Literature Overview of Motivation and Reward Systems

Since employees are human beings and being human being means that employees have the ability to think which signifies a huge selection of problems for the employers because these factors can't be quantified nor recognized completely through objective means. Also, what one individual thinks and seems can't be generalized for other individuals. Employees bring this problem to the office that your employers need to solve. Even if they are paid on time, workers may be dishonest, dissident, rude or sluggish and it could hard to ascertain why. The problem lies in the fact that it's very difficult to discover and evaluate behaviors like dishonesty, sluggishness etc that are indicative of an de motivated staff (Ritter and Taylor, 1997).

Owing to the increasing complexness of the task place and the inevitability of satisfying employees, organizations have been required to taking on a holistic procedure in the for of a total rewards system that functions as a fulcrum for balancing employee as well as organizational needs and takes care of the regulatory requirements like career and tax regulations. Although total compensation systems have much in common with their traditional counterparts, the total reward system draws on the task of certain motivational theorists such as Maslow, Herzberg, Alfie Kohn, Jeffrey Pfeffer, Huselid to name a few (Thompson and CIPD 2002). It has led to reputation of the importance of linking rewards with the entire strategy of the business.

A total praise system is designed so such that it departs from the traditional reward techniques and includes other intangible factors such as its feature of being holistic, takes on a contingency procedure, integrates the rewards with the other functions and overall aim of the business, is more employee oriented, offers a personal or customized approach, is distinctive and evolutionary such that it has the capacity to adapt to the required changes (Martin, 2010).

Total rewards system is one of the recent developments in the field on human being resource management which concept is defined as using all the gears available to the company in order to magnetize, preserve, encourage and gratify these employees and includes all kinds of investments made in things that lead to worker satisfaction and are appreciated by the employees (Armstrong, 2002). He further elaborates about the the different parts of a total incentive system and says it consists of both financial as well as non financial rewards. Financial rewards encompass factors such as foundation and adjustable pay, staff stock ownership and financial benefits while on the other palm non financial rewards include acknowledgment, prospects to develop skills and standard of living.

The concept of a total praise system originated from the US and presents the recognition of the affirmation that money is not everything as it identifies the value of other factors besides money such as offering adaptable working hours to employees, trainings and working at home opportunities (Perry, 2007). As the twentieth century progressed, a huge body of books regarding total rewards developed and the organizations shifted from offering just payment towards offering total rewards and now instead of offering homogenous rewards, organizations offer heterogeneous rewards that talk about the present day day situations in a much better way (Chowdhury, 2003).

The prize systems were simply known as pay and settlement packages however this term has evolved considerable over the years and has been referred to as total compensation or total rewards. Tropman (2001) has coined an impressive term because of this total pay back system and calling it cafeteria pay which is much more worker drive than its traditional counterpart. Incentive systems should be viewed as a means in which the employees can be energized as even the most skilled employees may not have the ability achieve full potential if they're not properly guided.

A company's determination to a total rewards system is a sign the company has acknowledged employees as its most significant resource which financial or tangible rewards by itself are necessary however, not enough to stimulate employees. Total rewards are a wide concept and it offers implications related to leadership, progress opportunities, and acceptance and job enablement. These systems have been developed in response to factors such as the constant warfare for keeping employees and a diverse labor force with diverse needs (Jensen, McMullen and Stark, 2007).

The main benefits of following a all natural approach towards reward system include development of recruitment and selection activity, reduction in the fixed portion of the rewards system, developing employees, and upsurge in cooperation, inculcating imagination and innovation and encouragement of good performance (Worldatwork, 2007). Organizations that foster such a program are in a much better potion to get and keep employees and continue to be more prominent in the eyes of the employees which is effective especially in a rigid labor market. Such something helps in customizing rewards, is cost effective and may develop to become a competitive edge for the company (Thompson and CIPD 2002).

