Incentives And Reward System For Enhancing Employee Performance

Company Background

Discuss about the Incentives and Reward System in Enhancing Employee.

Globalizing market allows organizations to expand their business overseas. In this context many organization are expanding their business in different countries around the globe. This globalization is motivating companies to produce new and innovative products. These products require innovative strategies to implement such innovative changes and these strategies used by organizations are offering great value to their employees as well. in this conceptual context it is very important that what type of innovations companies are introducing and what strategies they are making for their employee reward system. Offering rewards to their employees is common for companies to achieve the enhanced efforts and behavioural attitude of employees that are key essentials for the company to achieve its main objectives and goals. In studies it is suggested that the definition of a reward system is highly dependent on the type context for which it is being designed as there is no such reward system that is effective equally in different business contexts (Yavarzadeh, Rabi, and Abadi, 2015). This supports the discussion made in this report for the designing and implementation of such reward system for a particular business sector in a specific business environment. The variables and factors influencing the structure of an effective and efficient reward system are important to identify. Once these variables and factors of such kind are identified it is very important to understand that how each variable will influence the structure that is being designed to be implemented.

In this repost the discussion is made to identify all the possible variables and factors affecting an effective reward system and then among all the possible structure designs for the given business model one is described briefly with a complete discussion about its implementation. By the end of this report it will be easy to understand the designing and implementation of an effective reward system used in food and beverage industry.

Cheesy Pizza Inc. is a US based pizza store chain. This is a family owned and operated company. This was established in the year of 1985, in Brooklyn, New York. After this, company made its first move to the upper west side of Manhattan in 1991. Company is proud to serve authentic, and traditional homemade Italian dishes prepared only with fresh and never frozen ingredients. Restaurant chain has speciality in all of their pizzas along with Pastas, Sandwiches, salad, Calzones & Rolls, and Appetizers too (Cheesypizzza, 2018).

Reward System

In US company is making decent profit and operating successfully in different states. Now in the globalizing environment of global market company is planning to move overseas introducing its business in Singapore and Hong Kong with 10 outlets at each destination. For this company’s HRM has prepares a complete strategy that requires an effective reward system that can be utilised by the company to successfully launch its business in the new location with an ease. This reward system must be effective as well as efficient to help the organization to achieve its objectives and goals.

It is important for HRM to observe and recognize the worthiness of their employees. In order to observe and recognize the employees’ worth for the organization different reward systems are designed. These reward systems are also the fundamental of hiring and retaining the talented professionals. Rewards can be defined as any type of monetary, non-monetary, or any psychological incentives provided to the employees by their employers as an exchange for their contribution to the organization success. There are many more fundamentals of the reward systems defined in the literature. Among these fundamentals one main fundamental is the function implementing and reinforcing the objectives and values of the organization.

While designing a reward system it is important to clear the main objectives of the system. A clear understanding of the objective of the system makes it easy to design an effective as well as efficient system. Reward system mainly has the following objectives

• To hire and retain the sustainable professional
• To influence existing culture in the organization in terms of innovation, flexibility, and participation
• To encourage employees to achieve their individual goals ultimately serving for the organization objectives
• To reinforce the organization structure (Status and Hierarchy)

Idea of providing rewards or incentives to the employees is considered by the HRM team of an organization to hire well qualified and talented employees to achieve organization goals. This consideration of rewards in hiring is important because rewards or incentives provided by the organization play an important role in the efficient productivity of employees. Studies states that appreciating people for their efforts, by providing benefits or incentives, is a significant factor for their individual satisfaction. Skills of an individual are not enough to let them work with high efficiency until unless there is a provision of motivational reward system. These incentives provided through the reward systems encourage the self-motivation and leads to the higher productivity (Locke and Braver, 2008). In the literature it is defined that the success of an organization can be measures by the efficiency of the organization to exploit its employee’ qualification and skills. This definition of successful organizations motivates scholars to come up with comprehensive description explaining how to enhance the professional skills of employees and how HRM should choose individual candidates well deserved for the job profile. In this context it is acceptable to say that successful organization has a provision of an effective reward system that is efficient to enhance the employees’ productivity. Such system motivates employees to work hard and contribute to the organization in the process of achieving its goals and objectives. It is also noticeable that provision of sufficient rewards or incentives may help employees to overcome different obstacles they could face while working.

