Aims To Use Reward Management Theory Commerce Essay


Reward management is the core of human resource management. Reward management system scientifically justified or not, is closely linked with the core competitiveness of enterprises and market competitiveness (Amstrong & Stephen, 2005). Therefore adopting scientific and rational enterprise reward management, for optimal incentive effects, fully mobilize the enthusiasm of the staff and the initiative is crucial. A set of effective reward management system can not only reduce the cost of labor for enterprise, but also can greatly inspire the enthusiasm of the employees, initiative and creativity (Bratton & Gold, 2003). A scientific and reasonable reward management also can help enterprise according to market changes adjust business strategy, to improve market reaction speed, so as to have more competitive advantage.

This paper use reward management theory (Hierarchy of needs theory , Expectancy theory, Two Factors Theory,Equity theory) combined with COFCO Coca-Cola company's actual situation, analyzes the main problem from different perspectives, and then puts forward the optimization of the company reward management class operational strategy, the purpose is to help COFCO Coca-Cola company to improve its reward management present situation, the promotion enterprise's performance level and overall competitiveness.

Literature Review

Definition of reward management

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Reward Management refers to the strategies, policies and processes to develop and maintain an organization's financial reward systems. It is an integral part of the HR management in alignment with organizational goals. Reward management is regarded as an important role in the HRM. Most organizations realized that reward reinforces employee focus on their performance, enhance motivate on levels and gain their commitment (Allen & Kilmann, 2001). Extrinsic reward is initiated from outside the person and includes (Armstrong, 2007): salary and wages, employee benefits, interpersonal rewards, promotions. Intrinsic reward is the ones that is self-administered by the person and encompasses (Armstrong, 2007): completion, achievement, autonomy, personal growth. The strategic aim of reward management is to evolve and enforce the reward policies, processes and practices to affirm the accomplishment of organization's business goals (Armstrong & Murlis 2004).

2.2 Performance reward motivation theory:

Motivation is to inspire people's motivation, arouse the enthusiasm of the people work. Incentive theory is the core of the western theory of behavioral science. A large number of management practices have proved that the establishment of incentive theory to improve the efficiency of organization plays an important role.

Hierarchy of needs theory: hierarchy of needs theory basic view, the person's behavior is caused by the motivation, and motivation is the need of the decision. Therefore, first of all,the need change to a target · then from need to inspire people's motives, and guide its behavior. Hierarchy of needs theory first put forward by Abraham Maslow whom is a famous American psychologist and behavioral scientists. According to Maslow's hierarchy of needs theory, human beings always have some need to be met. Once a need to be met, this need is not have incentive effect any more, and then appeared another need remains to be meet. Maslow's hierarchy of needs present that the lower layers of basic need to meet later,people can rise to another level of need to pursue. Human needs are divided into five levels. ①Physiological needs ②Safety needs ③Love and belonging ④Esteem ⑤Self-actualization (Maslow, 1943).

Maslow's hierarchy of needs theory has certain reference value; managers in making reward management system according to the needs of employees choose appropriate management methods. Alder Buddha is the Yale university professor, behavioral psychologists. He put forward "ERG need theory",and this theory is similar to Maslow's theory,he also acknowledged that the human need to have layers, when people meet a need, can produce to meet the requirements of higher level needs. But about need analysis of alder Buddha is not only confined to the Maslow's hierarchy of needs theory category: One is that human needs are not entirely born, some needs can be acquired by people learning, such as the need for self-realization: two is put forward the famous "setback - back hypothesis", namely if higher level need failed and difficult to achieve, be back to its original need, and the original need is more important than before; the third is that managers should try to grasp and control work, through the work results satisfy people's various needs, arouse people work motivation.

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However,Hofstede (1984) have proved that there is lack of hierarchical structure of needs as suggested by Maslow. Some people may be deprived of lower level needs but strive for self actualization.

There is lack of direct cause and effect relationship between need and behavior. Sometimes peoples are not aware of their own needs. Measurement of satisfaction of needs is not possible.

Expectancy theory:Expectancy theory was made by the behavioral scientist Victor Vroom. Expectancy theory is that a person engaged in some activity power depends on two factors:the activity produced results expected to be attractive and the possibility of achievements. The former one refers to the satisfaction of people get after success, depending on their individual subjective feeling, and the same results for different people may have different attraction. For instance, the successful completion of a job can get promotion expected outcome is a great incentive effect for those who want to promote, but there is no attraction to those who does not want to assume responsibility. The possibility of achievements is another important incentive factor, it depends on personal faith, ability and external condition. According to the above theory, we can know that there are two ways to improve work incentive effect: one is to increase the attraction of the work result; another is to increase the easy degree of finishing the work to employees (Vroom, 1964). However,the enterprise should note that these two kinds of index does not depend on managers but employees must get approval, so to improve the incentive measures must be from passive actuator's point of view, only using this way, incentives can play a role.