Developing and making a complete rewards strategy is a five stage process (Manas and Graham, 2003). The first stage in the development is to build a meticulous knowledge of the main element success factors of the business enterprise so the main resources can be recognized. The next thing entails conveying this knowledge to the employees in order that they work on it and make the business successful. The third phase involves connecting employees with these success factors through a complete rewards strategy. The fourth stage is concerned with leveraging the probable of employees using these pay back systems as the last phase pertains to evaluation and reviews so the necessary changes could be made to the strategy.

A good praise system can cater to the human needs of the employees in order that they have some value for it. It ought to be perceived as being a fair payment for the amount of contribution made. The rewards system should also have the ability to meet the minimal standards established by the government so that it does not have any legal loopholes in it. In addition to this, the machine should be cost effective and should be assessed that whether that investment made in the proper execution of rewards is making the required come back in terms of performance. Last but not minimal, the rewards system should be able to support the corporate as well as business objectives of the business (Shields, 2007).

There has been debate regarding the aim of any rewards system and the most important functions an incentive system should be able to fulfill are that it ought to be inline with and support the entire objective of the company, it should be an offshoot of the goals of the business, it should be based on judging the performance of employees, it should be able to encourage and praise preferred behaviors, it will supplement the management design of the company, it will provide as a source of attracting and keeping the best ability and should be able to cater to the needs of the labor market (Cowling and Lundy, 1996).

Motivation has been defined in a variety of ways and majority of these definitions make reference to determination as the aspiration of an individual to accomplish beyond what's expected from them and this desire is propelled by inner factors alternatively than exterior factors and it creates a desire in the individual to become implicated in a frequent urge for perfection and improvement (Torrington, Hall, Taylor & Atkinson, 2009). From this definition, it can be inferred that motivation is the innate condition or declare that causes the creation of the behavior that helps the individual in become aimed towards a specific goal.

Franken (1994) has considered this definition to the next step and says that drive is not just limited to activation and direction; it also encompasses persistence or permanence of this behavior. According to the view point, there are three basic components of motivation which are direction which decides what the individual is trying to attain, effort which defines the level of effort applied by that individual and persistence which relates to how long the individual keeps trying to accomplish a result.

Various classification of motivation can be found however these meanings are restrictive and cannot define the inspiration of a worker because they do not look at the various problems facing an employee. Career motivation has been thought as a function of certain factors which are the individual characteristics of the staff, the situation that the staff is facing, the job decision that the worker has made and the habits exhibited by the worker. Career motivation should be therefore viewed as a multidimensional phenomenon (London, 1983).

Hull (1943) developed one of the original contributions in describing motivation and offered the drive theory having said that that as human beings, we all own needs which steer our stimuli that urge us to do this and try to satisfy the relevant needs. Due to the premise which it draws on, drive theory is therefore also famous as Drive Decrease Theory. The importance of this theory is the fact that it causes us to consider factors that encourage an employee to take action and what are the drives that s/he wants to lessen.

Motivation is often termed to be always a supposed construct that makes an attempt to explore the reasons behind what people do and it pertains to the study of instigation, strength, perseverance and price of an objective directed action and motives will be the requirements and desires that stimulate visitors to achieve something (Brophy, 2004). The analysis of desire revolves around the concept of energy which relates to the power of desires and needs to create an urge and way which helps give meaning to the behavior in relation to the external and inside stimuli (Deci and Ryan, 1985).

Various clinical tests have unveiled that motivation because of its very dynamics is intrinsic because it relates to the very basic human tendencies and when employees clearly know very well what they are supposed to do, they can be deeply motivated which brings about higher level of performance at the job (Bruce and Pepitone, 1998). Studies show that approaches that involve the use of dread, manipulation or in other words, by using a carrot and keep approach to inspire employees rarely works and could have negative repercussions on the performance of employees while on the other hand, employees appreciate implementing a motivation approach that helps in attaining personal development and a feeling of purpose (Bruce, 2006).

Regarding the equity in salary, Adam (1965) argued that employees do their maximum to maintain collateral between them and their fellow workers and equity is completed when the percentage of employee result and inputs is equal to other employees' percentage. This serves as a typical of comparison and when they are compensated according to this criterion they feel that the rewards are just and fair and this triggers an increase in determination. Incase employees believe they may have not been paid out justly compared to other employees they may feel de determined. A similar review was conducted that tried out to web page link wag collateral with employee motivation in profit and non profit sector employees. The study uncovered that there is a strong marriage between employee motivation and wage equity which really is a area of the total pay back system (Leete, 1998).

