positive impact of reward system on employee motivation pdfpositive impact of reward system on employee motivation pdf

Implementing a reward system can increase staff motivation and help drive the team towards the goals of the . 17, 601617. J. http://197.255.68.203/handle/123456789/2003, Aguinis, H., Joo, H., and Gottfredson, R. K. (2013). Besides, this study was performed in the context of one developing nation, Pakistan. When people are made to feel cared for, nurtured, and growing, that will serve the organisation well. (1992). Manage. Different researchers have examined motivational incentive and reward systems for employees. Employee commitment and motivation: a conceptual analysis and integrative model. COVID-19 has surely presented a unique challenge to both employees and employers. Retrieved October 13, 2021, from https://hbswk.hbs.edu/item/keep-covid-weary-employees-engaged-and-motivated. Rev. The impact of bonus intensity on job satisfaction. Retrieved October 15, 2021, fromhttps://finance.yahoo.com/news/employees-challenged-traumatized-workforce-unable-174600117.html. The survey was conducted from early March to late April 2019. Based on the above literature, it is evident that intrinsic rewards are one of the main factors that influence the motivation of an employee that has subsequent effects on amplifying the performance of the employee. Berdud et al. Manage. To win in the marketplace, you must first win in the workplace. (2021a) and Qing et al. This study was conducted to analyze the impact of intrinsic rewards on the performance of the employee with the mediating mechanism of employee motivation in the SME sector of Rawalpindi and Islamabad, Pakistan. Change Manage. Plus, from an economical point of view, digital rewards are a low-cost alternative to physical rewards as there are no printing or postage costs. Rumpel and Medcof (2006) also consider that the implementation of a total reward system can bring the following functional benefits to the organization: attracting, motivating and retaining employees. J. Rewarding employees makes them happier, boosting their morale to work better and deliver the desired results. Groysberg, B., & Abrahams, R. (2020, October 8). A total of 400 questionnaires were distributed to the target . They have collected the information with the help of interviews. Rev. Linking transformational leadership with nurse-assessed adverse patient outcomes and the quality of care: assessing the role of job satisfaction and structural empowerment. New York, NY: John Wiley and Sons. Econ. Thats because,. Res. 32, 382406. Global J. A reward management system involves the policies, processes, and practices of the organization for rewarding its workers by their skills, commitment, contribution, abilities, and artifice. This study is also important as it is relevant for understanding the reward preferences of the SME employees. Manage. To test the hypotheses of the study, we employed structural equation modeling (SEM) using the maximum likelihood estimation in IBM-AMOS software. Table 4. Behav Sci. 26, 1424. When we asked remote workers how they wanted their employers to engage with them, the majority said via rewards and incentives. Does dopaminergic reward system contribute to explaining comorbidity obesity and ADHD? Sci. For future research, other factors of employee performance like employee efficiency, job achievement, and job fulfillment should be considered while seeing the impact of rewards. In 2019 it was 1.4 billion and is growing at a rate of 0.43% ( 1 ). (2016). J. Occup. This doi: 10.1016/j.sbspro.2015.02.146, Keywords: intrinsic rewards, employee motivation, employee performance, small and medium enterprises, Pakistan, Citation: Manzoor F, Wei L and Asif M (2021) Intrinsic Rewards and Employee's Performance With the Mediating Mechanism of Employee's Motivation. doi: 10.1006/jesp.1999.1382, Osabiya, B. J. Copyright 2021 Manzoor, Wei and Asif. While in the previous section, the effects of COVID-19 on employee motivation and morale were examined, the specific effects of benefits in general were not. (?9RB>m! yG}l%p%3H,sHZ\[Fw`(P1. Retrieved November 4, 2021, from https://www.post-gazette.com/business/healthcare-business/2021/11/02/UPMC-employees-500-dollar-bonuses-Leslie-Davis-nurses-health-care-workers-covid-19-fatigue-reward/stories/202111020094. International Journal of Science and Research (IJSR) Baskar P. The general objective of the research. There is no doubt that rewards play a vital role in keeping employees happy. Items were ranked by a 5-point Likert scale, where 5 = strongly agree and 1 = strongly disagree. Hence, intrinsic reward has a positive and significant association with employee motivation (Standardized = 0.50, t = 10.13, and p < 0.01); additionally, employee motivation and employee performance have a positive and significant correlation (Standardized = 0.73, t = 18.69, and p < 0.01). A categorized list of motivation definitions, with a suggestion for a consensual definition. doi: 10.1016/S0378-7206(00)00055-0, Manzoor, F., Wei, L., Bnyai, T., Nurunnabi, M., and Subhan, Q. Manage. Revitalization through self-regulation: the effects of autonomous and controlled motivation on happiness and vitality. (2016) conducted their study in the healthcare sector of Spain and investigated the connection between incentives and internal motivation of the employees. Almost 26.7% of the age of the respondents was between 29 and 35 years. . The impact of remuneration on employees' performance: a study of Abdul gusau polytechnic, Talata-Mafara and State College of Education Maru, Zamfara State. We have studied the relevant source of intrinsic reward and employee motivation in the domain of work, and we used a measure of intrinsic reward that exclusively focuses on intangible incentives. Rev. It is also recommended for future researchers to check the effects of intrinsic and extrinsic rewards on the performance of the employee in other sectors like education, health, etc. doi: 10.3200/JRLP.138.1.35-48, Nix, G. A., Ryan, R. M., Manly, J. The SMEs involved in this study were cosmetics, electronics, food and beverage, pharmaceuticals, minerals, and construction. Provide training to workers on how to fixed measurable objectives and encourage them to set a variety of short- and long-term goals. (2016) examined the relationship between effective management of rewards on the performance of employees in the public service sector of Anambra state, Nigeria. Thus, in this section, we will examine five aspects of reward systems in organizations: (1) functions served by reward systems, (2) bases for reward distribution, (3) intrinsic versus extrinsic rewards, (4) the relationship between money and motivation and, finally, (5) pay secrecy. Interestingly, the study outcomes indicate that intrinsic rewards can be beneficial and effective in enterprises and organizations in the country. Research reveals that 89% of employers believe that their personnel exit for better pay elsewhere, but the truth is, only about 12% of employees who leave earn more from their next employers. Now that weve uncovered the direct correlation between reward systems and employee retention, lets focus on the ways in which you can design and manage your employee recognition process to give your business a competitive edge. Benefits and reward systems are integral to the attraction of a job, the wellbeing of employees, and retention in general; who would want to work for a company with no benefits? Issues in the adoption of international financial reporting standards (IFRS) for small and medium-sized enterprises (SMES). How About Mental Health? (1992) determined that flexible benefits have a positive association with the performance of employees and satisfaction. Results of bootstrapping for standardized direct, indirect, and total effects of the model. In this era of competition, motivated employees considered as a valuable assets and motivation play vital role in productivity and enhancement of job commitment and reduce job turnover intention. J. Five years may not sound like an awfully long time, but when job vacancies are, May really is the time to treat your staff like royalty this year. Manage. This can be seen in a Blackhawk News Network survey, where more than half of their respondents said that the impact of their reward would be lessened if not received in a timely manner (Romsey, J., 2021); the reason for this being the fact that feelings of accomplishment can fade over time. Another important result is that the motivation of the employee plays a positive and significant mediating role in the association of intrinsic rewards and performance of the employee. doi: 10.1016/j.euroecorev.2015.03.003, Liu, L.-L., Li, B.-M., Yang, J., and Wang, Y.-W. (2008). Their study concluded that intrinsic and extrinsic rewards are considered a principal motivator for the employees. 139, 196213. 180, 468476. Multivariate Data Analysis 7. Naud, R., Kruger, S., Saayman, M., Jonker, C., & Uysal, M.(2016)Black Jack: Do company benefits and feelings have an impact on my happiness?,Journal of Psychology in Africa,26:4,334-342,DOI:10.1080/14330237.2016.1185898, Rosa, W. E. PhD, MBE, NP-BC, FAAN, FAANP; Schlak, A. E. PhD, RN; Rushton, C. H. PhD, RN, FAANA blueprint for leadership during COVID-19, Nursing Management (Springhouse): August 2020 - Volume 51 - Issue 8 - p 28-34 doi: 10.1097/01.NUMA.0000688940.29231.6f. For example, gift cards can be personalised with the employees name, a message of thanks, and your company branding so your people have a reminder of why they were recognised and will be committed to repeating that behaviour. Behav. Educ. What role does culture play? To get the best out of an employee, the place of a robust