Employee motivation and reward systems in organizational management

Motivation

Employee Motivation

Managers and business owners know the importance of employee motivation to the success of their business. To that extent, they seek to understand it better for mutual success. Gateth R. Jones and Jennifer M. George, in their book entitled "Contemporary Management," define employee motivation as a combination of "psychological forces, which determine the direction" of an employee's behavior in an organization (Consador 2013)." They also describe it as an employee's "level of effort and of persistence" in his performance of tasks. The authors point to the combined directions of behavior, effort and persistence as the key factors. Motivated behavior may be intrinsic or extrinsic. Intrinsically motivated behavior performs tasks for their own sake and the source of the motivation is the performance of the task itself. Extrinsically motivated behavior performs tasks for material or social rewards or to avoid penalty for the omission (Consador). It is well-known that an organizational culture that rewards exemplary performance motivates employees to achieve or do their best (Lindblad 2013). This is done by implementing an adequate motivation and reward system. It is a way of formally acknowledging the accomplishments of employees and showing their importance to the company (Lindblad).

Rewards that Satisfy

Experience and experiments identify the factors, which make up employee satisfaction in the rewards given (Newman 2009, 2013). The input is comparable to the output. The reward is comparable to what is expected. The reward fairly compares with that of other employees who achieve and are rewarded for similar tasks. The correctness of the employee's perception of the rewards of other employees previously given is another factor. Misperception occurs because management does not reveal the confidential salary or performance of others who have been previously rewarded. And overall satisfaction comes from combined intrinsic and extrinsic rewards (Newman).

Employers give rewards to motivate employees perform better (Newman 2009, 2013). A management theory suggests certain conditions as necessary to employee motivation. One is that employees must believe that effective performance will reap certain rewards. Another is that those rewards are attractive or worth pursuing. And another is that a certain level of effort will achieve the organization's standards of effective performance. Receiving money, recognition, promotion or some other reward can follow exemplary effort. This motivation inclines an employee to perform better to receive these rewards. When this occurs, the employee becomes satisfied and more motivated to perform again and better (Newman).

Criteria of Effective Rewards

Knowing what rewards improve performance and enhance better productivity is the foundation of a workable rewards system (Accel 2013). They are part of good management, not a substitute. Effective rewards should be quick, significant, irrevocable, compatible with job performance, and the goals must be known, understandable and attainable by all employees. If they see that the reward plan is unfair or unrealistic, such as promoting on the basis of seniority or favoritism, it will produce the negative effect of reducing motivation. Rewards should be so structured as to balance goal and effort (Accel).

Financial rewards are classified into profit-sharing, job evaluation and merit rating (Accel 2013). Profit-sharing may be on macro or micro basis. It is macro-based if it relates to the entire company and micro-based if confined to a particular activity or product or service. Job evaluation involves job factors, such as working environment; physical characteristics, mental characteristics, extent of responsibility, and training and experience. Managers are evaluated according to responsibility, expertise, and human relations. Merit training rates the employee as excellent, good, average, or poor as to their abilities. These abilities are communication, human relations, intelligence, judgment and knowledge. The problem is that rating tends to be done mechanically, with heavy bias on the past of the rater. Or he may not be objective or play favorites (Accel).

A Employee Reward System and Organizational Performance

Training specialist Sherry Ryan of the Weyerhaeuser Company pointed to recognition and rewards as powerful tools of employee motivation (Nuri 2013). Recognizing employee achievement and adequately rewarding it benefits the company a number of ways or forms. These are the system can help achieve company goals. They can retain employees. They help create a talented workforce. And they add flexibility and increase company effectiveness (Nuri).

Help Attain Organizational Goals

As long as these goals are clearly defined by managers and understood by employees and aligned with the rewards system, repeated and improved performance can be attained (Nuri 2013). The reward systems should, however, not be based on seniority but on all staff levels in order encourage total employee participation (Nuri)

Enhance Employee Retention

Both tangible and intangible forms of reward, such as cash bonuses or gifts, can make an employee feel appreciated (Nuri 2013). Recognition and appreciation assert greater influence on motivation and performance than salary increases (Nuri). They strongly enhance loyalty.

Create a Talented Workforce

Rewarding employees in either tangible or intangible form benefits both the employee and the company. But instead of promoting them, the company can help employees develop their proven professional skills for their own growth. At the same time, it creates an organizational culture of a talented workforce (Nuri).

Achieve Greater Flexibility

Employee reward systems contribute to company flexibility and effectiveness (Nuri 2013). Motivating employees through a bonus system benefits them more directly. At the same time, it increases company performance. It an also use these bonus systems during its growth and rapid change. Bonus systems can help attain short or long-term company objectives and market shares (Nuri).

