The Role of Money and Financial Rewards in Organizational Behavior

This essay explores the significance of money and financial rewards in attracting and retaining employees, examining their impact on workplace relationships, motivation, and company goals. It discusses the advantages, such as increased productivity and the fulfillment of employee needs, while also acknowledging drawbacks like the potential for increased costs and the limitations of financial incentives. The essay incorporates organizational theories like Maslow's and Herzberg's to analyze how money satisfies employee needs, and explores managerial interventions to address ethical and cultural issues. It concludes that while money is a vital motivator, effective management must consider a holistic approach to employee motivation, balancing financial rewards with other factors to create a positive and productive work environment. The essay also highlights the importance of understanding the criteria for receiving incentives and how the amounts are determined.

Running head: Organizational behavior
Organizational behavior

Organizational behavior
(Essay topic: 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).
The main and primary motive of this paper is to outline and explain the significance of money
and financial reward to attract and retain wide range of employees. The paper discusses how
financial rewards and money help in maintaining favorable relationship with workers at the
workplace. It discusses the benefits and drawbacks of these rewards and incentives. The essay
also provides brief information about the managerial interventions that help in reducing and
preventing cultural and ethical issues.
There are ample of pros and advantages of money and financial reward in the workplace. It is
analyzed that money and financial rewards are also help in achieving long term goals and
objectives of the company (Fryer Jr, 2011). It is one of the significant benefits of the money and
financial rewards to motivate the workers. Furthermore, it also increases profitability and
productivity of the firm as well. Money plays a significant and vital role in motivation and
encouragement. Management makes use of financial incentives such as income, salaries,
departure benefits, bonus, medical reimbursement, health insurance etc (Burton, 2012). to
encourage and promote the employees towards the attainment of long term mission and vision.
Money plays an empirical role in satisfying the needs, wants and requirements of the workers.
However, these incentives and rewards might not always be inspiring (Bailey et al, 2018).
Sometimes, management might have to augment the financial incentives to keep the workers
within the corporation. It shall be noted that money and financial reward are really motivating
element when the security and psychological needs and wants of the workers have not been fully
attained. Money provides support in fulfilling the communal needs and wants of the workers to
some extent just because money is generally known as a basis of esteem, power and status
(Berdou, 2010).
Money is always be considered as a means of receiving a minimum standard of living. Employee
incentive comes in various forms within the organization. The financial incentive programs and
seminars are designed to inspire and motivate worker loyalty, trust and maximize performance
and productivity among the employees (Burton, 2012). For all financial incentive programs and
2

Organizational behavior
money, workers need to understand the criteria for getting the incentives and how the amount is
identified. Money and financial incentives is easy tool to motivate the workers in the workplace.
Rendering a monetary wage or reward maximize is also unique in terms of tax liability. In
today’s modern era, employers and managers pay a maximizing attention to reduce cost and to
enhance efficiency and effectiveness (Young, Beckman and Baker, 2012). When talking about
financial rewards and incentives, it means that the manager and employer spend lot of money on
the remuneration directly or the worker gets monetary reward. The financial rewards can be short
term or long term motivators to improve and enhance the performance and productivity of the
subordinates at the workplace (Mowday, Porter and Steers, 2013). These financial rewards also
are able to provide job satisfaction and job security to the workers. Bonus and incentives
motivate the workers to understand exactly what the company goals and how to achieve these
goals in an effective manner. Bonuses and rewards benefit the workers and managers as well
(Fullan, 2011). An employer and manager can also provide benefits and incentives to its workers
as a way of compensation and a recruitment method to attract and encourage the workers in the
workplace. All these are considered major pros of money and financial rewards. The benefits and
rewards can be different from one organization to another. No company can survive and grow its
business without using money and financial rewards within the organization. Along with this,
monetary rewards are called financial rewards that given to the workers to encourage and
motivate her or him. A possible way of doing this is through profit sharing. Performance related
pay and wage also are considered monetary rewards. Various organizational theories can be
applied in an organizational setting. These theories include Maslow’s theory and X and Y theory
of motivation. The theory X and Y was proposed by Douglas McGregor. It explains two
contrasting sets of assumptions that employer and manager make about their people. According
to theory X, employees do not like work and they try to escape and avoid the work. In simple
words, it is noted that employees dislike the roles and responsibilities (Latham, 2012). Theory Y
suggests that workers can perceive their employment as normal and relaxing. They exercise their
mental and physical efforts in a hassle free manner in their job or employment. If the
employment is satisfying and rewarding then it will result in worker’s commitment and loyalty to
the organization. It shall be stated that organizations should use theory Y to create a dynamic and
unique working environment and culture at the workplace (Reiss, 2012). Theory Y also promotes
3

