Evaluation Of Managing Human Resources Capital: Reward And Motivation

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Each and every organization tries to formulate well structured plan and policy regarding the appropriate strategy. Today most of an organization provides financial rewards and non financial rewards like compensation, incentives, appreciation and career development. To maintain good relationship between employees and employers, they need to establish fair reward system by viewing the organization ability to provide them offering. Modern organizations came with different methods of rewards to hold and get things done by employees perfectly in an innovative way. Both the employees and employers are important for an organization. Employers must act as a crucial role to establish and enhance fair reward system. It is not only important in the cash payments but must understand the market and offer what is offered by competitive organizations to hold employees as an asset. Motivation work as extrinsic an intrinsic factors which up lift emotional factor to motivate workers as by upcoming with innovative idea and taking organization one step ahead through getting of well structured pay plan, bonus, safety at work and different other plans by which employers can fulfill the goals of an organizations. Rewards and incentives are not only the factors that should be required by an organization but the other things like risk at work, conflict, stress, safety and environment should be maintained and provided by organizations. So that they can hold the value of skilled and intellectual employees for the long period of time.


Organization is a social arrangement of people or a group of people which pursues its target goal, control its performance and accomplish its objectives. Business organization can be range from home based small organization which includes few employees to large organization with tens of thousands of employees. Several of important aspects must be considered on achieving the goal of an organization. They are explicit which is recognized and deliberate or implicit which is operating unrecognized. http://managementhelp.org/org_thry/org_defn.htm 5 April 2010

"Human resource management (HRM) is a strategic approach to managing employment relations which emphasize that leveraging people's capabilities is critical to achieving competitive advantage, this being achieved through a distinctive set of integrated employment policies, programs and practices" (Bratton and Gold 2007). HRM is the activity within an organization that includes varieties of activities. The key activities are organization development, performance management, recruitment of people, employee motivation, compensation, benefits, training. An activity also includes managing an approach for the employee compensation and benefits, employee records and personal policies. http://managementhelp.org/hr_mgmnt/hr_mgmnt.htm

Motivation has always acquired the positive factors to energize an employee. It is the best possible way to get the best result from an employee in an organization. There are several ways to motivate staff but also motivating them has become challenge for employers today. This report describes on the financial motivation methods with different factors that must to be considered when increasing pay.


Today is the challenging and competitive world, it is harder to cope with the challenges of people and hard to cope with the employees in an organization. The different issues on the work stress arise in an organization. All the member of an organization feels the added pressure and the excessive stress interfere the productivity, reduces the economic health etc. http://helpguide.org/mental/work_stress_management.htm. The different challenges in motivation are:

Work pressure:

The stress in the work makes the people feel dissatisfaction and irritable and they lose the confidence and makes themselves less productive and ineffective. If the work pressure is chronic then it may lead to bigger problems. It not only interfere the job performance but also lead to health problems.

Fair rewards:

In an organization, employees must be provided fair rewards. All the individuals should receive equal pay on basis of their equal work. If the employers pay the rewards unfairly, the employees cannot be justified to their work.

Cross cultural Challenges:

It is one of the major issues in any business or organization. When people cannot identify or adapt the other cultures, conflict arises. So that the employee will perform dysfunctional. British business or firms are facing cross cultural challenges in terms of fundamental difference in ways of life. In the survey, it was found that the organizations were felt major cross cultural challenges with France, Germany, Middle East, Japan and China. For example, Japan had many intricacies in the things like etiquette and protocol developed on their unique hierarchical society. In the middle east of the world, Islamic people are very much an underlying on behind the most business and social behaviour. Like in China, behavioural patterns were dictated by Confucianism. So in overall, British business must have awareness and cross cultural is necessity when dealing with international people. http://www.kwintessential.co.uk/cultural-services/articles/cross-cultural-challenges.html 12 April, 2010

Motivating professionals

In an organization to motivate top level managers like CEO, Chairperson or Managers is not an easy task. They need to provide huge surplus or benefits on modern factors. Even getting the things done through them is hard. They are intellectual persons of an organization who directly or indirectly work as a model to take organization one step ahead than competitors. For eg. Pepsi CEO gets annual bonus, profit and shares which inspires him to work better and make decisions in a company more prominently.

