
Rewards are required in the organizations and they play a huge role in motivating the
employees (Howard,Turban& Hurley, 2016). They serve the purpose of achieving higher
organizational goals, help in securing better quality of employees and to increase their annual
revenue. The foremost objective is to build individuals' eagerness to work in one's organization,
to upgrade their efficiency. There are two sorts of prizes:
Extrinsic rewards: solid amount of rewards that the employees receive.
 Bonuses: By and large consistently, Bonuses impels the employees to put in
all endeavors and tries in the midst of the year to achieve more than a
satisfactory assessment that grows the likelihood of obtaining a couple of pay
as particular sum (De Gieter & Hofmans, 2015). The plans related to bonuses
differs within organizations; while some of the organizations ensure fixed
amount of bonuses, on the other hand other organizations pay bonuses to their
employees on the basis of their performance throughout the year, this process

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rather increases the chances of biases to occur and that may ultimately lead to
employee dissatisfaction and loss of productivity. Therefore, managers must
be careful to remain unbiased.
 Salary raise: The employees achieve this type of rewards after a year of hard
work, and this raise motivates the employees to gain new skills and improve
their performance. The raise in salary results in the long term job satisfaction
of the employees. In these, kind of situations related to salary raise the
managers should remain unbiased and judge the employees only according to
their performance and there should not be any discrimination among the
employees.
 Gifts: These types of rewards are a short-term based appreciation method.
Fundamentally presented as a token of gratefulness for an achievement or
obtaining an affiliations needed goal (Clot et al., 2015). Any employee would
hold this kind of compensation in high regards and they would gain
confidence in their work. This kind of reward ensures the employee that
his/her way id the correct one and thus they try to keep up the good work in
the future as well.
 Promotion: This is quite similar to the salary raise medium of compensation.
Promotions tend to create a long-term satisfaction in the minds of the
employees (Al-Emadi, Schwabenland & Wei, 2015). This is done by allowing
an employee to rise to a higher designation and by providing a higher title;
this will of course come with an increase in the responsibilities and
accountability. The interest of the employee is increased in this sort of reward

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as they believe that the administrators will choose the people who will prove
to suit the designations best. In this type of rewards as well the people who are
in the management should be careful to pick the candidates based on their
merits only.
Intrinsic rewards: these types of rewards tends to provide certain levels of personal
satisfaction to the employees.
 Information / feedback: This is a significant type of reward which is followed by
the effective managers as it holds huge importance to the employee as well as for
the management. Feedbacks offer guidance to the employees whether in a positive
manner or in a negative manner. This process at the same time create a bond and
also adds value to the management and employee relationship.
 Recognition: Recognition can be explained as the verbal form of appreciation.
This kind of reward may be provided to the individual employee through formal
meetings or under informal conditions.
 Trust/empowerment: In the societies or in any organizations, trust is a vital
requirement between two individuals or between an employee and the
organization. Trust is important in order to complete the tasks successfully, this
leads to increase in accountability and helps in winning the confidence of the
management, and it also adds importance to the decisions taken by the employee
(Aruna & Anitha, 2015). Thus, this type of reward will benefit the organizations
and provide them the idea that two minds are always better than one.

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Intrinsic rewards improves the employee to feel valued in the organization, while
Extrinsic rewards center around the execution and exercises of the representative with a specific
end goal to achieve a specific result.
Importance of Rewards or Compensation
 The compensation system will only be ideal when it will affect the efficiency of
the employees in a positive manner and the results will improve.
 Rewards will encourage the employees to make better performance and to achieve
their respective goals, the process of job evaluation will also be improved, and the
standards to meet will be also set in a realistic manner(Deery & Jago, 2015).
 The process of achieving compensation should be set in a simple and manner so
that the employees feel comfortable to understand the same and work towards
achieving their own rewards.
 The purpose of the rewards and compensation should be to enhance the morale of
the employees and to create a bond between the managers and the employees.
Conclusion
To conclude, Employee reward system is a method set by the companies to retain their
employees, to increase the job satisfaction and to improve the quality of performance of the
employees. Rewards are different from salary but may be offered in terms of money and in other
ways. A reward framework comprises of money related prizes and worker benefits, which
together include add up to compensation, it also has non-financial rewards and, in several cases,
processes related to performance management. Employees are encouraged by both Extrinsic as

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well as Intrinsic rewards, to be successful, the reward framework must have both the reward
types. All reward framework depends on goals to retain, manage, please and to improve the
productivity of the employees. Monetary rewards are an important aspect of the reward
framework, but there are several other factors, which motivate the employees to improve the
level of their performance. The reward practices and procedures are associated through a
laborers' point of view where the reward organization ought to evaluate the wants, wants and
needs of delegates as accomplices in the affiliation. Contemplations have additionally to be given
to the necessities or perspectives of different partners, particularly proprietors in the private
segment and governments, nearby specialists and trustees somewhere else.

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Reference list:
Al-Emadi, A. A. Q., Schwabenland, C., & Wei, Q. (2015). The vital role of employee retention
in human resource management: A literature review. IUP Journal of Organizational
Behavior, 14(3), 7.
Aruna, M., & Anitha, J. (2015). Employee retention enablers: Generation Y employees. SCMS
Journal of Indian Management, 12(3), 94.
Aslam, A., Ghaffar, A., Talha, T., & Musthaq, H. (2015). Impact of compensation and reward
system on the performance of an organization: An empirical study on banking sector of
Pakistan. European Journal of Business and Social Sciences, 4(8), 319-325.
Caza, A., McCarter, M. W., & Northcraft, G. B. (2015). Performance benefits of reward choice:
A procedural justice perspective. Human Resource Management Journal, 25(2), 184-199.
Clot, S., Andriamahefazafy, F., Grolleau, G., Ibanez, L., & Méral, P. (2015). Compensation and
Rewards for Environmental Services (CRES) and efficient design of contracts in
developing countries. Behavioral insights from a natural field experiment. Ecological
Economics, 113, 85-96.
De Gieter, S., & Hofmans, J. (2015). How reward satisfaction affects employees’ turnover
intentions and performance: an individual differences approach. Human Resource
Management Journal, 25(2), 200-216.
Deery, M., & Jago, L. (2015). Revisiting talent management, work-life balance and retention
strategies. International Journal of Contemporary Hospitality Management, 27(3), 453-
472.