Organizational behavior
and motivates decentralization of authority, decision making and teamwork. The employees shall
be given ample of opportunities to contribute for organizational well being (Hung et al, 2011).
Maslow’s theory is proposed by Abraham Maslow in 1943. It consists a five tier model of human
needs within a specific pyramid. The five tiers include self actualization need, esteem needs,
belongingness and love needs, safety needs and physiological needs. Money and financial
rewards help to fulfill the physiological and safety needs of the workers in an effective way.
Maslow considered physiological needs the most effective and significant as all the other needs.
Along with this, safety needs include security, stability, freedom and order. Thus, money helps to
make good and reciprocal relationship with workers in the workplace. Belongingness and love
needs are considered third significant need of Maslow’s theory. It includes intimacy, trust,
acceptance and friendship. Furthermore, esteem needs include status, dignity, achievement and
prestige. At the end, self actualization needs that include self fulfillment and personal potential.
On other hand, money renders for the job security and satisfaction of security and physiological
and safety need only which are called hygiene elements by Herzberg hygiene elements including
salaries, wages and other fringe advantages (Turner, Chandler and Heffer, 2009). The existence
of these components at a satisfactory level reduces and eliminates job disappointment. They are
unable to provide job satisfaction and security to the employees and thus, they cannot be
considered as motivational factors. Herzberg’s findings are based on various significant and
unique research. According to Herzberg, it is essential to provide job satisfaction, and security
for motivating the workers effectively and successfully. The employees can be motivated by
money and financial reward only if the money is sufficient to increase and enhance their standard
of living and status in the community. Therefore, good and dynamic management must create a
motivational system that is proficient of fulfilling the various kinds of human wants and needs.
Money and financial rewards help in making strong and good communication and collaboration
with employees in a large extent (Nuttin, 2014).
Money and financial rewards provide benefits to the workers largely but it also consists ample of
drawbacks that affect the capabilities and efficiency of the employees. One of the significant and
biggest drawbacks of using money to motivate workers is that it is expensive process. Each and
every time employer offers a bonus and reward or raise to workers in exchange for the
productivity and effectiveness, thus employer has to give up some profit and revenue. Moreover,
4

Organizational behavior
the workers may come to expect or demand a monetary reward and bonus for each and every
time they exceed (Breines and Chen, 2012). Along with this, many times employee motivation
tools and techniques do not involve money. Financial rewards may be less effective than non-
financial rewards or incentives, especially over time. In this way, it creates ample of
misunderstandings and barriers among the workers (Sadri and Bowen, 2011).
Due to lack of motivation, various organizational problems issues such as team problem,
employees issue and job satisfaction issues would be encountered by the organization that can
downfall the company in the competitive market. After the various analysis, it is stated that
various cultural, ethical and social issues could be faced by top management and managers while
initiating the business activities and operations widely. The ethical issues are related to code of
conducts, norms and ethics and on the other hand, social concerns include values, beliefs and
faith of the workers (Parker, Bindl and Strauss, 2010). Apart from this, cultural issues may affect
the productivity and effectiveness of the employees. Thus, the company should maintain
favorable working environment at the workplace to promote the workers towards the attainment
of desired targets and goals (Eyal and Roth, 2011). It has been analyzed that various managerial,
social and ethical intervention are formulated by the top management and managers. The
managerial interventions help in preventing and dealing with the situation that precedes the
behavior and culture. The aim of proactive strategies and policies is to reduce and eliminate the
future probability of the action and behavior. On the other hand, reactive strategies are
interventions that are used only once behavior occurs. Preventive and reactive are significant
managerial intervention that helps in reducing various issues related to behavior, ethics and
motivation (Dweck, 2013).
It is concluded from the above mentioned analysis that money and financial rewards play a vital
role in encouraging and promoting the maximum employees in the workplace for conducting the
business actions and functions effectively. These financial rewards and money also help in
maintaining strong and powerful relationship with employees at the workplace. The paper
outlines the demerits and merits of these rewards and incentives in a large extent.
5

Organizational behavior
References
Bailey, C., Mankin, D., Kelliher, C. and Garavan, T., 2018. Strategic human resource
management. Oxford University Press.
Berdou, E., 2010. Organization in Open Source Communities: At the Crossroads of the Gift and
Market Economies. Routledge.
Burton, K., 2012. A study of motivation: How to get your employees
moving. Management, 3(2), pp.232-234.
Burton, K., 2012. A study of motivation: How to get your employees
moving. Management, 3(2), pp.232-234.
Dweck, C.S., 2013. Self-theories: Their role in motivation, personality, and development.
Psychology press.
Fryer Jr, R.G., 2011. Financial incentives and student achievement: Evidence from randomized
trials. The Quarterly Journal of Economics, 126(4), pp.1755-1798.
Fullan, M., 2011. The six secrets of change: What the best leaders do to help their organizations
survive and thrive. John Wiley & Sons.
Latham, G.P., 2012. Work motivation: History, theory, research, and practice. Sage.
Mowday, R.T., Porter, L.W. and Steers, R.M., 2013. Employee—organization linkages: The
psychology of commitment, absenteeism, and turnover. Academic press.
Nuttin, J., 2014. Future time perspective and motivation: Theory and research method.
Psychology Press.
Reiss, S., 2012. Intrinsic and extrinsic motivation. Teaching of Psychology, 39(2), pp.152-156.
Sadri, G. and Bowen, C.R., 2011. Meeting employee requirements: Maslow's hierarchy of needs
is still a reliable guide to motivating staff. Industrial engineer, 43(10), pp.44-49.
6

Organizational behavior
Young, G.J., Beckman, H. and Baker, E., 2012. Financial incentives, professional values and
performance: A study of pay‐for‐performance in a professional organization. Journal of
Organizational Behavior, 33(7), pp.964-983.
Parker, S.K., Bindl, U.K. and Strauss, K., 2010. Making things happen: A model of proactive
motivation. Journal of management, 36(4), pp.827-856.
Eyal, O. and Roth, G., 2011. Principals' leadership and teachers' motivation: Self-determination
theory analysis. Journal of Educational Administration, 49(3), pp.256-275.
Breines, J.G. and Chen, S., 2012. Self-compassion increases self-improvement
motivation. Personality and Social Psychology Bulletin, 38(9), pp.1133-1143.
Turner, E.A., Chandler, M. and Heffer, R.W., 2009. The influence of parenting styles,
achievement motivation, and self-efficacy on academic performance in college students. Journal
of college student development, 50(3), pp.337-346.
Hung, S.Y., Durcikova, A., Lai, H.M. and Lin, W.M., 2011. The influence of intrinsic and
extrinsic motivation on individuals' knowledge sharing behavior. International Journal of
Human-Computer Studies, 69(6), pp.415-427.
7