The theories regarding employee motivation can be split into four broad solutions; paternalistic approach, methodical management, management through contribution and combination approach. The paternalistic strategy argues that if the workplace pampers and takes care of the employee's needs then the employees will be motivated to work hard while technological management is the contrary extreme and feels in the systematic soldiering of the employees. The 3rd approach is convinced that in order to receive the employees motivated, it is best to get participation form them in deciding their rewards. The fourth procedure is a combination all three past techniques and advises to build up reward systems that can achieve a balance of most three (Lawler, 1973).

Motivation is a very relevant concept in the workplace as well as it determines the persistence, intensity and quality of work that the worker performs and it is a emotional course that an employee requires when s/he interacts with the task environment and affects the amount of keenness of an individual to do work. Whether an organization is functioning at the national or international level, all face the challenge of developing incentive plans that cater to conflicting pursuits as the organization's goal is to increase profits while the employees are more concerned about making the most of their personal wealth (Gunkel, 2006).

Among the humanistic theorists who've investigated motivation, Abraham Maslow is one of the very most visible. Maslow (1954) offered his famous hierarchy of needs theory that attempted to divide human needs as growth and deficit needs. According to the concept, an employee cannot fulfill growth needs unless his insufficiency needs have been taken care of and therefore there will be a notable difference in the factors that encourage an employee seeking to fulfill deficit needs and the main one trying to fulfill growth needs.

Alderfer developed his ERG theory on lines quite much like Maslow and categorized the needs of an individual as life, relatedness and development needs. Lifetime needs are crucial to the survival of the average person, relatedness need are satisfied whenever a person achieves a feeling of belongingness' and pertains to those around the individual while growth needs are related to personal and self development of the individual. Unlike Maslow, he thought that a person may be determined to fulfill several category of needs simultaneously and for that reason be motivated by various different facets at the same time (Koontz and Weihrich, 2006)

Another theory often cited to explain the determination of employees at the job is Herzberg's two factor theory and helps the debate that factor that de stimulate employees will vary from those that motivate employees. The factors that impact the motivation of the worker were grouped as motivators which described factors such as popularity, enjoyment of the work, responsibility, sense of specialist and achievements while those that de motivate employees he termed as hygiene factors which refer to money, relationship with supervisor and fellow workers, working conditions and the like (Lingard and Rowlinson, 2005).

Another theory that tried out to explain why certain folks are more encouraged than others in obtaining a task is known as McClelland-Atkinson need achievement theory. Matching to the theory, the intrinsic inspiration of every specific is to achieve success as the extrinsic motivation that works against this is the drive to avoid failure. Individuals in whom the desire to accomplish is higher that determination to avoid failure seem to be more enthusiastic and excited while achieving a task (Jarvis, 1999).

Vroom's expectancy theory also makes an attempt to specify what factors pay an important role behind motivating a person. According to him, inspiration level of a person would change from one situation to some other which is reliant on that person's desire to achieve an outcome, the degree to which the individual believes that performance make a difference the outcome and the understanding that exerting more effort will lead to the desired results. For instance for some employees, promotion will be a strong motivator however for others it might not exactly be so because it would require more determination and time that they are not ready to provide (Borkowski, 2009).

McGreggor also provided his view regarding staff drive in this theory x and y professionals. Regarding to him, managers can be classified as belonging to category X or Y. Those belonging to category X believe that employees are in essence lazy and want to avoid work and the ultimate way to stimulate them is through coercion and strictness. On the other hand category Y professionals assume that employees can do a good job when they appreciate it and ant to accomplish something. So a category X supervisor would hire a different motivational tool as compared to a theory Y supervisor (Newell, 2002).

