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Motivation and Rewards

• satyendra
• July 14, 2013
• 2 Comments
• Extrinsic motivation, Incentives, Intangible rewards, Intrinsic motivation, Job satisfaction, Maslow hierarchy of needs, Motivation, rewards, Tangible rewards,

Motivation and Rewards

In the ever increasing competitive business environment, organization managements are now recognizing that there is a significant opportunity available today for improving the return on the human resources investment. This opportunity consists of aligning of the reward and incentive plans with organizational strategies since the success of the organization significantly depends on highly motivated employees who are productive and creative. Th motivated employees enhance the value they deliver to the organization. This process of motivating the employees is crucial for the organizational success, and its ability to attract and retain top performers for achieving the organizational objectives. It is important for the organizational management to understand that there is a link between rewards and motivation and there is a necessity to uncover what motivates their employees. The big challenge is to create an environment which allows all the employees to feel valued, perform at their best, and achieve the organizational goals and the objectives.

Organizational strategy associated with motivation and rewards towards job satisfaction of the employees has resilient effect on the success of the organization. The connections between motivation, rewards, and job satisfaction of the employees are of strategically importance for the organization for its success. Organization managements need motivated employees for maintaining an effective workforce which is willing to achieve strategic organizational goals and objectives.

In the present day environment, the organization is highly dependent on the work motivation level of its employees. Motivated employees are crucial for the success of the organization. The organization can reach some level of success without highly motivated employees but in that case it rarely achieves its full potential. Employees, being human, need encouragement for their efforts. Motivation and rewards have a strong link. Hence, it is necessary for the organizational management to find out the ways which motivates the employees so that a suitable reward and incentive system can be planned for the motivation of the employees for the effective performance of the organization. The well planned reward and incentive system can boost up the employees’ motivation at work and enhance their commitment for the organization.

The word ‘motivate’ is derived from the Latin verb ‘movere’ which means ‘to cause movement. Motivation refers to the activation, direction, intensity and persistence of human behaviour and the manner in which this behaviour is sustained towards reaching a desired goal. It can be defined as ‘a set of energetic forces which originate both within as well as beyond an individual’s being to initiate work-related behaviour, and determine its form, direction, intensity, and duration’. It is also defined ‘the set of processes that arouse, direct, and maintain human behaviour towards attaining some goal’.

Rewards can be used to influence motivation. By no means financial rewards are the only way to motivate, as there are many HRM (human resource management) practices which aim to motivate. The scope of the reward systems is broadened enough to include non-financial rewards, as these are also important to direct and shape the desired employees’ behaviours.

Motivation is the desire to achieve beyond expectations, being driven by internal rather than external factors. It means to be involved in a continuous striving for improvement. Motivation, in the context of work, is a psychological process which results from the interaction between the employee and the work environment and is characterized by a certain level of willingness. The employees are willing to increase their work effort in order to fulfill a specific need or desire which they hold. Motivation is frequently understood as ‘the process that accounts for an individual’s intensity, direction, and persistence of effort toward attaining a goal’. This definition can be divided into three main parts, where the intensity is related to the drive or energy behind individual action and effort, the direction refers to how efforts are correctly channelled into the direction which benefits the organization, and the persistence deals with how long an individual can maintain efforts to achieve goals.

Motivation is initiated by the conscious or unconscious recognition of unsatisfied needs. These needs create wants, which in turn become desire to achieve or obtain something. In order to satisfy needs and wants, goals are created and behaviour is selected to achieve the goals. If the goal is achieved, the behaviour is likely to be repeated when a similar need emerges. If the goal is not achieved, the action is less likely to be repeated. The process of motivation can be shown of their efforts and strive for achievement. The process of motivation (Fig 1) consider that (i) there is a need, (ii) there is establishing of a goal, (iii) taking of the required action, and (iv) attaining of the goal.

Fig 1 Process and type of motivation

The process of motivation is initiated by the conscious or unconscious recognition of unsatisfied needs. These needs create wants, which in turn become desire to achieve or obtain something. In order to satisfy the needs and wants, goals are created and behaviour are selected in order to achieve these goals. If the goal is achieved, the behaviour is likely to be repeated when a similar need emerges. If the goal is not achieved, the same action is less likely to be repeated.

