Reward System as an Essential Tool for the Development of Organization - Essay Example

RЕWАRD МАNGЕМЕNТ By Student’s name Code+ course name Professor’s name University name City, State Date Table of Contents Table of Contents 2 Executive summary 3 Introduction 4 Body 5 Theories associated with rewards 5 Conclusion 7 Recommendation 8 Executive summary In the recent years, despite organization ‘A’ having a reward system, the employees have not been motivated by the system. This report was established to examine why the reward system in the organization was failing to motivate the employees. Therefore, the report is expected to recommend the best reward system that should be used. The research examines different reward motivation theories such as Maslow’s hierarchy of needs and the equity theory to establish how different rewards provide motivation. The theories are supposed to bring about some understanding of how employees needs should be met. It further investigates the challenges with the current reward system. The major challenge being lack of equity in the reward system and a few cases of biases, making it ineffective. After evaluation of the different types of reward systems that can be used, the report concludes that it is ideal for the organization to adopt a new reward system. The new reward system would be promotions. This reward system agrees with the motivation theories and counters different challenges that are associated with reward systems. The report recommends immediate implementation of promotions as the new reward system, so that to improve the productivity of the organization. Introduction Employees in an organization determine the success or failure of an organization. Optimum productivity in an organization is achieved by co-ordination of all resources. This has led most organizations to create a human resource department to take care of the employees (Crosby, and Miren, 1984). The department’s main function is to ensure that the employees do not have any problem, they are paid in time and the employees are effectively motivated. The department is therefore expected to come up with the best motivation strategy to ensure that the employees are motivated. These motivations may be through giving of rewards (Javed, Muhammad, Maqsood, and Mustajab, 2012). Rewards are the best motivation strategy since the employees benefit most from them. They are divided into two; intrinsic rewards and extrinsic rewards. Intrinsic rewards are rewards that are generated from person’s will and self-satisfaction (Buller, and Glenn, 2012). Extrinsic rewards are concrete rewards given by the organization. Intrinsic rewards include; information, recognition, trust and empowerment. On the other hand, extrinsic rewards include; bonuses, salary increase, gifts and promotions (Jiang, David, Jia, and Judith, 2012). Extrinsic rewards are given as token by the organization to demonstrate its appreciation. The human resource department decides on the best reward systems to be used. It also decides on the best person to be awarded following various means of evaluation. However, intrinsic rewards are self-generated and the employees create them according to their needs. The rewards can be either long term or short term rewards (Glöckner, and Tilmann, 2011). Examples of long term rewards are salary rise and promotions. Gifts can be classified as short term rewards. Body Theories associated with rewards Rewards can be classified into two theories. These are the content theory and the process theory. The content theory deals with factors that motivate individuals from outside. It includes extrusive rewards such as bonuses, salary rise, gifts, and promotion. On the other hand, the process theory deals with rewards that motivate one from the inside. They are intrinsic rewards such as information, recognition, trust and empowerment (Morgan, and Fred, 2012). The content theory is defined by Maslow’s hierarchy of needs, which states that humans are driven by the need to achieve more. The theory states that human needs start with physiological achievement and goes all the way to self-actualization (Herzberg, Bernard, and Barbara 2011). It states that after humans achieve one level, they strive to achieve the next level until they reach the topmost level. For example, when a company gives reward in the form of promotion, the workers will try as hard as they can to achieve the next level. If an employee is a junior staff and wishes to be promoted, he or she may needs to add more education, work in that certain organization for a certain time and be competent in his/ her area of specialization. Below is a diagram showing the Maslow’s hierarchy of needs (Herzberg and Barbara 2011); (Maslow theory) The process theory is expressed by the equity theory. It states that humans strive to achieve self-satisfaction. They do so by categorizing all the actions into either fair or unfair actions. If they feel that the actions are not up to the standards and do not fully satisfy their needs, they say it’s not fair. The urge to know more about something creates a certain level of motivation that drives one to achieving it (Hatfield, Elaine, William, and Ellen, 1978). This can be said to be the reward. For example, if one needs to be recognized for work well done. They will work as hard as possible to ensure that they get that recognition. These theories can be applied in determining rewards in the organizations (Reigeluth, 2013). In organization ‘A’, the human resource management is very active in ensuring that the employees are fully satisfied with the working environment. They have established a reward system to reward the employees who are