reward system by the organisation cannot be overemphasized. Overworked employees with pandemic fatigue and little time to recuperate often feel like they are not being appreciated enough for all of the hard work they are doing. Public Admin. J. doi: 10.1080/09718923.2004.11892397, Allen, R. S., and Kilmann, R. H. (2001). Being in a safe environment with open communication and an abundance of resources is crucial to happiness. Psychol. Dev. Hum. Always treat your employees exactly as you want them to treat your best customers.. The science behind the effectiveness of experiences is that they engage multiple senses, which creates a memorable emotional reaction. It is possible only when motivated employees use their full potential to do the work. Employee turnover is a costly business. Sci. https://journaldatabase.info/articles/relationship_between_rewards_employee.html. Manage. J. Hum. doi: 10.1177/014920639101700305, Yang, H. (2008). The World Bank (New York) 8. doi: 10.1016/0030-5073(78)90054-5, Fornell, C., and Larcker, D. F. (1981). positive impact on employee cohesiveness in manufacturing firms. As far as the SME sector is concerned, it provides the framework for a developing and inclusive society through employment opportunities. Exploring the features of sustainable urban form and the factors that provoke shoppers towards shopping malls. The greater part of the respondents (45%) held an undergraduate degree. than not poorly practiced. Bus. Exploring talent management in India: the neglected role of intrinsic rewards. Extrinsic rewards and intrinsic motives: standard and behavioral approaches to agency and labor markets, in Handbook of Labor Economics, eds O. Ashenfelter and D. Card (San Diego, CA: Elsevier), 701772. When employees expect good things to come of their performance, they will be more motivated to excel. The recognition of their achievements may be translated into intrinsic rewards; and through these rewards, the employees may motivate and perform up to their maximum capacity. The effect of employees motivation on organizational performance. 76, 188199. These impressive smartphone statistics all point to one thing: employees are ready to receive digital rewards such as eGifts. Signature:. Specifically, the study reveals that the motivation of an employee significantly mediates the association between intrinsic rewards and the performance of the employee. Unhappy employees transfer the negative energy to business clients leading to loss of customers and business losses in the long run. Motivation in the workplace has been traditionally understood in terms of extrinsic rewards, be in the form of pay, benefits, bonuses, awards, or career advancement (Rebitzer and Taylor, 2011). Proc. Reward system emerged as a powerful tool to create and enhance motivation among Hotel attribute performance, eWOM motivations, and media choice. Employee turnover can also make it difficult to retain . In contrast, if an organization fails to reward employees, it will directly affect the performance of the employees. Med. Retrieved November 4, 2021, fromhttps://www.cnbc.com/2021/10/13/work-burnout-rises-despite-company-investments-in-mental-health.html. However, the study by these scholars failed to consider A study by the Brandon Hall Group found that companies that recognize their employees multiple times each month are more likely to see an increase in employee engagement. Transformational leadership and followers' attitudes: the mediating role of psychological empowerment. (2019). The key benefits of attitudes are the perceptions of autonomy and effectiveness (Cho and Perry, 2012). Workers were petitioned to rate their level of performance via a 5-point Likert scale, where 5 displays strongly agree and 1 displays strongly disagree. An example item is My performance is much better than the same qualified colleagues.. Forbes. Role of SME in poverty alleviation in SAARC region via panel data analysis. For instance, organizations can promote a reward management system (financial reward and non-financial reward), and this would motivate employees to achieve their goals and promote optimal fulfillment in work. The total number of respondents was 300, of which 54.3% were males and the remaining were female. (2005). Sustainability | Free Full-Text | The Impact of Incentive and Reward Systems on Employee Performance in the Saudi Primary, Secondary, and Tertiary Industrial Sectors: A Mediating Influence of Employee Job Satisfaction Volume 15 Issue 4 10.3390/su15043415 As shown in Table 7, we found that the indirect effects of employee motivation on the intrinsic reward and employee performance (estimate = 0.191, p < 0.01) are significant. doi: 10.1108/02621710510627064, Bedarkar, M., and Pandita, D. (2014). This recognition, however, should be based on performance and rewards should also be tied to it. 26% of employees were