A

Summer Project Report

On
“TO STUDY THE IMAPCT OF THE REWARD SYSTEM ON
EMPLOYEE MOTIVATION”

Submitted for the partial fulfillment of the requirement for the award of degree
of
MASTER
OF
BUSINESS ADMINISTRATION

Under The Guidance : Submitted by

Mr . Dhrendra Singh Princy Gupta
(Training Guide) MBA III Sem.
Roll No:-1833870011
Session: 2018-2019

K P ENGINEERING COLLEGE AGRA

Affiliated To APJ Abdul Kalam Technical University, Lucknow (U.P)
 CERTIFICATE

This is to certify that the Summer Training project report title “TO STUDY THE

IMAPCT OF THE REWARD SYSTEM ON EMPLOYEE MOTIVATION ” submitted by Miss.

Princy Gupta for the partial fulfillment of the requirement of master of business

administration degree (batch 2018-20) as per the requirement of the MBA curriculum

from Dr. A.P.J. Abdul Kalam Technical University, Lucknow embodies the

bonafide work done by her under my supervision.

Dherendra Singh

Project Guide
 DECLARATION

I, Miss Princy Gupta a student of MBA 3 semester K P ENGINEERING COLLEGE

AGRA Agra roll no. 1833870011 hereby decalred that report titled “TO STUDY THE

IMAPCT OF THE REWARD SYSTEM ON EMPLOYEE MOTIVATION” is an anthentic

work done by me.The study was undertaken by as a part of the course curriculum of

MBA Full time program of KP engineering college, Agra.

Princy Gupta
 ACKNOWLEDGEMENT

I would like to thank the faculty of K P ENGINEERING COLLEGE AGRA for giving me

this opportunity to explore into an area of my interest and their full cooperation during

the different stages of my project. I would like to thank Mr Piyush Shalya sir, Meghna

mam, Viplove sir, D.K. Kaushik Sir and my parents for guiding me and enriching my

project through his valuable outputs from her reservoirs experience. He was extremely

helpful in ensuring that my project was progressed on the right track. I would like to

acknowledge my wholehearted thanks to all faculty members.

Princy Gupta
 PERFACE

Without practical training, management education is meaningless so long with the theory;practical

training is provided to management students to expose them to the actual working environment of

any organization. Such training provides a framework of knowledge relating to the concepts and

practices of the assigned topics in the organization.

The summer training is an integral part of the course curriculum of MASTER OF BUSINESS

ADMINSTRATION (MBA 3th sem). In this the student is in the position to analyze the integral

working of an organization with mature eyes and understand the dynamics in a much better manner.

This particular research paper has been conducted for “TO STUDY THE IMAPCT OF THE

REWARD SYSTEM ON EMPLOYEE MOTIVATION ”. In the first phase of the research

report, there is a introduction of Motivation, types of motivation are given. After that a market

research is performed with a sample size of 100 people. The research study was limited to

walmart . Here in my survey, I have contacted the respondents through personal interviews with

the help of the questionnaire.

The main objective of the research is to know the impact of the reward system on employees

motivation at walmart
 TABLE OF CONTENTS

S.No. Title Page No.

1. CHAPTER 1
2. Introduction
3. Methodology
4. Motivation
5. Early Theories of Motivation
6. Contemporary Theories of Motivation
7. Integrating Contemporary Theories of Motivation
8. Motivation Tools
9. CHAPTER 2
10. Rewards
11. Types of Reward Programs
12. CHAPTER 3
13. Group-Based Reward Systems:
14. CHAPTER 4
15. Employee Reward and Recognition Systems
16. CHAPTER 5
17. Impact of Rewards for Motivation
18. CHAPTER 6
19. Impact of Performance Recognition and Motivation
20. Discussion
21. Conclusion and recommendation
22. Bibliography
23. Questionnaire
 CHAPTER 1

INTRODUCTION
 INTRODUCTION

Being the students of Master of Business Administration with major in Human Resource

Management and with the consultation of our Project Supervisor, we have selected the topic for our

project as “Employees Motivation through Rewards”.

Motivation and rewards are important part of the Human Resource Management. Without

motivation and reward, Human Resource Management seems to be incomplete and paralyzed. In

many organizations of international repute, competent employees are considered the real source for

the organization. Sometimes, the performance is measured through the employee turnover. So, it is

important for every organization to take care of their workforce especially the skilled, experienced

and willing workers/employees. The factor of such employees can be a competitive edge for any

organization for example, Southwest Airlines, USA, where employees are working as a community

and even life partner of each other. Even immediately after the 9/11 attack, when many companies

fired their employees, Southwest Airlines management announced that no employee will be fired.

This was due to the employee‟s factor that Southwest Airline did not want to loose its employees.

To retain their workforce, many organizations take different steps. Employees are motivated

not only through promotion, appraisal, and awards but also through many kinds of other ways, which

will be briefly discussed in this project.

 Background

According to Nationalencyklopedin (2015), reward is “either money or honour that pays out as

compensation, normally as a sign of appreciation or achievement.”

Why do organizations use reward systems? The purpose of the reward system is to contribute to

the increased value of an organization and to motivate and encourage actions that are needed for

a company‟s success. For the worker, the reward needs to be better than other options, and for

the organization, the outcome of the employees action must be better than the reward (Nilsson &

Ovle, 2013). Since every organization is different, the reward system should be adapted to the

specific organization (Wilson, 2003).

There are a number of theories on what motivates employees. Maslow's (1954) hierarchy of

needs is a relevant theory, which has a major role in leadership training. This theory states that

we as humans not only have a need for food, safety and human communion, but also want to feel

needed and have responsibility of what we do and achieve. When the needs of a level are met,

the focus moves on to a higher level. In short, it implies that people want to develop and

accomplish self-actualization (Paul & Alm, 1991).

There are some interesting aspects that need to be accounted for when reasoning about reward

systems according to Maslow. Among other things, we are reminded of the importance of taking

into account people's entire lives when try to increase employee motivation. Some employees

have a rich social life outside of work, while others see work as their main social platform. This

affects the impact rewards like parties and trips have on its employees. Something that is much

appreciated by one worker can feel like a punishment for others who feel a social pressure to

take part of these "rewards" (Nilsson & Ovle, 2013).

It is also interesting that some industries are not allowed to use variable pay, due to Swedish law.

This applies to the bank sector and the use of variable pay for businesses.
 Problem analysis

In the problem analysis, several of the problems that arise in the use of reward systems will be

addressed. It is important to keep in mind that reward systems are somewhat subjective and what

is conceived as a reward may differ from person to person. A person might think that a pat on the

back or a little bit of acknowledgment is sufficient, while another employee may only want

reward in the form of financial compensation. It can be problematic for a company to meet

everyone's needs in order to get a desirable result. Another problem with reward systems is that

those who do not get rewarded get indirectly punished. This can lead these workers to feel less

appreciated and therefore perform worse. Another challenge is, what happens when you do not

reward employees who expect a reward every time they perform? Will they start to perform

more poorly? These are some of the problems involved that the thesis will investigate. The thesis

will start fairly wide and then narrow the focus to answering the questions in the process.

A problem raised by Nilsson & Ovle (2013) is when employees that perform their job properly

get unjustly punished. For example, imagine a nurse who may have to work overtime when a

patient cannot be left unattended at the end of a shift. This leads to indirect punishment, if the

nurse is not getting paid for overtime. This can result in an employee losing motivation to

perform their job and leading to customer dissatisfaction, which affects the company negatively.

How important is the reward system? Maybe it is extremely necessary for the business to

operate. Would the employees still do more than what is required of them without the reward?

This will be investigated in this study and hopefully it will lead to some answers to these

questions.
 Aim

The purpose of this thesis is to get insight in how, why and what reward systems that are used in

Company X, how they motivate the employees and to find suggestion on how the organization

could maximize the use of reward systems.

Research questions

● Do reward systems motivate the employees at Company X?

● What reward systems are in use at Company X?

● How can Company X make their reward systems more effective?

Limitations

There are different types of rewards that can be used in different industries and companies for

different effects. The results would have been more credible if more companies had been

included in the investigation, but due to the extent of this thesis, only Company X will be

studied.

Not only are there different types of reward systems, but rewards can be directed at different

positions in the organization. In this study, only the rewards given to the employees and not the

managers are looked at, which is a further limitation. This is partly because there is no resources

to contact any manager in the company, and partly because a manager probably would not be as

objective as the employees due to the fact that managers possibly feel more obligations towards

their work.
Methodology

The methodology of this research project is that in the first phase, we define Motivation with

its elements and theories etc. After that we define Rewards and related topics like kinds of rewards

and their brief descriptions, and then we elaborate the Group-based Rewards and Recognition

Programs. In the next phase, the topic of Employees Rewards and Recognition System, Reward vs

Recognition, and Designing a Reward Program will be covered. The Impact of Reward for

Motivation will be explained to create better understanding relating to this project. Our next point

will consist of practical examples of implementations of motivation through rewards in SZABIST,

Islamabad Campus, and in International Islamic University Islamabad and will see its impact among

workers.

At the end, we will derive the results of the motivation through rewards from the discussion

and will give conclusion of our findings.

Motivation

According to Armstrong (1993) you can divide motivation into two types:

Intrinsic motivation – people motivate themselves to behave in a special way or to move in a

particular path. For example you can feel that your work is important and feel responsibility;

you feel that you can develop skills and abilities, that you have opportunities for advancement.