Motivation involves the emotional, social, biological, and cognitive influences that initiate behaviour. It is a factor which exercises a powerful force on the employees’ activities and exertion. It is an accretion of diverse practices which effects and directs the behaviour of the employees to accomplish certain particular goal. It is like a vigorous in the current environment which clearly produces and incorporates an optimistic influence on the job satisfaction. Motivation relay on a certain intrinsic and extrinsic features which are collaborated with positive results in abundantly devoted employees. Tangible incentives are functioning in growing performance for assignment and to inspire the smarter thinking. They support both quality and quantity to accomplish organizational goals. Moreover, factors related to the rewards and incentives are the most favoured factors for the employee motivation.

Management can motivate employees through methods such as salary, promotion, and praise. Employees can also motivate themselves by seeking work where individual goals, needs and wants are achieved. These two types of motivation are called intrinsic and extrinsic motivations (Fig 1) and are more closely described as follows.

Intrinsic motivation refers to the motivation which comes from inside of an individual. This motivation is generated through satisfaction or pleasure which one gets in completing or even working on a task. Factors which influence on intrinsic motivation include responsibility, freedom to act, scope to use and develop skills and abilities, interesting work and opportunities for advancement. These motivators, which are concerned with the quality of work life, tend to have a long-term effect since they are inherent in individuals and not imposed from outside.

Extrinsic motivation is something which is done to or for employees to motivate them. It arises from factors outside an individual, such as money, grades, criticism or punishments. These rewards provide satisfaction and pleasure that the task itself might not provide. Extrinsically motivated employees can work on a task even when they have little interest in it. This type of motivation normally has an immediate and powerful effect, however it does not tend to last for long.

Motivation theories try to explain why people at work behave the way they do in terms of their efforts and strive for achievement. The theories of motivation can be divided into the following two categories.

• Content theories – These theories of motivation are based on the needs of individuals. These theories try to explain why the needs of individuals keep changing with time and therefore focus on the specific factors which motivate them. These theories, in general, explain motivation as the product of internal drives that encourage the individual to move towards the satisfaction of his needs. Major content theories of motivation are (i) Maslow’s hierarchy of needs (Fig 2) (ii) McClelland’s learned need theory and (iii) Alderfer’s ERG theory, and (iv) Herzberg’s motivation-hygiene theory.
• Process theories of motivation – These theories tries to explain how behaviour change occurs and why individuals act in different ways. These theories focus on how an individual needs influence his own behaviour. These theories originate from early cognitive theories, which state that behaviour is the result of conscious decision making processes. Major process theories of motivation are (i) reinforcement theory (ii) expectancy theory (iii) equity theory and (iv) goal setting theory.

Fig 2 Model of Maslow’s hierarchy of needs

Maslow’s hierarchy of needs is a theory of personality which identifies five basic need categories. First category is the physiological needs which are basic human needs that are vital for survival. Examples of these needs are food, water, air and comfort. The organization provides a financial package by paying a salary and this way helps to satisfy employees’ physiological needs.

Second category is the safety need which is the need which protects the employees from harm, fear or any form of physical threat. These comprise needs relating to job security, occupational health, and healthy working environment, etc.

Third category is the social need which is the need of getting associated with social activities such as friendship, societies, groups or any form of socialized group.

Fourth category is the esteem needs. In everyone’s life, it gets to a point in where one needs belongingness. Employees need to feel that they are part of the organization or that ‘their voices can be heard’. This kind of need can come in two forms namely satisfying internally and externally. These include internal motivations such as self-esteem, accomplishment, and self-respect, as well as external motivations such as recognition, reputation, and social status.

Fifth category is the self actualization. It is the highest need which can fully satisfy the employee. However, it is to be noted that because of the open nature of this need, it can never be fully satisfied. Normally it is seen that, just a meagre percentage of employee population actually get to this level of self-actualization. This kind of motivation offers employees, the opportunity to get involved in activities such as innovations, creativity, etc. Such need includes truth, justice, wisdom, and meaning.

It can be concluded that motivation is important both for the employees and the organization. Employees benefit from being motivated because it helps them in self-development in order to ultimately achieve personal goals. Organization on the other hand benefits because motivated employees ensure a team which is empowered, optimistic, adaptable, creative and successful, all of which potentially improve the effectiveness and success of the organization.

Possibly the best means of understanding the employees’ motivation is to consider the social meaning of the work. In this respect, short-term goals and long-term goals of employees and the management can affect production in several different ways. Hence, giving attention to the manner in which rewards given to the employees are perceived is preferable to assuming that reward means the same thing to all. Rewards which the employees receive are very much a part of the understanding of motivation. It is frequently seen that rewards cause job motivation and satisfaction, which leads to the improvement in the performance.