Designing appropriate rewards program

On the basis of employees acquire, skills, knowledge and competency, the organizations should design appropriate rewards and incentives. As viewing the level on what they work and perform task and duties, the organization should provide benefits and compensation. Establishing a better reward programs may help employees work perfectly.


In any organization, there is reward system either being formal or informal mechanisms by which employee can be defined, appraised and then rewarded. Reward system makes an influence in the decision makers in terms of what choices are preferable on the pay off. For example, if the risk aversion is reward by the organization, then the managers are likely to make the conservative decisions. In between 1930's and mid 1980's, General Motors consistently gave bonuses and promotions to the managers who kept the low profile and controversy was avoided. And the final result was General Motors managers was having tough issues and passing the controversial decisions on the societies. (Stephen P. Robbins Timothy A. Judge organizational behaviour 13th edition 2009 prentice hall).


Today Incentive reward systems are most commonly used in many organizations around the world. There is not a specific thing as a perfect reward system and because of it; an organization should adjust the reward system after their own needs and effectively to accomplish their future oriented goals. It is very essential to know for the employers that the employees accept and feel motivated by the reward system. Any non organized or designed reward system, like having too high goals, could lead to the employees feel stressed and exhausted instead of motivated. http://www.essays.se/essay/d2e06924a4/ 12


Financial incentive reward system is given to motivate the employees as in term of money payment methods. Money is to be considered as the desired reward as it is one of the very important rewards offered in this plans. The assumption is made that the incentive pay plan has the high value in terms of money. This incentive reward can be defined as the term compensation in a way of base salary, pay incentives or employee benefits. This reward helps to fulfil the physiological and security needs of an employee and this lead to the employee's well better performance on the job. It is the significant method to compensate for the employees job performed. The various aspects of financial incentives reward are wages, salaries, bonus plans, commissions, profit sharing, pensions etc.


In the non financial reward incentives, the money plays little or no role to motivate the employees in an organization. It is the additional reward incentive paid for the employees. Money pay is not always important for motivating employees but the employers must understand the situations to the employees Motivation factor for this method is through providing flexible hours, recognizing employee priorities and understanding what makes employees feel better and attach on the part of the business. The various aspects of non financial incentives are job security, better designations, recognition, opportunities for advancement, award, appreciation etc.


Now the employer plans in a wider term and in a significant manner to reward the employees in an organization. Most of the organization has come with the wide outcomes that directly affect the cost and the profit of an organization. Incentive plans increases the productivity in an organization. The feature of wider incentive plan is a change in the relationship of employees and management in an organization. http://www.eridlc.com/onlinetextbook/chpt18/text _main.htm The pay plans includes:

ESOP (Employee Stock Ownership Plan)

"Employee stock ownership plans can be used to keepĀ plan participantsĀ focused on company performance and share price appreciation. By giving plan participants an interest in seeing that the company's stock performs well, these plans are believed to encourage participants to do what's best for shareholders, since the participants themselves are shareholders." http://www.investopedia.com/terms/e/esop.asp ESOP has several benefits on the employees and the shareholders also. An organization get reduce on tax equal to the fair market value of the shares. ESOP encourages employees on developing a sense of ownership and commitment to the firm. Then, ESOP provides increased financial incentives, creates a sense of ownership and helps in creating teamwork. The organization like Thermacore has a stock ownership plan for all of its employees. Every year, stockholders and board of directors approve a dollar value of stock to offer to employees. (Dessler, 2006) (Gary Dessler Tenth Edition Human Resource Management 2006 edition Pearson Prentice Hill)

Profit sharing

Profit Sharing regarded as pay plan is often used by an organization. In this plan, employees share in the organization profits. This type of plan is simpler than the cost-savings plan. It does not require any revolution between the relationship of employee and management. With this plan, management can change the attitude of employee in the organization with not being change in the attitude of managerial level toward the employees. The fact behind this plan is to make a partnership between employee and the organization. Profit Sharing plan boost productivity but the effect on profit is insignificant. http://www.eridlc.com/onlinetextbook/chpt18/text_main.htm