Employee Motivation and Organizational Performance

Employee motivation asserts a decisive effect on company stability, productivity, reputation and future trends (Williams 2013). What employees feel about their work and its results affects the performance of the business and, in the long-term, its stability. Highly motivated employees will do everything they can to achieve the objectives of the organization. This includes rising to any challenges confronted by the business. The opposite is true. Employees with low morale and motivation will easily succumb to internal or external vulnerabilities or challenges. They will not exert effort to support the organization. Eventually, the organization's overall performance is adversely affected and becomes unstable (Williams).

Insufficient motivation leads to less accomplishment or low-level productivity (Williams 2013). Employees who are not too motivated usually show this condition in other ways. They take longer when engaging in personal chats, internet surfing or longer breaks. These interruptions waste company money and mean reduced productivity. Both slow down organizational performance and hinder future success (Williams).

The low level of motivation among employees may also be a consequence of the company's loss in competitiveness, economic crisis, or any change or uncertainty within the organization (Williams 2013). Whatever the cause, words that spread around about an unbalanced work environment because of low employee motivation and morale will project an unpleasant image and feedback about it among potential clients and partners. A reputation of this kind can impair its future chances in the industry. And a slow-moving business is able to reach its clients, operating and developing for a future at only a fraction. The management needs to come to terms with reality and to improve performance, mainly by cultivating employee motivation and morale (Williams)

Problem-Solving Teams

The formation of problem-solving teams is one mechanism, which has been adopted to increase employee participation and involvement in solving problems (Kerrin & Oliver 2002). These teams observe accountability for their production process within their work unit. This is seen to increase their sense of responsibility for the problems, which develop within their unit. Using problem-solving teams in a UK automotive component company in a study, results showed that a combination of the individual and group-based incentives will be more effective in motivating employees in the individual level and the cooperation of their total cooperation at the team level than multiple reward practices (Kerrin & Oliver).

Goal-Setting

Psychologist Abraham Maslow proposed that human beings are motivated to fulfill their basic needs for survival before higher-level needs (Ray 2011). Offering monetary rewards will fill survival needs. At the same time, it provides the basis for goals, which will bring less immediate and less tangible rewards, such as praise, self-esteem and a sense of achievement. Companies should connect their goals to rewards, which will motivate employees to become productive. External motivation can be in the form of rewards connected to employee needs they themselves determine. Employees thus also participate in the goal-setting process (Ray).

This is one of the most-accepted forms of motivation today (Ray 2011). It is a tool, which businesses can use to improve organizational management, employee morale and retention. Goals must be specific, in written form, and understandable to employees. They should also be measurable, relevant to employees and set for achievement at a specific schedule. It is of utmost importance that employees participating in the process easily recognize these specific goals, such as sales goals. Bonuses and rewards should also be clearly explained (Ray).

Managers should expect that not all employees will attain established goals (Ray 2011). Smaller rewards should be given and motivation should be increased. Motivation in sales, for example, should be in percentages and proportionate to the level of achievement. Managers and workers must agree to the terms of the goal-setting contract. Goal-setting is an opportunity for consensus building within the organization (Ray).

Increasing Employee Motivation and Morale

There are more effective methods of doing this than just giving money rewards (Larmore 2013). Monetary rewards are always welcome but money does not always increase motivation or life employee morale. Raising employee morale and increasing motivation lead to a more positive and productive work environment and reduce work errors. Concrete examples can be mentioned. Managers and supervisors should frequently and public acknowledge employee accomplishments. Those who hear and see this will also try hard to receive the same recognition and praise. Managers and supervisors should meet with employees individually about his or her individual goals and career plans. A plan should be designed for him to track his progress. Employees, especially those performing repetitive tasks, should be challenged to perform more difficult tasks. This means that their superiors believe in their capability. This demonstration of confidence will boost their morale and increase motivation. Managers and supervisors should always be clear with their instructions to avoid confusion and discouragement. Managers and supervisors should also always be available for questions and comments. And employees should be trained for new responsibilities and to update their know-how. Management should provide employees with the needed resources for new responsibilities (Larmore).

Reward Systems

Total Quality Management

A study investigated the impact of reward practices on the relationship between total quality management and firm performance (Allen & Killman 1999). It found higher levels of firm performance with total quality management or TQM practices but not with the greater use of quality rhetoric. A TQM-based organizational strategy is founded on a philosophy of continuously improving organizational processes as its response to a demanding and constantly changing environment. The study also found that the use of extrinsic reward practices asserted a substantially positive and moderating effect on the relationship. Intrinsic reward practices did not do so. Extrinsic reward practices include profit-sharing, gain-sharing, employment security, and comp time (Allen & Killman).