The intrinsic motivation tend to have a better effect in the long-term because the motivation

comes from people themselves and is not created or forced from the outside.
Extrinsic motivation – this is what is done to motivate the individuals. For example, different

types of reward like increased pay or advancement. It can also be punishments: withholding pay

or criticism. This will have a quite powerful and instant effect on the individual, but not

necessarily in the long run.

In the figure below (Figure 1) there are examples of motivation factors, divided in the two types

that are explained above.

Figure 1 Two types of motivation

Money and motivation

According to a view called the economic man approach, financial reward is what motivates

workers the most. It states that if people perform in a certain way and that results in a reward, the

chance of repeating the performance is increased. But if the performance is overlooked or

followed by a punishment, the behaviour is not likely to be repeated. This kind of motivation

strategy is popular to use and can be effective under some conditions. This strategy is only

grounded on external controls and does not take into consideration the human factors. This kind
 of approach fails to value that the formal control system is influenced by the informal

relationship that occurs among employees. (Armstrong, 1993)

Also, the mind-set on how people value money differs - not only will it differ from one

individual to another, but also individually from time to time. That means that the outcome of

using money as a motivator is depending on the situation, including a person's values, needs and

preferences for types of economic or non-economic rewards. (Armstrong, 1993)

Taylor’s theory

Taylor‟s (2005) theory aims to explain what motivates employees at their workplace. The

renowned Taylorism states that individuals can be treaded like machine, in a standard way.

Furthermore, Taylor claims that individuals want to maximize their economic status, and that

this is the only factor that motivates people. For companies to achieve as good results as

possible, the managers should give direct instructions to the employees and the pay should

correlate with performance. (Taylor, 2005)

Needs theory

Maslow (1954) states that the human being has different needs. When a lower need is pleased we

aim for the higher need. The five categories Maslow describes are fundamental factors:

physiological, safety, social, esteems and the highest one is self-actualization (Armstrong, 1993).

Below there is a modified figure (Figure 2) that illustrates Maslow’s hierarchy of need, which

show the five categories that Maslow (1954) describes and the main order that the needs follow.
When a need is fulfilled, that factor no longer motivates that individual. According to Maslow

(1954) most people‟s needs follow the order above, but he also states that this can differ

between people. A need do not have to be complete for another need to occur. This goes under

the Needs Theory, which states the unfulfilled needs motivate behaviour. (Armstrong, 1993)

Figure 2 Maslow's hierarchy of need

Herzberg’s (1957) has a two-factor model of motivation, as an input to the Needs theory. He

said that money is a “hygiene factor”, which avoid diseases rather than gives health. This could

be negative if not present in a suitable amount. Also, the effect on positive feelings was mainly

short-term and the effect on negative feelings was long-term (Armstrong, 1993). Kohn (1993)

implies the same thing, that rewards give temporary compliance.

 Expectancy theory

Vroom (1964) formulated the theory called Expectancy theory, which states that if employees

can realistically expect that their work and input will give worthwhile rewards, the motivation

will be strong. So motivation is only expected when the correlation between the performance and

the result is usable, and the results are seen as a way of satisfying needs.

If the relationship between work and reward is clear and the reward has a value that is worth the

effort, external motivation works (Armstrong, 1993). This relation is demonstrated in the figure

below (Figure 3), it shows that the reward you get depends on the performance you made, which

in turn depends on the effort you put in. The theory also explains that the internal motivation can

be stronger than the external because the internal lies within the control of the individual who

can place bigger trust on past experiences to specify how much the reward is going to affect

their behaviour and performance. (Armstrong, 1993)

Money is an external motivation factor, and as the theory states, the correlation between effort

and reward must be clear if money can be a successful motivational tool. Therefore money is

useful in attracting people to a company and in getting them to stay. (Armstrong, 1993)

Figure 3 Expectancy theory

Goal Theory

Latham & Locke (1979) developed a theory called Goal Theory. Which implies that when

people are set with precise and realistic goals, the motivation and performance will be higher.

When individuals receive feedback on performance, goals that are set high are accepted, and this

will have a positive affect. The employees need to be involved in the goal setting and agree on

setting higher goals. In the process of setting higher goal, feedback is important to retaining

motivation. (rmstrong, 1993)

Definition of Motivation

Motivation can be defined as: “the processes that account for an individual’s intensity,

direction, and persistence of effort toward attaining a goal”. The goals are known as strategic

goals, which are set by the top management for their organizations. The persistent efforts should be

positive towards these goals otherwise these efforts have no sense of acceptability and always

discarded as null and void. The performance of an employee always align and congruent with the

strategic goals of the organization. Motivation is used as a close link between goal and the

interest/behavior of the worker to perform or complete the task. For this purpose, we have to

consider the organizational goals and the behavior to perform task as well.

The above definition has consisted of three main elements:

1. Intensity

2. Direction

3. Persistence

1. Intensity

This element requires more attention to be given when discussing the motivation. It is related

to the level of endeavor made for attaining the particular goal and objective. Keep in mind that if you

want to gain favorable outcomes in the shape of job performance intensity is necessary for

motivation but also required to be in the right direction towards organizational strategic goals and

objectives. Otherwise, this intensity de-tracked you or leads you in depressing aspects.

2. Direction
 Direction should be straight towards strategic goals of organization as already discussed in

previous paragraph that right direction is the right step to achieve strategic goals. To do so, we have

to put lot of quality efforts in our actions. Effort like giving the organization direct and consistent

results is efforts which should be seeking.

3. Persistence

In this last point, motivation also has persistent dimension which measures how much a

person can prolong or maintain effort. Motivation among individuals could stay them long enough

with a task to obtain their goal.

It is also relevant here to mention about above 3 points which are approximately same as like

by Performance Management Process. Performance management could define as “an ongoing

process of identifying, quantifying, and polish the performance of an individual, teams and aligning

performance with the strategic goals of the organization”.

The ongoing process can be explain as persistent and arrange performance with strategic

goals of organization and it is not wrong to assumed it as direction.

With the above explanation we can say that motivation is straight linked with performance

management of employee to act or perform a job as task oriented in which few goals or objectives

previously set. Employee has to perform accordingly to achieve organizational goals.

EARLY THEORIES OF MOTIVATION

Fruitful period in which motivation was developed is around 1950s. Four different theories

were developed during this period, which although heavily attacked and now questionable in terms

of validity are probably still the best-known explanations for the employee motivation. These

explanations have at least two reasons:

(1) They actually represent a base from which basic theories have grown.

(2) These theories are still use by practicing managers.

Hierarchy of Needs Theory

Abraham Maslow has given this well-known theory of motivation in which he explain that

within each or every person hierarchy of 5 needs exists in which each or every need is satisfied and

the next need becomes more important. Five needs are as follow:

1. Physiological

Includes thirst, hunger, sex, shelter, and other human body needs

2. Safety

Protection and Security from emotional and physical harm

3. Social

Friendship, Affection, Belongingness and Acceptance

4. Esteem

Internal human factors like autonomy, self-respect, and achievement, and also external

factors like recognition, status, and attention.

5. Self-actualization
 Drive on a path to become what is one capable to become; includes achieving one‟s

potential, self-fulfillment, and growth

Maslow separated these five needs into higher to lower orders. Safety needs and

physiological needs were explained in lower-order needs and esteem, social, and self-actualization

were explained in higher-order needs. Main difference between these two orders was that higher

order needs were satisfied within the person, whereas lower order needs were satisfied things such as

pay, union contracts, and tenure.

Clayton Alderfer tries to work on Maslow‟s need hierarchy theory to align with empirical

research more closely. His revised hierarchy need is named as ERG Theory. Alderfer give argument

in which he said there are three groups of core needs:

1. Existence (Physiological and Safety needs)

2. Relatedness (Social and Status needs)

3. Growth (Esteem and self-actualization)

Alderfer didn‟t assume like Maslow about these needs that they are already existed in rigid

hierarchy. An individual can focus on all three needs categories simultaneously.

Theory X and Theory Y

Douglas McGregor discus two different views of human being in this theory: one is basically

negative which is labeled as X Theory, and other one is basically positive known as Y Theory.
1. Theory X

In theory X Douglas put those people who do not like to do work, like they are lazy, do not

like responsibilities and they will not perform according to your expectations.

2. Theory Y

The assumption is totally opposite to theory X employees, these employees like to do work,

and they are creative and always like to perform with some responsibility.

Managers under Theory X, always believe that the employees dislike to do work, that is why

they are directed or even coerced to perform it. Beside these negative thoughts about the human

beings nature, managers under Theory Y, assume that the employees can do work in natural

environment. However, the Theory Y assumptions are more feasible than Theory X.

Two-Factor Theory

Two-Factor theory was presented by Psychologist Frederick Herzberg also called

Motivational-Hygiene Theory. Under this theory, it is explained that relation to work is basic to an

individual and failure and success can be determine by one‟s attitude at work, Herzberg ask the

question “What do people want from their jobs?” He asked them to explain in detail, situations like

where they felt about their jobs exceptionally good or exceptionally bad. The responses behind it

were then collected and categorized.

Herzberg conclude that answers which people give are significantly different about jobs

when they felt good instead of replies they give when they felt bad. Job satisfaction has certain

characteristics which are related to it.

