Executive summary
The paper analyses the relationship between reward systems adopted by organizations and the level of motivation upon the employees. Various theories about motivation and leadership have been explained to provide background information about motivational needs and reward systems. Other aspects related to the two issues have been discussed, for example, leadership and management, global labor changes among others. The overall discussion focuses on rewards and motivation.
Employees are motivated by different factors in the organization, but more so depending on the level of the employee. Therefore, it is the imperative that top level managers have to know what motivates their employees, and at what level.
There is wide range of literature review covered to help management to know employee motivators and how best such motivators can be found and met. Therefore, if the managers are able to realize the strategies that can motivate employees and the mode of carrying them out, then such an organization would be headed for success since the success of the organization entirely depends on the performance index of the employees. Monetary value is an important aspect in the employee motivation, though it’s not the only aspect that can motivate the employees, hence as already mentioned, its only by checking on all the motivators that the management can act on them.
Introduction
Employees are motivated by different factors; which may be categorized as monetary and non-monetary factors. Employee satisfaction requires an all round approach to improving their as well as creating an environment which is suitable for the achievement of goals of the organization. On the other hand, rewards are benefits that are accrued by employees in their workplace. There is a relationship between rewards systems implemented in an organization and the motivational strategies that are adopted by the managers. Employees are motivated by different factors and managers have the obligation to identify the best motivational factors to implement in their organizations. The morale of employees is affected by many factors and managers are concerned about effects of low employee morale on performance of their jobs. Employee morale also affects their turnover rate in a certain organization. High employee turnover has a very high cost to the organization especially when recruiting new employees. In addition, there is a higher cost of productivity when employee turnover increases. According to go2 Tourism HR Society (2010, para. 1) “compared to motivated employees, disengaged workers are less efficient, miss more workdays and cost organizations thousands of dollars in lost productivity. Keeping employee morale high is one of the best things you can do to instill loyalty and maintain productivity.” Employees are considered as one of the important aspects of an organization and improving their morale improves their performance. Management is transactional meaning that the subordinates do the things told by the manager because they have been promised a reward. The rewards take the form of salaries or wages offered to the employees (Greiner, 2004). The rational of the study is to establish the relationship between employee motivation and rewards will help managers come up with better policies about managing human resources. Employee turnover is a disastrous aspect which may jeopardize the operations of an organization.
Thesis statement: There is a positive relationship between employee motivation and the reward system adopted by an organization. Rewards improve performance of employees since they are motivated to work.
Title of the research: A comparative study to examine to what extent HR uses ‘best practice’ in reward strategies to motivate employees: comparing private and public sector organizations in Saudi Arabia
The overall aim of the research: To examine to what extent HR uses ‘best practice’ in reward strategies to motivate employees: comparing private and public sector organizations in Saudi Arabia
The objectives of the research are as follow
To evaluate what is understood to be ‘best practice’ in reward strategies
To assess the link between motivation and reward
To identify the reward strategies used within public and private sector organizations within Saudi Arabia
To assess the extent to which organizations attempt to use their reward strategies to increase motivation of workers
To make recommendations for possible changes to practice
Assumptions of the survey
All respondents will reveal all the required information about sustainable business activities of the organizations under survey.
The research will not be affected by biasedness of the respondents.
All respondents will be willing to participate in the survey.
The research will be conducted within the time frame provided and no extension will be provided
Minimal costs will be incurred in the research process
Limitation of the study
Not all the respondents will be literate to use the questionnaires for the provision of reliable data. Most of the managers will not be willing to provide data about their internal activities since they fear revealing some business secrets to their competitors. In addition, the data collected may be biased since not all respondents will provide the actual data about their personal and business activities.