doing well in their working place. They have also set a side one day per year to give evaluation reports and to reward the employees who are well performing in the organization. In the previous years, they have been giving gifts to these employees. The gifts are based on the area one is working at and what the organization can afford at that moment. However, this method of rewarding the employees is not efficient and has turned to be discouraging the employees instead of motivating them. The challenge associated with this method of reward is that the method of reward is short term. The employees will just get a one-time reward and that’s all. The second challenge is that the employees felt that the method was not fair. This is because the method did not have an effective way to measure the progress of the employees (Hafiza, Syed, Humera, and Khalid 2011). In some case, the quality of work of an employee does not correspond with the quantity of work produced. Some employees will strive to complete large quantity of work but with very poor quality. On the other hand, some employees can produce small quantity of work but of very high quality. Making it hard, to determine the best criteria to use. To break the monotony of giving the same gifts all the time, the employees are awarded in different types of gifts. However, employees value some gifts more than others. Therefore, some employees feel that some gifts are more superior to others. The method did not improve the organization welfare. That is, it did not benefit from improved quality of services (Kreps and David, 1997). Conclusion Reward system is an essential tool for the development of an organization as discussed above. It is evident that the reward system that the organization ‘A’ is using is no longer effective and needs to be changed. When choosing the best reward system, factors such as the motivation theories and the different types of motivation should be considered. Theories such as Maslow’s hierarchy of needs and equity theories have made the researcher understand the different level of motivation that an employee requires. The research has also evaluated the different challenges that the current reward system is facing. The research has evaluated various reward systems such as the promotions, an increase in salary and bonus. It, therefore, concludes that the organizations should change to promotions reward system since it counters all the challenges associated with the current reward system (Bidwell, Forrest, Isabel, and Adina, 2013). Recommendation I would recommend the organization to use promotion as their reward system. Promotion offers long term motivation to the employees. It gives them more responsibility, a better salary, and better-working conditions. Take, for example, a person who is a junior field agent, when promoted, they will be a senior employee in the organization and will be working from the office. First there will be a change in the working environment. Office work is more preferred by the workers than the field work. Secondly, the employee may be given a few employees to work under him or her. Hence, there will be increased responsibility. In most cases, increase in the salary of an employee comes as a result of promotions (Kumar, David, and Thomas, 2002). This method is only applicable to the paid and permanent workers in the organization. However, there are several factors that need to be considered when considering whether to adopt promotion as a tool to award the employees. First, the organization must consider the finances that are available. This is because, with promotion, there is an increase in the pay, and hence the organization must be in a position to pay the employees at any given time. The second factor that should be considered is the size of the organization. The size of the organization can determine if the organization can promote some individuals or not. Big organizations have more employees. This means that if one member is promoted in a big organization, there will be more work for him to do and also he or she will be relevant to the organization (Strock, Eugene, Lynn, and Beth, 2013). The scale that will be used when determining if an individual should be promoted should be clear to the employees. For example, an increase in the level of education can lead to the promotion of an individual. The employee should hence be motivated to keep on increasing their level of education to ensure they are candidates for promotion. Another scale that can be used is the time that one has worked for the organization. That can be a factor that can be used since it will help in winning the employee’s loyalty. By doing this, the employees will be gaining and also the organization will also be gaining. Promotions will contribute highly to the achievement of long-term goals of the organization (Yermekov and Zharas, 2013). As long as one may campaign for the organization’s reward system that is more motivating, the employees should also motivate themselves. Intrinsic motivation is far much better than extrinsic motivation. It is because with intrinsic motivation one does not need to be pushed by external forces. I would also recommend employees to have this kind of motivation since it makes them want to be the best and do what they think it’s good for the organization (Schneider, and David,1993). Bibliography Bidwell, M, Forrest B, Isabel F, and Adina S. (2013). "The employment relationship and inequality: How and why changes in employment practices are reshaping rewards in organizations." The Academy of Management Annals 7, no. 1: 61-121. Buller P, and Glenn M. 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