Rewarding employees because of their performance and behaviors is one of the strategies that many organizations are using to motivate and improve the performance of workers. However, many employers have never imagined that rewarding employees or providing them with incentives are linked to some risks. The rewards or incentives are never linked to negative consequences. Unfortunately, contrary to what many people think, any compensation or program is associated with at least one risk, which may result in a negative impact on the organization. Hence, employers should do risks analysis before implementing any form of compensation.
The first idea is rewarding employees with cash incentives. Studies have consistently shown that cash or monetary incentives motivate employees, resulting in improved performance and productivity. At the same time, financial incentives are linked to increased profitability in a company. Nevertheless, there are many risks that an organization may encounter when it implements cash incentives in the workplace, especially when it is based on the performance (Kesner, Tays & Kwech, 2017). For instance, rewarding employees with cash incentives because quality customer services may end up affecting customer satisfaction. To get cash incentives, an employee may decide to only address the concerns of customers with the history of high satisfaction score while ignoring with those with low satisfaction score. Consequently, an organization may end up with a declining quality of customer services. Besides, by providing cash incentives to employees who handle many within a given period, an employee may handle many calls without actually solving any issue affecting the customer, which ends up affecting the quality of customer services. Thus, cash incentives are linked to the risks of reduced quality of customer services that may negatively affect the performance of an organization.
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Also, rewarding employees with cash incentives can discourage some employees from working harder or achieving the set goals and objectives. An employee who misses the cash incentives for just barely missing the target may be discouraged from working harder after knowing that the effort will not be rewarded. Hence, Cash incentives can work as a de-motivating factor in the workplace if not appropriately implemented (Kesner, Tays & Kwech, 2017). Also, cash entitlement cannot lead to any motivation if employees start to feel that it is an entitlement, leading to unnecessary waste of financial resources.
The second idea is rewarding employees through promotions. The major risk of rewarding employee through promotions is enhanced unhealthy competition between workers. Even though employee competition can motivate some employees and leads to improved performance, it is also linked to some problems that can affect individuals and the organization at large. Employees who feel that they are lagging and cannot catch up with high-performing colleagues may resort on undesirable behaviors such as fraud and lying to customers ( Steinhage, Cable & Wardley, 2017) . Stiff employee competing can also trigger excess anxiety, which may end up affecting the health of employees.
Rewarding employee through promotions can also result in some risks that are associated with cultural diversity. Employees in a collectivist culture, especially in Asian countries believe in teamwork and collaboration to achieve the set goals and objectives Gunkel, Schlaegel & Taras, 2016) . Therefore, by rewarding employees through promotions, a company may end up affecting the spirit of teamwork within the workplace because some workers will feel that their efforts are not being recognized. Other employees may also feel the company is engaging in unfair promotion practices. Rewarding employees through promotions may not work in countries like Asia where teamwork is highly valued. As a result, to motivate employees in a collectivist culture, the company should provide group incentives instead of individual rewarding of employees.
The final idea is rewarding employees because they have stayed long in the company. Rewarding long-term employees can help in reducing turnover in the company. Turnover always increases the cost of business operations, and many companies strive to reduce their recruitment expenses ( Steinhage, Cable & Wardley, 2017) . However, such a rewarding technique is linked to some risks. First, it can reduce performance because some employees will stay put as they wait to be rewarded. Employees will stay for long because they are comfortable but not because they are productive. Secondly, a company faces the risks of reduced creativity when it rewards loyal employees. Long-term employees always run out of ideas, leading to reduce creativity and innovation.
Therefore, every employee rewarding program has some risks. To mitigate the risks, employers should conduct a comprehensive risks analysis and formulate strategies to counter them in case they occur. Organizations should not always assume that all employee reward and incentive programs are effective and help in motivating workers. Nonetheless, the risks should not discourage companies from rewarding and providing incentives to employees. Employee motivation is essential and should never be overlooked. Importantly, the motivation technique should have more benefits than the potential risks. Thus, because every motivation program is linked to some risks, the organization should always evaluate or assess the effectiveness of such programs as frequently as possible to mitigate their negative impact on employees and the firm.
References
Gunkel, M., Schlaegel, C., & Taras, V. (2016). Cultural values, emotional intelligence, and conflict handling styles: A global study. Journal of World Business , 51 (4), 568-585.
Kesner, M., Tays, T. & Kwech, J. (2017, June 23). Assessing risk in incentive compensation plans. Retrieved from https://deloitte.wsj.com/cfo/2017/06/23/assessing-risk-in- incentive-compensation-plans/
Steinhage, A., Cable, D. & Wardley, D. (2017). The pros and cons of competition among employees . Retrieved from https://hbr.org/2017/03/the-pros-and-cons-of- competition-among-employees
