IMPACT OF REWARDS ON EMPLOYEES PERFORMANCE

CHAPTER ONE

INTRODUCTION

1. Background of study.

Reward is one of the most important elements in motivating employees for contributing their best efforts to generate innovation ideas that lead to better business functionality and further improvise company performance both financially and non-financially(Dewhurst et al., 2010).The current financial crisis the world is experiencing has made the reward system, with focus on bonuses and viable remuneration, a highly debated topic in media.  The mantra that is always heard is that the organization expects employees to follow the rules, regulations and also to work according to the standards set for them whereas the employees expect good working conditions, fair play, fair treatment, a secure career, power and involvement in decision making.

Rewards systems are often used as a management tool for achieving desirable objectives. One of the most common purposes of reward is to motivate employees to perform better (Armstrong, 2006).

In today’s business culture, employees will give their maximum when they have a feeling or trust that their efforts will be rewarded by management (Baron, 1983).  Motivation is the key that gets people to do what they do. Motivation is an accumulation of different processes which influence and direct the behaviour of employees to achieve some specific goal (Baron, 1983).  One of the key issues that concern every worker in an organization has to do with the reward or compensation for their effort.

Employees not only want good pay and benefits, they also want to be valued and appreciated for their work, treated fairly, do work that is important, have advancement opportunities, and opportunities to be involved in the agency (Frey, 1997).Rewards play an important role in work unit and agency programs to attract and retain their employees. (Perry et al 2006). It is the day-to-day interactions that make employees feel that their contributions are appreciated and that they are recognized for their own unique qualities. Getting results from your reward programs means having the right reward strategy, smart design and effective execution(Srivastava, 2001).It is important to note that after recruitment, most employees subsequently expect or demand for other benefits as compensation for their time and effort towards achievement of organizational goals apart from the standard wage or salary (Miles, 2004). If the above benefits are not offered, it usually leads to various forms of dissatisfaction which may include; high absenteeism, constant grievances, high labour turnovers, strikes and as a result low performance of their due duties(Ax et al, 2006).

Effective employee reward systems can significantly increase work performance. In other words we can say that good rewards are most important way to engage the employees with their work and with their organization. They can motivate employees to increase their work quality and quantity and to align their performance with organizational objectives. They can therefore be a very powerful influence on employee behaviour, motivation and performance and should be an integral component in any company strategy.

1. Statement of the problem

Reward Management is one of the strategies used in organizations to improve organizational performance.  Researchers, practitioners and scholars have established that there is a positive link between reward management and desired performance (Lotta, 2002 and Srivastava, 2001)Modern Auto Services Ltd (MAS) is an organization that sell and service various range of vehicles.   The management has established rewards in the organization.These include cash bonuses in pursuit of increasing employee performance so as to ensure prompt and quality service.  However, the extent to which cash bonuses influence employee performance is not established.  The study evaluated the reward systems of organisations as a whole by focusing on MAS and established whether their current reward systems have any bearing on the performance of the employees.  This study therefore aimed at determining the impact of reward on employee performance at MAS.

1.3 Objectives of the study

1. Identify the basic components of rewards package in MAS
2. Assess the relative strengths and weaknesses in the current reward systems of the company
3. Ascertain the extent and impact of relationship between the various reward systems and corporate performance

1. Identify ways of improving the various reward systems to enhance corporate efficiency and effectiveness at MAS