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Skill-based pay means compensation Is knowledge relevant to the work (Miltonic and Newman, 2002). Reward had been seen to be a vital instrument in employee performance. A well rewarded employee feels that he/she is being valued by the company that he/she is working for. They are also encouraged to work harder and better if they are aware that their well-being is taken seriously by their employers, and that their career and self development are also being honed and taken care of by their company. Employees are the engine of organization vehicles while reward is the fuel.
No organization can achieve its stated objectives without its employees. International Journal of Arts and Commerce Volvo. 2 No. 2 February 2013) rewards are taken up as the fundamental . The purpose of reward systems is to provide a systematic way to deliver positive consequences. Fundamental purpose is to provide positive consequences for contributions to desired performance (Wilson, 2003). The only way employees will fulfill the employers dream is to share in their dream (Sextillion, 2010). Reward systems are the mechanisms that make this happen.
They can include awards and other forms of recognition, promotions, reassignments, non monetary bonuses like vacations or a simple thank-you. International Journal of Business and Management; Volvo. 8, No. 21; 2013) 2. 1 Designing Effective Reward Policies The task of developing a strategic rewards framework for organizations is usually challenging but necessary to survive in the competitive and changing market place. The process however cannot be copied from the organizations but needs to be designed, developed and grown within the unique environment of the organization (Wilson, 2003).
A well designed incentive program rewards measurable changes in behavior that contribute to clearly defined goals. The challenge in developing such program lies in determining what rewards are effective agents of change, what behaviors can be changed and the cost and benefits of eliciting change (Hartman et al, 1994). ( International Journal of Business and Management; Volvo. 8, No. 21; 2013) According to Dublin (2002), “Motivation is the complex of forces starting and keeping a person at work in an organization.
Motivation is something that puts the person to action, and continues him in the course of action already initiated”( Commonwealth Executive Masters in Public Administration JUNE, 2011) Motivation is a complex phenomenon, which is influenced by individual, cultural, ethnic and historical factors. Motivation can be defined as “a series of energize forces that originate both within and beyond individual”s self”. These forces determine the person”s behavior and therefore, influence his/her productivity Jackson, 1995).
According to De Cozen et al. , (1996), people who are motivated use a greater effort to perform a Job than those who are not motivated. In other words this means that all thinkable factors of physical or psychological aspects that we interact with, leads to a reaction within our self or of the entire organization. Keynote (2000) exerts that money remains the most significant motivational strategy. As far back as 1911, Frederick Taylor and his scientific management associate described money as productivity.
Taylor advocated the establishment of incentive wage systems as a means of stimulating workers to higher performance, commitment, and eventually satisfaction. Every organization’s reward system should focus on these major areas; compensation, benefits, recognition and appreciation (Sardinia, 2010). (International Journal of Business and Management Volvo. 8, No. 21; 2013) Nelson (2004) notes that raise and recognition are the most efficient intrinsic reward that enhance employees performance.
Many studies in the creativity literature have shown that the firm’s reward system plays a critical role in motivating employees to perform creatively (Gingerers, 1992; Gingerers, Airmail and Perez, 1998; Gingerers and Rhodes, 2001). As an effort to stimulate employees’ creativity, many managers have used extrinsic rewards (e. G. Monetary incentives and recognition) to motivate their employees (Fairbanks and Williams, 2001 ; Van Dick and Van den Ended, 2002).
While empirical research has shown that extrinsic rewards help enhance individuals’ creative performance. The literature is still divided when it comes to its effects on individuals’ creativity (Bear et al. ,2003) The effectiveness of skilled employees is likely to be limited if they are not motivated to perform. One of the means that organizations can use to enhance employee motivation and performance is to provide performance- related compensation ( Delaney and Hustled, 1996).
A reward and compensation system is based on the expectancy theory, which suggests that employees are more likely to be motivated to perform when they perceive that there is a strong link between their performance and the reward they receive( Fey and Bookmark, 2001; Guest, 2002; Mendoza, 2002). According to Shore & Shore (1995), employees who are able to experience and receive recognition for their work are also able to have a better perception of their work, their workplace and the people they work for.
