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Evaluation Of Reward Systems And Their Impact On Performance


Introduction


The current business environment is complex, dynamic, and it requires effective management processes to enhance survival in the intensely competitive working environment. Over the years, businesses have evolved to become complex institutions whose outcome depends on the overall efficiency among the constituent strategic units. This means that organizational success is dependent on several unpredictable variables thus the need for effective management applications depending on the industry of specialization, nature of business and other requirements that are requisite for achieving the defined economic objectives in accordance with the prevailing conditions.

Employees are among the core business elements that define the overall outcomes irrespective of the challenging conditions. Normally, employees are individuals who are contracted by companies to offer their skills in exchange for monetary and other forms of agreed rewards. The employees are able to apply their expertise to accomplish their designated tasks as per the specifications of the job. However, their outcomes are dependent on the ability of their hosting companies to identify, manage and retain the available talent for long-term benefits, as well as achievement of the defined strategic objectives.

This is based on the fact that companies apply rewarding schemes that reflect employee performance and equity in terms of their overall achievements. Most organizations alter their rewarding mechanisms in order to match the prevailing economic conditions disregarding their effects on the workforce. It has been noted that the nature of the schemes defines workplace dynamics such as employee motivation, performance levels, and ability to work in the same company without selling their skills to competitors. Therefore, it is essential to evaluate rewarding schemes and their overall influence on the workforce.

Evaluation of reward schemes and their organizational impacts


Reward management is an essential business component especially when working in the modern labor market. Today, employees are well informed of their options, and they have the ability to shift their loyalties to competitors. Therefore, businesses are supposed to manage their employees effectively, or they risk losing their valuable assets whose contribution is relevant for accomplishing the defined strategic objectives. Without an effective workforce, organizations have a minimal chance of success due to their lowered differentiation advantage, level of expertise, and creation of innovative solutions that are competitive in an environment whose requirements are unpredictable and highly dynamic.

The process of reward management is concerned with the development and implementation of plans with a primary objective recompensing individuals. People work according to their professional skills, and they demand additional recognition depending on their levels of performance. In other words, there should be consistency, equitable, and fair rewards in order to recognize the value of the contributions made by employees. With time, the rewarding processes generates positive outcomes to the company thus the need for ensuring that efforts are identified, and equitable compensation provided as per the quantified inputs from individual workers.

Normally, reward management is comprised of analysis and control of employee compensation, remuneration and other associated benefits towards employees. In fact, management of rewards is aimed at implementing effective and efficient structures within the organizations so that workers can have the necessary levels of compensation depending on their efforts. Most of the time, the structures consist of payment policies, practices, and administration of payrolls as part of the rewarding processes. Through these elements, the management is able to shape positive behavioral patterns among the employees so that their outcomes are aligned to the outlined objectives.

Historically, the concept of rewarding employees as per their contribution is a popular management tool due to its effectiveness. The concept emerged based on psychological and behavioral research processes where the concerned academics sought the most effective ways to develop viable behavioral patterns, as well as shaping effective workplace cultures. Due to advancements in the field of behavioral psychology, businesses have been able to develop and implement effective rewarding mechanisms as per the workplace dynamics. This can be attributed to the fact that the concept examines employee responses due to the provisions that are meant to motivate them and increase their productivity.

Due to the importance of the schemes, companies have dealt with policies, processes, and strategies that guarantee employee contribution is recognized irrespective of the magnitude and nature of the tasks. In other words, the primary objective is to ensure that workers are fairly, equitably, and consistently rewarded depending on their value in the company. In fact, the schemes exist so that the involved individuals can be motivated towards achieving specific goals that are usually defined by the administrative entities. Therefore, the process of rewarding should not only be concerned with financial benefits, but also psychological aspects that enhance workplace productivity.

Although the concept is perceived to have significant benefits to the concerned organizations, its practical application is difficult. Most of the time, companies create the schemes hoping to reward specific behavioral patterns; however, these outcomes do not occur due to some unprecedented occurrences in the working environment. This has been illustrated by DALTEX Nigeria Limited where the financial constraints forced it to redefine its functional strategies. In this case, it is essential to evaluate the dynamics associated with employee management and the expected outcomes in the face of intense competition and rivalry throughout the targeted market segments.

In order to optimize the results from the rewarding schemes, organizations are supposed to combine diverse management practices depending on the dynamics within the respective workplaces. Typically, rewards are used to serve various purposes to organizations; therefore, their utilization builds better employment deals within the industries of specialization. Thus, their utilization within the prevailing administrative structures improves the overall outcomes from the workforce irrespective of the challenging situational factors. This means that most organizations assimilate the rewarding structures with their salaries so as to modify behaviors throughout the workplace.

