Discuss about the Performance and Profitability of an Organization.
Performance and profitability of an organization depend on the performance of its workforce. In order to perk up performance and motivation of the employees, the most recognized and effective process is employee reward system (Shields et al. 2015). Reward systems motivate employees to change and enhance their work habit and key behaviors so that their respective organizations can be benefited.
Importance of reward systems in employee motivation
In spite of being the most effective motivational factor, reward systems and their applications are still biased in most of the business organization. Employee reward systems are divided into two parts that are intrinsic reward system and extrinsic reward system. Intrinsic reward systems are non-physical rewards. They cannot be seen or felt but are emotionally associated with the employees. According to Conrad et al. (2015), intrinsic reward rewards can be defined as the sensation of satisfaction one finds in the completion of any task. On the other hand, extrinsic reward systems come from an external source such as employers only. However, according to Cho and Perry (2012), extrinsic rewards can also be attached emotionally if implemented properly as employees value such rewards. A debate is always is there to decide which rewards systems is most effective as implanting both intrinsic and extrinsic would be a tough job for small organizations. That is why; most of the organizations tend to use either intrinsic or extrinsic rewards. As money is considered as the most valuable asset, extrinsic rewards are implemented in most of the organizations. However, as mentioned by Shields et al. (2015), not all the employees can be motivated by financial rewards as recognition, sense of achievement, extra holidays and other intrinsic rewards are also desired by them. In order to find out which rewards is better and can implement higher motivation among the employees, many types of research took place. Some of those researches supported intrinsic reward and some of them supported extrinsic reward. As a result, it is yet not clear that which rewards system a small organization can execute in their organizational culture to motivate its employees. Besides, it is also important to find out the best reward within intrinsic or extrinsic reward system. For example, bonus or commissions might implement more motivation among the employees than fringe benefits. It helps an organization to focus on one particular yet effective reward process, which will reduce the implementation and maintenance, cost (Presslee et al. 2013). In today’s business environment, where competition among the organizations is fierce, the need for reward systems is paramount. That is why; it is important to conduct research on the current business atmosphere to figure out which reward systems will fit the most. In order to carry out this research, an organization will be selected where motivation level of the employees are comparatively low. Carrying out research in such organization will help to understand which reward systems are mostly welcomed by the employees.
In the end, it can be said that employee reward system is a process that must be updated and upgraded according to the needs of the employees. One organization cannot just implement one reward method and expect all the employees to get motivated from it. Especially for different industries, the priorities and expectations of the employees are different. That is why; reward systems that will be able to motivate employees in different industries will be different too.
Cho, Y.J. and Perry, J.L., 2012. Intrinsic motivation and employee attitudes role of managerial trustworthiness, goal directedness, and extrinsic reward expectancy. Review of Public Personnel Administration, 32(4), pp.382-406.
Conrad, D., Ghosh, A. and Isaacson, M., 2015. Employee motivation factors: A comparative study of the perceptions between physicians and physician leaders. International Journal of Public Leadership, 11(2), pp.92-106.
Presslee, A., Vance, T.W. and Webb, R.A., 2013. The effects of reward type on employee goal setting, goal commitment, and performance. The Accounting Review, 88(5), pp.1805-1831.
Shields, J., Brown, M., Kaine, S., Dolle-Samuel, C., North-Samardzic, A., McLean, P., Johns, R., Robinson, J., O'Leary, P. and Plimmer, G., 2015.Managing Employee Performance & Reward: Concepts, Practices, Strategies. Cambridge University Press. Cambridge.