Investigating Reward System Effects on Employee Performance at LEGO

This business report investigates the effect of reward systems on employee performance, using LEGO as a case study. It begins with an introduction outlining the research aim, objectives, and questions, followed by a literature review defining reward systems and their impact. The report examines the concept of reward systems, issues affecting employee performance (such as lack of strategic focus and feedback), and the benefits of financial rewards, including increased motivation and loyalty. The research methodology includes both primary and secondary research methods to gather data. The report concludes by summarizing key findings and suggesting alternative methods for improvement. The report highlights the importance of a well-structured reward system for improving employee performance, and organizational growth.

Business Report

Table of Contents
INTRODUCTION...........................................................................................................................1
Overview and background of research........................................................................................1
Research aim...............................................................................................................................1
Research Objective......................................................................................................................1
Research Questions.....................................................................................................................2
Rationale of Study.......................................................................................................................2
Literature Review.............................................................................................................................2
Concept of reward system...........................................................................................................2
Main issues that impacts upon employee’s performance level...................................................3
Benefits of financial reward system on the performance of LEGO employees..........................4
RESEARCH METHODOLOGY.....................................................................................................5
RESEARCH OUTCOME..............................................................................................................18
Alternative methods:......................................................................................................................19
CONCLUSION..............................................................................................................................19
REFEENCES.................................................................................................................................21

