Understanding Reward And Recognition Theory

The Role of Human Resource in Motivating Employees

Discuss about the Reward and Recognition Theory.

Every individual working in an organization has a motivational factor to perform the tasks and responsibility assigned to them. The motivation are classifies as an intrinsic and extrinsic motivation. Intrinsic motivation comes from within the individual to do the job effectively due to factors such as high job satisfaction or feeling of contentment at workplace. Extrinsic motivation can be derived from various factors such as base pay, rewards and monetary compensation etc. It is the duty of the HR to identify the motivational factor in every individual in order to optimize their performance to achieve organizational goals in the long run.

The role of human resource has been identified as the most important in present day scenario. In today’s world of competition where companies are taking various strategic decisions of growth and expansion in order to secure their position, what differentiates them is their competent workforce. Human capital is the most important factor which contributes in achieving the organization’s desirable goals and objective. It is the responsibility of an HR to select, recruit and provide training to each individual so that they can contribute successfully in the growth of the organization (Aslam, et.al., 2013). The role of HR has not been limited to being a mediator between senior management and employees rather they are recognized as a strategic contributor because they don’t just manage people but also ensure their strategic contribution towards the long term sustainable growth of the organization. In order to align individual’s effort with the organization’s vision and mission it is very important that every person believes in the management’s decisions and stay motivated to achieve them (Tan & Nasrudin, 2011). Here the role of HR comes into the picture. In order to optimize full potential of every individual they design certain policies and procedures in order to motivate them to perform their best.

Motivation is the key force which drives every individual’s performance. An employee cannot contribute efficiently if they don’t have a motivational force. It is the responsibility of HR to identify the motivating factors in every individual and use them to achieve goals and objective. There are certain HR practices which are identified as the performance motivators in every organization. These are Reward and Recognition schemes (Cania, 2014). These schemes are known as an extrinsic motivation because it motivates employees to achieve targets in lieu of rewards. Internal motivation comes when an individual is satisfied with their work and they are willing to achieve more (Armstrong, Brown & Reily, 2009). Rewards and recognition schemes works as convincing factors to help employees to attain their full potentials and over perform their targets. It not only helps to attain organization goal but also help individual to meet their career expectations and gives them a learning experience. It also helps to encourage healthy competitive behavior among employees. The main advantage of being competitive is that it pushes individual to cross their limits and be productive for the organization. Increase in productivity and efficiency of human capital will help every organization to achieve their goals and targets and outperform their competitors easily (Becker & Huselid, 2006).

Intrinsic and Extrinsic Motivation: Understanding the Difference

The purpose of initiating reward and recognition programs in any organization is to give recognition and reward to the employees that help to support and contribute in achieving the desired goals and objective of the organization. Rewards are identifies as the form of compensation received by an individual working in the organization in both monetary and non-monetary terms for the contribution made by them in the organization. Rewards are often stereotyped as just compensation in monetary terms but there is more to it. Monetary rewards include a hike in salary, contingent pay which means paying extra for the target achieved and other employee’s benefits such as gift cards or paid vacation. A non-monetary reward includes performance appraisals, promotions, work recognition, growth, learning experiences etc. Recognition refers to the acknowledging and appreciating individual’s contribution. Gone were the days when employees used to crave for money but now they want recognition and acknowledgment for the work performed by them. Many people don’t value rewards but all they want is that their work is appreciated. People who are internally motivated crave for recognition of their efforts. People who are not motivated, various monetary reward schemes are designed to motivate them to work efficiently and achieve targets.

Distributing rewards is not a matter of concern but doing it in the fair and just manner to every deserving individual is important. Reward and recognition programs come with their own set of advantages and disadvantages. Retaining a talent in any organization is a matter of key concern in the today’s world. Companies often cannot find individuals who are goal oriented and sincere in their work, but if they find someone capable they should try to retain them for the growth of the organization. Rewards and recognition schemes helps an organization to retain employees by rewarding their work and recognizing their effort time to time and motivate them to improve their productivity which results into reducing the turnover rate. Apart from retaining the employees it is very important that the organization recruit the deserving candidate. Rewarding the right people creates a positive image of the company in the outside world because people who are working there share their experiences and they represent company in front of the outside world (Vokic, 2016). This is an advantages for the organization as the people who want to join the organization in future see the employees working over there are well rewarded and appreciated they are motivated to work with them, thus ensuring the opportunity to attract and recruit the best of the talent (Dynamic business, 2015).

The Power of Reward and Recognition Schemes in Boosting Employee Performance

Rewards and recognition programs improve the work culture of the organization because people are appreciated and motivated, thus creating a positive environment to work hard. It also encourages employees to work extra to achieve organization goals because they know that their efforts will be recognized and they will be a strategic contributor in achieving the goal of the organization. Absenteeism rate will also be low because people will be driven to work productively in order to achieve praises and rewards. But Rewards don’t ensure quality, people may achieve targets or complete their work but it will all be for reward and may lack quality work. It may also spoil employees as they will be only willing to work hard when they will be provided with some rewards (Jiang, Qi & Xiao, 2009). But overall it is recommended for every organization to initiate a reward and recognition program to motivate each and every individual to work efficiently. The thing that is to be kept in mind is that the program should not affect the financial position of the company i.e. it should be economical and cost effective.

