Essay: Rewards & Performance Appraisal For Organizational Growth.

Reward System and Its Importance

Reward and performance appraisal is a part of organizational performance management. Performance management is process of influencing the employees to work together to achieve the organizational target (Andries & Czarnitzki, 2014). It boosts the employees to provide their best performance to establish a strong future of the organization. Organizational management often uses reward and appraisal policy to motivate the employees. There are many examples of such organizations that offer bonus, incentives, extra leaves and insurance policy to the employees. Starbucks is one of such companies. It is well-known for its behavior towards employees. According to the management of Starbucks, employees are the key elements of their organization. The management often offers their employees insurance, bonus and incentives. This type of behavior helps the organization to retain their employees for a long time and fight against many difficult situations ("Starbucks", 2017). Reward and appraisal system increases the loyalty of the employees towards the organization. Such practice helps the management to establish a strong relationship with the employees and maintain a healthy and friendly atmosphere within the organization (Cummings & Worley, 2014). Employees are the soul element of every organization. The success of every organization is highly dependent on the performance and behavior of the employees. Proper behavior of the employees also plays an important role to maintain the reputation among the society. Reward and appraisal system helps the organization to shape the behavior of the employees. Organizations can avoid many future risks like labor strikes and lock out by appreciating the performance of the employees (García-Peñalvo et al., 2016). Reward and recognition help the organization to increase the productivity as well as the market demand. However, many organizations experience various difficulties to implement rewards and appraisal strategies which leads the organization to meet some unwelcomed circumstances. This article is analyzing the obstacles that one organization faces in implementing reward and performance appraisal system within the organization (Gold, 2015).

Reward is considered as one of the essential tool to influence the growth of the organization (Riasat, Aslam & Nisar, 2016). Reward management refers to a system in which the strategies and policies to appreciate the performance of the employees are formed and implemented. To enrich the productivity of the organization and built a strong organizational structure it is important appreciate the employees on achieving every short-term goals (Yadav & Dabhade, 2013). Such behavior boosts the performance of the employees to achieve the long-term objective. Reward system is an essential part of the organizational strategy of every leading organization. According to many reports, it is highly important to acknowledge the achievements of every employee (Kerr & Hayward, 2013). It is the sign of a great and efficient leadership. Effective leadership demands the support of employees. Organization can earn the faith and support of their staffs by respecting their achievements. Reward and recognition provides an enthusiastic atmosphere within the organization. The main objective of the rewards system in an organization is to promote the positive behavior of the employees towards the organization (Van Dooren, Bouckaert & Halligan, 2015). Reward system encompasses all elements that preserves the capacity to attract the skilled and potential customers. These elements are- Pay benefits like bonus, incentives and professional developments like increment in salary, promotions, training opportunities, insurance facilities and so on (Buckingham & Goodall, 2015). There are many organizations that provides training and development program to their employees about the reward policy of their organization where the management gives a clear and transparent picture about their reward system and how the employees will be eligible for the reward.

Performance Appraisal and Its Relation to Rewards

Performance appraisal also known as performance review is a process to evaluate the performance and productivity of the employees of an organization. In this process management addresses every employees individually and discusses about their experience in the organization, provides efficient suggestions, shares their own experience, counsels them, trains them to actively participate in organizational development, gives them a transparent picture about the organizational goal and motivates them to achieve the target. The main objective of performance appraisal is to enhance the capacity of the employees to influence the growth of the organization (Podgórski, 2015).

There is a strong relation between Performance appraisal and reward system.  Both of these systems are an integral part of organizational culture (Christopher et al., 2017). It is only possible to give reward to any employees after evaluating the performance of every employee. Performance appraisal helps the management to monitor the performance graph of every staff. It will help the management to identify the best performer among the all the employees. Every organization must include the system of performance appraisal system and reward system into their rule book (Shaout & Trivedi, 2013). There are many importances to implement reward policy within the organization. Some of them are as follows:

Reward system is beneficial for both the organization and the employees of the organization. This practice will motivate the employees to give their best performance for the betterment of the organization. Rewards and recognition increases the commitment of the employees towards the organization, so it will be beneficial for the growth of the organization (Bednall, Sanders & Runhaar, 2014).

The rewards system will motivate the employees to actively participate in the development of the organization. Reward is considered as one of the best motivation for the employees. Employees will be motivated to prove themselves and provide quality service to the organization.

Reward practice will decrease the number of the absenteeism in the organization. While employees will receive rewards for their regular presence, good work and hard work, they will be motivated to come to the office on regular basis and hard work to achieve the reward.

Reward system is highly beneficial to increase the commitment level of the employees towards the organization. Awards for the best performance and hard work will make the employees feel as an important part of the organization. Eventually it will increase their loyalty and dedication towards the organization and encourage them to give their best performance for the employees (Radebe, 2015).

