Introduction
Human resource managers create different platforms for employees to achieve their set job descriptions in a competitive space successfully. To achieve this, most organizations should operate in a business space that offers a dynamic and competitive environment in a strategic and skilled manner. Different approaches such as monitoring and evaluation, reward and recognition approach, goal-setting approach, and job design approach are a few of many different strategies used to achieve employee performance. Similarly, employee-employer relationships, job security, and training and development act as guidelines for the different procedures used in rewarding employees and the impact on employee performance. These reward systems may be subdivided into intrinsic and extrinsic rewards. This paper seeks to propose different reward systems and their impact on employee performance.
Intrinsic and Extrinsic Reward Systems
Motivation is defined as a set of processes that are crucial in encouraging positive employee behavior and direct this behavior towards achieving organizational goals. Satisfied employees feel valued within their different organizational levels and are encouraged to work harder and effectively on the condition that their concerns and wellbeing are well accounted for by their employers. Employees also value their career and the level of self-development that their various job roles impact on them (Lepper & Greene, 2015). Effective employee engagement is key in organizational performance, with motivation being the key across all levels. Work experience and employee engagement are related to positive results in terms of client satisfaction and operational profits. Therefore, incentive programs are crucial in ensuring that employees enjoy their value in terms of tangible services and benefits that come as a package in their agreed work contract. These reward mechanisms are divided into two categories; namely, intrinsic and extrinsic rewards. Extrinsic rewards are tangible or financial, and in most cases include promotions, increased wages, and bonuses. Intrinsic rewards, on the other hand, refer to psychological reward systems that are channeled by an employee (Legault, 2016). This in mind, a reward may be defined as a token of appreciation from an employer to an employee for their services rendered within the organization.
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Well-designed reward systems act as a motivational factor for employees, channeling a positive reaction in the form of increased work efficiency as well as improved emotional advances towards their different roles. It also boosts creativity, which in turn leads to increased productivity.
Intrinsic Rewards
Intrinsic rewards tend to be non-physical, in that they are not visible neither are they tangible, but directly relate to the employees. They bring a sense of contentment upon completion of an assigned task. These rewards tend to be directly related to work efficiently as a result of completing an assigned task. The higher the rate of work efficiency, the higher the level of intrinsic rewards one is accorded (Kuvaas, Buch, Weibel, Dysvik, & Nerstad, 2017). Different organizations adopt different mechanisms such as; positive feedback, empowerment, and recognition.
Feedback
Positive feedback significantly outlines an employee’s success rate depending on their level of achievement. This is important, especially in offering guidance towards achieving more. Feedback may be good or bad, depending on the capability of the employee. It is important as it creates a bond between an employer and an employee.
Recognition
Recognition identifies an employee’s performance through verbal appreciation. Employers normally adapt this mechanism in either an informal or formal setting. It is at this juncture that employees receive appreciation for the work well done. This tends to boost self-esteem amongst the employees, which in turn leads to organizational satisfaction as well as transparent communication channels (Lepper & Greene, 2015). Significantly, this improves decision-making strategies amongst employees, especially as they go about their work schedules. Recognition may be through an act of praise in the presence of other employees or privately. It is known to boost healthy competition amongst employees as well.
Empowerment and Trust
Employee empowerment in any organization builds on trust, which has proven to be an effective value, especially in employer-employee relations. Trust is important in ensuring work effectiveness in any organization. It also gives a sense of responsibility, such that managers can successfully task their staff with broader responsibilities, which often lead to career development and organizational behavior change (Legault, 2016). This reward mechanism is particularly important as it adds problem-solving skills to an employee’s skill set, such that they can handle different situations in a structured and well-guided manner. The aspect of collaboration becomes clear within this aspect, improving communication channels as well.
Extrinsic Rewards
Extrinsic rewards tend to be tangible and mostly come from employers. They are well designed to have an emotional impact on employees, as they are perceived to be of high value. Such rewards are directly affected by work effectiveness, which is used as a merit in the rewarding mechanism. However, the reward is guided by company guidelines, meaning that not every profit made or successful project would lead to an employee being rewarded. This makes it important for the employees to ensure they surpass their previous achievements, such that they can be awarded (Kuvaas, Buch, Weibel, Dysvik, & Nerstad, 2017). In most instances, a company may choose to award all its employees, especially if they achieved their set milestones, or reward an individual for effective work coordination and efficiency. Extrinsic rewards may be in the form of increased pay, bonuses or commissions, improved working conditions, fringe benefits, profit sharing, and promotions.
Improved Payment Schemes
Organizations may choose to redesign an improved payment plan that focuses on appreciating the value of an employee for contributing through their efforts or their input in achieving set organizational milestones. This acts as a motivational driver, spearheaded by job satisfaction.
Bonuses
Efficient productivity leads to increased profits; a factor is driven by the passion of a group of employees or an individual within the organization. As such, it is crucial for employers to appreciate their employees by sharing these profits with them in the form of additional payment, a commission, or a bonus (Lepper & Greene, 2015). The rates can be predetermined by the number of employees in the company and do not necessarily have to happen in the month the profits were achieved. It is mainly determined by the guidelines set within the organization. Such a reward receives high recognition and is deemed to be of more value to the employees.
Fringe Benefits
Fringe benefits include an extra package that normally comes as part of the salary package. This could be in the form of life/medical insurance, pension plans, company cars, or even employee discount systems.
Improved Work Conditions
Improved working conditions are necessary, especially since employees spend a lot of their time in their different places of work (Legault, 2016). As such, employers need to ensure that the workspace accommodates employee needs, such as advanced technology, ample working space, and a sound environment that provides a serene workspace for all employees.
Promotions
Promotions are given to employees who genuinely work hard to ensure efficiency and teamwork at all times. These individuals usually show exemplary organizational skills that tend to create a positive rapport for the organization. Their promotion would involve assigning new tasks and responsibilities that lead to an increment in power, status, and payment.
Conclusion
As part of employee appreciation, human resource managers may choose to adapt to different recommendations that would show their value to the organization. This could be in the form of proper compensation plans, non-monetary reward schemes, promotions, and other benefits. However, organizations must be cautious of the rising fake needs that their employees may raise, as it may negatively impact work efficiency. There should be constant monitoring and evaluation of all employees to ensure that efficiency is maintained at all times. It is advisable to adopt either intrinsic or extrinsic reward mechanisms, especially since different individuals operate at different work speeds. This would encourage healthy competition amongst the staff, allowing them to exploit their full potential.
References
Kuvaas, B., Buch, R., Weibel, A., Dysvik, A., & Nerstad, C. G. (2017). Do intrinsic and extrinsic motivation relate differently to employee outcomes?. Journal of Economic Psychology , 61 , 244-258.
Legault, L. (2016). Intrinsic and extrinsic motivation. Encyclopedia of personality and individual differences , 1-4.
Lepper, M. R., & Greene, D. (Eds.). (2015). The hidden costs of reward: New perspectives on the psychology of human motivation . Psychology Press.