Literature review
Bruce and Pepitone (1998) provide that motivation is the inner drive that compels a person to behave in a particular pattern. People have different needs which they require to satisfy through different means. People are motivated when their needs are satisfied. When people are in need they seek opportunities which can satisfy them. The urge to get satisfaction drives a person to achieve something. Therefore, the existence of needs motivates individuals to work hard to achieve goals and objectives. Goals are motivators. When an organization or an individual has set goals to achieve within a specific period of time, they are motivated to achieve these goals. They are inspired to achieve the goals within the time frame provided. Abraham Maslow explained the hierarchy of needs such that when one need is satisfied a person seeks another. There are positive gains to be achieved and negative aspects to be avoided when a person is seeking satisfaction of certain needs. All needs have aspects of gain and loss whereby a person seeks to gain and avoid when seeking satisfaction (Goble, 2004).
Frederick Hertzberg discussed motivation of employees by providing two factors which determine the level of satisfaction in the workplace. Kliem (2002) identified the two motivational factors as maintenance factors and motivational factors. He explained that maintenance factors are also called dissatisfiers and that they are focused on the job. Examples of such factors include salary, work conditions and policies. Employees are dissatisfied when these factors lack in any form. Hertzberg named motivational factors the satisfiers and explained that these factors do not cause dissatisfaction if they are lacking in the organization. He provided that they improve the level of satisfaction when implemented. Examples of motivational factors include sense of achievement, recognition and others (Kliem, 2002).
Motivation determines the performance of activities within the organization. The behavior of individuals is shaped by the motivators since people seek factors which improve their work conditions. Satisfaction of one need leads to the demand for another need according to Abraham Maslow (McClelland, 1987). There are both intrinsic and extrinsic factors which motivate an individual to behave in a particular manner. Intrinsic factors emanate from within the person and give a person the will to achieve more. Extrinsic factors originate from the environment in which a person lives (Goble, 2004).
Bruce and Pepitone (1998) were of the opinion that there are two categories of motivational factors: Intrinsic and extrinsic factors. Intrinsic factors refer to the inner feeling that a person has about the place of work. Extrinsic factors are the external factors which motivate an employee. Extrinsic factors include rewards, promotion, recognition and others. Employees work harder when their welfare is put into consideration by their managers. There are three C’s of intrinsic motivation provided by Bruce and Pepitone: collaboration, content and choice. Collaboration refers to the inspiration to cooperate in the work place. This is an aspect of employee involvement in the decision making process where managers provide opportunities to their workers to contribute ideas about the operation of the organization. Content refers to the overall goals of an organization. Employees are motivated to work when they are made to realize that their work add value to the organization. When employees are provided the opportunity to take interest in their work they improve performance and contribute willingly to the organizational goals. Choice is the freedom to make decisions about the operations of the work provided to employees (Bruce & Pepitone, 1998).
In an organization the employees are motivated by various factors. Money has been said to be a motivator. However, many people have criticized this ideology by suggesting that people seek various aspects beyond the monetary gains. The overall work environment determine the satisfaction levels of the workers. The management should establish the best motivators to increase the satisfaction levels of the employees. Motivation helps an individual overcome challenge when the going becomes tough. It is an aspect which encourages a person when there is little or no hope in a certain endeavor. The desire to change cultivates motivation to an individual and provides the ability to desire new things. Realizing the need for change is the initial step in achieving motivation (McClelland, 1987).
The external/extrinsic factors which motivate a person to behave in a particular pattern consist of the environment within which a person is located. When the environment provides challenges a person is motivated to overcome the challenges. People are motivated by their colleagues. When the environment does not create challenges, a state of comfort prevails and a person does not seek new things which can change his/her behavior (Bogardus, 2009).
Rewards are the benefits which employees accrue from the organization. When creating the employment contract between the employees and the organization; the package of rewards is provided to provide a clear understanding about the benefits to be obtained for each activity done. The management may change the reward strategies according to the prevailing conditions.
