The purpose of this essay is to distinctively identify the effects of financial rewards on the work motivation of an organization and also whether or not this system of reward can cause an increase in the levels of work motivation already present in the organization. It furthermore aims to discuss weather Financial Rewards are the best way to increase the work motivation present. Although the essay shall primary be focused on Financial Rewards and Work Motivation, other factors that may have an effect on work motivation shall be discussed. For this purpose the understanding of work motivation shall be taken as such: The factors that are internal and external to employees that determine when he or she works, how hard he or she works and how long he or she works (Colquitt, Lepine and Wesson, 2009, pp.178-179).
Furthermore the understanding of Financial Rewards to be undertaken is : The entire Reward System which focuses on Salary, Bonuses, Incentives etc., which aims to increase the amount of effort put in by the employees to achieve their work goals and increase work motivation in the organization as a whole (Hollyforde and Whiddett, 2002, p.166). By the conclusion of this essay the need for Financial Rewards its importance and status as apparently “the best way” to increase work motivation shall understood.
There have been countless efforts over the years to understand the numerous factors and desires that determine and help to fully appreciate the intensity, quality, efficiency and reliability of the work performance of an employee. Since the eventual progress of learning and observation of the environment and factors has led to the conclusion that an employee’s performance is one of the most distinguishing factors that the organization or a business needs to cultivate in order for the organization to succeed. Work has always existed and been around in one form or another throughout our history but it is only in the recent couple of decades that we have come to understand the motivation to work or simply work motivation (Kressler, 2003, p.3). We must also take into consideration that different ways of motivation are influenced or can be influenced by the cultural context that it is applied in. People of different cultures may be motivated in different ways by the same rewards or incentives.
The System of Reward must not differ substantially from the culture it is implanted in. However we must also note that most motivational theories are biased in the sense that they are US centric and based on studies conducted on test sample populations that may reflect cultural connotations and behaviors only found in the US.(Chiang and Birtch, 2012, pp.538-541) A Theory that seems to understand the disadvantage of a system solely focused on Financial Rewards is the Cognitive Evaluation Theory by E.L. Deci in which Financial Rewards would be seen as the External locus of Control and as understood by this it lessens the intrinsic motivation of the employee or person. It is assumed that activities are likely to be sustained longer if started by being motivated by intrinsic motivation and not an extrinsic motivation (Hollyford, et al, 2002, pp.37-38).
According to the description by Kallberg and Rognes (2000) Non-financial rewards tend to have more broader aspects regarding improving performance and are focused on motivation for the long term of an organizations towards their employees. On the other hand as per Hofstede’s Topology in the category of Individualism-Collectivism explains Financial Rewards as being short-term and transactional in nature hence they are preferable for individuals who emphasize the aspects of individual contribution, individual ability and those that support that personal efforts are ultimately responsible for the job outcome. It is also suitable to people who see an increase in Financial Rewards as an attainment of Higher Status and Authority in the organization.(Chiang, et al, 2012, pp.542). Offering Non-Financial or pay benefits have been seen to have a positive effect as quoted by Francois Podeur,
“The employees prove a high degree of organization commitment, are more loyal, feel more motivated to exceed their limitations and personal growth.”(Ciorbagui-Naon, 2010, pp.44)
On the other hand as stated in Victor Vrooms Expectancy Theory in 1964 that when rewards are offered employees effort is increased and Money is almost always used as it is supposedly the most powerful and influential incentive in society and is already in fact largely used. . (Zani, Rahim, Junos, Samanol, Ahmad, Merican, Saad and Ahmad, 2011, pp.328-329) Since money is the basis or foundation of financial rewards and most Reward Systems the value of money against work motivation can be directly quoted as follows:
“Money is not everything, Many would be happy with more time off, or more job security, than more money. People are prepared to trade off things for money once they have enough or grow weary of the game.”(Furnham, 2006, p.26-27)
Furthermore several studies that have been carried out regarding the relative importance of pay or money have shown that money or pay ranks below factors such as job satisfaction, recognition, good people to work with etc., But the tendency of people to rate the things and factors which are regarded as more socially acceptable or less socially acceptable higher or lower respectively, the results of such studies could have varied or misleading results (Armstrong, 2010, p.143-144).