Objectives of Reward System

There are various aspects for which reward system has its importance like

As the incentives is one of the common approaches to motivate employees to achieve their goals along with the organization goals, organizations must think very carefully about these reward system to be efficient for a long time (Alfandi, and Alkahsawneh, 2014). Organization have their goal set for long term that requires an effective and efficient reward system which must be adaptive to any change that the organization may face in the future.

While designing reward systems organization must pay attention to the suitability of their internal corporate environment with the reward systems they are designing (David, Rajput, Khan, and Raghuwanshi, 2015). This attention is essential as the system will ultimately affect the internal corporate environment of the organization significantly.

Any reward system designed for the organization employees must be aligned and sustainable to the business strategies organization has to achieve its goals and objectives in long term.

Reward system is an integrated operation of an organization with its HRM team. HRM practices are associated with such provision by the organization therefore a reward system must be designed in such a manner that it is aligned with the HR practices of the organization (Dreher,et al, 2009). Designing process of the reward system requires significant involvement of HR practices as HRM understands

It is important to undertake the consideration of laws and regulations destination country has for the reward system. Organization is taking its business to the other country requires it to consider every legislative rule to be followed by the organization for the sustainable establishment of the business. In this case Cheesy Pizza is opening 10 outlets of the company in each location. In this context the legislation of Singapore states some considerations for the designing of any reward system company wants to implement in the country. The ministry of manpower of the destination country has set a Special Employment Credit Scheme (SEC). this scheme allows company to provide wage offsets to the employees of Singapore and company earning on an average more than S$4,000 a month. This scheme also allows company to provide intrinsic rewards to the Singapore employees with some disabilities (Wong, and Kiat, (2017).

Designing process of any reward system requires a proper planning and understanding of all the basic requirements of the systems objectives and innovations (Yan, 2014). While designing a reward system it is necessary to analyse different factors that may influence the effectiveness and efficiency of the reward system (Ferreira, and Otley, 2009). Also it is essential to understand the requirements and thorough knowledge about every step of the process. There are various factors or consideration to be undertaken while designing a reward system that are as

• Total rewards
• Pay structure
• Reward mix
• Extrinsic and intrinsic motivations and
• Equity

Importance of Reward System

When organization is thinking about designing a reward system the term “total reward” is used to describe the combination of both monetary and non-monetary benefits provided to the employees (San, Theen, and Heng, 2012). This investment of the organization in the form of total reward makes the organization to attract and retain its professionals contributing significantly in the organization success (Galvan, 2010). Total rewards of an organization have mainly two critical characteristics which are Programme and Value.

A programme must be considered as a part of total rewards as the reward system designed for the purpose must have a specific programme in this organization is investing and managing the whole reward system.

This is an important component of the reward system as it must have an ascribes value among the employees working for the organization

Pay structure of the reward system must be clearly described for different rewards organization is investing in. Both the Economic (monetary) and non-economic (non-monetary) rewards are to be provided according to the specific structure formed for the provision of such rewards. In this structure both the monetary and non-monetary rewards are defined separately (Huang, and Chen, 2010). The pay structure of any reward system can be described given in the below chart

While considering the business strategy complying with the reward system reward mix is designed to promote a culture that comply with the business strategy of the organization (Shaw, Horton, and Chen, 2011). Some exceptional efforts are driven through the various variable elements of reward system along with maintaining the simplicity, equity and flexibility. The design comprises cash and non-cash payment and both the fixed and variable elements of the reward system. In this consideration basic salaries are marked as benchmark of the reward system (Jeyaraman, and Kee-Teo, 2010). Mix reward system is also used to provide rewards for the team efforts as well as the individual efforts made by the employees to achieve their own as well as organization objectives.

Reward systems are categorised on the basis of key motivation behind the achievements undertaken for the provision of rewards. On this basis reward motivations are categorised as intrinsic and extrinsic motivations. Extrinsic motivations are the external form of motivation that are based on the tangible rewards while the intrinsic motivations are internal form of the motivation employees that is motivation to do something for personal satisfaction (Uzonna, 2013). Differentiation between both the forms of motivation can be explained with the help of below given table

Factors Influencing the Reward System

While designing a reward system it is necessary to consider the theory of equity which focuses on the determination of the fairness of the distribution system. This theory measures the equity of reward distribution system that is defined as whether the rewards are distributed with the fair assessment of employees based on their efforts made for the accomplishment of their given tasks (Ke, and Wei, 2008). To observe the equity theory in practical at workplace the easiest way is to find whether the employees are comparing their work with their colleagues who get rewarded by the organization. Sometime there are situations in the organization which demonstrates that employees are not satisfied with their recognition and saying the other one who get more rewards has not done the work even similar to me then it is clear that employees are not satisfied with the reward system and management has to improve its existing reward system with suitable changes (Buckholtz, et al, 2010).

