Reward Management towards organizational Growth
Source: Personnel Today
What Is a Reward?
In Harvard Business Review, they have specified as below
"It is difficult to overstate the extent to which most managers—and the people who advise them—believe in the redemptive power of rewards, Alfie Kohn argues in “Why Incentive Plans Cannot Work” (September–October 1993). Certainly, the vast majority of U.S. corporations use some sort of program intended to motivate employees by tying compensation to one index of performance or another. But more striking is the rarely examined belief that people will do a better job if they have been promised some sort of incentive" (Stewart. B, Appelbaum . E, Lebby. A. M, Amabile T. M, Mc Adams. J, Kizolowski. D, Baker III. G. P, Wolters D.S, Beer.M 1993)
The word reward defined as "a thing given in recognition of service, effort, or achievement."(Oxford Dictionary)
Reward Management:
According to Armstrong, M. and Taylor, S. reward management consists with strategies, policies and practices to required to ensure that value of people and the contribution they make to achieving organizational, departmental and team goals is recognized and rewarded.
According to them it gives answers to following questions.
1. How do we value people?
2. How are we going to reward them according to that value?
Aims of Reward Management ( Armstrong, M. and Taylor):
- Support the achievement of business goals by developing a performance culture and stimulating high performance
- Attract and retain the high-quality people the organization needs
- Motivate and win the employee engagement
- Reward people acccording to the value they create
- Deliver value on the investment in rewards to both employer and employees
- Align reward practices with employee needs
Many researchers have proven that the reward management is all about adding value to people not attaching value to them.
How does reward management system work?
Reward management system is a core fundemental system in any organizational context. Rewards does not only mean the basic pay. Basic pay also comes under rewards but reward content more than just that.
As per the definitions given above reward is adding value to people and their contribution. Rewards can be monitory reward or otherwise. As we discussed earlier in Herburg's theory employee motivating factors, there are two types of motivating factors. That could also be considered when designing a reward system.
Refer below video to get more insights about reward management system.
Impact of Reward Management System to the Organization:
Barber and Bretz (2000) mentioned that reward management systems have major impact on
organizations capability to catch, retain and motivate high potential employees and as a result getting the high levels of performance. (Güngör, P., 2011)
Additionally, Güngör highlighted the importance of investing on people to ensure enhancing abilities and skills of employees such as investing on training, learning curves.
Furthermore, social exchange theory shows that employees behave in positive ways when the organizations invest to them (Güngör, P., 2011).
In their research article, Remuneration reward management system as a driven factor of employee performance, Martono, S., Khoiruddin, M. and Wulansari, N.A., have supported the above statement and have identified that there is a positive correlation between reward and motivation and hence on their performance.
The management can decide on the rewarding systems. Practical implications will be as below.
- Commissions on Target
When employees achieve the set target they get a commission on it. This is mostly seen in sales departments to motivate sales staff to bring more sales.
- Performance Based incentives
Introducing a performance based incentive will help the organization to get the best of employees. Which will ultimately improve the employee performance hence achieving the organizational goals.
- Special Allowances
While these are monitory factors there could be other factors that could be considered as rewarding system.
- Health and Insurance benefits for staff and their families
- Special appreciation awards (example: employee of the month, employee of the year, employee for best attendance etc)
- Special trainings (example: foreign training, signing up for special job related cources etc)
Conclusion:
All these reward systems will help employees to be more engaged with their work. Additionally the organization will be able to create a loyal workforce within the organization. It will also help organization to improve the performance of employees. Utlimately the organization will walk towards achieving its goal and objectives and ultimately achieve the desired growth. Rewarding for employees is not a cost to the organization. It definitely is an investment. A good rewarding organization will also have a very positive employer branding. They will also attract best people in the industry to the organization which will ultimately help the organization to have the best workforce.
Do you get the desired rewards from your organization?
References:
- Armstrong, M. and Taylor, S., 2023. Armstrong's handbook of human resource management practice: A guide to the theory and practice of people management. Kogan Page Publishers.
- Güngör, P., 2011. The relationship between reward management system and employee performance with the mediating role of motivation: A quantitative study on global banks. Procedia-social and behavioral sciences, 24, pp.1510-1520.