Irrespective of the nature of the business, corporations use two major kinds of rewards in their workplaces. The first type of the rewards includes intrinsic rewards received by employees during predefined periods throughout the financial year. This classification is further composed of other groupings of rewards so that their offering is reflective of the function being rewarded. In DALTEX, it is evident that different forms of rewards existed although they were reduced due to the challenging financial conditions. On the other hand, these forms of rewards are used depending on the intended outcomes from the employees.

As part of the intrinsic rewards, bonuses are usually offered annually to recognize employee contribution during the financial year. Normally, the companies offer satisfactory appraisals since the workers have a chance to earn more money in addition to their salaries. The bonus schemes vary depending on the organization; some have fixed rates, while others have variable systems that deal with the issues in subjective ways rather than eliminating provision of symmetric benefits. In addition to the bonuses, managers offer salary increments depending on the exhibited performance levels further creating a hardworking culture in their working environments.

Sometimes, the management is forced to offer short term benefits depending on the intended outcomes of the organizational goals. Among the short-term benefits is the provision of gifts are rewards to appreciate and recognize the achievement of specific goals with tangible elements. On the contrary, the management may decide to offer long-term benefits such as promotions that elevate specific workers to higher levels in the administrative matrix based on their recorded performance. These elevations create the notion that hard work is the defining factor for additional rewards, prestige, and recognition in the workplace thus the increased willingness to increase performance levels.

The second classification of the rewards is intrinsic. On the contrary to the extrinsic rewards, the primary objective of these rewards is to provide personal satisfaction rather than physical elements. In this classification, information is the most valuable reward that is used by managers to guide employees. Using this technique, the management is able to develop effective bonds with the workforce thus adding value to the overall contributions throughout the workplace. With effective communication and working relationships, the management has the capability to ensure that the workforce achieves the intended outcomes with the available resources using innovative solutions.

Another form of the intrinsic rewarding process is recognition and trust within the organizations. Recognition involves appreciating employee performance through verbal and other forms of communication in a formal environment. There are other forms of recognition that boost happiness and self-esteem among the employees resulting in the additional efforts towards their designated tasks. Conversely, the trust and empowerment are critical in the rewarding structures since they add value to the existing relationships. In fact, this function is essential for workplace efficiency because it is through trust that managers delegate tasks and at the same time, employees feel appreciated thus their willingness to complete their tasks successfully.

The varied forms of rewards generate different outcomes; therefore, managers are supposed to come up with effective mechanisms to apply them in the respective workplaces as per the specified requirements. In this case, intrinsic requirements increase employee satisfaction, while extrinsic rewards focus on the activities and performance aspects of employees in the organizations. Due to their different approaches, the major difficulty for the managers is to balance the rewards to shape organizational culture and behavioral patterns as required to achieve the specified objectives.

With time, these challenges have degenerated into the establishment of motivational theories, and how their application guides employees towards accomplishing specific objectives. As per the theoretical provisions, the management is supposed to develop tailor made rewarding schemes in accordance with the prevailing conditions. In the process, the management is supposed to offer the rewards according to varied parameters in the workplace. One of the basic factors for consideration is the employees’ personality and interests within and outside the workplace. For instance, employees who are sports fans get more satisfaction through provision of tickets for the next big match; these may be irrelevant for others with different interests.

The motivational theories outline that the management should be able to determine the nature of the rewards, and the individuals who as qualified for the benefits. It is of importance to identify the recipients since their selection is used to illustrate how the company recognizes and handles the process of rewarding employee contribution. In this case, it begins with the identification of the recipients whether they should be individuals or teams who have worked to accomplish their specified tasks effectively. Then, the management can select the appropriate rewards that are harmonious with the work that has been done.

If individuals are targeted, the forms of benefits may include increased base pay, benefits, incentives, and elements that reflect the applied performance and competence levels. On the other hand, teams have varied benefits and rewards as compared to their counterparts who are individuals. In the team environment, bonuses, group cooperation, profit sharing, and gain-sharing are dominant rewards that enhance teamwork. In the modern business environment, teams are inevitable thus the need for creating effective reward structures to enhance their performance levels irrespective of the constraining factors within their workplace settings.

Utilization of motivational theories plays a major role in defining organizational success in the increasingly competitive business environment. The content theory, for instance, enables the management to enumerate and analyze factors within the workplace in order to make informed decisions that reflect the dominant dynamics. Through the analysis, organizations determine the appropriate factors that can be applied to enhance workers to perform better with increased levels of efficiency. This means that this theory concentrates on the different kinds of personal traits as they are exhibited in the working environment.

