According to Armstrong, a reward system is a combination of policies and processes used by an organization for paying its employees in accordance to their contribution, competence and skill and what they are worth. A reward is something that reinforces, maintains as well as improves an employee’s behaviour. According to Robins and Judge 2013, job satisfaction is a feeling about a situation and its different aspects that result from evaluation of its characteristics. It is the extent to which individuals like or dislike their job. Satisfaction in the workplace can be influenced by several factors among them; the work itself, pay, supervision, opportunities for growth, relationship with core workers, etc. (Al-shaibah, 2015).
Employees are motivated by extrinsic motives. If employees focus on their work itself, they are likely to be driven. A precise match between the task and interest and skill leads to better performance and satisfaction. Focusing on the extrinsic motives enhances an employee learning process, intellectual curiosity and having fun. Employees who are emotionally stable, agreeable, extroverted and conscientious are more likely to enjoy their jobs (Chamorro-Premuzic, 2013).
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Different theories have been developed to explain employee motivation. Among the most commonly mentioned principles are the Maslow's Needs theory and Expectancy theory. Maslow identified five needs that affect each person. These are; physiological, security, affiliation, esteem and self-actualization. The needs of an employee can be linked to the model. An employee is motivated if they achieve the need at each level and would look forward to moving to a higher demand level. The expectancy theory, on the other hand, assumes that individual believe in the relationship between effort and reward. According to the theory, people are motivated if they think that more effort contributes to the right performances that lead to the desired rewards (Fowler, 2014).
There is more to reward than just money. A reward system should take into account recruitment, retention and influence behavior. It should conceive a work existence that exceeds employee’s needs and motivate them to contribute additional effort. The system should focus on a broad range of issues. Similarly, money should be spent where it is useful in addressing the shifting values of employees (Armstrong, 2010).
Motivation and performance are enhanced most by creating a challenging, fun and empowered work environment where employees can utilize their abilities to carry out activities for which they are appreciated. Creating such an environment is an uphill task and requires more time than just resulting in rewarding (Armstrong, 2010).
An organization should develop a total reward system that will have a larger impact on the employees. Such a system will enhance the relationship in the work environment while remaining flexible to meet individual needs. It can be useful in attracting and retaining employees by delivering a positive psychological contract (Armstrong, 2010).
Different models of total reward have been developed. They provide a framework for developing a composite of awards by selecting financial and non-financial elements and at times showing how they relate to each other. The models provide a basis for a whole reward policy and communication with the employees (Armstrong, 2010).
Towers and Perin model can be used to develop a reward system that leads to job satisfaction. The model has four quadrants where the upper two pay and benefits represent tangible rewards. They are financial in nature and used to recruit a potential employee. The pay quadrant includes base and contingent pay, cash bonuses, long-term incentives, shares and profit sharing. Benefits incorporate pensions, holidays, healthcare, other perks and flexibility (Armstrong, 2010).
The lower quadrants represent nonfinancial rewards which can create human capital and process advantage. They enhance the values of the pay and benefit quadrants. The components include training, on the job learning and performance management all falling in the third quadrant. Lastly, organizational culture, leadership, and communication complete the model. A combination of transactional/tangible rewards with relational/intangible rewards leads to job satisfaction (Armstrong, 2010).
An exciting/challenging job is rated the highest retention factor for all genders in every industry. Other factors are being recognized, having a supportive boss, fair pay, career growth, learning and development, organizational culture, working with great people, etc. It is the responsibility of the management to develop a mix that ensures job satisfaction hence leading to retention.
References
Al-shaibah, M. (2015). Reward System and Job Satisfaction: A Conceptual Review. Global Advanced Research Journal of Management and Business Studies, 4 (4), 137-141. Retrieved April 30, 2017
Armstrong, M. (2010). Armstrong's Handbook of Reward Management Practice: Improving Performance Through Reward (3rd ed.). Kogan Page
Chamorro-Premuzic, T. (2014, August 07). Does Money Really Affect Motivation? A Review of the Research. Harvard Business Review Retrieved April 29, 2017,
Fowler, S. (2014, November 26). What Maslow's Hierarchy Won't Tell You About Motivation. Harvard Business Review. Retrieved April 30, 2017
Robbins SP, Judge TA (2013). Organizational Behavior. 15th ed. England: Pearson Education Limited.