Along with the design of an effective reward system it is equally important to implement designed system in an effective way. Implementation of the system measures the possibility of success that the system will get in the future and affect productivity of employees in the expected manner (Venkatesh, and Bala, 2008). There are certain things to be considered with top priority for an effective implementation of the reward system organization management has designed. These considerations of effective implementation are as following

Communication of the new reward system designed by the organization must be communicated to the employees as well as the managers responsible to implement the system in their respective departments. Communication is critical element to introduce such system that needs to be known by each and every employee to consider the system seriously. An effective communication is made in the formal communication channel of the organization that can help the organization to communicate the information of reward system effectively. Once the system information is communicated to the employees it is important to ensure that the system is familiar to every employee working in the organization (Michie, Van Stralen, and West, 2011). Only with an effective communication channel of the organization such information can be passed effectively.

These unions are called trade unions of the organization comprising employees and a leader leading the group of employees. Trade unions are considered as a tool of workers for conveying employee demands to the higher authorities of the organization effectively. Communication of the reward system to the employees requires the involvement of employees union with high priority consideration. Union is the main channel of communication through which the information can easily be transferred to the employees in much effective way (Stoeckel, et al, 2008). Union in the organization channel of communication has more importance for conveying a message to employees in comparison to other communication for managerial communications. There are different functions and roles of trade unions in an organization for implementing such systems.

Adapt to the Future Change

Some of the functions of trade union are as following

• Increasing co-operation and well-being among workers
• Securing facilities for employees
• Establishing a bridge of communication between employees and employers
• Ensuring the fulfilment of workers’ interest

Trade unions play an important role to the functions of employees and employers in order to create and maintain a harmonious work environment in the organization. This harmonious environment at workplace makes it easy to create strong relationship between employees and employers that helps organization to convey any information effectively.

Line manager are the key element of any communication channel within the organization. This importance of line managers in the communication channel makes it more important to train them for the effective communication and implementation of the reward system organization designed for the employees (Morris, and Venkatesh, 2010). Proper training of line manager helps the organization to communicate desired information and implement the reward system effectively (O’Reilly, Caldwell, Chatman, Lapiz, and Self, 2010).

Implementation process does not end with the implementation and regulating the reward system effectively. To make it successful and effective for a longer time period it is important to collect feedbacks from employees about the reward system that management designed and implemented in the organization (Tsujino, and Sakurai, 2009). Feedbacks are necessary to make required changes to make it more effective and employee acceptable. Making it employee acceptable ensures its success for sure as the system is designed to motivate employees and if employees are satisfied with the design it will fulfil the objectives of its design which is the ultimate goal of reward system.

From the above analysis of the factors influencing reward system designing and implementation is highly recommended to the company to consider each and every aspect of the reward systems and any influence on the respective aspect. Regardless of the time restriction or delay in the identification of a factor influencing the reward system in any manner it is essential to consider its influence along with taking suitable alternatives to overcome the influence.

Conclusion

Analysis of the above report suggests that there are various factors that are need to be considered while designing and implementing the reward system. Report finds that the reward system designing is very important for Cheesy Pizza Inc. to open the new outlets in Singapore and Hong Kong successfully. While designing such systems for employees report suggests making a clear understanding of the objective of the rewards system. These objectives are considered as the main goals or aims of the system. At the time of designing several factors influencing the design of rewards system are important to be considered for an effective design. Implementation part of the designed system is mentioned equally important in the report as effective implementation is the key strength of an organization to make any system successful in the present as well as future effectiveness of the system. In this reports the variables influencing the effectiveness of implementation of the reward system makes it clear that these variable must be considered and should be used in the process of implementation. The report analysis concludes that the factors influencing the design part as well as the implementation part of the reward system regulating are very important to be undertaken by the management of organization. Consideration of these factors can influence the reward system effectiveness in a very significant way.

Suitable to the Internal Corporate Environment

References

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