In Concurrence with the above, according to Deming “Pay is not a motivator” as it buys the things people want but it does not motivate you to work. There is no research that supports paying people more money will encourage them to better the work performance, especially in the long run. This is also agreed upon by Kohn (1993) and Turner (2006). But the studies also concluded that it has a slightly higher or lower effect in different industries for example as in a study by Turner(2006) conducted on factory workers and service businessmen which found little relation between performance and financial incentives in factory workers but found the opposite when the study was conducted on service businessmen. (Zani, et al, 2011, pp.330).
Although Financial Rewards are supposedly provided equally according to the Principle of Distributive Justice, this is not always so as most systems are individualistically designed that they cater towards one person’s performance on the whole and may serve to de-motivate the average and low-performance attaining employees. Furthermore according to studies by Thompson (1992b) and Marsden and Richardson (1994), financial incentives related to pay have little to no effect in increasing motivation and work performance.
Also according to these studies the effects of Financial Rewards are hard to determine as there are debatable or skeptical ways of monitoring its effectiveness and to also take into consideration the other factors that at the same time may be in effect that may affect performance and motivation such as innovation, new technology etc. Another factor that must be taken into consideration is the way Financial Reward are introduced into the organization and the principles and practices used implementing it, according to a study conducted for The Department of Employment in the UK by Bowey and Thorpe successful l outcomes are more dependent on the effectiveness of communication and Support systems rather than the pay design or financial reward provided. (Armstrong, et al, 2010, pp.147-150).
On the basis of the above information reviewed and analyzed we can conclude that while financial rewards are the most commonly used and implemented system of reward used today it is not necessarily the best way to increase work motivation on the whole, for the organization. The use of financial rewards cannot be rejected or discarded as it plays a part in motivating an individual but it must be taken into consideration that Financial Rewards work best when within the Framework of an Integrated system of reward that combines both Non-financial and Financial Rewards together. The system that might work best is a system that takes into consideration also the cultural context in which it is placed as this may have an effect on the performance of an individual due to a reward used. Also the ratio of Financial Rewards to Non-Financial Rewards affectedness is dependent on the industry or sector it is situated in.
Armstrong, M. (2010). Armstrong’s Handbook of reward Management Practice Improving Performance through Rewards. 3rd ed. London: Kogan Page Limited. pp.143-144. Armstrong, M. (2010). Armstrong’s Handbook of reward Management Practice Improving Performance through Rewards. 3rd ed. London: Kogan Page Limited. pp.147-150. Chiang, F.F.T. and Birtch, T.A. (2012). The Performance
Implications of Financial and Non-Financial Rewards: An Asian Nordic Comparison. Journal of Management Studies. Vol.49, No.3, pp.538-541 Chiang, F.F.T. and Birtch, T.A. (2012). The Performance Implications of Financial and Non-Financial Rewards: An Asian Nordic Comparison. Journal of Management Studies. Vol.49, No.3, pp.542 Ciorbagui-Naon, R. (2010). Modalities of Non-Financial Motivation of Employees Within Organisations. Annals of the University of Petrosani Economics. Vol.10, No.4, pp.44. Colquitt, J., Lepine, J. and Wesson, M. (2009). Organizational Behavior Improving Performance and Commitment in the Workplace. 2nd ed. New York: McGraw-Hill/ Irwin. pp.178-179. Furnham, A. (2006). Pouring Money Down the Drain?. British Journal of Administrative Management. Vol.53, Issue.2, pp.26-27. Kressler, H. (2003). Motivate and reward Performance Appraisal and Incentive Systems for business Success. Hampshire: Palgrave Macmillan. pp.3 Hollyford, S and Whiddett, S. (2002). The Motivation Handbook. London: CIPD House. pp.37-38. Hollyforde, S. and Whiddett, S. (2002). The Motivation Handbook. London: CIPD House. pp.166. Zani, R. Md., Rahim, N. A., Junos, S., Samanol, S., Ahmad, S. S., Merican, F. M. I., Saad, S. M. and Ahmad, I. N. (2011). Comparing the Impact of Financial and Non-Financial Rewards Towards Organizational Motivation. Interdisciplinary Journal of Contemporary Research in Business. Vol.3, No.4, pp.328-329. Zani, R. Md., Rahim, N. A., Junos, S., Samanol, S., Ahmad, S. S., Merican, F. M. I., Saad, S. M. and Ahmad, I. N. (2011). Comparing the Impact of Financial and Non-Financial Rewards Towards Organizational Motivation. Interdisciplinary Journal of Contemporary Research in Business. Vol.3, No.4, pp.330.
Courtney from Study Moose
Hi there, would you like to get such a paper? How about receiving a customized one? Check it out https://goo.gl/3TYhaX