 Core factors like advancement, responsibility, recognition, and achievement are related with

job satisfaction. Person who felt happy or nice thoughts about his work give attributes which are

given above.

Other side, dissatisfied respondents give attributes to extrinsic factors such as pay, company

policies, supervision, and working conditions.

McClelland’s Theory of Needs

This theory of need was invented by David McClelland and his associates. The theory states

three important needs that help to explain motivation which are achievement, power, and affiliat ion.

These three needs are briefly explained as under:

1. Achievement Need:

This need is basic point which one wants to achieve in his or her life.

2. Power Need:

Person wants such power which makes him superior so that others behave well with

him.

3. Affiliation Need:

This need is desire for close friendly and interpersonal relationship.

CONTEMPORARY THEORIES OF MOTIVATION

Early Motivation theories though were well known but unfortunately they have not held up

good under clear examination. Other sides there are contemporary theories that have one part

common in them: each has valid supporting documentation with them. This means that the theories
are questionably wrong. We call these theories as “Contemporary Theories” because they explain

employee motivation with respect to current state of thinking. Some theories are mentioned as under:

Cognitive Evaluation Theory

This theory states that allocation of extrinsic rewards on the basis of behavior that had been

intrinsically awarded previously tends to decrease overall level of motivation.

Perfect example of this theory is a person is working in an organization without any pay or

wages. After some time when he is working better for that position he got the job for it. With some

extra incentives he got what he wants at the same level of job work. That person will enjoy working

in such condition and possibly he can put more efforts as before.

Goal-Setting Theory

This theory says that difficult and specific goals, with feedback, results as higher

performance. A higher level of output can be produce by specific goals than does the standardized

goal of “do your best”. Why?

A goal setting can be utilized more systematically with the objective program by

management. Objective of management is to emphasize participative goals set that are verifiable,

tangible, and measurable.

Self-Efficacy Theory

It is also known as “Social Learning Theory” or “Social Cognitive Theory”. Self-Efficacy is

basically a belief of an individual that he or she can perform the task. Self-efficacy and Goal-setting

theories are not directly contending each other, rather they support each other. Whenever manager

set difficult goal set for his employees, this action of manager lead his or her employee for a higher

level self efficacy and also lead them to set their own higher level of performance. Model from next

diagram can explain it:

Albert Bandura argues this research and said there are four ways of increasing self-efficacy:

1. Enactive mastery

2. Vicarious modeling

3. Verbal persuasion

4. rousal
Reinforcement Theory

Reinforcement theory is counterpoint to goal-setting theory. Theory which says that behavior

is function of its results. Reinforcement theory concentrates solely upon, whenever a person takes an

action what happen to him or her and ignores an individual inner state.

It is clear that, pay can increase motivation of people, it is clear for people that process is way

more complicated than stimulus response.

Equity Theory

This theory says that a person who compares his job input or job output with other individual

input and output and than try to alter his performance to match with other performance. An

employee adds different referents to the complexity theory of equity. Employee can use four

different referent comparisons which are:

1. Self-inside

Inside an organization different positions were experienced by employees

2. Self-outside

Outside the organization different positions or situations were experienced by an

employee.

3. Other-inside

Compare yourself with another individual in the organization

4. Other-outside

Compare yourself with another person from outside of organization.

Expectancy Theory

Presently most acceptable theory with explanation of motivation is expectancy theory by

Victor Vroom. There are also some criticisms on that theory but mostly evidence support this theory.

This theory says that the power to acting in a certain way depends upon the power of an expecting

thing that the actions will result the following outcome.

Focus of this theory is on three relationships:

1. Effort relationship

The probability receives by an individual that will take towards performance by

putting given effort.

2. Reward relationship

In this an individual believes, that particular level of performing will lead desired
outcome.

3. Rewards-personal goals
An organizational reward which satisfy personal needs or goals

INTEGRATING CONTEMPORARY THEORIES OF MOTIVATION

All motivation theories are moving around rewards and performance. All theories have

something common in them, that they predict the strong relationship of effort and performance,

rewards and satisfaction, performance and rewards of personal goals. These relationships are

influenced by different factors. For effort, which lead towards good performance person should have

the ability to perform and performance appraisal process or system that actually measures the

individual performance should be fair must be perceived as being fair and objective. Performance-
reward relationship should show some strong results if an individual think that his performance is

rewarded.

MOTIVATION TOOLS

There are several ways to motivate employees. It differs from company to company,

organization to organization, firm to firm, industry to industry and according to the operation in the

business organization working globally. It is also deferred on the basis of nature of work, size of the

company, social and cultural values, and demographic norms. The ethical and fairness norms are on

the other hand very important factors in motivation tools and strategies.

The best efforts relating to employees‟ motivation should be focused on what an employee

deem to be important. It was observed that an employee within the same section/department of any

organization will have different motivators and job satisfaction. Now, it is observed by many

organizations that flexibility rewards and job design is providing positive results in employees‟

increased length of service and affiliation with any organization, increased productivity and output,

job satisfaction and high morale. Although this "cafeteria-plan" approach to the work-reward

continuum presents variety, some strategies are prevalent across all organizations that strive to

improve employee motivation.

1. EMPOWERMENT

It is very important factor that employees working in the organization may have to give some

responsibilities, decision-making authorities, increased their control over the assigned tasks for

which they are held responsible, and be provide better equipment to perform those activities/tasks.

Thus employees are held responsible for their activities and accountabilities.
 Due to this factor, the employee will feel free to perform their part of tasks and helps

organization to accomplish their strategic goals and targets. Empowerment brings the job

enlargement of the 1950s and the job enrichment that began in the 1960s to a higher level by giving

the employees some of the power to expand their own jobs and create new, personally identified

challenges.

2. CREATIVITY AND INNOVATION

At many organizations employees who have creative ideas in their mind do not tell or

express them to the management because they have fear in their minds that if they tell these ideas to

management, they could jeopardize their job. In few working environments this is like you are

dictating your management, to do so you need company approval and some one who could

appreciate you on your work, otherwise both organization and employee will suffer. When power of

taking good ideas into account is transfer from top management to front line employee‟s who know

the job, products or services personally could results in better idea for the benefit of organization.

Managers need to motivate their employee‟s to work as one unit so that more flexible idea can be

generated, this is because people have ideas according to their environment which help them think

upon problems better than that person who do not have such problem in their environment. Example

of creativity and innovation is 3M known as Minnesota Mining and Manufacturing Corporation,

which allow its workers to put some effort in their product, which results in profitability and have

successful new system of product development in industry.

3. LEARNING

There are different tools which can help an employee to avail more opportunities and if they

have these tools they will take the challenge. Companies can make them or motivate them to

enhance their skills which may supportive for the organization. There are different ways to motivate

and increase employee knowledge among them there are accreditation and licensing programs which

are very popular. In other words, the control of knowledge will be a sufficiently valuable if

knowledge is applied to the work to be finish, then this is better event for the employer and

employee as well.

4. QUALITY LIFE

Number of work hours in America for each week has rise and most of the families have at

least two working members to meet their daily needs. Under these conditions, many workers have in

their mind “how they are going to increase their living beyond their workplace”. Often, this thinking

of employee at work will reduce his or her morale and productivity. Companies that have gained

employee motivation have increased their productivity by instituting flexible employee

arrangements, programs incorporating job sharing, flextime or condensed workweeks for example,

have been focusing on overwhelmed employees successful for the work which has to be done and

beyond the demands of their lives.

5. MONETARY INCENTIVE

For all the attributes of a winner of alternative motivators, money still fill up a rightful place

in motivators mix. Company profit sharing gives awards to employees for quality product

production, quality service performance, or company quality process improvement. Some

Companies give different benefits to its employees. It could be monetary reward or other rewards for

generating process improvement ideas or from cost saving, which will boost the productivity and

also reduce absenteeism. Money effects when it is part of employee‟s ideas. Further, monetary

incentives could be proved counterproductive, if it is not available to all members of company.

6. OTHER INCENTIVES

Non-monetary motivators are more effective for the employees. These systems are not

enough in some part, we actually want to increase outcomes of employees and difference of salaries

may divide the employees instead of uniting them. It is proven that non-monetary motivators are

related to team spirit and also include responsibility, recognition, and advancement. A Managers

who judge the “small wins” of employees, participatory, promote environments, and when they treat

their employees with respect and fairness will get their employees more motivated. The most

successful rewards, would be as letters of citation and off time from work, increase personal

fulfillment and enhance self-respect. Over the longer term, sincere humble and even personal

gestures show lot more effective and better than awards of money. In last, programs which have

monetary systems of reward and self-actualizing, satisfies intrinsic needs might be the most

important needs of employee motivation.