INTRODUCTION
Overview and background of research
Reward systems are mainly used by business organisations in order to improve
employees performance. This system is mainly concerned with effective implementation of
strategies and formative policies with the help of which performance of employees is enhanced.
It is important for an organisation to frame strategies relating to reward system in their
management in a highly equitable and fair manner (Zatorre, 2015). Reward system consists
evaluating and giving compensations, remuneration and benefits to employees that can be in
monetary and non monetary form. These system mainly include, practices, payroll
administration, executive pay, team reward and minimum wage. Present case study has been
conducted on, LEGO which is a construction set company in Denmark and patented in United
Kingdom. Company expanded its business by producing plastic toys. Organisation is currently
looking forward to expand their area of servicing for this it is essential for company to strengthen
their labour base. This objective of company can be easy be fulfilled with the formative
implementation of reward system technology and strategies. In context with this, top level
management team of company is planning to formulate and effective research on the concept of
reward system that will effectively benefit them to maximise their command on the operational
activities in an international market.
In context with this, aims and objectives of this present research is developed by
researcher. With help of this, researcher will effectively able to understand present trends,
challenges and benefits of reward system that will benefit company to stimulate their growth.
With references to this, mentioned below there aims and objectives of research of LEGO is
described below in descriptive way:
Research aim
The research aim for present investigation is “Investigating the potential effect of reward
on employees' performance. A case on LEGO”
Research Objective
 To identify the concept of reward system.
 To analyse the issues which occurs that impacts upon employee’s performance level.
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 To examine the benefits of financial reward system on overall LEGO's performance level
of staff members.
Research Questions
 What is the concept of reward system?
 What are main issues that impacts upon employee’s performance level?
 What are the benefits of financial reward system on overall LEGO's performance level of
staff members?
Rationale of Study
Main motive of this research for LEGO is to maximise company profitability through the process
of improving its organisational activities in a global market along with having moderate amount
of knowledge on the subject of reward system and its influence on business. Next purpose of
present company is to analyse estimated number of population having knowledge about company
. In the section of academic sector, this research will benefit learner to expand future study scope
and enhance their skills and knowledge base. In addition to this, research will aid learner to
identify various opportunities along with developing professional skills. This will lead towards
high end career growth for company. In relation with researcher, major purpose of investigator is
to increase knowledge about LEGO and their activities and operations in international
marketplace. This will benefit researcher to work with same company in future as per accordance
to expertise zone.
Literature Review
Concept of reward system
As per the thought given by Al-shaibah and Habtoor, 2015 reward system is formative
procedure and regulation which is mainly associated with systematic allocation of compensations
and benefits to workers. This is one of the most important system as each and every organisation
wants to extract best out of their employees. For this it is required to recognize employee
productivity and effectiveness. Therefore, reward system acts as an one of the most affective
motivating factor that will lead towards both organisational and workers high end growth. In this,
LEGO which is an construction set company motivate their staff by giving them attractive
reward base and rank them as per according to their efficiency and output. Reward system aid
employees to gain recognisance which ensure their high level of performance. This system can
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be in financial and non-financial way which is offered to employees who render their services in
best effective way. All these schemes that are provided to employees efficiently influence their
behaviour and strengthen their engagement in organisational activities. Reward system is mainly
a process in which effective formulation of strategies and policies are done with a aim to treat
and reward employees in fair, equatable and constant way (Rolls, 2016). This system not only
ensure employee high growth but also strengthen organisation, individual and team performance
level. Along with this, LEGO by taking advantage of different types of motivational tools can
effectively appreciate their employees and increase their contribution towards organisation
functions. There are different types of reward system measure including, intrinsic and extrinsic
which is used by company to appreciate performance level of their employees. This system of
reward and benefits generate feeling of respect among employees. In the section of intrinsic
reward system there are certain basic things include that are, recognisance, achievement, job
satisfaction, job enrichment, empowerment, job enlargement, personal growth and status and
team working. While in Extrinsic reward factors certain factors included in this are, work
environment, social relationship, fringe, incentives, base wage, promotion and benefits. All these
rewards system is effectively use by LEGO to increase productivity level of their employees.
Main issues that impacts upon employee’s performance level
Performance management is considered as bureaucratic process by HR which gives no
value or add little value to organisation (Anitha, 2014). If Lego do not have performance
management within their working structure then they need to improve their working structure.
There are different issues which affect performance of employees are mentioned below:
 Lack of strategic focus: Goals and strategies of organisation must be merged in
performance management process for delivering real value business. Lego needs to be
focused and should not have lots of goal as this create confusion, unalignment and
inefficiency of employees. Performance management must focus on critical goals by
which employees can understand day to day objectives of work.
 Lack of meaningful and timely feedback: Employees should not wait for feedback of
performance review. As this will make employees of Lego blindsided which can lead to
disengagement, frustration, confusion and disappointment. This will disengagement will
demotivate employees and they will be less productive. For this management of Lego
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must ensure that their employees are provided with timely and meaningful feedback by
which they can review their performance.
 Lack of proper communication and training: Without effective training employees will
not understand working structure of Lego. For this it is essential for managers and leaders
of Lego to provide their employees with necessary training. It is necessary that
employees have good communication skills by which they can communicate effectively
with their clients and other employees or management of Lego. This will also have
significant and positive impact on their performance.
All these issues affect LEGO in both positive and negative manner and hamper its
growth. This will also lead towards lowering down of employees performance which
automatically create numerous obstacles in company developmental path. These issue impact on
company performance and decrease their ratio of growth for this, it is important for company to
frame effective strategies and policies to improve their reward management section. This will not
only aid employees to increase their performance but also help company to increase their overall
rate of productivity and profitability.
Benefits of financial reward system on the performance of LEGO employees
Financial reward system is concerned with rewarding employees with monetary
incentives. This method is adopted by the organisation for the purpose of positively impacting
performance level of employees . It is one of the vital factor that helps in motivating individual
to work more effectively (Bassous, 2015.). This system comprises of monetary factors such as
compensation, bonus, commissions etc. One of the psychological aspect of human's is attached
with that, they feel the need to satisfy their Ego. Due to this reason they linked their success with
their financial achievement hence this method helps in boosting self esteem. Awarding workers
with appropriate salary which is particular amount given at the end of particular period is very
important, as money is essential for the survival and every individual work for living. Providing
effective compensation for performing certain task has led to the improvement in the
performance level of LEGO's staff members. It can be seen from the fact that organisation has
achieved profits and growth and the employees are performing expectationally well. Due to the
time rate pay factor of Financial reward system, has provided benefits of getting paid for
working every hour. This has led to increased satisfaction level in the staff members of LEGO
and as a result they have become more committed towards the company. When employees feel
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that they are being underpaid or undervalued, this creates frustration amongst the workforce
which ultimately affects the performance level of business entity. Increased loyalty and
commitment provides benefits of low turnover and growth in the productivity of every
individual. Management does not have to spend too much time on hiring new people. There are
people in the organisation who may not feel satisfied with monetary incentives thus rewarding
them on financial basis will not be enough. Therefore the first and foremost responsibility of
managers is to understand what are the expectations of employees and whether they should be
provided with financial incentives or non financial incentives. The major difference that lies
between monetary and non monetary factor is involvement of money as under non monetary
incentives employees are often rewarded with medical benefits like health insurance etc. Another
main advantage associated with this system is that if the people working in the organisation will
portray good picture in the eyes of public this will help in attracting large number of talented
candidates to apply for the company. In this way competitive spirit amongst the staff members
will generate, that will push them to work harder in order to retain their position. The
management should ensure that as per this system everyone are given equal compensation based
on their contribution. Different business entities have different policies of compensation
according to the criteria which best suits the structure of company. Adopting this system has
influenced LEGO's workers way of working. They are able to meet their personal goals and
higher productivity. The Main aim of enterprises is to efficiently achieve organisational goals
therefore using this method is beneficial to fulfil that requirement.
RESEARCH METHODOLOGY
Primary Research:
It is a methodology that a researcher use in order to gather data and information in a
direct way rather than to depend on collecting data from other sources such as previous research.
In this form of research method data can be collected form, observations, face to face interview,
focus on groups and more. It is one of the most important way through which data can be
collected from first hand (Murayama and Kitagami, 2014). Therefore, it is the easiest method to
make report in good and effective manner. Therefore, this method will prove effective for
researcher to formulate a good report.
Secondary Research:
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In this methodology, information and data is collected from already existing data. It is
collected in order to maximise research effectiveness. In secondary research data can be gathered
form, websites, libraries and form already published reports. This form of data collection method
is one of the cost effective and does not take much time. In addition to this, with the help of
internet sources, educational institution, non government agencies and public libraries also
benefit to acquire informations and related data. Hence, secondary research will prove to be
effective in order to effectively identify research topic along with determining effective result
for research.
In the present research, researcher is taking advantage of primary and secondary research
mode in order to collect data as to complete research in best effective way.
Quantitative Research:
It is systematic method in order to conduct an investigation. This is done by getting data
and statistics in quantifiable manner (Ginane and Revell, 2015). Along with this, this mode of
research also can be done with the help of mathematical and computational techniques. In this
information is extracted from already existing consumers as to conduct research by using online
surveys, questionnaire and sampling method. Quantitative research is conducted with the help of
cross-sectional surveys and survey research that will benefit in formulating research in best
effective way while taking advantage of various research methods.
Qualitative Research:
It is a market research in which more focus in on gathering information through open-
ended and conversational communication. There are different types of methods that are framed
in an effective manner. This is done by taking advantage of perception and behaviour of
consumer in a target market for a particular topic. There are different mode of qualitative
research such as, in-depth interview, ethnographic research, content analysis, and case study
which is used in research. With the help of this research method researcher can effectively able
to draw data in a descriptive way.
Sampling:
Random sampling method is used in this research by the investigator in order to finalise
co-defendant from wide are of population. In order to conduct this research in best effective
manner estimated number of 30 respondents are selected. These respondents are also the
stakeholders of LEGO.
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DATA ANALYSIS AND INTERPRETATIONS
QESTIONNAIRE
Q1) Are you aware with the concept of reward system?
a) Yes
b) No
Q2) What are the most attractive method of reward system?
a) Monetary
b) Non-monetary
Q3) What are the main benefits of reward system for LEGO?
a) Increase in profitability
b) Increase in number of opportunities
c) Increase in performance of Employees
Q4) Do you think, reward system concept is helpful for small scale companies?
a) Agree
b) Disagree
Q5) In which manner Reward System encourage operational activities of LEGO?
a) Positive
B) Negative
Q6) Are you aware about different type of rewards that has been provided by LEGO?
a) Agree
b) Disagree
Q7) As per your perception, reward will provide benefits to LEGO in terms of business
expansion at international market?
a) Yes
b) No
Q8) What are the drawbacks of Reward System that has been faced by LEGO?
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a) Short Term Motivation
b) Increase in Competition
c) Resentment
Q9) Do you think, providence of reward is the only method through which LEGO can sustain
its employees for longer period of time?
a) Yes
b) No
Q 10) Provide some effective recommendation to LEGO through which profitability of
company can be increased.
Theme 1. Concept of Reward System
Q1) Are you aware with the concept of reward system? Frequency
a) Yes 22
b) No 8
8
a) Yes b) No
0
5
10
15
20
25