dissatisfied completely. Bus. (2018). This can be done by creating a psychologically safe working environment in which employees are encouraged to speak up about their struggles with confidentiality to their superior (Groysberg, B., & Abrahams, R., 2020). Econ. J. Pers. 14:14051432. However, many researchers have argued that money is not the only motivator for employees to enhance their performance. Reinforcement, reward, and intrinsic motivation: a meta-analysis. (1986). They concluded that intrinsic rewards like employee development, recognition, and pay/salary have a significant and positive effect on the performance of employees in the public service of Anambra. The mediating effect of employee motivation on the relationship between intrinsic reward and employee performance is our main finding. This study fills the gap in the sphere of knowledge and addresses the role of intrinsic rewards in the performance of employee with the mediating mechanism of employee motivation in the SME sector of Pakistan. As evident in Table 5, we found support for Hypothesis 1 (Standardized = 0.46, t = 9.17, and p < 0.01). About 30% of the respondents had 25,000 and 35,000 (PK Rupees) per month income. Also, this analysis has different methods compared to previous studies. Table 7. Kuvaas (2006) suggested that employees will take more responsibility when offered developmental opportunities. Motivation and performance in higher education. Do intrinsic rewards matter for real estate agents? They found the best effects of employee motivation toward performance appraisal. So, as an employer, if you want happier, productive, trustworthy, and long-serving employees, go out of your way and reward them. (2019) examined the relations among various types of management control, intrinsic and extrinsic motivations, and performance in the public sector. Furthermore, to be positively linked to in-role performance in the domains of education, work, and physical (Cerasoli et al., 2014), there has also been evidence of a positive correlation between contextual work performance and creativity (Gagn and Deci, 2005). (2017) conducted their research in California, and they examined the relationship between training and internal motivation in organizations (profit and non-profit). Figure 2. doi: 10.1007/BF02723327, Barber, A. E., Dunham, R. B., and Formisano, R. A. (2021, November 3). An in-depth look of the effects of benefits and reward systems on such factors will be presented, as well as a look into which reward systems would benefit employees most during the pandemic. Based on their findings, they concluded that reward system helps to increase employee performance by enhancing employee skills, knowledge, and abilities in order to achieve organizational objectives. (2019b). Reward Management System Tool includes both extrinsic and intrinsic rewards, which are also called financial and non-financial rewards. Proc. Theyre an easy-to-use payment method that can be instantly delivered to any mobile device and then redeemed at a wide variety of leading retailers from anywhere. Prentice Hall. The COVID-19 pandemic has been a traumatic year and a half for countless employees, and it is very important that employers recognize this and act accordingly. Horizons 56, 241249. Hum Resource Manag J. Sara . Happier Employees According to Kristen Hamlin, no employer wants to work with sad employees. Proc. To achieve this objective, data have been collected through the questionnaire method from small and medium enterprises of Pakistan. Therefore, this is the first study to examine the effects of intrinsic reward on the performance of the employee through employee motivation in Pakistani SME sector. The employees prefer to get immediate monetary benefits as compared to the recognition of their works. (2019) recommended the estimates for NFI and CFI to be above 0.8 for a good fit. COVID-19s Effect on Employee Morale and Motivation. doi: 10.1111/j.1465-7295.2007.00069.x, Yen, C.-L. A., and Tang, C.-H. H. (2015). Psychol. These results are in line with a previous study of Gngr (2011); he has conducted his study on global banks in Istanbul. The survey also asked if COVID-19 was affecting the performance of an employees job, to which over half of participants strongly agreed or agreed (Singh, P., 2020). It also focuses on the role of motivation of the employee as an intervening factor. The study describes the impact of an employee reward system on employee productivity in selected service sector organisations in Hyderabad; it focuses on the effects of a reward system on employee . 109, 851857. Second, the intrinsic reward should have a significant relationship with the predicted variable (job performance). In the absence of a good reward management system, their employees will be demotivated, and the performance of their employees will also be declined. The prior studies are in favor of the positive consequence of a reward system on the performance of the employees. Facts about the true impact of reward systems on employee retention. J. Significance tests and goodness of fit in the analysis of covariance structures. 