Cultural Values and Equity Sensitivity

Developing effective rewards systems for a diverse workforce and across diverse cultures for global operations is a separate matter altogether (Wheeler 2002). This new situation is addressed by the equity theory, a major process motivational model. A study was conducted to explore the relation of equity sensitivity to culturally-related values. It found positive relationships or collectivism, femininity, power distance, and uncertainty avoidance for a diverse workforce in the U.S.A. And for collectivism and femininity for Taiwan (Wheeler).

Empowerment for Rewards

Born and Molleman (1996) examine the implications of empowerment for rewards and how rewards systems can support empowerment. The define empowerment to refer to both enlargement and enrichment of jobs. The authors surveyed the machine group and the assembly group in a plant of a large Dutch firm with a staff of 1,800. The authors concluded that empowerment needed to be supported by other types of rewards to be applied more flexibly. Two additional pay systems would be those rewards types. The first should focus on the potentials of an employee and reward the employee with multiple functions. The other type should focus on the performance of the team (Born & Molleman).

Reward and Recognition Process

This company made several attempts to develop this process but failed (London & Higgot 1995). The employees lost interest in the previous various systems. The company's quality committee introduced a new process based on an objective assessment by managers, fellow employees and internal customers. The new process was well received by employees, as can be gleaned from the analysis of the results of the study. At least 6-8 nominations are received for every quarter. As of now, 89% have achieved an overall score of 90% or greater. Thirty-three per cent of them have been 95% or greater. The combination of reward and recognition within the one process is largely acceptable to the employees (London & Higgot)

Motivating Different Generations: Volvo Car Corporation

This study sought to gain deeper understanding of whether managers in this Swedish company were motivated by a rewards system (Axelsson & Bokedal 2009). It also explored the existence of generational differences in the company and the thoughts and preferences of the respondent managers on the matter. The researchers conducted 20 interviews with the managers. The company is located in Goteborg, Sweden. The study drew from the growing reality of different generations working together, each with its own characteristics and factors based on experiences. The researchers found interest in exploring how managers of different generations perceive reward systems. Results of the study showed that differences between generations exist but not substantial enough to distinguish one reward system from another. All generations of managers perceive salary as the most important part of a reward system. They also perceive non-monetary rewards of great importance. They did not perceive the variable components of the reward system as motivating as believed, although needed (Axelsson & Bokedal).

The study concluded that the managers surveyed were not directly motivated by a reward system (Axelsson & Bokedal 2009). It found both differences and similarities between the sample populations, Baby Boomers and Generation X respondents. One more conclusion was that the surveyed managers saw the reward system as a say to shared their result with those who helped create it. It should, therefore, exist in all organizational levels (Axelsson & Bokedal).

The Best Multinational Companies

The Great Place to Work Institute listed the top 10 multinational companies with the happiest and most contented employees (Ezine Mark 2013). Many factors were listed as creating a pleasant work experience. The most important attributes gathered included "a place where you truth the people you work for, have pride in what you do, and enjoy the people you work with." A list of 25 out of 350 multinational companies was made. These companies meet their employees' desire of 40 hours of paid volunteer work a year (Ezine Mark).

Kimberly Clark won the distinction of inspiring its employees to aim higher and to build on their corporate legacy of innovation and excellence. The company has 37,000 employees with a 1.2% employee growth in 1 year (Ezine Mark 2013). MacDonald's provides jobs to the long-term unemployed and then invests much on their training and development. It has a workforce of 1,800,00 and an employee growth of 3% in 1 year.

SC Johnson is a family company, which has committed itself to be one of the best to work for in the U.S. And in the world. It boasts of a rich history and innovative programs and services to balance employees' professional and personal lives. It has 12,000 employees and $8,800 million global revenues. Hotel Marriott claims to have established the best practices in the industry. It has 129,000 employees and $11,691 million global revenues. SAS software developer has a 7.6% employee growth in 1 year ad 12,226 employees. Microsoft Corporation topped the list of the best multinational companies to work for, granting employees full 40 hours of paid volunteer work a year. It has 90,819 employees and an employee growth rate of 2.7% in one year. And Google employees are said to engage in regular talks with speakers, including prominent musicians and artists. It has 28,768 employees and an employee growth rate of 31.9% in 1 year (Ezine Mark).

Conclusion: Why Employees Stay and Excel

Salary and financial rewards are not everything in a job, which attract and hold productive and excellent employees (Lindblad 2013). Many or most of them give importance to the workplace community and their professional relationships. Employers should take the hint and enhance the conditions and connections, which bring in and retain dream employees. Employers can, on their own initiative, strategically set up the conditions and environment for their mutual and long-lasting benefit (Lindblad). #