As discussed previously, a significant factor that determines the level of motivation is course and the goal setting theory will try to explore this factor. Performance management and pay back systems often evaluate performance in relation to goal achievements and goals have to be stated in a manner that they inspire employees. For a goal to be motivating, it should be challenging, clear and attainable. In case the target is unachievable, it can have a poor impact and de motivates a worker somewhat than motivating him/her (Locke and Latham, 1990).

Motivation is normally regarded as of two types; extrinsic motivation. Extrinsic desire happens when a person, or in cases like this is motivated to perform because of exterior factors and rewards rather than the enjoyment of the work for example Lepper, Greene and Nisbett (1973) conducted experiments with university children and divided them into two organizations and were asked to get. One group was promised to get a medal if they performed well while the other group had not been promised anything. One group was granted the medal and they were asked to repeat the experience and the group that hadn't obtained the medal proved helpful harder than the group that had become the medal previously. This implies that the group devoid of the medal was motivated by the extrinsic reward and same is applicable at work. Intrinsic drive happens when the employee is determined by inside factors and the excitement or pleasure of the work itself.

From this talk, it can be inferred that motivation is a process in itself that makes an employee want to attain something and tips in a certain path and the organization is the framework within which this process takes place. The process of motivation has four phases; initially, the staff has a motive or quite simply a drive or need that needs to be fulfilled, the next thing is that the staff shows a certain habit to fulfill that require and that brings about the third stage which is goal fulfillment. The ultimate stage relates to feedback and it may lead to decrease in the urge in case the need is satisfied and intensification if it's not fulfilled (Tulsian and Pandey, 2009).

Individuals are definitely more influenced and encouraged by a caring approach rather than carrot and stay approach. Pennebaker and Sanders (1976) conducted a study and offered a theory called the reactance theory which said that people often do duties they are forbidden to just to establish that they posses liberty of choice. Just in case an organization tries to coerce employees in complying or attaining a certain goal, the result may be other to what is expected and could lead to staff de inspiration.

Some research workers have found that extrinsic motivation is not so effective and in some cases even corrosive and damaging to the employees. Unnecessary use of extrinsic rewards can result in unsafe competition and the employees, rather than concentrating on enjoying the task accessible start centering too much on the incentive and therefore the performance is negatively afflicted in the log run and this decrease in performance is permanent rather than non permanent as it brings about an adjustment of action (Kohn, 1992).

Some research workers have investigates the value of extrinsic factors, specifically pay and discovered that there exists a discrepancy between what employees say and do about the need for pay. Even though employees may rate pay as being of a very high importance however in reality it is not equally important for all employees and in certain situations, the value given to a good salary may also drop (Rynes, Gerhart and Minette, 2004).

Pfeffer and Sutton (2000) brings another point of view to the study of determination and employee performance and says that employees should not be labeled into categories such nearly as good and bad performance because after the have been branders as bad, their drive to work will be reduced and for that reason, there will be a reduction in the performance of employees therefore a rewards system needs to treat employees quite and not evaluate them on preconceptions.

The level of performance of employees in an company is a function of three interrelated factors specifically employee skills, motivation and strategic concentration of the employees. Worker skills and strategic focus are of no use unless employees are motivated to use these skills and concentrate on the work (Becker, Huselid and Ulrich, 2001). Schwartz (2006) thinks that while devising praise systems for your employees, there can never be considered a one size meets all way and the factors that motivate one employee may not be able to motivate another one as motivation originates from within and a business can only do this much to provide and environment and compensate system that stimulates the procedure of motivation in an employee.

A review asked the employees to indicate the ways in which the organization could help make the work more meaningful for the coffee lover and the results disclosed that the factors that employees mentioned were both extrinsic as well as intrinsic and for that reason a total incentive system needs to focus on and dwelling address both these issues (Podmoroff, 2005). Another study carried out to study the factors that lead to worker motivation exposed similar results that employees graded enjoyable work and excellent pay as keys to higher levels of employee inspiration and based on these studies, the researchers suggested designing incentive systems which cater to factors such as job enlargement, job enrichment and marketing promotions (Lindner, 1998).