- Martono, S., Khoiruddin, M. and Wulansari, N.A., 2018. Remuneration reward management system as a driven factor of employee performance. International Journal of Business & Society, 19.
- Stewart. B, Appelbaum . E, Lebby. A. M, Amabile T. M, Mc Adams. J, Kizolowski. D, Baker III. G. P, Wolters D.S, Beer.M , Rethinking Rewards. Published on The Magazine in 1993 available on https://hbr.org/1993/11/rethinking-rewards accessed on 11.04.2024
This article provides a compelling overview of reward management and the advantages it may give to organizations.
ReplyDeleteEven though rewards may be beneficial in motivating employee, over dependence on extrinsic rewards may weaken their intrinsic motivation. Could the focus shift from enjoyment of the work itself to simply achieving a reward?
Hi Nufail, well that is a very tricky question. It depends how the organizations elevate their reward for my understanding. Researchers have proven that Motivation does not have a direct impact on performance. Rewards will create engagement and will retain employees. When you retain employees you have the best work force. That is where the rewards play the major role over motivation.
DeleteWell written Tharukshi. You briefly mention customizing the rewards systems to suit individual preferences and needs, but I wonder how the reward management concept would work with a diverse workforce whose preferences and motivations can vary a lot? Also, it would be good to see more examples of non-monetary rewards ( I know you've mentioned special appreciation awards and training opportunities), anything else you could think of? It was an interesting read, and I gained some perspective into reward management, thank you.
ReplyDeleteGreat it helped you Anji. Well managing rewards on a diverse workforce indeed will be challenging. An organization cannot always provide 100% to employees. Yet, organzations can should make sure that they value employees for the contributions they make. If it is an exceptional contribution than expected, then the organization will make sure that they reward them exceptionally.
DeleteA compelling explanation about the reward management and the advantaged that is gained by the organization at large. Extrinsic rewards may be attractive for some but if the focus is lost by the organization on the intrinsic rewards then there could arise a disparity of interest on the part of the employee and the employers. for this reason reward management should be handled with utmost care.
ReplyDeleteDefinitely. You have to be extremely careful in reward management. The reward management need to draw a line on rewarding.
DeleteHi Ashan. Definitely. That is why a reward management system has to be implemented. In my personal experience, my organization has a special committee called "leave and awards" committee. This is where they discuss all exceptional rewards. Other organizations they discuss during board meetings on exceptional rewards.
DeleteReward system is s most important concept and it will encourage employees to work at that organization. It will increase the employee satisfaction. Most of the time employees are complaining that they do not receive any recognition and rewards from the organization and they feel that they do not have any growth. So your article has touched most of the areas which important for the growth of the employees as well as the organization.
ReplyDeleteThank You very much Salindri. Correct. Even us as employees complain about this at certain points. Organizations such as start ups will struggle with providing extrinsic rewards. At this point they can make sure that they do their best to provide intrinsic rewards to employees.
DeleteAgreed, as reward systems can serve as a mechanism for improving employee performance. can lead to increased productivity, efficiency, and overall performance across the organization.
ReplyDeleteHi Arundathi. For sure. In addition, it helps organization to retain employees as well as create a great employee branding.
DeleteAbsolutely, reward management plays a crucial role in organizational success by recognizing and valuing the contributions of employees. Implementing effective reward systems can enhance employee motivation, engagement, and performance, ultimately leading to the achievement of organizational goals.
ReplyDeleteAs for your question, yes, I feel valued and appreciated by my organization through their reward systems.
Really informative piece on the importance and impact of reward management systems in organizations! It's fascinating how rewards can significantly influence employee motivation and performance. would like to know, what types of non-monetary rewards have you found to be most effective in boosting employee morale and engagement?
ReplyDeleteHi Ramesh. Thank You. In my personal opinion that could be a simple appreciation. As I have mentioned above health and insurance, staff gatherings, special offers for staff, choosing employee of the month (this we can see in many shopping complexes), appreciating employees for their exceptional work by highlighting them through a communication channel and inform the entire organization. These could consider as non-monetary or intrinsic rewards from my personal point of view.
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