Interpretation: Reward system is one of the most effective measure with the help of which
performance of employees and productivity of company can be increased in best impressive way.
It is a formative process which result in raising performance and productivity of workers in order
to stimulate company growth. As per the above representative graph, it has been evaluated that
22 out of 30 respondents are in aware with the concept of reward system as it help employees to
increase their job performance and career opportunities which lead towards global expansion of
their growth. While, 8 out of 30 respondents are unaware with the former concept of reward
system as they are not much aware about organisational structure and culture.
Theme 2: Methods of Reward System
Q2) What are the most attractive method of reward system? Frequency
a) Monetary 14
b) Non-monetary 16
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Interpretation: With the help of reward system organisation can effectively maximise their
overall rate of profitability. This system not only aid employees to increase their job performance
but also benefits company to maximise their end outcome. As per the above representative graph,
it has been analysed that 14 out of 30 respondents think that monetary mode is most attractive
way in reward system as it is reward which can be seen and utilized. While on the other hand, 16
out of 30 co-defendant said that non-monetary form is best effective method in reward system as
in this there are different types of elements with the help of which reward can be offered to
employees such as, paid leaves, tour packages and more.
Theme 3: Benefits of Reward System for LEGO
Q3) What are the main benefits of reward system for LEGO? Frequency
a) Increase in profitability 8
b) Increase in number of opportunities 9
c) Increase in performance of Employees 13
10
a) Monetary b) Non-monetary
13
13.5
14
14.5
15
15.5
16