Thus, there is a need for the employer to really make an effort in showing the employee that his/her wellbeing is of concern to the organization and the management and that the contribution of the employee awards the organization is highly valued. This idea is further reiterated by Buchanan (1974) who adds that the recognition of contributions towards the organization has a positive relationship towards increasing the commitment of the employee towards the organization and its objectives. According to Norris, N. , Greenberg, B. And Linda (2008) the drive to acquire is most easily satisfied by an organization”s reward system is how effectively it discriminates between good and poor performers, ties rewards to performance, and gives the best people opportunities for advancement. International Conference on (Advance Research in Management, Economic and Finance Seep 7, 2013 Patty) organization. This is a very crucial factor towards an employee motivation. Recognition describes how the work of an employee is evaluate and how much the appreciation he receives in return from the organization.
It also specify the way an organization gives its employee the reward and status for his work and activities. It was measured through recognition satisfaction item of Job Satisfaction Through recognition employees get chances to known to others within organization. This is very vital factor towards an employee’s motivation. Recognition tells how much work Is to be distributed and how the performance of employee assess and how much appreciation he would get in return. It also denotes the way in which organization rewards his employee was measured through recognition. F rewards or recognition offered to employees were to be altered, then there would be a corresponding change in work motivation and satisfaction. 1. 1. 2 Bonuses Bonus programs reward individual accomplishments and are frequently used in sales organizations to encourage salesperson to generate additional business or higher profits. They can also be used, to recognize group accomplishments. Bonuses are generally shorter motivators. By rewarding an employee’s performance for the previous year, bonus programs tend to encourage short-term perspective rather than future-oriented accomplishments.
In addition, these programs need to be carefully structured to ensure they are rewarding accomplishments above and beyond an individual or group’s basic functions. Otherwise, they run the risk of being perceived as entitlements or regular merit pay, rather than a reward for outstanding work. Impact of Fair Reward System on Employees Job Performance in Nigerian Agape Oil Company Limited Port-Harcourt M. O. Gull Relationship between Rewards and Employee’s Performance in the Cement Industry in Pakistan Muhammad Impair Squishier, Khalid’s Zamia and Dry.
Stride All Shah Effect of Reward on Employee Performance: A Case of Kenya Power and Lighting Company Ltd. , Nassau, Kenya W. L. Ninja, R. N. Animal, L. K. Kibble & Genii Nagging 1 Faculty of Commerce, Shagbark University, Kenya influence the actions of people. The purpose of reward systems is to provide a systematic way to deliver positive consequences. Fundamental purpose is to provide positive consequences for contributions to desired performance (Wilson, 2003).
The only way employees will fulfill the employers dream is to share in their dream (Sextillion, 2010). Reward systems are the mechanisms that make this happen. They can include awards and other forms of recognition, promotions, reassignments, non monetary bonuses like vacations or a simple thank-you. Employees could be rewarded for working overtime, taking initiative, team work, reliability, exceptional attendance, outstanding customer feedback, meeting deadlines or timeliness, productivity etc.
Employers and managers should then design or come up with a system to measure or quantify all these aspects so that rewards are then given accordingly. Cash Bonus Cash bonus is another form of reward that organizations use to reward employees for exemplary performance that is if they have performed higher or exceed their set targets, this hence makes them eligible (Finale, 2011). The amount of cash is determined by how high the employee has over exceeded the set targets or they can also be based on ranks or Job groups.
Nowadays, companies are rewarding performance bonuses to Junior employees to increase output, unlike the past where they used to be a privilege of top executives. Performance bonuses are now on the rise in many organizations because managers ant to link performance to reward. (Block & Legalese, 1997). Performance Measuring performance is of great importance to an incentive plan because it communicates the importance of established organizational goals. “What gets measured and rewarded gets attention” (Blander et al, 2001).
The management of individual performance within organizations has traditionally centered on assessing performance and allocating reward, with effective performance seen as the result of the interaction between individual ability and motivation. It is increasingly being recognized that planning and an enabling environment have a critical effect on individual performance, with performance goals and standards, appropriate resources, guidance and support from the managers all being central (Darlington, Hall & Stephen, 2008). Extrinsic outcomes or rewards in organizations have traditionally meant pay or other monetarily based incentives.
Brief and Lad (1977) conceptualize extrinsic work outcomes as any “object or event” received by the individual as a result of task performance. Terms surrounding the definition of intrinsic rewards or outcomes have been more vague and ambiguous than for extrinsic outcomes. All of the following have been seed in the attempt to define intrinsic outcomes: feelings of growth and status (Lealer, 1971); task enjoyment (Calder and Straw, 1975); and feelings of worthwhile accomplishment, self-fulfillment, and pride in work (Dyer and Parker, 1975).