 There are certain companies who have outperformed their competitors just because of their reward programs. McDonalds is one of them. They are one of the Australia’s largest employers. The secret of their success is their strong recognition and reward program. In order to achieve growth and success the organization should treat each and every people who are involved in the daily operation of the business should be treated as the strategic contributor in achieving the goals (Patel & Mujtaba, 2007). Efforts of every individual working should be recognized as rewarded in a fair manner. That’s what McDonald’s does. They have clearly emerged as the people oriented organization because they feel investing in people will help them to be sustainable in the competition in the long run. They increase the self-esteem of the individuals by initiating recognition programs such as crew recognition program at the store level, organizing annual events to acknowledge the efforts of employees at the corporate level. They also provide monetary rewards in the form of gift coupons and appreciating every individual in the group and publishing their names in their monthly magazines WRAPT. The benefits of engaging in these programs are McDonalds’s is operating in the service industry, where customer satisfaction can be ensured by providing good customer service (Alam et.al., 2013). The service providers are the employees of the organization who can only work well when they are motivated to do their work. Hence by providing everyone with fair rewards an organization can motivate individuals to work more with dedication and enthusiasm so that customer delight can be achieved. Reward program also boost the productivity of the employee working over there (Danish & Usman, 2010). Recognition program in McDonald’s have made every employee feel satisfied and content about their job which directly result in low turnover and high retention rate (Dobre, 2013). Recognition scheme main advantage is that they open the doors of promotion and progressing ahead in the career. It was mentioned in the case study that around three managing directors of the McDonald’s started as employees, which means individual’s efforts are recognized and they are promoted ahead. This is an example which motivates other employees in outperforming beyond their limits in order to grow and become future leaders of an organization.

The Benefits and Drawbacks of Reward and Recognition Programs

There are certain theories which were provided by various experts that relate directly to the McDonald’s recognition scheme. Abraham Maslow’s Hierarchy of Needs states that there are five needs that motivate people and individual will move on to the next stage when the other needs are fulfilled. These stages are physiological, safety, psychological, self-esteem and self-actualization. The need for money is classified in the physiological needs and the need for recognition is above the physiological needs (Kaur, 2013). It directly points out that after earning for survival an employee crave for recognition in the organization (Jerome, 2013). Another theory which can be related to McDonald’s recognition theory is Frederick Herzberg’s Motivation-Hygiene Theory. He clearly identified job motivators and hygiene factors that satisfied employees and amongst them Achievement and Recognition were on the top to attain job satisfaction. Expectancy theory can also be related to McDonald’s reward and recognition scheme (Baah & Amoako, 2011). The theory was given by Victor Vroom. This theory states that the performance of individual working in the organization is directly proportionate to the desire to achieve the rewards. Their job performance is motivated is affected by the desire to earn the reward. Here the driving force is the reward (Parijat & Bagga, 2014). It can be clearly seen that Maslow, Frederick and Vroom focused on the need for recognition and achievement. Employee recognition program of McDonald’s have ensured customer satisfaction and rather than treating their reward and recognition program as an expense, they called it is an investment which will be fruitful in the long run of the organization.

Reward and recognition program are undoubtedly beneficial but they may levy a financial burden on the organization. Generally reward and recognition programs involve cash coupons, shopping vouchers, organizing events etc. which may be not cost effective for a mid or small size organization. HR practice of rewarding and recognizing employee’s efforts in McDonald’s is very effective but also requires large investments. Non-profit organization like spastic center that does not operate on profit cannot spend on such Reward and recognition programs. The provide a nominal salary to its employees and then rest of the amount is paid in terms of other allowances such as food and entertainment which is also restricted to $16500 per year. What works best is the Non-monetary form of recognition (Chinkungwa & Chamisa, 2013). Recognition programs are very important in these organizations because that is the only element which can ensure low turnover rate and high employee’s productivity (Burma, 2014). The various forms of recognition programs which can be implemented in Non-profit organization like spastic centers are: Praise, which involves praising the effort of individual by managers or senior authority in form of simple Thank you in front of the organization or a group of members. Another form of recognition and reward program can involve providing small gift vouchers as a token of appreciation which can involve travel voucher, recreational activity voucher, meal voucher, parking voucher or movie and shopping voucher. The benefits of giving these vouchers are they are not expensive. Nomination based schemes are also a form of recognizing an individual’s effort which involves giving trophies, memento or certificates. The nomination for the deserving candidates is done by either the working staff through a poll, by top level authority or by the clients and customer based on the individual’s performance.

Effective Ways to Implement Reward and Recognition Programs

The benefits of Non-monetary reward and recognition program apart from being cost effective are that they help the employee to work for recognizing their efforts in terms of performance appraisals and appreciation rather than in monetary terms. This also ensures employee retention along with workplace satisfaction to the employee. This scheme works because it was already discussed above that the need for recognition is above the monetary rewards. When individuals are giving their time and resources to the organization they expect certain acknowledgment and appreciation from their employer. Reward and recognition program ensure that every individual’s works gets appreciated so that they are motivated to work hard in the direction of achieving the company’s vision and mission (Tessema, Ready & Embaye, 2013).

Conclusion

The report states the importance of motivation of employees in the workplace. It discusses various rewards and recognition schemes along with its benefits to both the organization and employee. This impact of recognition schemes followed by McDonald’s for their employees has been discussed along with its advantages. Various motivation theories have been states and all of them have discusses the importance of reward and recognition programs on the employees performance. The report concludes that rewards in monetary terms is not always important, recognition has been identified as the most important factor of motivation among the employees rather than monetary rewards.

References

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