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Employee rewards is about how people are rewarded in accordance with their value to the organisation. According to (Armstrong, 2007), the strategic approach in Reward Management is to determine the type of reward, either intrinsic and/ or extrinsic, that makes employees motivated on their work. Intrinsic rewards are non financial rewards related to individual's responsibility, achievement and the work itself, while extrinsic rewards are usually controlled by the organisation, (Thomas, 2002). For example, financial, material and social rewards, such as praise, recognition are considered extrinsic, while personal feeling of self esteem, self satisfaction, worth and accomplishment are classified as intrinsic rewards (Manus and Graham). To further enhance the strategy used in reward management, according to (Duncan Brown, 2007) the system of rewarding employees should be developed and implemented to help support the achievement of the organisation's business goals and objectives. Indeed, giving incentives through a reward system to employees is an essential part of retaining, attracting, motivating and satisfying employees (WorldatWork, 2000). Therefore a comprehensive, practical and substantial reward system, which is founded on employee performance and the quality of work, would have an effect on the performance of the organisation, as implied by (The Hay Group)
Organisations as suggested by (Armstrong, 2007) offer a two way experience for both employers and employees. The author stated that employers benefit largely from the training they offer to employees, given that the expected knowledge and skills were learned through the organisations investment on their human resources. While employees, on the other hand, are given the opportunity to improve their work capabilities as qualified and productive members of the workforce. () highlighted the importance of high work life quality through good supervision, working conditions, pay and benefits as well as challenging and rewarding jobs. The author added that these conditions will provide opportunities for employees to contribute to the overall effectiveness of the organisation as they become more motivated and productive members of the organisation's workforce.
A number of researchers have noted the relationship between rewards, employee job performance, productivity and job satisfaction. (Puffer, 1990) found that behaviour which is rewarded is more likely to be repeated than behaviour which is not. Additionally (Greene and Craft, 1972) concluded that the administration of rewards was the most significant mediator of the relationship between job performance and job satisfaction. The authors also noted that subsequent performance in organisations is caused by the rewarding of the employee current performance and not by job satisfaction. Furthermore they argued that it is not job performance but the existence of rewards that has the strongest impact on job satisfaction. As stated by Lawler (1967), "Good performance may lead to rewards, which in turn lead to job satisfaction".
Kerr (1975) suggested that reward systems may however; result in undesirable and unintended consequences. The author noted that employees seek information concerning the activities that are rewarded and often proceed to do those activities to the exclusion of activities that are not rewarded. The extent to which this occurs will depend on the perceived attractiveness of the rewards offered.
In addition, the reward system may also fail to reward the behaviour that has the greatest impact on the long term success of the organisation. One explanation for this involves how performance is measured (Kerr, 1975). Management often seeks to establish simple, quantifiable standards against which performance is measured. This approach may result in the rewarding of behaviours that have limited application to overall organisational effectiveness, while excluding those that more complex or abstract such as cooperation and creativity, which are examples of behaviours that are difficult to quantify and measure (Armstrong and Murlis, 2007).
Performance Management and Performance Appraisal
To ensure that employees are rewarded fairly, employee performance, in the organisation, should be managed. According to Armstrong and Baron (2004) performance management is "a process designed to improve organisation, team and individual performance". In addition, the authors assert that to manage performance effectively, the employees should know on what basis their performance would be measured. The authors as well as the Chartered Institute of Personnel and Development research, stated that the performance management processes in any organisation must define individual performance and contribution expectations, assess performance against those expectations, provide for regular constructive feedback and result in agreed plans for performance improvement, learning and personal development.
To assess employee performance and provide feedback on which performance adjustments can be made, performance appraisals are conducted Armstrong (2007). Performance appraisals according to some theorists should be used to review constructively employees' performance in order to encourage them while other theorists suggest appraisals should be used strictly for development purposes as linking appraisals to reward systems spoils the appraisal process because it then makes appraisals judgemental, punitive and thus affects employee motivation (Dransfield, 2000).
It is necessary for organisations to have motivated employees. The word "motivation" is derived from the word "motivate" which means to move, impel, or induce to act to satisfy a need or want (Butkus & Green, 1999). Motivation is one of the most fundamental concerns of how organisations used their reward system to encourage high levels of performance among employees. The aim of organisations is to develop motivation processes that help ensure that employees deliver results in accordance with the expectation of the organisation (Armstrong, 2007). As motivation can be assumed as the reason behind why employees perform better and more efficient. There are many assumptions in human motivation established in research. (Wiley 1997), assumed that motivation is inferred from a systematic analysis of how personal, task and environmental characteristics influence behaviour and job performance. While (Wiley, 1997) assumed that motivation affects behaviour rather than performance. The author explained that the "initiatives designed to enhance job performance by increasing employee motivation may not be successful if there is a weak link between job performance and employee efforts".
Definitions of motivation varies, motivation has been defined as the psychological process that gives behaviour purpose and direction (Kreitner, 1995); a predisposition to behave in a purposive manner to achieve specific, unmet needs (Buford, Bedeian, & Lindner, 1995); an internal drive to exert high levels of effort toward organisational goals, conditioned by the effort's ability to satisfy some individual need" (Robbins, 1998).
Like rewards, there are two types of motivation, intrinsic and extrinsic. Intrinsic motivation
Many theories have been written on motivation. Motivation theories can be divided into two content and process theories. Content theories emphasize the factors that motivate individuals. Examples of content theories are Maslow's theory, Alfelder's theory, McClelland's theory, and Herzberg's theory (Mullins, 1999). On the other hand, the emphasis on process theories is on the actual process of motivation. Some examples of process theories are Expectancy theories, equity theory, goal theory, and social learning theory (Mullins, 1999).
Butkus, R.T. & Green, T.B. 1999. Motivation, Beliefs and Organizational
Transformation. Quorum Books.