19, 16671682. Examining the quasi-public spaces in commercial complexes. For example, when someone completes a task successfully, they will often experience a sense of satisfaction and achievement. Impact of Reward System on Employee Motivation Hansika, V. A. K. K.1 and Mahalekamge, W. G. S.2 The reward is a valuable part of inspiring positive behaviors and cementing values in the organization. (2009). How flexible rewards programs boost employee engagement. Res. Asymptotic and resampling strategies for assessing and comparing indirect effects in multiple mediator models. Firms that provide high Firms that provide high financial rewards are more likely motivate than others. An in-depth look of the effects of benefits and reward systems on such factors will be presented, as well as a look into which reward systems would benefit employees most during the pandemic . J. Appl. Keeping the same approach, Introduction One of the greatest challenges for the manager to keep their staff motivated and committed. doi: 10.1108/JERER-12-2019-0051, Netz, Y., and Raviv, S. (2004). To date, very few studies have explored the reward management system and its effect on employee performance in the Pakistani SME sector. 4, 327334. With 60% of UK workers planning to look for a new job in 2022 and over 70% of UK employees wanting their employers to make more effort to motivate them, theres never been a better time to focus on your reward system. Moderating effect of organizational citizenship behavior on the effect of organizational commitment, transformational leadership and work motivation on employee performance. Hypotheses 70, 11181120. Even so, he also claimed that if the performance of the employees is observable, then organizations can use direct bonuses or relational contracts to motivate them based on their performance. 24, 15101520. (2019). the 21-34 and 35-49 age groups) who see incentives as a necessary component of their employee compensation. Besides, motivation is completely related to enthusiasm and commitment (Van Den Broeck et al., 2013), thriving (Spreitzer et al., 2005), and well-being (Nix et al., 1999). Impact of rewards system in employee's motivation in the organizational context: A quantitative study . Factors for increasing the competitiveness of small and medium-sized enterprises (SMEs) in Bulgaria. Kyklos 63, 597626. doi: 10.1016/j.sbspro.2014.04.174, Bentler, P. M., and Bonett, D. G. (1980). The issue with long-term rewards is that employees can lose interest in working towards them if its a drawn-out and arduous process. Motivated employees enable firms to meet their goals easily and at a lesser cost. Brookings global economy and development. Behav. CNBC. http://www.berjournal.com/wp-content/plugins/downloads-manager/upload/BERJ%203(3)12%20Article%203%20pp.29-48.pdf, Perera, D., and Chand, P. (2015). Figure 1. Functions of Reward Systems Once you factor in the time and effort involved with recruiting and training new candidates, it's no surprise that the average employee exit equates to 33% of their annual salary. Regression coefficients for a direct relationship of variables for testing hypotheses 13. Mediating role of reward system. In this study, we measured the age of the employee through categorical variables (1 = less than 25 years, 2 = 2529 years, 3 = 3039 years, 4 = 4049 years, and 5 = 50 above years), employee gender (1 = male and 2 = female), income (1 = above 55,000, 2 = 45,00055,000, 3 = 35,00044,000, 4 = 25,00034,000, and 5 = below 25,000), and education (1 = no education, 2 = elementary school, 3 = secondary/high school, 4 = bachelor/college, and 5 = master degree/University). Prod. First, the predictor variable (intrinsic reward) should have a significant relationship with a mediator (employee motivation). In contrast, there is an increasing interest and attention on the use of both extrinsic and intrinsic rewards as a performance-related stimulation. (2005). The research carried out by Bashir et al., (2014) find out that there is relationship between employee motivation and Employee performance. Received: 17 May 2020; Accepted: 10 June 2021; Published: 15 July 2021. Its easy to see the appeal of digital rewards. Organizations should do whatever they can to increase the motivation of the employees. Give employees input into company goals as well to make them feel like they are working toward a greater cause. Intrinsic rewards elicit a positive emotional reaction and work to motivate employees to continue to improve as well as make lasting behavioral changes when needed (Ryan and Deci, 2020). Res. (1959). 