Scanlon Plan

Scanlon Plan is progressive and designed to follow the encourage cooperation, involvement and sharing of benefits. In this plan, organization is participated through the teamwork and employee participation. And the bonus is paid if the current ration is good than that of the base period. "The Scanlon Plan is not the only organization-wide plan, but it is the best known. Others that have been successful in the United States include the Rucker Share-of-Production, Kaiser, and Nunn-Bush plans. A more recent plan is Improshare, of which more than 100 had been adopted as of the early 1980s" http://www.eridlc.com/onlinetextbook/chpt18/text_main.htm

Annual bonus plan

It is a plan designed to motivate for the short term performance and tied to the organization profitability. The task of this Plan is to motivate employees by achieving the Company's strategic objectives, ensuring the linkage between performance and rewards to strategic objectives, and provide awards for high performance commensurate with accomplished results. Recently, John Lewis Partnership distributed annual bonus of £151m to its staff. http://www.guardian.co.uk/business/2010/mar/11/john-lewis-staff-share-151m-in-bonuses

Gain Sharing Plan

Gain sharing Plan is similar and early version of Scanlon Plan. It is designed for sharing the saving of cost from improvement on productivity with employees. It is an incentive plan where all or many employees are engaged in a common effort to achieve the organization productivity objectives with the result of cost savings gains that is shared among organization and employees.

Merit Plan

Merit Plan is "an incentive plan implemented on an institutional wide basis to give all employees an equal opportunity for consideration, regardless of funding source. The merit increase program is implemented when funds are designated for that purpose by the institution's administration, dependent upon the availability of funds and other constraints." http://www.hr-guide.com/data/G442.htm It helps to make an appropriate decision on providing pay to high performer employee and it can also differentiate between the performance between the employee and an organization.


For any employers, it is not simple to gain an employee's satisfaction with the rewards. But it is an aspect of several factors that organizations must learn how to manage. "Motivation is defined as a process that account for an individual's intensity, direction, and persistence of effort toward attaining a goal." (Robbins, 2009) Motivation is the result of the interaction between an individual and a situation. In any organization, the manager plays the vital role for the successful employee motivation. For the positive employee motivation and higher morale of employee, effective management is very critical in the business workplace. Achieving success is not an easy task. It requires keen interest, capacity, motivation and enthusiasm. Each and every organization should understand the perception, attitude and behaviour of persons in consideration to reward system. You are a worker means; you are selling yourself to the organization. Manager is the person whose activity consists of getting the things done by employees. Fair reward system, establishment of strategy regarding payments and incentives will satisfy employees, which can be maintained by a manager. Manager should work as bridge between management and employees for providing extra benefits, offers, compensation and rewards. So that employees will motivate towards work to fulfil the goals of an organization.

Establishing right performance measure

Managers must know how well employees are performing. Managers should measure the behaviour of employees at first then compare their performance with requirements. "Performance management eliminates the performance appraisal or annual review and evaluation as the focus and concentrates instead on the entire spectrum of performance management and improvement strategies. These include employee performance improvement, performance development, training, cross-training, challenging assignments, 360 degree feedback and regular performance feedback." http://humanresources.about.com/od/performancemanagement/ Performance_Management_Evaluation_Review_Improvement.htm

Mutual monitoring

Manager should play vital role for monitoring and establishing the right kind of reward system for the mutual benefit of organization and employees. He or she may play vital role to establish right kind of rewards, incentives, compensation and payment by monitoring what the employers has given to employees and vice versa.

Improved merit plan

Manager plays a role to improve what the organization is offering to the employees and how the relationship is maintained between the organizations and workforce. Improved merit plans in an organization works as special kind of reward to the employees. It helps to encourage workers to fulfill their duties and tasks in a structured way.

Conflict management

Manager also has an important role to avoid conflict in the workplace. Conflict is obstacles to de motivate the workers to work in a perfect and peace environment because they have confusion on the task given by the management.

