Reward Systems
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Rewards are what employees receive for performing well. Sometimes these rewards come from the organisation in the form of money, recognition and promotions. Rewards can also consist of feelings from having performed well in work. It can be said that rewards are very powerful motivators of performance.

Organisations need various types of performance from their employees. They need them to become active members of the organisation, they need them to do their job as it has been defined and they need their employees to improve their performance. In order to achieve improvements in performance different reward systems must be applied.

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These rewards in organisations help employees to be more committed and motivated to their job and working environment:

  • System rewards are automatically given to all employees for merely being members of their organisation. System rewards can be defined as being the basic wage rates. 

  • Individual rewards are given to employees based on the quality and quantity of their performance. Performance related pay (PRP) is seen as an individual reward policy, where pay is rewarded in relation to the volume of output. PRP can cause divisions amongst workers, where employees become more worried about the fact that their colleagues are being paid more than them.  (Please click the link to our PRP section at the bottom of this page).

  • Growth rewards are received by employees for job innovation, learning and improvement. 

The key to managing performance through rewards is linking the desired performance with the appropriate reward.

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In an ever more competitive environment, the aim of organisations must now be to focus on increasing the added value of their employees. This is achieved, by encouraging employees to increase their effort and performance higher than the average standards. This has been carried out using employee appraisals and motivational methods. 

Employers have become increasingly aware of the rich potential for good constructive ideas that exist from the employees on the job experiences. One method for using this knowledge is through suggestion schemes, these are becoming highly recognised, as they allow for improvements in all areas of work. These schemes are very flexible and can be readily adapted to meet all kinds of working conditions. Suggestion schemes can be seen as a means of increasing profit and worker participation. 

Suggestion schemes aim to improve employee attitudes by directing their attention to the positive and progressive aspects of their jobs. This helps to boost employee morale and increase job satisfaction. It can be identified that if an employee is unhappy in his/her job it reflects on a negative attitude on his/her performance and also with other people.

Experience in many companies has shown low employee morale reflects on low productivity and increasing costly errors. Suggestion schemes play a useful role in increasing and maintaining morale.

Another method which is not related to pay is the performance appraisal system. This method is used as a means of raising individual performance and identifying development needs. Appraisal systems today are becoming part of the management culture, where managers feel it necessary to appraise and be appraised.

Self Rating, this is a form of appraisal where the employee takes a look at themselves, avoiding any negative feedback from traditional appraisals. Self rating is an effective way of trying to get the employee to look at what their roles are in relation to business needs.

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It is fair to state that employees are not motivated by money alone. Paying different wage rates to employees doing the same jobs can cause more problems than benefits.

There are other incentives to reward employees, other than financial such as appraisals. Appraisals can prove to be an effective means for looking at human resources, as they allow us to:

  • Ensure that the abilities and energies of individuals are being used effectively.

  • Allow employers to identify better uses of individuals talents and experience.

  • Training needs can also be identified.

  • Future decision making as data of abilities can be kept on file for future reference.

Other examples of incentives/motivators include:

  • Team briefings - Management tell sub-ordinates what needs to be achieved, this opens up the lines of communication, and makes everyone aware of what needs to be done.

  • Team buildings - Employees are taken on outings to pursue some systematic group exercises led by a trainer or time spent on social activities. The logic is to enthuse a team working ethic.

  • Quality circles - Regular meeting sessions where a group of employees discuss quality related issues.

It can be said that if managers are to be successful, they must focus on strategies that improve the overall performance of the business by using employees as a vital resource which needs to be nurtured and not just developing and implementing control systems to fix short term problems.

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(c)  Est 08/00 - Last Updated 28/05//2001