 Chapter 2
REWARDS
 REWARDS

All organizations have goals and visions. In order to reach them, they have to get their

employees to work towards the same goals and visions. As individuals, employees rely on

different motivational factors, and it can be very difficult to know how to get the employees to

perform at their best. (Nilsson & Ovle, 2013)

Employees are motivated directly by the reward system when they contribute to their

organization's effectiveness. This can lead to for example a seller making an extra visit on a

Friday afternoon, instead of taking an early weekend, hoping to reach monthly sales quota in

order to be rewarded. This form of reward system has proven to be highly motivating, based on

the simple idea that we humans strive to do perform better if we are able to acquire what we

want. (Bengtsson & Hedberg, 2012)

However, this approach can be negative as well, as it can give the impression that the manager

believes that employees are not performing at their best. Managers are indirectly implying that

employees can be more effective, creative and focused if only they get an award. The dilemma is

to make it not look like a bribe, and that is where the personnel policy aspects gets caught in the

middle. (Bonner & Sprinkle 2002). Nilsson & Olve (2013) write about another negative aspect

regarding reward system: a reward for one employee can be a quite the opposite for another

employee. If the employees are “awarded” with a weekend trip as a reward, some may find it

very exciting while some, for instance a parent of young children, might find this “reward” as

punishment.
 Why use reward systems?

In order to ensure the effectiveness of an organization it is required that workers are motivated

and this can be facilitated with the help of reward system. Rewards can get individuals to

perform better and it also promotes motivation and satisfaction. It may also be a good way to

retain important workers in the organization and the reward can also get the employee to feel

important and needed. If good performance in the organization is rewarded, it will most likely

happen again. (Nilsson & Ovle, 2013)

Companies that choose to reward the employees, perform better than companies that do not use

any reward system. They also believe that reward systems could get more people to become

interested in working at the company and, above all, it means that they have employees who

want to stay in company. (Bau & Dowling 2001)

The selection of a reward system

It is important that a business chooses the reward system that is working for their organization.

The situations may be different from company to company and an example of this could be if a

company wants to motivate, recruit and retain skilled staff within the company. (Nilsson & Ovle,

2013)

As mentioned before, there is no optimal reward system that can be used in every organization

and in every situation. However, there are some things a company should consider before they

choose which reward system they intend to use. (Nilsson & Ovle, 2013)
Bau & Micheal (2001) mentioned that there are two different types of rewards and there are

external rewards and interior rewards. Economic rewards, benefits and performance bonuses

belongs to external rewards. The inner rewards cover their own satisfaction when an employee

performs or provides for the company. (Nilsson & Ovle, 2013)

There are a lot of different types of reward systems, for example:

● Salaries and incentive pay

● Stock options

● Stocks in the company

● Other benefits

Figure 4 Selection of reward systems

Salaries and stocks are considered as financial rewards, which are external. However, other

benefits can be acknowledgement, receiving free time from work, which are considered as

interior rewards. Some people prefer external rewards while other interior or a combination of

the two. (Nilsson & Ovle, 2013)

 As mentioned before different companies use different forms of reward systems depending on

what they want to accomplish, and also due to the cost factor (Nilsson & Ovle, 2013). Some

companies choose for example to issue fractional shares to its employees as a form of reward.

Should the employee terminate his service in three years, the employee loses its shares. This is

also an effective way for the company to reduce staff turnover and keep important employers.

According to Rahman & Hoque (2014) there are five job dimensions that are very important for

an employee in order to feel motivated and satisfied in their work place. These are the work

itself, pay, promotion opportunities, supervision and co-employees.

Definition

The Rewards can be defined as under: “A Reward System is the set of mechanisms for distributing

both tangible and intangible returns as part of an employment relationship”.

According to the above definition, there are mainly two kinds of rewards:

1) Tangible Returns:

It consists of:

a. Cash Compensations: such as basic pay; dearness allowance; merit pay; and

incentives both short-term and long-term;

b. Benefits: such as income/pay protection; work/life focus,

tuition reimbursement, and allowances.

2) Intangible Returns:

Also referred to as Relational Returns, which include job recognition (intrinsic

reward), employment security, challenging work, learning opportunities

Some of the rewards are given as under:

1) Base Pay

2) Contingent Pay/Cost-of-Living Adjustments

3) Short-term Incentives

4) Long-term Incentives

5) Income Protection

6) Work/life focus

7) Allowances

8) Relational Returns (Intangible in nature, such as job security, recognition and

status, work challenges, learning opportunities and opportunities to crease

personal relationships during service)

Performance Evaluation

Rewards are always based on performance. The performance of individual or a group can be

evaluated as per following points:

1. Quality of work;

Rewards always depend on the quality of work and behavior during work. The

higher the quality, the bigger the reward is.

2. Productivity;

It is a major component for any organization/company. If there is productivity, it is

rightly said that the organization is growing. When there is more or less productivity

rewards are used to increase its productivity.

 3. Job knowledge;

To increase the productivity, it is necessary to have job knowledge, which is what to

do and how to do. When there is higher level of job knowledge, the performance and

productivity is relatively high. To recognize the performance, rewards is given to

maintain or increase such levels.

4. Customer served.

The quality of work, sometimes, measured through how the customer is being served

and satisfied. If the company‟s customer are satisfied from the services they gained, it

is rightly said that the company is doing well.

TYPES OF REWARD PROGRAMS

There are large number of different kinds of reward programs intended for performance of

individual and team as well.

Variable Pay

It is also known as pay-for-performance and is related to compensation program mostly used

in the private organizations having production units or sale representatives. Under this kind of

reward, a portion of relevant employee‟s pay is nominated “at risk”. Under this scheme, there

established links between variable pay and the performance of the Co, the outcomes of related

business unit, accomplishments of an individual, or combination of any one. It can of such forms

like:
  Bonus programs;

 Commission;

 Profit Sharing;

 Stock options; and

 One-time awards for significant accomplishments.

Some of the companies used to pay less than competitors to their employees and on the other

hand, endeavor to reward and motivate their employees through program of variable pay instead.

Shawn Tully states in Fortune that: “The test of a good pay-for-performance plan is simple: It must

motivate managers to produce earnings growth that far exceeds the extra cost of [the program].

Though employees should be made to stretch, the goals must be within reach.”

Bonuses

This kind of reward system is frequently used throughout the world. It is mostly used in the

private organizations to motivate their employees for better results or improvement. Bonus programs

have been used in American business for sometime. Bonus system is particularly used by the sales

organization to motivate their sale representatives in order to increase sale and broaden the profit

margin or the organization. To expand this scheme sometime, it is used on individual representative,

group-based, departmental-base, office/region-base.

Some experts have the opinion that small business organizations are keenly interested in

long-term benefits, they should definitely consider other kinds of reward program. Bonus is rightly

said as short-term motivator. The reward on the performance of employees for the past year, they are

encouraged with a short perspective and not future-oriented activities. Thus Bonus programs are
required more care when being structured with the confirmation that employees activities or

performance are over and above the accomplishment of required level of basic duties and functions.

On the other hand, the employees will continue to receive his regular merit pay without any

additional reward. It is pertinent to mention here that Bonuses are completely legitimate ways of

rewarding on outstanding working and such incentives is really a very powerful tool for motivating

future high level performance.

Commission

It is other form of Bonus program used as incentive reward. Under this program,

Commission is paid on sale basis. Targets are given with the variability of Commission percentage

on more than target achieved. More the target achieved, more the Commission percentage paid.

Profit Sharing

Under this type of rewards, a particular portion of the profit in percentage is allocated for

employees. This amount is paid on yearly basis to the employees of the company after closing the

books. It is usually equal to percentage of the salary of employee. This benefit can be given in the

shape of cash or contributions of 401(k) plan for employees.

The basis purpose of this Reward is to motivate employees to work so that the profit margin

of the organization may increase. Resultantly the amount of share-profit for employees will be

increased accordingly. Employees working in such kind of organization are expected to be more

enthusiastic to accomplish their goals and objectives and work hard not for the organization but also

for the sake of this incentive. Here a negative aspect is that since this kind of rewards are paid to all
employees; there can be no differentiate between low performers and high performers. High

performers are discouraged a little bit, which tantamount to reduce future performance. Jack Stack in

Inc., “an accumulation of everything that happens in the business over a given period of time” and is

therefore difficult for most employees to connect their actions to. Stack argued that “[employees]

have to be able to see the connection between their actions, decisions, and participation, and changes

in [a company‟s goals].”

Stock Options

This Reward system was previously known as territory of the large companies and top

management people, while now-a-days this Stock Options method have become growing method to

reward employees and middle management by every companies or even newly born companies.

Under this program, the employees of the company related company can buy their own company‟s

stock at fixed price for some particular period but not more than 10 years. This option is mostly

given to outstanding employees as rewards and usually called Preferred Stock. It is generally

authorized by the board of directors of a company duly approved by its shareholders out of the

outstanding shares of the company, usually equal to a certain percentage.

As mentioned in the pre-paragraph, the employee who performs outstandingly is eligible

having service of 4 year and above. This option is used for long-term motivator and an attempt to

retain such employee for a durable period in the best interest of the organization/company. If such

employee leaves the organization/company prior complete required duration of service or prior to

being fully vested, this option is treated as canceled. When any employee becomes completed vested

in this program, he/she is eligible to allot/purchase certain number of shares at the fixed price (or on

originally agreed strike price) from the company. Then this stock option is known as “exercising”.
When an employee purchases this stock, he/she have the option to retain or sell it to any other

party/person on the market price and retain the share of the profit.

Awarding or setting stock option in this way is a some of risk for the company too as the

company deprives the profit of the difference between face value and the market value. In addition,

the company has to pay dividend on annual basis on these stock, which also increased the liability of

the company. The company has to purchase some shares from the open market to balance its

outstanding shares and keep it at the level of up-to-the mark. Thus the company access cost due to

market price factor.

