Advantages of financial reward in employee motivation
Employee motivation is one of the most important aspects to be considered by business organizations due to the fact that the more motivated will be the employees, the more will be their productivity and effectiveness. There are number of strategies being used by the human resource managers in motivating their employees (Shahzadi et al. 2014). The most commonly used strategy in employee motivation is financial rewards. This is mainly used due to the reason that money is a major influencing factor for the human beings in their decision making process. However, in terms of the motivation, there are number of theories being given by different authors regarding the advantages and disadvantages of using financial reward for employee motivation (Lau and Roopnarain 2014).
This essay will discuss about the pros and cons of financial reward as a fundamental pert of employee motivation and relationship. In doing so, this essay will critically analyze this factor by the help of different journals. In accordance to the finding from the critical analysis, this essay will recommend a few points.
According to Yousaf, Latif, Aslam and Saddiqui (2014), financial and non financial reward can both be beneficial for the human resource managers in motivating the employees. However, according to the authors, financial rewards are most effective in motivating the employees and marinating positive relationship with them. This is due to the reason that employees work in the organization to earn money. Thus, money is the most basic form of requirement for the employees. The authors have also stated that the major benefit of using financial reward for employee motivation is having less influence of other external motivating factors. According to the Maslow’s need theory of motivation, safety is the basic needs that should be fulfilled in order to motivate the employees. This is due to the reason that if the employees are having favorable financial return from their workplace, then they will be more motivated to work. In addition, if the employees are getting favorable financial return, then they will be less influenced by the other factors such as workplace environment. Human resource managers should have to look after fewer factors in motivating their employees (Eisele et al. 2013).
However, the major issues with this article are lack of discussion regarding the negative impacts of financial reward on the employee relationship. There are number of negative impacts such as not giving importance to the health and safety of the organizations. According to the Maslow’s need theory of motivation, safety needs not only refer to the financial safety of the employees but also their health and physical well being. However, in this article, these factors are not being discussed.
Disadvantages of financial reward in employee motivation
On the other hand, some other authors came up with the view that employees can be motivated by financial reward and money can enhance employee relationship but to a certain extent. As per Grandey, Chin and Diamond (2013), it is obvious that financial rewards and other monetary benefits do motivate the employees in their workplace. However, employees will get motivate only to the extent their personal goals and objectives are getting met by financial rewards. The authors have also stated that different employees are having different set of expectations from their workplace. Though the majority of these expectations of the employees can be fulfilled by monetary benefits, but there are number of expectations of the employees that cannot get fulfilled by the financial reward. In addition, it is also being stated by the authors that employee relationship can also be maintained by providing the financial benefits only if the employees are getting satisfied by it. Therefore, according to the authors, if employees are giving more preferences on the monetary aspect over other factors in having effective relationship with the management then financial rewards will be beneficial and vice versa (Mikkelsen, Jacobsen and Andersen 2017).
The authors have also given the example of reward for performance. This concept states that employees should be paid in accordance to their performance. Thus, if the employees are performing better then they will get more financial reward and vice versa. This article stated that employees will get more motivated to perform better if they are being given financial reward for that. On the other hand, the employees will also carry favorable and positive relationship with the management if they have the impression that management will pay them more for their better performance. According to reinforcement and expectancy theory, employees will get motivated by financial reward only if they perceive pay as the core determining factor for their performance. Thus, it can be concluded that financial rewards can motivate the employees to a certain extent and it is not only the most effective means of motivating the employees.
It is being stated by Misra, Jain and Sood (2013) that apart from financial rewards, there are other factors also that determine the level of motivation of the employees. Thus, using financial rewards as motivating tool for the employees will have their own set of disadvantages. The authors have stated that the major disadvantage for using financial reward is that continual use of monetary benefits will be perceived as entitlement and not as a motivating tool. This is due to the reason that if the employees are continuously getting financial rewards for their good performance, then it will become entitlement for them and they will no more get motivated by it. They will perceive it as their right or provision with their job role. Thus, with time, employees will not get motivated by financial rewards.
Recommendations
However, the major shortcoming being identified with this article is that the outcome is based only on the survey of retail employees in capital region of India. However, the attitude of the employees towards the financial rewards may be different in Indian context and in context of other countries. Therefore, the findings of this article cannot be based on the viewpoint of only a small number of employees.