Rewards and recognition boosts the morality of the employees and helps them to avoid any kind of unethical activity. It helps them to stay focus on their work and review their own performance. While the employees will review their own performance and identify their mistakes, the development of the organization will be influenced.

Rewards and recognition will maintain a healthy atmosphere within the organization (Ye, 2015). Reward system plays a vital role in shaping the behavior of the employees. Awards for good behavior will motivate the employees to behave properly in the work place. Eventually it will decrease the number of workplace violence and raise the image of the organization among the society. In his modern word, while six out of ten persons faces various kinds of humiliation, harassments and other forms of violence in their workplace, awards for good behavior in the work place will help the organization to maintain peace and harmony within the organization (Armstrong, Ittner & Larcker, 2014).

Benefits of Implementing Reward System in the Organization

Rewards and recognitions often influences the employees to work together to achieve the organizational target. This practice helps the employees to realize the value of team work and motivates them to maintain healthy relation with their fellow workers and work as a team to achieve the common goal (Buckingham & Goodall, 2015). Team work will lead the organization to meet the desired target, produce creative ideas and maintain happy atmosphere within the organization. There are many organization that provide award for good team work.

There are several various types of rewards to boost the employee’s motivation. They are as follows:

Intrinsic Rewards signifies the personal satisfaction. The satisfaction that one may get from his or her professional field like pride on own performance, accomplishment of a task successfully, being a part of a renowned team and so on. Intrinsic reward encompasses recognition, trust, verbal appreciation, good feedback from the authority. Intrinsic rewards give employees a good and positive feeling and boost their self esteem (Wolpert et al., 2014).

On other hand extrinsic reward includes the money rewards, bonuses, salary increment, gifts and incentives and so on. The extrinsic reward concentrates on the performance and participation of the employees. This set of awards mainly reviews the outcome and productivity of the organization and considers the potentiality of the employees (Pulakos et al., 2015).

The organizations often find it difficult to maintain balance between the feel good factor and performance of the employees as the intrinsic awards can be achieved by every employees of the organization while the extrinsic reward is only achievable for the performers and talented employees (Cummings & Worley, 2014).

The basic objective of performance management by using rewards and performance appraisal is to stimulate the employees and improve the quality of their performance. The organizations often face difficulty in applying reward system and performance appraisal system within the organization. There are many obstacles that discourage this effort of the organization to inspire their employees. Some of them are as follows:

The design of the reward system and performance system must be designed as per organizational structure. The design must be suitable for the infrastructure of the company. It must not be duplication of rewards system of other organization. The rewards and appraisal system of many organization often faces this challenge. Management must pay attention while constructing the reward and performance appraisal system of the organization. It must be unique and inspiring. The management must consider the fact that the development of their organization is highly dependent on strategy. They must be careful while designing the system (Kuvaas,  Buch & Dysvik, 2016).

It is often evident that rewards and appraisal system of many organization faces difficulty due to the partial behavior from the authority. The management must be aware of the fact that rewards recognition and performance appraisal system must be a fair practice. Management cannot take any biased decision. They must be neutral and treat all the employees of the organization equally. The main objective of performance appraisal is to identify the most talented and hard working employee of the organization and to identify the flaws and strength of the employees. Management must be careful while practicing this activity. The award must be received by the most deserving performer (Noe et al., 2014).

Various Types of Rewards to Boost Employee Motivation

It can be seen frequently that there is a lack of integrity within the organization. Rewards system and performance management faces difficulty due to lack of integrity. It must be integrated with the organizational structure, organizational strategy, human resource activity and organizational culture. Every organization must include rewards policy and other performance management system into their organizational strategy. It will help the organization to increase the productivity of the organization by influencing the employee’s performance (Goetsch, & Davis, 2014).

Lack of committed and dedicated leaders also discourages the implementation of rewards system and performance appraisal system within the organization. It is the responsibility of the leaders to implement the system appropriately and make the system an integral part of the organizational culture. However, the lack commitment from the leaders can harm the organizational structure as well as the reward and performance appraisal system (Paillé et al., 2014).  The organizational leaders are responsible for monitoring and measuring the performance of their team members. They are responsible to identify the flaws of their employees and rectify their mistakes and boost them to give their best performance to flourish the organization and achieve the desired target.  The lack of commitment and dedication among the leaders can destroy the potentiality of their team members as they are responsible to influence the capability o the employees (Cooke, Saini & Wang, 2014).

