The Effect of Reward Systems on Employee Performance in C.F.C Buea
Department: Management
No of Pages: 55
Project Code: MGT5
References: Yes
Cost: 5,000XAF Cameroonian
: $15 for International students
ABSTRACT
This
research work focuses on the effect of reward systems on employee performance
in the modern work environment and how satisfaction with rewards can lead to
higher performance and better job satisfaction.
Based
on a critical review of published literature, it is clear how important the
right combination of rewards is to the performance of an organisation.
Employees should always be aware of the relationship between their level of
performance and how they are rewarded for that performance.
This
project will examine how different types of reward systems affect that
performance and attempt to establish which type of reward systems are more
beneficial to the company in question and in the current business climate it
operates in. How can performance be
enhanced and the required business outcomes accomplished?
How
can reward systems contribute to this performance and outcomes? These issues
will be addressed in the context of best international practice regarding
reward structures and from primary data collection.
This
research was conducted at operational managerial level. Considering how many
employees report into this level, this is where I believe both employee and
employer interact the most regarding rewards, motivation and how that affects
performance.
CHAPTER ONE
INTRODUCTION
1.1 Background of the
Study
Today’s
organisations are operating in a very dynamic and highly competitive
environment. To remain relevant in the market, they have to be able to respond
quickly to ever changing customers’ demands.
Reward management is one of the ways used by
organisations for attracting and retaining suitable employees as well as
facilitating them to improve their performance. The management has established
rewards in their organisations in pursuit of increasing performance so as to
ensure quality service.
Employees’
rewards refer to “all forms of pay and rewards received by employees for their
performance. This study therefore is aimed at determining the effect of rewards
on employee’s performance.
Reward management is one of the strategies
used by human resource managers to attract and retain suitable employees as
well as facilitate them to improve their performance through motivation and to
comply with employment legislation and regulations.
As
a result of these pressures, to design reward structures that facilitate the
organisation’s strategic goals and the goals of individual employees. Reward
systems are very crucial for an organsation (Maund, 2001). Rewards include
systems, programs and practice that influence the actions of people. The
purpose of reward systems is to provide a systematic way to deliver positive
consequences.
The
fundamental purpose is to provide positive consequences for contributions to
desired performance (Wilson, 2003). Establishing this balance is one of the
main reasons of rewarding employees. Organizations that follow this approach to
create this balance focus on the two main components of a reward system which
are Intrinsic and Extrinsic rewards.
That
is: compensations, benefits, appreciation and recognitions. Studies that have
been conducted in the topic indicate that the most common problem in
organisations today is that they miss the important component of reward, which
is the low-cost, high-return ingredient to a well-balanced reward system
(Pratheepkanth, 2011).
A
key focus on recognition is to make employees feel appreciated and valued.
Research has proven that employees who get recognised tend to have higher
self-esteem, more confidence, more willingness to take on new challenges and
more eagerness to be innovative (Pratheepkanth, 2011).
Reward
system is an important tool that management can use to channel employees
motivation in desired ways. In other words, reward systems seek to attract
people to join the organization, to keep coming to work and motivate them to
perform to high levels.
The
reward system consists of all organisational components including people,
processes, rules and decision making activities involved in the allocation of
compensations and benefits to employees in exchange for their contribution to
the organisation.
In
order for an organisation to meet its obligations to shareholders, employees
and society, its top management must develop a relationship between the
organisation and the employees that will fulfill the continually changing needs
of both parties.
At
a minimum, the organisation expects employees to perform reliably the tasks
assigned to them and at the standards set for them and to follow the rules that
have been established to govern the work place. Management often expects more:
that employees take initiative, supervise themselves, continue to learn new
skills and be responsive to business needs.
At
a minimum, the employees expect the organisations to provide fair pay, safe
working conditions and fair treatment. Like management, employees often expect
more depending on the strength of their needs for security, status,
involvement, challenges, power and responsibility. For organisations to address
these expectations, an understanding of employees reward systems (motivation)
is required.
Mills
and al. (1984), defines motivations as “a set of processes concerned with the
force that energises behaviour and direct it towards attaining some goals”.
Kreither and Kinicki (1992) postulate that motivation represents “those
psychological processes that cause the arousal, direction and persistence of
voluntary actions that are goal directed”.
If
it is the goal of the managers to successfully guide employees towards
accomplishing their goals, that is organisational objectives, it is imperative
that they understand these psychological processes.
Schermerhorn and al. (1991) conceptualised motivation as based on content and process approaches. The content theories of motivation emphasize the reasons for motivated behaviour and what causes it.
These theories specify that the
correlates of motivated behavior that is, states, feelings or attitudes
associated with motivated behaviour helps to represent psychological
deficiencies that an individual feels some compulsion to eliminate.
Establishing
this balance and meeting these needs is one of the first reasons according to
Deeprose (1994) to reward and recognise employees. Formal reward programs which
denote financial rewards such as salaries, cash bonus, fringe benefits,
bonuses, promotions or share options play a significant role but employees
accept these as intrinsic factors for the job.
Every company needs a strategic reward system
for employees that address these four areas: compensation, benefits,
recognitions and appreciation. The problem with reward systems is that many
businesses today are missing one or more of these elements (usually recognition
or appreciation) and the elements that are addressed are not properly aligned
with the company’s corporate strategies.
From
the above views, it can be thought of that rewarding employees (motivation) is
of a greater value to the employee’s behaviour toward performance (work). It is
therefore necessary that the management of organisations have this at the back
of their mind during planning.
1.2 Statement of the
Problem
Reward
management is one of the strategies used in organisations to improve employee
performance. It is therefore important to find out what motivates its employees
so that it can plan a suitable reward system and gain better results.
In
viewing the increase in productivity in the work today, which has resulted in
economic growth, most African countries like Cameroon for instance have
witnessed a consistent drop in their productivity. This is due to the lack of
some of the reward systems by some of the organisations to reward their
employees.
This
study is therefore intended to analyse the effect of intrinsic and extrinsic
rewards on employees performance. (CFC BUEA) which will later lead to
efficiency and effectiveness.
More
specifically, this study also aims at finding out which element of the reward
systems functions well and which element could be further developed and
improved in order to increase employees satisfaction.
The
driving force behind these studies is to enable employees of CFC BUEA to give
feedback on their work motivation and their attributes towards the reward
systems and perhaps increase the commitment to the organisation. Based on this
information, this research is therefore structured to provide answers to the
following questions.
The
main research question is;
- To what extent do reward systems affect employee performance at CFC?
The
specific research questions are:
- Which are the most important rewards that motivate employees at CFC?
- How can the reward system be improved to enhance performance at CFC?
1.3 Objective of the
Study
- The main objective of this study is to investigate the effects of reward systems on employee performance.
More specifically, the research sets out;
- To examine the effects of promotion on the performance of employees in CFC.
- To examine the effects of compensation on the performance of the employees in CFC.
- To identify the most important rewards that motivate employees at CFC
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