Human beings have different traits and attributes; therefore, it is necessary for managers to identify their existence so that the appropriate strategies to increase performance are formulated. Poor handling of personal traits interferes with the dominant behavioral patterns in the workplace resulting into reduced performance levels. On the other hand, understanding personal traits is essential for developing plans that leverage on personal strengths while complementing their weaknesses in accordance with the specified tasks. Without the understanding, administrative matrix has the probability to develop irrelevant rewarding schemes that generate negative outcomes instead.

The content theory is focused on the provision of the extrinsic rewards: these are things that are physical, and their existence enhances employees'physical circumstances. Further, these things improve the physiological aspects of the workers by boosting their performance through provision of rewards, respect, and recognition as a way of improving job satisfaction. Therefore, the content theory is concerned on the application of the two types of rewards so as to alter the behavioral patterns into productive tendencies in spite of the dynamic and constrained factors within the working environment.

Another theory used in the design of effective reward structures is Frederick’s motivator-hygiene theory. In the theory, it is argued that employees’ dissatisfaction or satisfaction in their respective jobs is defined distinctive factors that exist at the extreme sides of the spectrum. Therefore, these factors are supposed to measure the factors separately so that their application generates the appropriate outcomes. The two sets include hygiene factors, and motivator factors since they exist in every workplace. According to Frederick, real motivation in the workplace is defined by existence and consideration of competing tasks, and the role played by the rewards is prevention of dissatisfaction.

On the other hand, the expectancy theory is used to posit the essence of behavioral patterns in organizational performance. As per the theory, people select their functional behaviors based on the desirability of the expected outcomes after some economic action has been performed to completion. In other words, the theory establishes the relationship between motivation, performance, and productivity in the highly diversified workplaces. Many organizations have used this theory to enhance their employee motivation as they anticipate quantifiable benefits from the management. The above theories with their variants have been used in countless studies in order to develop informative management practices.

The motivational theories provide theoretical basis for effective management of employees through processes that have undergone rigorous testing from the field of psychology. Needs of the employees are based on a series of known requirements and layers that are accompanied by the fundamental physiological needs. Through the theories, employers are able to suffice the rudimentary specifications that motivate people to work in the first place. Therefore, employment is recognized for the resources it brings to the employees, thus the need to use the rewards as the primary form of shaping performance structures within the complex organizations.

Through the theories, development of the employee benefits structures generates varied advantages to the organization. First, organizations are facing shortages in their workplaces especially when seeking for services from top performers, and workers with differentiated skill sets. However, the reward strategy is critical for addressing the issue of recruitment and attraction of exceptional skills, expertise, and experiences from the competitive labor market. With the appropriate rewarding schemes, the concerned organizations are able to attract the appropriate professional skills since they suffice the basic physiological needs that motivate people to work for economic benefits.

The concept of providing equitable benefits is fundamental for employee retention. The modern social environment is dynamic, and employees are seeking for alternative solutions to their economic needs even if it means leaving their current employers. In other words, employees look for the bigger picture in terms of deciding where they want to work, and their expected benefits. Therefore, if the company has implemented favorable benefits, employees are committed to the organization when performing their designated tasks. In fact, employees are known to look at the total rewards and other packages when deciding to stay or leave their employers.

This element is the one that befell DALTEX Nigeria limited the moment the management decided to eliminate the existing rewarding schemes. Due to financial constraints, the management opted to implement a cost reduction strategy with significant implications to the employee’s management specifications. In this case, more employees left the company, with no replacement since the working conditions were not favorable. Therefore, although the cost savings reduced the budgetary expenditure, the business lost in terms of employee retention and recruitment. This is a bigger loss to the organization since employees are the core elements that define the overall success or failure of the business.

Another implication of effective systems is innovation and creativity among the involved employees. As illustrated in the DALTEX case, elimination of the rewards reduces the levels of creativity due to poor motivation among the employees. With no rewards, the employees do not have anything to motivate their willingness to work in the company. However, the application of the rewards motivates workers to perform better in terms of developing innovative and creative solutions to the prevailing business challenges. This is motivated by the existence of schemes that identify, recognize, and reward the workers equitably depending on their contribution.

Rewarding has beneficial implications to businesses in terms of reduced labor costs and employee turnover. Since workers use benefits packages to decide on their possible employers, existence of equitable processes ensures that companies reduce their labor costs, as well as the resultant turnover levels. It is estimated that companies lose up to 30 percent of annual salary from the vacated position in terms of wasted man hours, recruitment costs, and lost expertise.

Conclusion


In the current business environment, rewarding schemes are essential components for enhancing performance, motivation, and production levels among the employees. The negative consequences for having poor rewarding structures are illustrated in the case of DALTEX limited where it managed to reduce costs, but lost significantly in terms of employee retention, recruitment, and development of innovative solutions. Therefore, the schemes are relevant in the modern business environment in order to attract the required talent, retain it, and recognize the overall contributions towards achieving the specified corporate objectives.

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