Lawler (1971) claims that expectancy theory is too simplistic and deceptive because it assume that if an employer makes a reward, such as a financial bonus or promotion, enticing enough, employees will increase their productivity to obtain the reward. However, this only works if the employees believe the reward is beneficial to their immediate needs.

Two Factors Theory:Herzberg put forward the Two-factor theory (also known as Herzberg's motivation-hygiene theory and Dual-Factor Theory). Herzberg thought to influence employees mainly by two factors: hygiene factors and motivational factors

Hygiene factors are those job factors which are essential for existence of motivation at workplace. These do not lead to positive satisfaction for long-term. But if these factors are absent at workplace, and then they lead to dissatisfaction. In other words, hygiene factors are those factors which when adequate in a job, pacify the employees and do not make them dissatisfied. These factors are extrinsic to work. Hygiene factors are also called as maintenance factors as they are required to avoid dissatisfaction. These factors describe the job environment. The hygiene factors symbolized the physiological needs which the individuals wanted and expected to be fulfilled. Hygiene factors include: pay, company policies, working conditions and interpersonal relations. Any improvements in hygiene factors do not motivate workers but their reduction below a certain level will dissatisfy them (King, 1970).

The motivational factors yield positive satisfaction. These factors are inherent to work. These factors motivate the employees for a superior performance. These factors are called satisfiers. These are factors involved in performing the job. Employees find these factors intrinsically rewarding. The motivators symbolized the psychological needs that were perceived as an additional benefit. Motivational factors include: recognition, sense of achievement, growth and promotional opportunities, responsibility and meaningfulness of work (Herzberg, Mausner & Snyderman, 1959).

Unlike the hierarchy of needs theory of Maslow, Herzberg thought meeting the low-level needs will not produce incentive effect, on the contrary, it will only lead to dissatisfied with a sense of the disappearance.

The model is not applicable in all conditions, there is mixing up of both the factors in a job, which cannot be separated as intrinsic and extrinsic.

This theory was limited to the engineers and accountants. The effect of hygiene and motivational factors may totally be reserve on some other categories of people

Equity theory: Equity theory is a theory that attempts to explain relational satisfaction in terms of perceptions of fair/unfair distributions of resources within interpersonal relationships. Considered one of the justice theories, equity theory was first developed in 1963 by John Stacey Adams, a workplace and behavioral psychologist, who asserted that employees seek to maintain equity between the inputs that they bring to a job and the outcomes that they receive from it against the perceived inputs and outcomes of others (Adams, 1965). The belief is that people value fair treatment which causes them to be motivated to keep the fairness maintained within the relationships of their co-workers and the organization. The structure of equity in the workplace is based on the ratio of inputs to outcomes. Inputs are the contributions made by the employee for the organization. There are three kinds of comparison, one is to put the pay and input to compare, the second is put now reward and his past reward to compare, the third is to put self reward and others reward to compare.

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However, some critics argued that people might perceive equity/inequity not only in terms of the specific inputs and outcomes of a relationship, but also in terms of the overarching system that determines those inputs and outputs. Thus, in a business setting, one might feel that his or her compensation is equitable to other employees', but one might view the entire compensation system as unfair (Carrell and Dittrich, 1978).

Chinese attitude toward reward

According to Tang et al. (2000), China's conventional trend of "iron rice bowl" (tackling employees requirements through governmental welfare schemes) is waning away due to the substantial influx of the overseas investment, so western practices shaking Chinese management by replacing the concept of performance based pay, higher income differences and other benefits like, monetary incentives, growth opportunities, welfare benefits, etc. (Armstrong and Murils, 1988; Baruch, 2004). China's labour market is reckoned one of the prime challenges in the globe and human resource is summit operational issue because of the paramount labour cost and high turnover issues in china (Leininger, 2007). Wei and Gima (2009) argued in their study that Chinese companies should be used concurrently high order, long term trend in reward structure and a low level- perilous reward structure to augment the positive outcomes of market orientation on the performance of new product.

Reward management in COFCO Coca-Cola

Background of COFCO Coca cola

COFCO Coca-Cola is one of the three Coca-Cola bottling partners currently operate in China. COFCO Coca-Cola was established in 2000, which was a joint venture funded by COFCO Corporation as the majority at 65% and The Coca-Cola Company at 35%.CBL engages in the bottling production and sales and distribution of Coca-Cola products in sixteen provinces, cities and autonomous regions in China under the franchise agreements with The Coca-Cola Company. As the end of 2010, COFCO Coca-Cola delivered 486 million unit cases, which makes CBL become one of the top ten Coca-Cola bottlers in the world.

Reward management in cofco coca-cola

COFCO Coca-Cola belongs to international joint venture enterprise, because of the influence of national culture and western culture, taking the corresponding reward management will have unique characteristics.