15, 3851. It also results in lower annual turnover enabling organizations to achieve revenue targets and succeed. Sci. These values are greater than the suggested cut-off point of 0.60 and confirm the existence of inner consistency reliability between each construct (Fornell and Larcker, 1981; Asif et al., 2019a). Employee rewards breed happiness and contentment at their places of work. First, by testing the mediating role of employee motivation in the relationship between intrinsic reward and employee performance, this study contributes to a superior understanding of the causal mechanism through which intrinsic reward relates to the job performance of the employees. The Motivation to Work. The results supported the hypotheses that there is a positive association between intrinsic reward, employee motivation, and employee performance. Plus, 71% of employees without company reward systems said that rewards are likely or somewhat likely to affect their motivation to perform better at their jobs. The study concluded that there is a positive link between reward systems and employee performance. Research has shown that if employees recall the occasion of a reward more easily, theyll associate the positive emotions they felt with work. An intrinsic reward is an internal reward that employees achieve from completing their tasks or projects successfully. INTRODUCTION "An employee's motivation is the direct result of the sum of interactions with his or her manager". J. Pers. Manage. 46, 7988. The major results of the study disclose that intrinsic rewards have a significant positive impact on the motivation of the employee and employee performance. Lawler (2003) found certain design factors responsible for PMSE, for example, ongoing feedback, use of behavior-based measures, preset goals, trained raters, and equitable rewards. J. Org. The findings of the study showed that internal motivation was positively correlated with work performance and has a negative link with turnover intention and burnout. How is this done? Int. endstream endobj 48 0 obj <>stream Los Angeles, CA: SAGE Publications. Table 2 showed the findings of the goodness of fit indices of CFA, where the values of Goodness of Fit Index (GFI) = 0.897, Adjusted Goodness of Fit Index (AGFI) = 0.870, Normed Fit Index (NFI) = 0.945, Relative Fit Index (RFI) = 0.937, Incremental Fit Measures (IFI) = 0.972, TuckerLewis Index (TLI) = 0.968, Comparative Fit Index (CFI) = 0.972, Standardized Root Mean Square Residual (SRMR) = 0.064, and Root Mean Square Error of Approximation (RMSEA) = 0.057. For the same reason, employees are more likely to remember rewards if they are presented ceremoniously or if they are a complete surprise, as unexpected events are easier to recall than regular daily routines. Soc. Retrieved October 15, 2021, from https://assets.kpmg/content/dam/kpmg/ng/pdf/advisory/covid-19-and-employee-rewards.pdf. Also, employee motivation (mediator variable) and outcome variable employee performance also have a significant and positive association, and these findings are consistent with the previous studies of Mak and Sockel (2001), Bedarkar and Pandita (2014), and Khan et al. Contemp. Structural Equation Models With Unobservable Variables and Measurement Error: Algebra and Statistics. Manage. To energize workers and make them concentrate on their work in an inclusive manner, all these positive-affect states are theorized. Employers should continually alter their benefits and reward systems to cater to the needs of all employees, as it is certainly not a one-size-fits-all situation. Apr 2015. Intrinsic motivation was positively associated with pay and job satisfactions, whereas extrinsic motivation was negatively associated with job satisfaction and not associated with pay satisfaction. As there are several other sources of tangible reward and extrinsic motivation in most work settings, including handsome salary, bonuses, deadlines, evaluations, and surveillance, future work could develop new and broader measures. It is a general presumption that the motivation of an employee plays a pivotal role in amplifying his/her productivity and performance. (2013) determined the impact that a reward management system has on employee performance with the mechanism of the mediating role of employee motivation at Isfahan electric company. doi: 10.1002/job.322, Gibson, T., and Van Der Vaart, H. (2008). (2010) suggested that factor loading more than 0.5 is considered significant, and therefore, loadings provide a significant effect for each construct (Han et al., 2019; Asif et al., 2020). A. With most workforces being a diverse range of demographics spanning multiple generations, its impossible to second-guess their preferred rewards. Account. Besides, analyzing the motivation of employees as a mediator helps us better understand how and why intrinsic incentives can improve the behavior of employees at work.