The management uses different strategies to motivate their employees by the use of different reward strategies. Reward incentives use both monetary and non-monetary strategies to improve the performance of the employees (Bogardus, 2009). The monetary rewards include promotions, increment in wages, paid leaves, hospital allowances and others. The non-monetary rewards include thanks giving for improvement in the workplace, recognition by the top management and others. The management encourages the workers to improve their performance when they create reward incentives within the organization. Reward incentives such as promotions, salary increment and others should be based on the quality of work done. Leadership within the management of the organization should be encouraged to enable the employees apply the suitable strategies. Managers need to be good leaders so that they can integrate all the needs of the employees as well as understanding the particular characteristics of the employees (Kotelnikov, 2001).
According to Bogardus (2009) employees are not only motivated by the wages they receive from the organizations but also motivated by many other factors within the environment of the organization. Performance related pay improves the quality of the work done by the employees. Money is a motivator and increase in wages improves the performance of the employees. This system provides incentives to the employees to work hard to increase the total amount earned. Workers are more productive when their wages are determined by the individual efforts. Performance related system encourages employees to improve the quality of work done; it also motivates employees to increase their productivity. Promotions within the organizations are done on the performance of the employees to encourage them work effectively and efficiently (McClelland, 1987).
In a capitalistic economic system the employees (owners of the labor factor of production) and the managers (owners of capital) are rivals. Each of the party aims at maximizing his benefits from the other. The employees aim at getting the highest amount of wages possible from the organization. The management aims at obtaining the maximum output from the employees. The two groups are always against each other and the initiatives to engage employees are just but methods of promoting the goals of the management. Most of the initiatives have no monetary benefits to the employees (Lawler III, Mohrman, Benson & Jossey-Bass, 2001).
In an organization the employees have different personalities, attitudes, responsibilities and views. Employees require different motivation strategies to ensure they improve their performance and work for a long duration of time (Gómez & Crowther, 2007). Motivators increase the efficiency of employees. Hertzberg provided five motivators in the workplace: recognition, achievement, advancement, responsibility and the work itself. He differentiated motivators and hygiene factors by suggesting that motivators aim achieving job satisfaction in the long run but hygiene factors are focused on short term satisfaction of the employees (Gómez & Crowther, 2007). In addition to increasing productivity, motivation reduces employee turnover and eliminates counterproductive behavior. Improving the welfare of employees boosts their morale and increases their output. Dissatisfaction among the employees affects the performance of public companies and has an impact on the financial position of such organizations (Khan, 2003).
According to Bruce and Pepitone (1998) managers in an organization cannot motivate other people but can only influence what motivates. In modern organizational environment leadership has been identified as a very key factor. Through leadership managers are required to influence their subordinates to contribute to the goals of the organization willingly. Employees are motivated when their leaders are providing necessary support in their daily chores. Managers who interact with their employees are able to identify their needs. It is only through appropriate communication that employees and their managers come into consensus about the appropriate terms of employment (Bruce & Pepitone, 1998). Employee-centered leadership behavior contributes more to job satisfaction and improved performance compared to the job-centered leadership behavior. The roles of leaders and their subordinates need be clearly established to avoid conflicts in the performance of duties. Leaders should adapt to different situations since different circumstances face the organization. Leaders should manipulate followers to achieve specific goals. However, they should provide room for errors since the followers are human beings and have the probability of making errors (House, 1971).
Henry Fayol (1949) provided that the work of a manager is to plan, organize, control, direct and staff the various resources provided to him/her by the shareholders. A manager must ensure that all the goals and objectives of the organization are achieved by using appropriate strategies which motivate employees to accomplish the goals of the organization. To enhance their subordinates to become innovative and to produce commodities which are competitive in the market, managers are applying leadership strategies to create an entrepreneurial environment within the organization (Mintzberg, 1994). It is through leadership that managers are able to identify the needs of all stakeholders and integrate the resources of the organization to managerial decisions. As leaders managers have an obligation to guide their employees towards achieving the goals of the organization. Therefore, adequate resources ought to be provided. Rewards are used to motivate employees to contribute willingly to the goals of the organization. Henry Fayol suggested that money is a motivator and can be used to change the behavior of employees. He suggested that remuneration packages provided to employees should be attractive to motivate them. To ensure there is a balance between remuneration policies and available resources, Fayol suggested that managers should create wage systems which coincides with the resources of an organization. As such, managers have an obligation to provide remuneration scales which motivate employees and at the same time the organization is not deprived off its ability to operate (Fayol, 1949).