But on the other hand, the company reduced its tax liabilities by releasing the stocks to the

employees and compensates expanses from the additional amount earned through issuing the stock

options to the employee, even on the fixed price basis. The second benefit for this stock option is

that as the company has shown this sale and compensation, hence accounting methods do not require

showing options being an expense on accounting books. This way the company increases the value

and maximizes the wealth of the share holders too.

Chapter 3 Company
Profile &

Group-Based Reward

Systems
Company Profile & Group-Based Reward Systems

Bharti Wal mart (Best Price)

(It has opened 22 Nov.2010)

Impact of Bharti Wal -mart (Best Price)

Awareness

Always Low Prices

"Always Low Prices" That was Sam Walton's pricing philosophy when he opened the first Wal-

Mart in 1962. Today, we're still committed to bringing you great products at our Every

Day Low Prices, whether you're shopping in your local store or at Wal-Mart.

It is based on cash-and-carry store

 Self-service store offers business members multiple benefits of

price, convenience, choice, quality and hygiene all under one roof .

 Unique „Mera Kirana‟ and Business Solutions Centre created to share solutions with

small and medium retailers on best practices in assortment planning, layout and fixtures,

displays, backroom, licenses, hygiene, customer retention, accounting and value added

services.

 „My Partner‟ programme that includes seminars on taxation for kirana owners, food

safety & hygiene workshops & live demonstrations for hotels, restaurants and caterers.

Facility

 WHO CAN BE A MEMBER?

Businessmen which include:

 Retailers

 Wholesalers

 Manufacturers

 Traders

 Self employed professionals


These all must have proper business license or vat/tot number, with past 2 months sales
report.

AGE:18 years and above.


All the members will be given a card , which they have to show at the time of entrance
in the premises.

One businessman will be given two more additional cards for other members of his family.

Membership Cards are made free of cost.
 
THE BENEFITS OF BECOMING A MEMBER

Low and transparent prices.


All items under one roof.


New and excitement items.


Relevant items for your business.


Freehand hygienic food items.

Targeted customers

 Retailers

 Wholesalers

 Institutional customers

Retail buyers are not encouraged by the Bharti- Wal-Mart BEST PRICE modern Wholesale, but

this segment is also giving a significant business to company.


Major clients

 Border security force

 Army

 Air force

 Medium and small retailers

 It has tie-ups with 30,000 retailers and 8,000 suppliers across the country.
 
General information

 There is a minimum fixed quantity for some of the product categories.

 No maximum limit.

 Same and fair price for small and big retailers or wholesalers.

 The customers who purchase in bulk have some negotiation power In some

product category.

 The security system is very good.

 Cashiers are provided with buzzers/alarms, if any problem occurs they press it.

PRODUCTS

Multi brand and multi category store with 7000 different items.

Major categories

 FMCG

 Consumer durables

 Dairy products

 Fruits and vegetables

 Tobacco

 Stationary

( All products are from Indian only).


Growth

By and large growth is increasing because they are cover all the rural small and big Retailer and

wholesaler; they are also given the always low price.

 Problem identify

Whole seller and Retailer Problem


To collect the money for pay.

Supply chain management.

Distributer Problem

Decrease of sales.

Collection of the money in the market.
Chapter 4

Research
 RESEARCH

The information obtained for the study is from secondary data sources.

Secondary data comprises of information obtained from annual reports, journals, and brochures of

different FMCG Company‟s.

It also includes organizational manuals and other important documents maintained and published by

various FMCG companies. It also includes information collected from websites, business magazines,

business news papers etc. Moreover it also contained information‟s collected from the various

pamphlets published by different FMCG companies.

MEANING OF RESEARCH

Research in simple terms refers to search for knowledge. It is a scientific and systematic search

for information on a particular topic or issue. It is also known as the art of scientific investigation.

Several social scientists have defined research in different ways.

In the Encyclopedia of Social Sciences, D. Slesinger and M. Stephension (1930) defined research as

“the manipulation of things, concepts or symbols for the purpose of generalizing to extend, correct

or verify knowledge, whether that knowledge aids in the construction of theory or in the practice of

an art”.

According to Redman and Mory (1923), research is a “systematized effort to gain new knowledge”.

It is an academic activity and therefore the term should be used in a technical sense. According to

Clifford Woody (kothari, 1988), research comprises “defining and redefining problems, formulating

hypotheses or suggested solutions; collecting, organizing and evaluating data; making deductions
and reaching conclusions; and finally, carefully testing the conclusions to determine whether they

fit the formulated hypotheses”.

Objectives Of Research:

The objective of research is to find answers to the questions by applying scientific procedures. In

other words, the main aim of research is to find out the truth which is hidden and has not yet been

discovered. Although every research study has its own specific objectives, the research objectives

may be broadly grouped as follows:

1. To gain familiarity with new insights into a phenomenon (i.e., formulative research studies);

2. To accurately portray the characteristics of a particular individual, group, or a situation (i.e.

Descriptive research studies)

3. To analyze the frequency with which something occurs (i.e., diagnostic research studies)

4. To examine the hypothesis of a causal relationship between two variables (i.e., hypothesis-

testing research studies).

 RESEARCH DESIGN

A research design specifies the method and procedures for conducting a particular study. It can

broadly be defined grouped as Exploratory Research, Descriptive Research and Causal Research.
An E x p l o ra to ry Research is a preliminary investigation, which does not have a rigid design

&focuses on the discovery of the new ideas.

A Descriptive Research is a well structured study undertaken when the researcher wants to know

the characters tics of certain group.

A Causal Research is undertaken when the researcher is interested in knowing the cause effect

relationship between two or more variables.

In this research the descriptive research is u s e d t o a n a l y z e t h e d i f f e r e n t o u t l e t s

t h a t a n s w e r “ w h o , w h a t , w h e n , w h e r e a n d h o w ” o f t h e subject under

investigation. Data is the key activity of marketing research.

Sources of data
Data can be obtained from two important sources namely:-

1. Primary

2. secondary

Primary Data:

Primarydata are gatheredfor the specificpurposeor for a specific

r e s e a r c h project, consist of original information for the fulfillment of project objective.When

the data are required for the particular study can be found neither in the internal record of t

heenterprisesnorinpublishedsource.

I n s o m e c a s e s i t m a y b e c o m e n e c e s s a r y t o c o l l e c t original data.
Primary data can be collected in four ways:-

1. Observation.

2. Focus.

3. Survey.

4. Experiment.

Secondary data:

Secondary data are the data, which already exists somewhere. Secondary data provide starting point

for research and after that the advantage of low cost and ready availability. Secondary data can be

divided into two types:

1. Internal data.

2. External data.

When researcher uses the data that has already been collected by other data are called secondary

data. Secondary data can be obtained from journals i .e. internal sources report, government

publication and books, professional bodies etc.

Internal data are reports and memos generated within an organisation to facilitate its operations and

annual report . External data are those specially produce for outside consumption.
 Research Methodology


A questionnaire was designed.


The dealers were visited personally and a detailed feedback and questioning session was
carried out.


The internal shop display across brands were put inside the market mapping sheets to get the
share of Display among all brands across product categories.

Objectives of the study :

The objectives of the study is that to understand that the what type of factors afftecting the

motivation of the employees in their work life or to achieve the personal or company goal

.keeping in the view the main objectives of the study the review of various existing studies has

been taken into the consideration for the purpose of understanding the variables related to the

impact of reward system on the employees motivation . to study the perception of the employees

regarding the reward system , the level of motivation on the employees work style and

achievements of goals .To find out the which reward system increases the most of the employees

motivation in the company .

 Limitations of the Survey:


Due to Lack of time, not all the dealers were questioned.


Not all dealers were willing to reveal figures regarding sales of various products and brands
from their counter.

The collection of primary data needs high cost for the survey .

The information not be assumed as accurated given by the employees.

Findings of the Study:


There was a very high correlation between internal shop display and amount of brand sale in
all the counters.


The most important factor for a dealer to stock a particular company‟s product was not margin
but the after sales service provided by the company as they have come to the

conclusion that customer loyalty is the best form to increase sales and loyalty can only be

achieved by selling them products of companies which had an excellent after sales

service network.

It was the convincing power of the Dealer which finally persuades the consumer to choose a

particular brand and not totally the strategies or action plans implemented in the corporate offices so

there is a high need to stay in touch with the market.

 Swot analysis

Strengths:-

Strong brand Portfolio, Price quality & Variety.

Innovative Aspects.


Presence of established distribution network‟s in both urban & rural areas.


Solid base of the company.


Corporate social responsibility.

Weakness:-

“Me-too” products which illegally mimic the labels and brands of the established brands.


Strong competitors & availability of the substitute products.


Low exports levels.


High price of the some products.

Opportunities:-

Large domestic market-over a billion populations.


Untapped rural market.


Changing life style & rising income levels, i.e. increasing price income of customers.


Export potential and tax & duty benefits for setting exports.
Threats:-

Tax and regulatory structure.

Mimic of brands.


Removal of import restrictions resulting in replacing domes.

Temporary slowdown in economy can have an impact on FMCG.