Change management must be considered while implementing rewards system and performance appraisal system.  While establishing the system management must be careful about the change management process. Policies must be established in such a manner that it can be modified with time. The policies must be flexible enough. In this competitive era, every organization is changing their organizational structure to survive in the race and beat their rivals. They are implementing and modifying their strategies every now and then. In order to win the competition every organization requires employees who are talented and able to contribute to achieve the desired target of the organization. The management must design their reward and performance management system according to the scenario, so it can encourage the employees to actively participate in achieving the organizational target (Elnaga & Imran, 2013).

The inability of the management to identify the organizational goal or measuring the performance of the employees create difficulty for implementing the reward and performance appraisal system for the in the organization. At first, management needs to identify the objective of the organization and establish the strategy accordingly. Without knowing the goal of the organization management will not be able to measure the performance of the employees to achieve the goal. The inability to discuss about the work experience with employees, review the performance of the employees or inability to give training to the employees about the organizational strategy and policy can act as a challenge for implementing the reward system and performance appraisal system. The management must be careful about this issue while establishing new strategy (Meyers & van Woerkom, 2014).

There are some people who may oppose the decision of the management to implement reward system and performance appraisal system. Labor Union often act as a villain in applying performance management system and reward system within the organization. Labor union has possess a good control over organizations. These unions mainly fight for the right of the employee. However it is often evident in many cases that these unions prevent the organization to appreciate the deserving employee and rewarding them. Under the pressure of these pressure group organizations often select the undeserving for the promotion or financial reward. It must be observed by these labor unions as well as the organizational management that work it is important to encourage the morale power of talented employees as it will be beneficial for the organization and working for long time is not enough for any employee to be nominated as eligible for reward. One must hold some real good qualities to earn the respect and reward (Ye, 2015).

Managers often act as an obstacle in implementing reward system and performance appraisal system. The inexperienced manager will design the whole structure of reward system and appraisal system poorly for which organization may ace various difficulties. Some managers may not want to play the role of critique. They may not want to spoil the future of their subordinates. Such behavior may lead the managers to give more marks to the employees than they deserve (Armstrong, Ittner & Larcker, 2014). It will harm the organizational structure as well as the system of appreciating the employees. It is often evident that managers do not treat all their employees equally. These types of behavior are not acceptable for a successful and effective organizational structure. These behaviors will discourage the talented employees to give their performance and eventually it will stagnant the growth of the productivity. Managers must play neutral role. They must realize that it is their responsibility to treat every employee equally and motivate them to give their valuable contribution in establishing a bright future for the organization.

It is hard to monitor the performance of every employee in large organizations. Large organizations possess a large number of workforce it is hard to maintain the performance graph of every staff. In fact it is hard to address every employee individually and discuss with them about their work experience or give them training about organizational structure and policy. Face to face interaction with every employee is possible in the small companies where the work force is limited. The large enterprises often face difficult to identify their best performer. The large organizations that have huge workforce must use some unique techniques to communicate with their employees and give training. The management of the large companies must use some efficient tools to evaluate the performance of the employees and train them about their organizational strategy and organizational objective (Bednall, Sanders & Runhaar, 2014). Management must maintain effective and regular communication with their employees to monitor their performance graph and identify their flaws. The lack of communication may lead the organization to meet an awful consequence.

It is often evident that there is lack of transparency within the organization and employees who are unable to perform are getting the rewards. It will discourage talented employees and prevent them to give their best performance for the development of the organization. Management must be careful about the transparency level within the organization. They must maintain a transparent and effective relation with all the employees (Christopher et al., 2017). It will be helpful for them to implement the reward and appraisal system in the organization and it will increase commitment of the talented employees towards the organization.

As per the previous discussion, it can be stated that reward system and performance appraisal system plays key role in influencing the performance graph of the employees and enhance the growth of the organization. Reward and recognition motivates the employees to give their best performance to achieve the organizational goal. Reward and performance appraisal are interrelated and highly responsible for organizational development. Performance appraisal help the management to identify their best performer and rewards boost the moral value of talented employees. Reward system and performance appraisal system is an integral part of organizational culture. The management of every organization must include performance management policy into their rulebook. Applying rewards and recognition system makes the organizational goal easier to achieve for the management. It is important for the management to appreciate the long term success of the e employees to achieve the long-term goal. Now a day every organization often faces tough competition from their rivals. The main objective of the organizations is to survive in the race. They use rewards and recognitions as key tool to improve the performance quality of employees. There are two basic types of rewards: intrinsic reward which includes verbal appreciation, good feedbacks and extrinsic reward which includes bonus, promotion and salary increment and so on. However, it is not easy to implement reward systems and performance appraisal system within the organization. The management faces various difficulties and challenges while applying performance management system in the organization, such as- the inability of the management to identify the talented performer, lack of potential leader, opposition from labor union, lack of transparency and partiality from the management. These challenges often prevent the management to implement the performance management system successfully. Management must avoid all these issues while structuring the performance management system within the organization.

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