Employee motivation is one of the most essential parts of the success, performance, development and survival of the organization. Motivated employees are of great value for the organization, since (i) they are efficient, effective, focused and committed to the organizational mission and goals (ii) they frequently experience higher job satisfaction, (iii) they are less frequently absent from work, (iv) they deliver higher levels of performance and productivity, (v) they tend to work harder when workplace demands are high, (vi) they are loyal to the organization, resulting in low employee turnover, and (vii) they deliver high levels of customer service which leads to greater customer satisfaction and customer retention.

The intrinsically motivated employees bare committed to their work to the extent to which the job inherently contains tasks which are rewarding to them. And the extrinsically motivated employees are committed to the extent that they can gain or receive external rewards for their jobs. For employees to be motivated in a work situation there is to be a need, which the employees have to perceive a possibility of satisfying through some reward. If the reward is intrinsic to the job, such desire or motivation is intrinsic. But, if the reward is described as external to the job, the motivation is described as extrinsic.

It is being frequently accepted that motivating employees is the ultimate responsibility of organizational management. While rewards can serve as incentives and those who bestow rewards can seek to use them as motivators, the real motivation to act comes from within the individual. A well designed and functional reward system is an efficient way to increase employees’ work motivation. Motivation can originate from internal sources, described as biological and psychological variables, and from external sources, such as rewards, incentives and goals. As a result, motivation can be described as being either intrinsic or extrinsic. Intrinsic sources of motivation encompass those which arise from within the individual. Biological attributes and psychological depositions are examples. Extrinsic sources of motivation are a result of the environment outside the individual and it includes rewards such as money, social recognition or praise.

The rewards distinguish into three main types which the employees seek from their organization i.e. extrinsic, intrinsic and social rewards (Fig 1). Extrinsic rewards are the physical benefits provided by the organization such as pay, bonus, fringe benefits and career development opportunities. Intrinsic rewards refer to the rewards that come from the content of the job itself, and encompass motivational characteristics of the job such as autonomy, role clarity and training. Social rewards arise from the interaction with other people on the job and can include having supportive relationships with the line manager and co-employees.

There also exist a substantial affiliation between reward and recognition, and similarly in employee motivation and job satisfaction. It has been seen that if rewards and recognition offered to the employees then there is a substantial modification in their motivation and satisfaction. Fig 3 shows the expectancy model for reward.

Fig 3 Expectancy model for reward

Employees change their behaviour by working harder or prioritizing their actions if they know that by doing so they are going to be rewarded with something of value to them. Hence incentives are a great way to reward effort and behaviours which the performing organizational managements always encourage. Incentives paid to employees in return for efforts and behaviour of employees which contribute to the organization goals, enhance organizational effectiveness and productivity and hence generate a positive outcome both for the organization and the employees.

There are several factors which can affect employees’ performance like training and development opportunities, working conditions, employee-employer relationship, job security and organizational  over all policies and procedures for rewarding employees. Among the factors which affect employee performance, motivation which comes with rewards is of utmost importance. The word rewards state the benefits which the employees receive from their jobs, and the significant elements of employee job attitudes are organizational commitment, motivation and job satisfaction. In the organization, rewards play an important role in building and sustaining the commitment among employees which ensures a high standard of performance and the employees constancy

Reward refers to all categories of financial benefits, tangible services and benefits which an employee receives as part of employment relationship with the organization. There are two aspects which decide how much a reward is attractive. These aspects are the quantity of reward which is provided and the weightage an employee gives to a specific reward. Employees are certainly closer to their organizations and perform better job, while they receive healthier reward and recognition in their organizations. Rewards increase the level of efficiency and performance of the employees on their jobs and it then result in increasing the success of the organization.

Rewards are the benefits that arise from performing a task, rendering a service or discharging a responsibility. Salary is the most significant and motivating benefit which is received by the employee in return for performing a task or service. Salary can also be a powerful demotivator if the employee is not satisfied with the pay packet. There are two types of rewards as given below.

Tangible rewards – Tangible rewards are also called transactional rewards. These arise from transactions between the employer organization and employee and include rewards such as pay, bonuses and other benefits.

Intangible rewards – These rewards are known as relational rewards. These rewards are to do with learning, development and work experience. The examples of these rewards are opportunity to develop, recognition from the management of the organization, colleagues, personal achievements and social life.

Both tangible and intangible rewards are necessary to maximize the positive impacts on the employees with respect to motivation, job engagement and organizational commitments. Both the rewards together are known as comprehensive reward system.