However, to improve the morale of their employees many managers use remuneration as the only factor to regulate and fail to recognize other factors affecting employees. Employees like being treated differently and that better payment is not the only factor that employees consider as a motivator. There are several depended factors which affect employee morale; and they relate to the individual employee or the workplace environment. Such factors include; employee training program, compensation, organizational policies and practices, recognition, performance evaluations and others. Many managers fail to adopt different employee retention strategies when dealing with people from different nationalities.
Open and honest communication is required of managers and employees to create trust between all stakeholders of the organization. Micromanagement of employees is required especially where large number of employees is being controlled by a few managers. This provides opportunities of splitting and grouping employees according to how closely related they are with each other. Team building events should be established within the organization to promote understanding between all the parties. Additional ways of improving employee retention should be identified by the management since multinational organizations have special needs which require assessing needs of employees at different levels (Wiseman & Shuter, 1994).
In an organization employees have different personalities, attitudes, responsibilities and views. Employees require different leadership and motivation styles to ensure successful organizational operations. There are common elements required to be used by leaders irrespective of the leadership style adopted. These elements are grouped as either hygiene factors or motivation factors. The overall goal of the leader is to create job satisfaction among the employees. This strategy aims and increasing productivity of the human resources to an organization (Saari & Judge, 2004). Motivators increase the efficiency of employees. Hertzberg provided five motivators in the workplace: recognition, achievement, advancement, responsibility and the work itself. He differentiated motivators and hygiene factors by suggesting that motivators aim achieving job satisfaction in the long run but hygiene factors are focused on short term satisfaction of the employees (Fisher 2000).
In addition to increasing productivity, job satisfaction reduces employee turnover and eliminates counterproductive behavior. There is a positive correlation between job satisfaction and employee performance. Job satisfaction refers to the contentment that employees have in their workplace and is influenced by many internal and external environmental factors. Improving the welfare of employees boosts their morale and increases their output. Dissatisfaction among the employees affects the performance of public companies and has an impact on the financial position of such organizations. Leadership behavior is divided into transformational and transactional. Through the transformational leadership employees are able to change their attitude towards their job and the organization. Transformational leadership encourages employees to be entrepreneurial and innovative in their workplace. This strategy increases job satisfaction among the employees and creates autonomy in the workplace. Transactional leadership provides employees with job security, steady pay and favorable benefits (Saari and Judge, 2004).
Improving employee morale benefits all stakeholders of an organization. The results of boosting employee morale are increased loyalty to the jobs allocated, high rate of attendance at work, and improved productivity. Employees tend to become efficient when they have a high morale and they reduce costs related to low moral. Achieving a high level of employee morale is attained through several methods. Money is not the only motivator since employee morale is affected by both monetary and non-monetary factors. Managers must be interested in the welfare of their employees and appreciating every effort being made by them towards achieving the organizational goals. Personal experience with all employees is required to improve understanding about their specific needs. Social interactions between employees should be encouraged to resolve conflicts through better understanding of the differences between their life experiences. Social events such as games should be promoted to create understanding through interaction. Employees should work as a team and isolation should be avoided since it creates depression among the employees. Reward incentives should be established within the organization to motivate employees improve their performance. Cooperation between employees should be encouraged to promote understanding. The work environment should be improved to motivate employees and provide a feeling of responsibility to achieving goals established by the organization. Employees are motivated to work in environments which meet their needs and they will perform better in organizations with better mechanisms of satisfaction (Gunsch, 2010).