Similar to the European and American many enterprises, under t- he influence of the market economy, COFCO Coca-Cola continue the reward management method which used in Europe and the United States, according to the consulting company quantitative advice, analysis of human capital, reference industry market and talent market price, according to the position, performance, and personal ability to decide the reward level. Besides that, COFCO Coca-Cola according to the latest reward level of the labour market decides the salary of each position. Under the situation between supply and demand of the labour market in turmoil, COFCO Coca-Cola is through the way of the trade negotiations between the two sides (employees and employers) to identify common accept reward level,. Europe and the United States enterprise pay attention to personal performance rather than seniority, advocate personal incentive reward system, the reward gap of senior management and ordinary post, outstanding staff and ordinary employees is very wide, sometimes this gap could reach hundreds of times.

At the same time, under the influence of the traditional Oriental culture, Chinese enterprises attach great importance to human feelings and relationship, pay attention to enterprise's long-term development, under the influence of this culture, most of the enterprise using senior salary system, this is a system combined with seniority and ability. The age and the length of the uninterrupted length of service is not only decided to staff salaries, but also decided the main basis of promotion. Under the similar condition of education, ability and contributions, who has the long uninterrupted length of service, who will be promoted. The managers of enterprise think that this way can eliminate a lot of complicated evaluation factors, reduce unfair of subjective. The reward level between enterprise internal equivalent qualifications staff do not have much difference, but the reward between high seniority employees than low seniority staff has a huge difference.

The problems

According to the current status of COFCO Coca Cola, the limitation of this reward management is:


Current reward system lack of fairness and the salary of some position do not widen the gap, the bigger salary difference in some same position also let employees feel dissatisfaction.

The enterprise lack of scientific job evaluation. Job evaluation is the foundation of reward design; evaluation of the results will be powerful basis to determine compensation. Job evaluation content mainly includes the task and responsibility, work need skills, task completion, working environment and risk, and so on. This enterprise does not have a detail, scientific and reasonable job analysis, and thus cannot get accurate job evaluation.

The process of decision and the program is not transparent. Current salary to employee complete confidentiality and transparency is low; in addition, although the performance appraisal is related to employee performance, assessment score invisible also make employees feel unfair. And employee salary level once determined, it is hard to change, and then cause the staff's dissatisfaction.

There is a bigger difference between current salary and labour market average price. The salary of those who engaged in simple work is higher than the labor market salary, the enterprise internal salary average tendency obviously.

The incentive is not enough

Through the reward system to motivate work sense of responsibility and enthusiasm of employees is the most common and most effective also the most used method. But at present the enterprise adopt the same reward system, reward structure, the combination of reward system and the position also not enough, there is no other incentive way to admit that the staff's working achievement and contribution. Besides that,the incentive method is too single, which cannot satisfy the needs of different levels employees.

Unrealized performance reward view

The reward payment aspects are still largely reflecting the allowance reward view, that is,every year employees will have a raise in reward due to the length of working and other reasons,especially for senior managers,no matter what happens in enterprise. This tendency does not comply with the design of the modern enterprise reward system. The existing allowance reward view seriously affects the enthusiasm of employees, the good or bad personnel performance in the salary reward is not reflected in. The enterprise should be gradually from allowance reward view changing to performance reward view, making reward mainly based on job performance.

Same work with different reward

The existing reward system for internal employee and external staff made different reward standard, this problem causes some employees lose the sense of enterprise belonging, also influence their work enthusiasm, after a short termination of contract, many employees choose to leave the company.

The total reward management mechanism is unreasonable

The existing reward system is mainly based on post,not related to the ability and personnel performance , thus as a result of a lot of people in order to obtain relatively high income put more attention to how to seek a higher position, so that their work energy dispersion. In addition to,bonus link to the position level and basic salary in a large extent rather than link to job performance in a certain period.


Play the role of incentive mechanism

Maslow hierarchy needs theory tells us that in the design of the reward system should give different incentives to different needs for employees, in order to maximize the effect. The company also should be aimed for different employees, designing different incentive system.

For front-line employees, because of their relatively strong need for low-level, mainly using money incentive to meet their basic living expenses, so that employees can feel at ease working in the enterprise, cultivating loyalty and the dedication spirit for the enterprise.

For the managers, since most of them are knowledge workers, incentives should be in the material incentive basis, providing more promotion opportunities to them, in order to meeting their self-actualization needs.

For the technical personnel, due to their desire to have a sense of accomplishment, the enterprise can meet the needs of their skills upgrading through training, or making work more challenging by the re-design of the work.

Optimized reward management system

Job analysis in a scientific way

Job evaluation in a reasonable way

Performance appraisal in a efficiency way

Building the comprehensive reward system

The enterprise should strengthen the working environment construction. The specific operation including, building a studying organization, and prevent depreciation of human capital, build a good enterprise culture, pay attention to the staff's emotion.


The essence of reward is a kind of trading or a exchange, reflects the trade relationship between the enterprise and employees, is the enterprise to attract, motivate and retain talents needed and an important means of success. Therefore, the level of reward management for the development of the company is very important.

This essay presents the reward management current practice and the problems in COFCO Coca-Cola. Besides that, some recommendations is be given in the end of the essay.

The aim of this essay is to provide some suggestion for COFCO Coca-Cola enterprise reward system, at the same time, provide some inspiration and reference to other enterprise in China.