Comprehensive reward system is an important tool which the management can use to channel employee motivation in desired ways. In other words, reward systems seek to attract people to join the organization, to keep them coming to work, and motivate them to perform to high levels. The reward system consists of all organization components which include HRM processes, rules, and decision making activities involved in the allocation of compensation and benefits to employees in exchange for their contribution to the organization.

Good remuneration has been found over the years to be one of the policies the organization can adopt to increase the employees’ performance and hence increase the organizational productivity. Also, with the present global economic trend, managements of many organizations have realized the fact that for the organization to compete favourably in the present day competitive market, the performance of the employees goes a long way in determining the organizational performance. These managements have seen that how an appropriate reward package can prop up or influence employees to develop positive attitude towards their job and thereby increase their productivity.

Job satisfaction is a sensation which the employees have about their work environment and their expectations towards work. Thus, job satisfaction can be recognized as what one wants or values from the job. Different kinds of satisfaction lead to diverse objectives and behaviours which ascend from different types of motivation in getting different types of rewards. Rewards with their aftermath relationship are expected to establish on satisfaction of the employees with their organization. It is normally seen that employees who reveal high job satisfaction is motivated by rewards, and rewards supported work engagement.  The employee satisfaction achieved through rewards is established to be associated with job satisfaction. In addition, job satisfaction is associated with the monetary compensation (pay, promotion, and incentives) and non-monetary compensation is one of the most important explanatory variables in an organization.

Organizations are to have determined a balance between the performance of the employees and their commitment to the work which result into job satisfaction. Reward and motivation are the two main factors which have an effect on the job satisfaction and motivation of employees. There is a significant relationship between reward and recognition, and between motivation and job satisfaction. Providing the financial benefit to employees without any prominent expression also loses its importance. Rewards have a direct link with the motivation and job satisfaction of the employees. Variations in rewards and recognition can bring a positive change in work motivation and job satisfaction of the employees. Fig 4 shows a comprehensive model of rewards and incentives.

Fig 4 Comprehensive model of rewards and incentives

It has been shown that strategic rewards which are vertically integrated with the support of organizational strategies can also be horizontally integrated with other human resource (HR) strategies, in order to achieve the employees as well as the organizational needs. The comprehensive rewards system is to be developed in a way that people strategy is aligned with the organizational strategy. Hence, when looking at the concept of the comprehensive rewards system, it is necessary to identify that it aligns with strategic rewards. When developing comprehensive rewards system, management is to consider all aspects of work experience which employees’ value.

The comprehensive reward system states that rewards embrace everything employees’ value in the employment relationship. It lays emphasis on why it is imperative to get the financial rewards element right and also providing employees with rewarding experiences which arises from the work they do, their work experience, how they are managed and developing their skills careers. This essentially means that while getting financial rewards right it is important for the organization to continue to practice the things which enhances the elements that contribute to non-financial rewards. The comprehensive reward system model consists of five elements of rewards including compensation, benefits, work-life balance, performance and recognition and development and career opportunities. These elements signify the tool kit which the organization selects to offer for the comprehensive reward system which is aligned with the value proposition that creates value for both the employees and the organization.

It is also important to understand the elements which the comprehensive reward system is comprised of. It is necessary to understand why the comprehensive reward system elements are vital in the organization. The five elements of the comprehensive reward system can be managed both formally and informally. The elements also take into consideration the external influence it has on the organization, for example, regulatory issues, cultural influences and practices, and competition. However, they are not mutually exclusive and are not intended to represent the ways which the organization organizes or deploy programs and elements within them. But they are known to be the most important factors of attracting, retaining and motivating employees. The universal rewards approach is required and needs to be to be in accordance to the industry practice and culture in order to ensure the successful implementation of the comprehensive reward system in the entire organization.  Fig 5 shows a model for comprehensive reward system.

Fig 5 Model for comprehensive reward system

There are essential attributes that contributes to the success of a reward system for the employees. These attributes are (i) recognition of individual differences between the employees, (ii) clear identification of behaviour deemed worthy of recognition, (iii) allowing employees to participate in the reward system, (iv) the system is to link rewards to performance, and (v) the recognition process is to have clear visibility. Employee rewards system is not only about tangible and intangible awards. It is also about changing the corporate culture in order to meet goals and initiatives and most importantly to connect employees to the core values and beliefs of the organization. Strategic employee recognition is seen as the most important program for the organization not only to improve employee retention and motivation but also to positively influence the financial situation.