Recommendation

As it is obvious from the study the products of HUL have approached the high water mark of sale in

the global consum er market . However, there are genuine reasons to observe that they have yet to

attain the cutting edge status on many counts. In this regard a few suggestions can be m a d e t o g i v

etherequiredboosttothemarketingprospectsofHULproducts.These

c a n b e summed up as follows:


An attempt should be made by HUL management to tap all the potentials offered by the
global market by devoting a more substantial, efficient and

better equipped resource base. This task can be accomplished in the first place by

implementing a stronger and more ending distribution channel for various products so that

even those sections of consumers who are not accessible so easily, can be

covered with greater ease.

Efficientinfrastructuralbasecoupledwithbetterand

m o r e c o m p r e h e n s i v e a d v e r t i s i n g strategies should be resorted to;

though HUL is presently surfing

ahead of others on the path o f t a k i n g s o m e g r e a t i n i t i a t i v e s i t s h o u l d b e

m o r e c o n c e r n e d a b o u t i t f o r t h e p u r p o s e o f corporate image building.

 
Agri cult uralpursuitsrequi redtom eett hedem andsofcerta in a

g r o b a s e d a n d c u l i n a r y product segments should be more planned, systematized,

efficiently viable and less cost -effective.


The price structure for various products should be more within the limit of affordability for
consumers; the grassroots consideration in this regard should not be ignored. Here, the

policy of loco-centric rather than uniform price structure would certainly be more

advantageous.


Industrial manufacturing units of these products should be set up at places lying nearest
to the places where sources and raw materials for different

products could be available in the easiest possible way.


HUL should go for more planned and sensible marketing and advertising strategies
with a view to accomplishing the task of global brand image buildings.


Hyper marketing and retailing network should get special attention as vital components
of HUL‟s marketing policy.

Many small businesses using different strategies to accomplish organizational goals and

objectives through team structures many of them look for ways to reward on cooperation between

individuals and departments. Bonuses, commission, profit sharing percentage, and stock options out

of outstanding shares can be used to reward group and team achievements.

 For the sake of reward, any organization/company can select individual or group

contributions or combination of both. Reward system on the basis of Group provided on the

evaluation of the team performance or the accomplishment of target provided to them. While the

individual rewards are provided on the basis of personal performance on excellence and those who

are above the average performers. Thus, an employee can gain both the rewards i.e. group-based and

individual rewards, group-based on the basis of part of a group and secondly on the basis of

individual performance too.

Here this system encourage individual on his/her performance to all members of the group

instead they are average performer, under-average or above-average employee. But under program,

an individual, whose performance is excellent, can only earn extra benefit or incentive on his/her

individual performance.

Through these group-based and individual rewards, employees are motivation to improve

their performance and behavior under the umbrella of the organizational working environment. The

organization, through this system gain quality of work, customer service, and productivity to grow

among their competitors.

Recognition Programs

Recognition Program can frequently be used by the large organization but for the small

organization, this program is required extra attention and care due to scarcity of resources such as

finance and other related systems for this purpose. Most of the employees merely appreciate awards

in the shape of money for their good performance but some people, who prefer recognition on

monetary incentive for their extra ordinary performance. If proper performance recognition and
other kinds reward system are applied in any organization, it is very helpful tool to motivate

employees and may excel the productivity, better results in the form of output.

In case of the small businesses organization, it is important for them to separate recognition

program from the reward systems if they want to setup their performance recognition

system/program. It is only possible when focusing for the recognition of an employee‟s effort. Here

recognition means the employee may be provided proper rewards in the shape of money, promotion,

certificate, letter of appreciation, lunch/dinner in his/her honour etc. Only monetary benefits are not

necessary for performance recognition. Glasscock and Gram stated in National Productivity Review

that “effective recognition methods should be sincere; fair and consistent; timely and frequent;

flexible; appropriate; and specific”. They further state that it is necessary that every action of the

employee is recognized which supports the goals of the company, whether it is through informal

feedback or formal company-wide recognition. Similarly, every employee of the company should

have the same right/opportunity to have recognition for work they done.

It required for recognition to occur on frequent basis and timely completion of this process so

that any action of the employee could not be overlooked and may not urge further additional high

level performance. Similar to rewards, the recognition method requires to be appropriated for

achievement. Keep in mind that those actions which are beyond the achievements of goals or not

related to goal align, are required more attention so that they should be corrected timely. An

entrepreneur, however, should remain somehow flexible in the methods of recognition due to variety

of recognition and motivation programs. Finally, employees are needed to clearly understand the

action or behavior which is being recognized by the company. The owner of the organization is
required to be ensured and reinforced what specific action is required to be recognized and it is to be

communicated exactly to all employees.

As stated earlier, there are many ways/forms for recognition. It can be through structured

programs which include: conducting regular recognition events i.e. banquets or

lunch/breakfasts/dinner, employee of the month/year recognition, an annual report or yearbook

which features the efforts or accomplishments of employee(s), recognition boards of department or

company. Other can be recognition as Informal or spontaneous which have the in form of the

privileges through working at home, attend the office late or leave early, or more time for lunch

breaks.

Another way to recognize the performance of an employee is to give some power and

additional support, extra authority, and give his/her name to other employees for consultancy.

Symbolic recognition as „commemorative inscription‟ on coffee mugs etc can also be effective

proved their sincere appreciation of hard work. Letter of appreciation is mostly recognized for

performance in the small organization, who has limited financial resources.

Both rewards as well as recognition programs is being used in small businesses. The owners

of such businesses should prior determine the desired employee‟s behaviors, required skills, and

accomplishments that will support their business targets/goals. The owner will have a better edge in

the current competitive business environment through rewarding and recognizing outstanding

performance.
 Chapter 4
EMPLOYEE

REWARD AND

RECOGNITION

SYSTEMS
 EMPLOYEE REWARD AND RECOGNITION SYSTEMS

In the today‟s competitive business environment, companies are trying compete in the

current business environment. Financial crises have made the situation worst especially for under-

growing business organizations and they are striving hard in the current scenario. For this purpose,

the two major factors are being focused by almost every business organization to complete in this

business environment and trying their best to have competitive edge for their organizations. These

two major factors which effect the production are given as under:

1. Quality of Work

2. Minimize the cost

1. Quality of Work

To survive in the current business environment, the companies/organizations are searching

for different and means for them. Quality of work is one of the major production factors, which is

giving important by every organization. If any organization succeeds to produce quality products,

they can capture major part of the market or even customers of the other organization.

For this purpose, they introduce different schemes and programs to motivate their employees

so that their goal to produce quality products could be achieved and they may not only retain their

own customers but also attract the customers of the other similar products as well.

3. Minimize the cost

 In order to increase the share of the profit, the companies or organizations are stressing on

this second production factor. For this purpose, they are continuously searching for those factors

from where they can reduce or cut the part or whole cost. Many experts are being consulted and

different strategies are being made to concentrate on this issue. Maximum utilization of resources is

made try to accomplish the goals effectively and efficiently.

Many business owners are searching for such kind of improvements in quality of work and

reduction in cost. Job markets are going very tight and paying heavy amounts on skilled and well-

experience person on the key posts. On the other side, small organizations try to expecting more

from their employees and employees are also looking more from their owners. Through a method to

motivate employees, reward and recognition programs, is to bring change in the behavior during

work to more befit the small business. Behavior is known as the attitude of an employee during

work.

In addition to the facts mentioned above in the Chapter 1, there many other ways that can

also be included in Employee Rewards program, some of which are as under:

Reward vs Recognition

Mostly Reward and Recognition terms are used interchangeably, but it should be considered

separately. Reward systems for employees refer to programs setup by organization to reward on

good performance and thus motivate employees on individual and on group levels. Normally, they

are being separately considered from salary but may be of monetary nature or otherwise have

additional cost to the organization. The small organizations are also considering the sphere of
influence of large organizations and have to start such kind of incentives for motivation due to

competitive job market environment to sustain their good performance employees.

It is noted that employee recognition programs on the one hand, often combined with

rewards but on the other hand, they preserve a different purpose altogether. Rewards programs are

generally monetary form in nature while recognition programs are generally non-monetary and have

no cost for the organization. Sue Glasscock and Kimberly Gram argued in Productivity Today for

differentiating these terms that recognition shows a psychological benefit, whereas, reward indicates

a monetary or tangible benefit. Though major elements relating to designing and maintaining reward

and recognition systems are approximately the same, but it is helpful remember this difference,

especially for the owners of small organizations interested in staff motivating while keeping costs

low.

Differentiating Rewards from Merit Pay & the Performance Appraisal

While designing reward programs by the small business organization, they need to separate

reward system from merit pay or salary system. Those financial rewards, which are given on regular

basis such as gain-sharing, Bonuses, etc. must be correlated with the accomplishment of tasks/goals

of individual employees or group and must be considered as pay at risk so that it can distinguished

from salary. In this manner, the manager/supervisor may be in a position to have a sense of

eligibility for deserving employee and ensure that this reward is being granted on the outstanding

performance and not on the basis of basic competency of the relevant employee.

Enhancement in merit pay, however, is not thus part of an employee reward system. It is

considered as increase due the factor of inflation with additional percentage separating employees is
due to competency. This additional percentage is making the difference between good and average

employees of the company, and also used as motivational tool for employees. This increased in

percentage is varying within the employees due to good, better and best employees. The other aspect

of this additional percentage increase that it increased the fixed cost of the company due to variance

in employee‟s payroll instead of variable salaries increases in the shape of bonuses which have to be

re-earned each year. Finally, this kind of financial variance impact is very crucial element in the

small business organizations relating to successful employee‟s job. Merit increases normally review

an individual‟s behavior to performance his/her job, without proper considering the performance

within the context of the group or business.

