The Role Of Financial Rewards In Motivating And Building Relationships With Employees

Using Organizational Behavior Theories to Increase Employee Productivity

In today’s competitive business world, the importance of highly productive and motivated employees has grown substantially. The competition in industries is considerably high, and organisations focus on gaining a competitive advantage in order to sustain their future growth in the market. As per Li and Cai (2012), the top-level management of companies implements various organisational behaviour theories in order to increase the productivity of employees and motivate them. It is referred to the study of individuals and groups behaviour who are working in an organisation. The organisational behaviour theories enable the management to evaluate the key aspects which include the job satisfaction of employees and such information allow them to enact business strategies which are focused on improving their overall performance. Motivated employees are highly productive, and they work towards achieving organisational objectives. The human resource department of corporations provides both monetary and non-monetary rewards to their employees in order to motivate them to work at their highest capacity which benefits the company. Monetary and other financial rewards assist the HR managers in building strong relationships with employees which result in increasing their job satisfaction level (Miner, 2015). This essay will focus on the role of monetary rewards while building relationships with employees. This essay will evaluate a number of organisational behaviour theories to understand how financial rewards can enable corporations to motive their workforce. Furthermore, pros and cons of monetary rewards will be discussed in the report by evaluating various organisational behaviour theories.

Motivating employees is a vital step in every organisation because a motivated workforce means highly productive staff members who work towards achieving corporate objectives. In order to motivate employees, the management is required to understand what motivates their employees. According to Miner (2015), they have to develop programs which are focused towards both motivating and retaining talented employees. In this context, the hierarchy of needs theory assists the management. The theory is developed by Abraham Maslow which divides employee needs into five categories which include physiological, safety, belonging, esteem and self-actualisation. Maslow provided that in order to motivate employees, the management is required to assess and fulfil their needs which increase their job satisfaction level and motivate them to perform better. Lower level employees have physiological and safety needs which can be fulfilled by extrinsic rewards such as money increase in salary, bonus, fringe benefits, and others (Ozguner and Ozguner, 2014). On the other hand, mid-level and top-level employees are motivated by intrinsic rewards such as sense of achievement, recognition, works of praise, work freedom and others. Money is the most obvious and effective way of motivating employees. Well paid employees are satisfied with their job, and they have a positive relationship with their management. Many organisations also introduce performance-based monetary rewards to motivate their employees to perform better to achieve more rewards (Taormina and Geo, 2013).

Along with the development of countries, the living conditions of people have improved as well. Studies have shown that although money is the easiest way of motivating employees, however, it is effective in a short run. Generally, in the long run, employees look for factors such as positive working environment and job satisfaction rather than high income. ‘Two factors theory’ or ‘Motivation-Hygiene theory’ was developed by Frederick Herzberg. The theory provides that job satisfaction is affected by motivators and dissatisfaction with hygiene factors (Ali, 2013). It provides that the reasons for job dissatisfaction include factors such as working conditions, salary, co-worker relationship, policies and rules. On the other hand, job satisfaction is affected by recognition, achievement, responsibility, personal growth and others. Herzberg argued that improving the satisfier factors result in increasing job satisfaction, whereas, improvement in hygiene factors decreases job dissatisfaction. Based on this theory, it can be concluded that lack of monetary rewards or basic pay results in dissatisfying employees (Pegler, 2012). However, satisfier factors contribute to increasing the job satisfaction of employees. Both these factors play crucial role in motivating employees and retaining them in the organisation, but, it shows that monetary rewards are not enough to motivate and retain talented employees.

The Hierarchy of Needs Theory and Extrinsic Rewards

While using monetary rewards, there are a number of benefits received by corporations. Firstly, they are the fundamental part of an employer-employee relationship. The first step in attracting talented employees is paying them the highest salary package than competitors. People have basic needs which are fulfilled by money, thus, it is a good way of motivate employees to the company (Park and Ryoo, 2013). Furthermore, well-paid employees are happy with their organisational, and they have a strong bond with the management. They understand that the management knows their worth; therefore, they are well paid. It creates a strong bond between employees and the management which is crucial for them motivation. Studies have shown that performance-based rewards are good way to motivate employees to perform better and achieve their targets. When employees are paid monetary rewards based on their performance, then they are more likely to be motivated to improve their performance (Latham, 2012). Furthermore, monetary schemes are easy to understand by employees, therefore, when the management wanted to achieve a target then they are more likely to offer a financial reward to employees. It is also a universal reward and employees can choose how they wanted to spend it. It also appeals to all levels of staff which include administrator to the CEO.

Along with various benefits of monetary rewards, there are various disadvantages as well. It is a common saying that “Money cannot buy all happiness”. Similarly, not all people are motivated by money, especially talented employees. It is easy for talented employees to get high paying jobs in the industry, thus, they focus on other factors such as working environment, corporate culture, co-workers relationship, employee-centric regulations and others (Cho and Perry, 2012). Monetary rewards are ineffective in the long-term benefit. Employees did not prefer to work in a hostile environment even if they are getting well paid. Moreover, in a hostile environment, it is difficult to motivate employees even by monetary rewards. On the contrary, financial incentives can have unexpected consequences which establish a risk-taking culture in the company in which employees do whatever to achieve their targets. It creates biases between employees which lead to discrimination between employees. It is more likely to increase the retention rate at the corporation which affects the productivity of the company (Ifinedo 2012). Furthermore, it is difficult for the management to sustain participant interest by using financial incentive schemes over the long term. Generally, people get frustrated by working continuously for money, and they are more likely to focus on factors such as strong relationship, supporting culture, positive environment and others.

Based on the above analysis, it can be seen that there are both negative and positive influence of monetary rewards on employee motivation. In order to effectively use monetary rewards, it is recommended that managers should use organisational behaviour theories. For example, expectancy theory of motivation was given by Vroom which provides that employees’ motivation depends on the fact which outcome would be like (Renko, Kroeck and Bullough, 2012). If employees like the outcome, then they are more likely to put extra efforts in order to achieve the desired results. Similarly, rather than establishing a monetary scheme for the entire organisations, the managers should evaluate the needs of employees working at different levels. Generally, needs of high-level employees are different from requirements of low-level employees. Based on expectation theory, the managers can provide either monetary or non-monetary rewards to employees based on the expectations of employees (Nasri and Charfeddine, 2012). Furthermore, continuous development and change in the reward policy are necessary because employees did not get motivated by those needs which are already fulfilled (Yidong and Xinxin, 2013). Thus, use of organisational behaviour theories and evaluation of employees needs is necessary to use monetary rewards in the organisation effectively.

In conclusion, organisational behaviour theories are crucial for a corporation since it assists in motivating and retaining talented employees. The management can use these theories to evaluate the needs of employees in order to implement policies which are focused towards motivating them. Monetary and other financial rewards are an effective way of motivating employees and building strong relationship with them. However, as provided by various organisational behaviour theories, they are effective for short-term targets. The benefits of monetary rewards include a strong relationship with employees, easy to understand, effective from both low to high-level management and universally applicable. On the other hand, its disadvantages include lack of job satisfaction, encourage risk-taking culture, not suitable for all employees, hostile working environment, increased retention rates and effective for short-term targets. By using organisational behaviour theories, the management can establish monetary rewards strategies which assist in fulfilling employees’ needs and motivating them to achieve organisational goals. Effective use of both monetary and non-monetary rewards leads to creating a positive workforce environment which assists in sustaining future growth of a company.

References

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