It is stated by Hofmans, De Gieter and Pepermans (2013) that other than financial reward, job satisfaction also determines level of motivation of the employees. In addition, it is also being stated by the authors that employees will have proper relationship with the management if they are satisfied with their working environment. However, if the management initiates only financial reward for their employees then may be all the employees will not get motivated due to the fact that they will get motivated by recognition and working environment in their workplace. Hence, it is another disadvantage being identified by the authors of using only financial rewards. All the employees will not get motivated by having financial rewards and not concentrating other factors may in turn cause de-motivation among the employees (Dar et al. 2014).
The major shortcoming for this article is that authors have discussed only about the differences between job rewards and job satisfaction. Thus, only these two variables are being discussed in the article. However, apart from these two variables, there are some other factors also determine the motivation level of the employees. The findings of this article are limited and not covering all the aspects of employee motivation and employee relationship.
Thus, from the above discussed analysis, it is identified that financial rewards are important in motivating the employees but it is not the only way to motivate them. There are number of factors that should be maintained by the human resource manager in motivating their employees. It is recommended that financial rewards should be used as basic form of motivation for all the employees. In the further stage, factors such as working environment, job division, and job recognition and work life balance should be given concentration (Dasgupta 2013). Thus, the more holistic will be the approach of the employee motivation activities, the more will be the coverage of larger sections of employees. It is also being recommended that in order to have more specific motivation tools for the individual employees, their preferences should be identified in the first stage of selection. In accordance to that, employees can be motivated by means of different strategies (Aguinis, Joo and Gottfredson 2013). It is important for the human resource managers to determine and identify the shortcomings of existing strategies of employee motivation and modify accordingly. It is recommended that the feedback should be taken from the employees due to the reason that they will able to notify if they are getting motivated or not.
Conclusion
Thus it can be concluded that financial rewards are not the only one to motivate the employees and it is limited to a certain extent. In this essay, the critical discussion identified that apart from the financial rewards, there are number of other factors that should also be focused by the human resource managers in order to motivate their employees. It is also concluded that non-financial strategies are also equally effective and important in motivating the employees. This essay recommends that proper balance between the financial and non-financial motivational tools will help in having maximum output from the employees.
Reference
Aguinis, H., Joo, H. and Gottfredson, R.K., 2013. What monetary rewards can and cannot do: How to show employees the money. Business Horizons, 56(2), pp.241-249.
Dar, A.T., Bashir, M., Ghazanfar, F. and Abrar, M., 2014. Mediating role of employee motivation in relationship to post-selection HRM practices and organizational performance. International Review of Management and Marketing, 4(3), pp.224-238.
Dasgupta, P.R., 2013. Volatility of workload on employee performance and significance of motivation: IT sector. Science Journal of Business and Management, 1(1), pp.1-7.
Eisele, L., Grohnert, T., Beausaert, S. and Segers, M., 2013. Employee motivation for personal development plan effectiveness. European Journal of Training and Development, 37(6), pp.527-543.
Grandey, A.A., Chi, N.W. and Diamond, J.A., 2013. Show me the money! Do financial rewards for performance enhance or undermine the satisfaction from emotional labor?. Personnel Psychology, 66(3), pp.569-612.
Hofmans, J., De Gieter, S. and Pepermans, R., 2013. Individual differences in the relationship between satisfaction with job rewards and job satisfaction. Journal of vocational behavior, 82(1), pp.1-9.
Lau, C.M. and Roopnarain, K., 2014. The effects of nonfinancial and financial measures on employee motivation to participate in target setting. The British accounting review, 46(3), pp.228-247.
Mikkelsen, M.F., Jacobsen, C.B. and Andersen, L.B., 2017. Managing employee motivation: Exploring the connections between managers’ enforcement actions, employee perceptions, and employee intrinsic motivation. International Public Management Journal, 20(2), pp.183-205.
Misra, P., Jain, S. and Sood, A., 2013. Compensation: impact of rewards and organisational justice on turnover intentions and the role of motivation and job satisfaction: a study of retail store operations in NCR. International Journal of Human Resources Development and Management, 13(2-3), pp.136-152.
Shahzadi, I., Javed, A., Pirzada, S.S., Nasreen, S. and Khanam, F., 2014. Impact of employee motivation on employee performance. European Journal of Business and Management, 6(23), pp.159-166.
Yousaf, S., Latif, M., Aslam, S. and Saddiqui, A., 2014. Impact of financial and non-financial rewards on employee motivation. Middle-East journal of scientific research, 21(10), pp.1776-1786.
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