A review was conducted to check the employee motivational factors in European employees over a period. This longitudinal research examined the studies done in the years 1946, 1980, 1986 and 1992 and uncovered that the factors that stimulate employees have evolved as time passes and the latest studies also show that employees have become more extrinsically motivated than they were in the original survey plus they rated high salary as the main motivating factor (Wiley, 1997).

Ross Gardner (2010) argues that even though over time, the compensation systems and categories have widened the compensation types have boiled right down to tow basic types; transactional and relational. Transactional rewards will be the tangible or extrinsic rewards such as payment and benefits that receive to the employees while relational rewards will be the ones that deal with prsonal development. These rewadrs can be given immediately or indirectly to the employees. For example direct transactional rewards are pay and incentives while indirect transactional rewards range from old age benefits and health benefits. Direct relational rewards could be supplying a training curriculum while indirect relational compensation can be culture and weather of the business.

Another effort was designed to link employee's career motivation with the rewards system and even though rewards might be able to enhance the performance and desire of a few employees, to make this improvement business wide a broader methodology is necessary so that even the average employees can realize their full probable. The main element is to foster and encourage such an environment that people to become more goal directed and guidelines should be developed remember organizational needs (McNaughton, Carlson and Dietz, 1992).

A study was conducted in the year 2009 in which 763 organizations were researched across 66 countries of the world. This survey showed the only 40 % of the organizations were considering options of employee proposal as performance measurement tools and 57% of the organizations proved a commitment to plans to judge the full total remuneration system holistically somewhat than concentrating on specific components. This exhibited the increased focus on organizations on going for a holistic methodology towards reward systems (GBN, 2009).

According to another study, finance institutions have started to concentrate more on employee drive and view rewards by firmly taking a holistic strategy. Banks have finally stated to see rewards as an investment rather than liability and the performance of employees as a return on the individuals capital. The goal therefore is to leverage this investment in rewards in way to attain employee motivation (Bush, 2003).

A analysis was conducted to review the impact of Reward and identification programs on the level of drive and job satisfaction among employees. The research studied employees from Unilever Company and comprised of 80 respondents. The study determined that factor such as campaign and working conditions have a significant and positive effect on employee inspiration (Ali and Ahmed, 2009).

Various studies have been conducted to review the factors which may have a direct effect on employee inspiration. One such analysis revealed that worker drive can be increased by developing a fostering culture which the main factors that influence it are acknowledgement and feedback and simply offering additional money does not necessarily increase productivity. Another essential aspect is helping employees focus on a goal which only works when employees have the proper skills and training to achieve those goals (Fuhrmann, 2006).

Public sector organizations are large and make use of a large range of employees and studies have been conducted to investigate how open public sector employees are encouraged tow work. The study showed that there is a positive marriage between employee motivation and the rewards offered but there exist differences between levels of affect when compared with the private sector employees. In addition to this, the analysis also showed that level of determination is also related to commitment to the business in the public sector (Crewsen, P. E, 2010).

Another study that was designed along similar lines examined the dissimilarities between motivating factors between public and private sector employees. The analysis had a sample of 629 organizations and it revealed that at the managerial level, the same factors encourage employees' but at the lower levels of the hierarchy, motivating factors become entirely different and ethic is placed as a very high motivating factor by the private sector employees (Jurkiewicz, Massey, Jr. and Brown, 1998).

Locke and Latham (1990) have developed a model called the powerful cycle that comes with the findings of all these theories. Corresponding to them, when the employees face a challenging and difficult task and they are able o make that happen goal because of higher level of efficacy, inside locus of control and the related ideas that leads them to deliver a high level of performance. The mechanisms employed to achieve this performance level are focusing attention in the right course, hard work, determination and coining strategies and strategies for achieving jobs. Such high performance if turns out to be rewarding for the employees brings about upsurge in job satisfaction as well as determination.

A review of the literature has established the value of rewards in the motivation of employees. Rewards systems have little by little changed form being one dimensional financial compensation to a built-in system that encompasses all tangible and intangible aspects by means of a complete rewards system. Desire is inspired more by intangible rewards such as acknowledgement. Total reward systems play an important role in identifying the amount of motivation of employees.

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