Designing a Reward Program

The following key points are required to be considered when developing and designing a

reward program:

1. Identification of company or group goals that will support reward program

2. Identification of the desired employee performance or behaviors that will

reinforce the company‟s goals

3. Determination of key measurements of the performance or behavior, based on the

individual or group‟s previous achievements

4. Determination of appropriate rewards

5. Communication of program to employees

In order to gain maximum benefits in the shape of increased productivity, quality of work,

customer service etc., the owner of the company, while designing a reward program, must identify
company or group goals to be attained and the desired behaviors or performance that will contribute

for the purpose. If the desired objectives or goals seem to be obvious, the company will frequently

make the mistakes in connection with rewarding behaviors or achievements which lead to either

failure of desired objectives or business goals or actually disrupt them. If teamwork is set as a

business goal, the bonus system rewarding individuals who are performance good and giving

productivity at their own or at the expense of another does not make sense. Similarly, if quality of

work is an important issue for any company, the reward system that the owner designs should

emphasize rewarding the quantity rather than accomplishment of work by a business unit.

Proper measurement of performance ensures the rewarding program pays off according to

business goals. Since rewards consist of real cost in terms of money or time, small company owners

need to ensure that before rewarding, performance has actually improved. Again keep in mind that

the criteria need to correlate to a small company‟s goals or objectives. As Linda Thornburg

mentioned in HR Magazine, that: “Performance measures in a rewards program have to be linked to

an overall business strategy. Most reward programs use multiple measures which can include such

variables as improved financial performance along with improved customer service, improved

customer satisfaction, and reduced defects.”

The entrepreneur should consider, when developing a rewards program, is that rewards are

matching to the end result for the company. Perfect attendance and observing office hours might

merit a different reward than saving the company‟s money through improved interaction and

contract negotiation. It is also very important to consider reward programs for both individual and

group accomplishments so that both individual initiative and group cooperation and performance are

promoted accordingly.
 Last but not least, if you want to successful rewards program, the requirements of the every

employee should be clearly spelled out. Motivation depends on the ability to understanding by an

employee/worker for what is being asked from him/her. Once this understanding process has been

completed, reinforce the original communication with the help of regular meetings, circulars, memos

etc., for promoting the program. Keep your communications simple but frequent to ensure staffs are

kept side by side of the changes towards system. You are required to use all possible methods of

communication during the whole process, so that the sender and receiver may complete the whole

process of communication.
 Chapter :5
Impact of Rewards for

Motivation
 Impact of Rewards for Motivation

Under the present working environment, there is a trend among the growing organizations

that they are realizing to build an adequate balance between the employee‟s contributions for the

growth of the organization and the organization‟s contribution for admitting the employee‟s

performance in the shape of rewards as well. The strategic approach of the organization is to

maintain and establish balance in both sides, which is one of the key reasons to reward employees.

The organizations that following this approach towards creation of balance are normally focused on

the recognition called intrinsic reward.

According to the studies conducted by various organizations on the topic of reward, it was

revealed that most common problem among the organizations is that they are missing the important

component of Reward for their employees and thus missing the motivation factor of productivity. It

is further revealed that this factor is low is cost but high result component of well-balanced reward

system.

Employee‟s recognition has great impact on the performance of the employees of the

organization. Due to recognition factor, employee feels more pleasure in respect of values and

appreciation during the affiliation with the organization shows good working behavior.
Advantages of Rewards for Motivation
There are lots of advantages of Rewards which motivate employees; some of them are

mentioned hereunder:

1. Employees self-esteem increase;

2. Employees feels more pleasure;

3. Employees become more satisfied;

4. Quality of work increase;

5. Productivity increase;

6. Employees recognition ;

7. Increase employees values;

8. Willingness to work increase;

9. Increase confidence level;

10. Employees turnover ratio decrease;

11. Organization grow more;

12. Competitive advantage for organization;

13. Organization culture improved;

14. Dedication to work increase;

15. Employees learning increase;

16. Production level increase;

17. Increase in profit;

18. Innovation increases

19. Reduction in cost; and

 20. Self-efficacy improve

The above points are only advantages, there are other numerous advantages which are still

under the veil and can be revealed from time to time.

The strategic or top management of every organization is required to crease relationship

norms between the organization and employees. Once this relationship buildup, it will be much

benefited for organization and employees as well. Under this way organization can save lot amount

by spending little on Reward for the motivational purpose.

It was observed from the past situations that those organizations, which are not focusing on

the relationship between organization and employees, or not taking care of their workers, mostly

remain in trouble of different kinds. The productivity level of such organizations mostly observed as

declining trends and employee‟s turnover ratio is very high as compared to other organizations.

The impact of the Rewards for the Motivation to employees can be easily understood through

the following model:

This model shows the relationship between the Reward System and the Employee

Motivation. The explanation of this model is briefly given as under:

 According to this model, Reward System consists of two kinds of Rewards, Intrinsic

Rewards and Extrinsic Rewards, which leads to Employees Motivation. Both Intrinsic and Extrinsic

Rewards are separately explained hereunder.

1. Intrinsic Reward

This Reward is given on the recognition of performance of an employee. It is mostly non-

monetary benefit and related to psychological satisfaction. It includes Awards like „Employees of

the year‟, lunch/dinner in the honour of employee, etc.

2. Extrinsic Reward

This kind of Rewards consists of: pay, Organizational working environment, job security,

status with the additional constant potential of increase in merit pay, promotion, special training etc.
 Chapter 6
Impact of Performance

Recognition and

Motivation
 Impact of Performance Recognition and Motivation

In this chapter, we will see the impact of Performance Recognition and Motivation on the

performance of individual or group. This can also reflects from the turnover ratio of any

organization. We will try our best to approve through the following practical examples in the two

different organizations like Shaheed Zulfiqar Ali Bhutto Institute of Science and Technology

(SZABIST), Islamabad, and International Islamic University, Islamabad (IIUI).

(1) Performance Recognition and Motivation in SZABIST

In the SZABIST, reward program is granted to individual and group as well. 10% annual

inflation increased to every employee of the university. But 5% reward annual increased on average

basis is granted to only those employees who performed at the level of satisfactory and above

satisfactory. Thus this percentage of annual reward differs from individual to individual on the basis

of performance of the employee. The below satisfactory performers are deprive of this increased and

are also arranged meeting with them to know the facts and figures for their poor performance. Proper

motivation is being made through the following ways:

1. Enhancement/continuation of education for employees free of cost;

2. Motorcycle advances

3. Car loans (equal to 12 monthly salaries);

4. House building advance;

5. Emergency loans;

6. Leave encashment; and

 7. CP Fund contribution at the rate of 50%.

Most of the above loans/advances are based on the Security Deposits of the students, which

is amounting to Rs. 5,000/- per student. As the students are increasing on each semester and

recovery from the individuals is also going on, the amount of loans / advances is gradually granting

to the maximum employees of the SZABIST.

The effective of the systems relating to Rewards and Recognition of performance/ service

can be seen from the turnover ratio, which is less than 10%.

(2) Performance Recognition and Motivation in IIUI

The International Islamic University, Islamabad, is one of the biggest set up university is the

capital territory region and twin city. Its employees are approximately exceeding from the figure of

2500. Many kinds of rewards, advances increments, loans, etc are being granted to its employees on

the recognition of their performance.

Some of the rewards for motivation to employees are given as under:

1. Emergency Loans;

2. Car / Motorcycle / Cycle advances according to the cadre;

3. House Building Advances (up to 225,000);

4. Leave encashment;

5. Ex-cadre scheme for technical staff;

6. Medical advance;
 7. Gift on retirement;

8. Bearing of funeral expense;

9. Convenience facility with reasonable recovery;

10. Marriage loan;

11. Continuation education program and employees and their children;

12. 3-5 Advance increments for excellent performers

13. Transport facility for funeral prayers; and

14. Many other kind of facility.

The university has recently doubled almost every loans/advances for the employees and

further considering doubling the remaining advances such as House Building Advances etc.

According to the latest news, House Building Advance has been placed for the Board of Governors

meeting being held on Friday, February 4, 2012.

The university is also contacting different banks and other financers to build housing

accommodation for employees adjacent to the university premises and the land available within the

location of new campus.

DATA ANALYSIS

AND

INTERPRETATION
1 Do reward systems motivate you ?

INTERPRETATION: The tabular diagram shows that 86 % of employees were motivates

with the financial rewards system and left of the employees were not satisfied with that reward

system and some of them did not answer them.

2 What kind of reward motivates you the most?

INTERPRETATION: the tabular diagram shows that the About 70% of employees get

motivates with the financial reward and 15% with the acknowledge and 10% with the promotion

and 5 % with the other reward system , but in this the ones who answered “other” wrote “more

education”, “extra vacation”, “getting to leave work early” and “none”.

.
3 .Do you get rewarded for your achievements ?

INTERPRETATION: The tabular diagram shows that the 60% of employees

answer that there achievements get rewarded for the work done by them .but the 30% of the

employees answer no that there achievements did not get rewarded by the company and left

of 10% did not answer this .