Unwanted happening remove

Organization is a work place where working environment should be perfect and enhance for fulfilling goals. Unwanted happening should be analyzed and understand by managers to make flow of work in an organization. This kind of things can be removed by negotiation, agreement, reconciliation and conversation. For example the problems between top level managers and staff union of British airways in UK.

Health and safety

Safety work is a motivational factor for the employee on performing the job. Each and every organization should apply healthy and safety measures to motivate and energize workers to get the things done. For example, employees working in the mine factory should have health insurance and safety measures as the worker has high stress regarding health at work place.

Stress management

When there is lot of pressure on the work then the employees are stressed. It can be removed on the conversation and negotiation between the manager and employees. Today's work and workload consist of stress and it can be managed through recreational activities. For example, a reception working in LSC may have lots of stress than marketing assistant because of high work pressure at work place.

Here, Mc Gregor has identified two set of assumptions about people Theory X and Theory Y. Theory X involves negative assumptions about people and Theory Y involves positive assumptions about people. The basic rationale for using Theory Y rather than Theory X in most situations is that managerial activities that reflect Theory Y assumptions generally are more successful in satisfying the human needs of most organizations members than are managerial activities that reflect theory x assumptions therefore activities based on theory y assumptions are more motive organizational members are activities based on theory assumptions.

So in general, manager must follow the theory y to motivate the employees in work place as it maintains perfect environment to achieve organizations goals and strategies.


Management should offer different offering to the employees which may work as merit issue to increase and motivate by employers for job satisfaction. Here not only merit issue, payment, profit sharing plan, Scanlon plan, gain sharing and annual bonus will play vital role but the factors like job rotation, job enrichment, job appreciation, career development and 3600 should also be implemented. It is a good idea to motivate the employees by offering the incentive rewards payment system. When these rewards are achieved by the employee they get the satisfaction and motivate to do the job. These rewards are provided among the employees in terms of comparing their input performance like how much knowledge they have, job skills, effort, ability etc. And on the result of it, the employee is rewarded the intrinsic and extrinsic motivation. But when we come to the employee's perspective, we can see that employees will not only be motivated from above incentive plan pays but also they are looking for the job rotation. Employees feel monotonous on working in the same department for long period of time so they need to change the department for the refreshment. Now the employee says not only the employer evaluates the performance of the employees but employees also should evaluate the performance of their colleagues and seniors also in an organization. So there should be 3600. So in sum we can say that offering only the incentive pay plans doesn't motivate the employees but the management must consider other things also which the employees are looking for.



Dessler G (2008) Human Resource Management, (10th Edition), Prentice Hall.

Braton, J & Gold, J (2007), Human Resource Management, (4th Edition), Palgrave Macmillan,

Organization, http://managementhelp.org/org_thry/org_defn.htm (April 5, 2010)

Human Resource Management, http://managementhelp.org/hr_mgmnt/hr_mgmnt.htm (April 5, 2010)

Challenges for employers http://helpguide.org/mental/work_stress_management.htm (April 11, 2010)

Example of cross cultural challenges http://www.kwintessential.co.uk/cultural-services/articles/cross-cultural-challenges.html (12 April, 2010)

Incentive reward system http://www.essays.se/essay/d2e06924a4/ (12 April, 2010)

Incentive pay plan http://www.eridlc.com/onlinetextbook/chpt18/text _main.htm (12 April, 2010)

ESOP http://www.investopedia.com/terms/e/esop.asp (12 April, 2010)

Profit sharing http://www.eridlc.com/onlinetextbook/chpt18/text_main.htm (12 April, 2010)

Annual bonus example http://www.guardian.co.uk/business/2010/mar/11/john-lewis-staff-share-151m-in-bonuses (12 April, 2010)

Merit plan http://www.hr-guide.com/data/G442.htm (12 April, 2010)

Establishing right performance measure http://humanresources.about.com/od/performance management/Performance_Management_Evaluation_Review_Improvement.htm (12 April, 2010)