Rewards systems adopted by multinational companies must match the specific economic conditions in the countries they are established. Rewards are the benefits which employees accrue from the organization (Kotelnikov, 2001). When creating the employment contract between the employees and the organization; the package of rewards must provide a clear understanding about the benefits to be obtained for each activity done. The management may change the reward strategies according to prevailing conditions in each country. Management uses different strategies to motivate their employees by the use of different reward strategies. They use monetary and non-monetary strategies to improve performance of employees. Monetary rewards include promotions, increment in wages, paid leaves, hospital allowances and others. Non-monetary rewards include thanks giving for improvement in workplaces, recognition by top management and others. Management improves employee morale and encourages workers to improve their performance when they create good reward incentives within the organization. Reward incentives such as promotions, salary increment and others should be based on the quality of work done. Leadership within the management of multinational organizations should be encouraged to enable the employees apply suitable production strategies. Managers need be good leaders so that they can integrate all the needs of employees as well as understanding particular characteristics of employees (House, 1971).
The increasing competition in the domestic and global markets requires the managers to focus on establishing strategies which will provide competitive advantage to the organization. Globalization has changed the business environment and managers are taking other options to manage resources to achieve competitive advantage and to maintain an integrated system between internal and external environments of an organization. Globalization has been accompanied by increase in competition in both domestic and global markets. This has forced managers to come up with better strategies to manage organizational resources to create competitive advantage as well as increase profitability against the highly competitive market environment. As globalization continues to take place in the global markets managers are required to adopt better strategies to manage their workers (Cooke, 2003). As market conditions continue to change, there is increasing need to come with better human resource management policies to maintain competitiveness in the global markets.
Labor market has experienced a lot of changes since many organizations operate in the global markets. Labor factor of production has become mobile and people can work in different countries. This has increased competition for skilled labor and there has been a great need to improve employee motivation. Reducing employee turnover in the current market conditions requires adopting better strategies when managing human resources. Employees become loyal to the organization when they are motivated to work. Different reward systems are accepted by different labor markets. Countries have regulated remuneration systems adopted by organizations operating within their jurisdiction. It is important for managers to understand the legal regulations established by different governments, especially when working in a multi-governmental environment (Bohlander & Snell, 2009).
As the current labor market becomes increasingly competitive, and employee talent becomes a driving force for the organizations’ success, more and more organizations are putting tremendous effort to attract, develop and retain top talented employees. Business environment has become more competitive and human resource managers are required to focus on the welfare of their employees (Ackerman & Anderson, 2001). All organizations require talented workers to compete successfully in the business environment. Professionals require better wages since the demand for their services is high. To properly management talent in an organization, managers should introduce better systems of motivating professionals to attract and retain them. Many people have attained excellent skills and required to work in organizations which recognize their talents and help them develop their careers while working. The issue about talent management has been very hot due to the increasing rate of employee turnover in organizations (Ackerman & Anderson, 2001). In addition to better rewards, employees seek other aspects to become satisfied with the work environment. For example, appropriate training, joining welfare association, and others.
Methodology
Personal interviews will be conducted to collect primary data. This research tool has been preferred since it provides accurate information and some qualitative information which may not be captured by questionnaires is well presented. Both qualitative and quantitative data will be colleted to measure the variables about employee motivation and rewards. Qualitative data will provide information about the motivational variables. Quantitative data will explain the changes in rewards used in the organizations under survey for a given period of time.
Conclusion
Employees are motivated by monetary and non-monetary benefits. Motivation is the inner feeling that a worker develops to improve performance in the workplace. Rewards are the benefits that employees obtained from the organization. Labor markets have changed and managers should develop better strategies to improve employee motivation since competition has intensified with introduction of global markets. Globalization has brought a lot of changes in the labor market and managers need to adopt better strategies of aligning human resource management with the changes. Employees improve their performance as the organization provides better rewards. Money has been identified as a motivator and can be used to change the attitude of employees towards the job. Satisfaction of employees requires adoption of an integrated approach when motivating. Both monetary and non-monetary rewards should be used to ensure overall job satisfaction. Reward incentives motivate the employees to improve their performance, thus there is a positive relationship between rewards and employee motivation.
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