Effective Reward Management Is Critical To Organizational Performance

1829 words - 7 pages

Effective reward management is critical to organisational performance

Being rewarded and recognised for their work or contribution is what keeps an employee motivated to work towards achieving the organisational as well as personal goals. When the employees is motivated by rewards, they will have job satisfaction consequently increasing the productivity of the organisation. It necessitates the need of managers to pay more attention in understanding their employees and come up with suitable types of reward systems for the organisation so that the employees are intrinsically and extrinsically motivated all the time. The hypotheses that I put forward here is to support this statement that effective reward management is critical to organisational performance as it helps in enhancing operational efficacy and in turn production output.

Allen, Takeda, White, & Helms (2004) state that reward practices play an important role in motivating employees and some reward practices are more effective than others in influencing performance. Most researchers agree that reward practices logically serve as motivators in shaping the behavior of employees and motivating them to perform at higher levels, and the use of proper rewards can culminate in improved firm performance at the organisational level. Consequently, they also add that that it is important for managers and human resource professionals to carefully consider national cultural values when designing a rewards system to fit their organisations as some reward practices may be universally effective regardless of culture, whereas others may be culturally sensitive. They accentuate the importance of managers’ selecting reward practices both associated with superior organisational performance and compatible with the cultural and organisational context (Allen, Takeda, White, & Helms, 2004). Forrest (as cited in Donovan, 2008) says that before putting any motivation programme together, an employer should profile the target audience in terms of age, gender & interests and should also ensure that the rewards it offers will appeal to any individual.

As cited in Zhou, Zhang & Montoro-Sa ́nchez (2011) reward management is a key function in HRM systems in modern enterprises, playing an important role in attracting, retaining and motivating employees (Milkovich and Newman, 2004). Furthermore, Schuler and Jackson (as cited in Esteves & Caetano, 2010) state that the focal point of success of companies today is centered on the effective use of human resources.

In today’s knowledge-based economy, innovation has become the principal source of competitive advantages in global business; the success of firms now depends more on their intelligence capability – such as employee creativity – than traditional material assets (Amabile et al., as cited in Zhou, Zhang & Montoro-Sa ́nchez, 2011). The creative capability of individual and collective knowledge workers is the fuel that powers innovation in firms. While...

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