Money and financial rewards play an important role in maintaining healthy employee relations. Employees desired to achieve their personal as well as professional needs which can be fulfilled by these financial rewards. The unit aims to understand the role of money and financial rewards to build employee relations. For this, the following Learning Outcomes needs to be achieved:
- Describe how theories of organizational behavior applied in an organizational setting.
- Examine challenges for an organization including cultural, ethical, and social in the context of an organization.
- Conduct relevant research and critique findings on current developments in organizational behavior.
Topic: Money and other financial rewards are a fundamental part of the employment relations
Money cannot buy us happiness but only money can fulfill most of our needs and provide a high level of satisfaction. To retain an employee in the organization, organizations are required to maintain a balance between what employee has contributed through his work and what he is getting in the return. Objective of organization can only be achieved by retention of employees by fulfilling their requirements. Organizations are adopting various approaches to motivate their employees, to accomplish the organizations objective (Gallus and Frey, 2016). There are various monetary and non-monetary incentives that impact the performance of employees in the organization. People prefer only money in form of salary, bonus, increment and paid holidays. But there are employees who get motivated by non-monetary awards too like flexible working hours, recognition, health benefits, education, insurance, free foreign tours, etc. Money helps to improve the performance of employees and makes the job more enjoyable. A highly satisfied employee will put in proper efforts for its growth. A person is never satisfied with what he is been paid, he always wants more (Gubler, Larkin and Pierce, 2016). Organizations conduct programs to develop their employees to improve their efficiency and effectiveness but reward has gained more importance. Investing in training and development will improve the employee performance which will in return expects more from the organization. Highly engaged employees will contribute more to the organization.
Organization behavior is study that shows the behavior of an individual, group or any organizational structure, their knowledge, abilities and skills for achievement of organizational goal. It includes motivation, interpersonal communication, attitude, development, structure, process, work stress, conflicts, behavior, power and work design. It is important to identify the attitude and behavior of people who work for us. It is the study which shows what people are doing and that behavior is affecting the performance of organization. They help to build the more improved work surroundings. The process of recruitment will not help to determine the performance of the employee but his behavior at workplace will help us to measure his performance (Ali, Mohamad and Hamid, 2016). There are number of organizational theories which help to measure the performance of employees. One of the motivational theory is, Abraham Maslow's hierarchy of need theory which is divided into 5 levels starting from physiological needs, security and safety needs, belonging and love, higher position and self esteem needs and self actualization needs. He said that if employee's basic needs are met then he will fill motivated and will try perform better. But if there basic needs are not meet then they will feel demotivated and unsatisfied and will not be able to give their efforts in the performance. Organization should fulfill the needs of employees and give them incentives to feel safe, secure and motivated and improve their performance.
Personality theory, which includes the actions and reactions of an individual. It includes how much talkative, his nature, cooperativeness, trust-worthy, responsible, goal-oriented, calm, enthusiastic, imagination power, innovating power etc. This theory identifies personality traits and the working environment which help in determining satisfaction and turnover. The six working environment are:- realistic, artistic, social, investigative, enterprising, conventional (Men and Jiang, 2016). People who work in their favorable work environment are likely to be more successful. Agency theory assumes that employ will get indulge in only those task which will increase their wealth and will never get involved in non monetary task.
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Equity theory explains employees reaction with their efforts and what is been paid in return. An employee always measures rewards with work. They measure their performance and pay with their peers, if he feels unfair, then he would feel demotivated and stressed. A fair distribution of reward and incentives should be there. Expectancy theory says that if achievements are awarded then he feels motivated and if performance is not awarded then they will probably leave the job (Parrish, 2015). As organizations expands, the problems also intensify (Robinson and et.al., 2015). But many organisations fails to expand because of misunderstood mission and strategy, failing to work as a team, non availability of proper resources. Some other organisational problem faced by the employees can arise due to lack of communication, use of wrong organisational structure, unclear chain of command.
A proactive manager is one who foresees the future, what is to be done now to get benefits in the future to reward their employees for work. He is always engaged in some or the other activity. He uses his imagination to plan for the future. He prevents occurrence of any incident which might arise in future and make plans to face those risk which might arise in the future. He tries to be organised with his time, space and schedule (Muhammad and et.al., 2015). He keeps an eye on the work and performance of the employees so that they can get incentives for their extra efforts. Only by getting incentives in form of cash a employ is going to feel satisfied.
Proactive problem management tries to prevent the happening of any event or incident by solving problem before they happen in form of any dangerous incident. To prevent happening of any incident, management should quickly identify and manage the task, keep an eye on the process and see if it fits correctly or not, identify the places where incidents can exist in future and take actions to correct them. Communicate with your team, your goal, mission and objective. Provide a positive working environment where they feel satisfied and motivated. Placing of right person at the right job. Rewarding employees when they meet the targets (Millward and Brewerton, 2015). Creating a culture where employees speak truthfully. Educating employees about what is right and what is wrong. Appreciate their creative ideas and provide them with good working atmosphere. Conduct training and development programs for improvements. A proper review of past and present performance and finding out deviations and try to correct those deviations.
Organizations should form strategies and policies which aims at fair, equitable and consistent reward according to their contribution in the organisation. Rewards can be intrinsic or extrinsic. Extrinsic rewards are those which are related to money like fringe benefits, incentive in form of salary and wage, promotions, transfer whereas intrinsic rewards are those which does not relate to finance. And includes achievement, recognition, accomplishment, and job satisfaction (Zheng and et.al., 2015). Remuneration is an element which is used to appraise the employees. Reward is what an employer offers in exchange of the contributions. No reward means disliking towards job. These rewards motivate employees to achieve high level of performance and provide long term satisfaction. Existence of money may or may not be a good motivator but its non-existence may demotivate an employee. Presence of money is not only used for buying goods and services in an economy but is a symbol of status and recognition for the employees. Higher the pay high is your reputation and status in the society and even at workplace. Organisations can utilise their extra profits to be distributed to employees in form of reward. Nowadays, employees expects more for their contributions in return. They prefer the non financial rewards.
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Extrinsic and intrinsic rewards are highly correlated. This means that a good salary means increase in work performance which also adds to satisfaction, happiness and a feeling of fulfilment. Employees get motivated through remuneration and this helps in reduction of absenteeism and organisation's turnover, also improves the performance. One of the most important factor to be focused is jobs satisfaction which could be achieved only by combining both monetary and non-monetary rewards. Components which improves employ performance are bonuses, basic pay and a share in profit (Hyman, 2018). With the increase in remuneration, employees can maintain their prestige and can also have economic security.
It is assumed that when employer are giving a high salary to the potential employee's, they expect more from them in return. They increase the work pressure which may lead to disliking from work, making excuses to do work, more stress and may leave the job. They may be given task in which they lack the skills and abilities. From the above analysis, it has been concluded that incentives are the most important tool for the measuring the performance of an employee. Motivation and incentives are interlinked because only money can satisfy an employee and increase his work performance. An effective remuneration will enhance the performance of a employee (Gallus and Frey, 2016). Financial reward consists of rewards in form of money. If employees are motivated with money they will perform well. High remunerated employees put their best efforts at workplace to increase the productivity. A reward should be equitable as per the performance of the employees.