4. Would you perform as well without rewards?

INTERPRETATION : Around 50% answered no on the question if they would

perform as well without rewards. 62% of those who answered yes on the previous

question answered no on this one and only 10% answered yes. 79% of those who

answered no on the previous question answered yes on this one.

84
5. Are rewards important for you to exceed your goals?

INTERPRETATION : The fifth and last question on the survey “are rewards

important for you to exceed your goals‟ almost 85% answered yes. So, just 15% feels

that they would perform better than their main goals without rewards.

The following chapter sets empirical data against the theoretical framework in the form

of an analysis, where we compare and discuss differences and similarities between the

both. First we compare the results from the survey and the interviews with the theory

about motivation, and then with the theory about reward systems. The chapter end with

a discussion where we have more focus on our own reflections.

85
86
 Coverage area’s

7.Coverage Area No. of counter

Raisen 100

Berasia 60

Mandideep 70

Obedullaganj 75

Indus Town 40

87
4. ANALYSIS AND INTERPRETATION OF DATA
4.1 DESCRIPTIVE STATISTICS

4.1.1 Response about the support from the HR department

SL NO NUMBER OF
PARTICULAR
RESPONDENTS PERCENTAGE
1 Highly satisfied 18 36
2 Satisfied 29 58
3 Neutral 3 6
4 Dissatisfied 0 0
5 Highly satisfied 0 0
Total 50 100
(Table 4.1)

(Chart 4.1)

INTERPRETATION
The table shows that 58% of the respondents are satisfied with the support they are getting from the HR department.

4.1.2 Management is interested in motivating the employees

SL NO NUMBER OF
PARTICULAR
RESPONDENTS PERCENTAGE

1 Strongly Agree 27 54
2 Agree 20 40
3 Neutral 3 6
4 Disagree 0 0
5 Strongly Disagree 0 0
Total 50 100
 (Table 4.2)

(Chart 4.2)

INTERPRETATION
The table shows that 54% of the respondents are strongly agreeing that the management is interested in motivating the
employees.

4.1.3 The type of incentives motivates you more

SL NO NUMBER OF
PARTICULAR
RESPONDENTS PERCENTAGE
1 Financial Incentives 15 30
2 Non financial Incentives 9 18
3 Both 26 52
Total 50 100
(Table 4.3)
 (Chart 4.3)

INTERPRETATION
The table shows that 52% of the respondents are expressing that both financial and non financial incentives will equally
motivate them.

4.1.4 Satisfaction with the present incentives scheme

SL NO NUMBER OF
PARTICULAR
RESPONDENTS PERCENTAGE

1 Highly satisfied 18 36
2 Satisfied 29 58
3 Neutral 3 6
4 Dissatisfied 0 0
5 Highly satisfied 0 0
Total 50 100
(Table 4.4)
 (Chart 4.4)

INTERPRETATION
The table shows that 58% of the respondents are satisfied with the present incentive scheme of the organization.

4.1.5 The company is eagerness in recognizing and acknowledging employee’s work

SL NO NUMBER OF
PARTICULAR
RESPONDENTS PERCENTAGE

1 Strongly Agree 18 54
2 Agree 29 58
3 Neutral 3 6
4 Disagree 0 0
5 Strongly Disagree 0 0
Total 50 100
(Table 4.5)
 (Chart 4.5)

INTERPRETATION
From the study, 58% of employees agreed that the company is eager in recognizing and acknowledging their work, 36%
strongly agreed and only 6% showed neutral response.

4.1.6.1 Periodical increase in salary

SL NO NUMBER OF
PARTICULAR
RESPONDENTS PERCENTAGE

1 Strongly Agree 12 24
2 Agree 23 46
3 Neutral 3 6
4 Disagree 9 18
5 Strongly Disagree 3 6
Total 50 100
(Table 4.6)
 (Chart 4.6)

INTERPRETATION
The table shows 46% of employees agree that there is a periodical increase in the salary.

4.1.6.2 Job Security existing in the company.

SL NO NUMBER OF
PARTICULAR
RESPONDENTS PERCENTAGE

1 Strongly Agree 15 30
2 Agree 18 36
3 Neutral 11 22
4 Disagree 3 6
5 Strongly Disagree 3 6
Total 50 100
(Table 4.7)
 (Chart 4.7)

INTERPRETATION
The table shows 35% of employees agree with good job security exist in the company.

4.1.6.3 Good relations with the co-workers.

SL NO NUMBER OF
PARTICULAR
RESPONDENTS PERCENTAGE

1 Strongly Agree 15 30
2 Agree 27 54
3 Neutral 8 16
4 Disagree 0 0
5 Strongly Disagree 0 0
Total 50 100
(Table 4.8)
 (Chart 4.8)

INTERPRETATION
The table shows 54% of the respondents agree that they have good relations with co-worker.

4.1.6.4 Effective performance appraisal system.

SL NO NUMBER OF
PARTICULAR
RESPONDENTS PERCENTAGE

1 Strongly Agree 10 20
2 Agree 23 46
3 Neutral 8 16
4 Disagree 6 12
5 Strongly Disagree 3 6
Total 50 100
(Table 4.9)
 (Chart 4.9)

INTERPRETATION
The table shows 46% of the respondents agree to effective performance appraisal system existing in the company.

4.1.6.5 Effective promotional opportunities in present job,

SL NO NUMBER OF
PARTICULAR
RESPONDENTS PERCENTAGE

1 Strongly Agree 9 18
2 Agree 26 52
3 Neutral 9 18
4 Disagree 3 6
5 Strongly Disagree 3 6
Total 50 100
(Table 4.10)
 (Table 4.10)

INTERPRETATION
The table shows 52% of the respondents agree with effective promotional opportunities in their present job.

4.1.6.6 Good safety measures existing in the organization.

SL NO NUMBER OF
PARTICULAR
RESPONDENTS PERCENTAGE

1 Strongly Agree 15 30
2 Agree 23 46
3 Neutral 3 6
4 Disagree 6 12
5 Strongly Disagree 3 6
Total 50 100
(Table 4.11)
 (Chart 4.11)

INTERPRETATION
The table shows 46% of the respondents agree that there is a good safety measure existing in the company.

4.1.6.7 Performance appraisal activities are helpful to get motivated.

SL NO NUMBER OF
PARTICULAR
RESPONDENTS PERCENTAGE

1 Strongly Agree 9 18
2 Agree 23 46
3 Neutral 6 12
4 Disagree 3 3
5 Strongly Disagree 9 18
Total 50 100
(Table 4.12)
 (Chart 4.12)

INTERPRETATION
The table shows 46% of the respondents agree that the performance appraisal activities are helpful to get motivated.

4.1.6.8 Support from the co-worker is helpful to get motivated

SL NO NUMBER OF
PARTICULAR
RESPONDENTS PERCENTAGE

1 Strongly Agree 12 20
2 Agree 29 46
3 Neutral 0 0
4 Disagree 6 12
5 Strongly Disagree 3 6
Total 50 100
(Table 4.13)
 (Chart 4.13)

INTERPRETATION
The table shows 58% of the respondents agree that the support from the co-worker is helpful to get motivated.

4.1.6.9 Career development opportunities are helpful to get motivated

SL NO NUMBER OF
PARTICULAR
RESPONDENTS PERCENTAGE

1 Strongly Agree 10 20
2 Agree 26 52
3 Neutral 2 4
4 Disagree 4 8
5 Strongly Disagree 8 16
Total 50 100
(Table No.4.14)
 (Chart 4.14)

INTERPRETATION
The table shows 52% of the respondents agree that the career development opportunities are helpful to get motivated.

4.1.7 Factors which motivates you the most.

SL NO NUMBER OF
PARTICULAR
RESPONDENTS PERCENTAGE

1 Salary increase 21 42
2 Promotion 15 30
3 Leave 3 6
4 Motivational talk 5 10
5 Recognition 6 12
Total 50 100
(Table 4.15)
 (Chart 4.15)

INTERPRETATION

The table shows that the 42% of the respondent is responding that increase in salary will motivate them the most.

4.1.8 Incentives and other benefits will influence your performance

SL NO NUMBER OF
PARTICULAR
RESPONDENTS PERCENTAGE

1 Influence 32 64
2 Does not influence 12 24
3 No opinion 6 12
Total 50 100
(Table 4.16)
 (Chart 4.16)

INTERPRETATION
The table shows 64% of the respondents responded that incentives and other benefits will influence their performance

4.1.9 Management involves you in decision making which are connected to your
department.

SL NO NUMBER OF
PARTICULAR
RESPONDENTS PERCENTAGE

1 Yes 47 94
2 No 0 0
3 Occasionally 3 6
Total 50 100
(Table 4.17)
 (Chart 4.17)

INTERPRETATION
The table shows 94% of the respondents agree that they the Management involve them in decision making which are
connected to your department.

Major competitors
Procter and Gamble (P & G) India.

Godrej Consumer Products LTD.(GCPL)

Dabur India LTD.

Colgate Palmolive India LTD.

88
 Marico Limited.

Indian Tobacco Company (ITC)

Gillette

John son & Johnson

Britannia

Amul

Motivation

Interviews

From the interviews, we got information saying that all the employees get most motivated

by financial rewards out of the different rewards asked about. A financial reward is an

extrinsic motivation and this kind of factor has support from the theory The economic

man approach of being an effective motivation factor. As money has different value and

meaning for different people, we cannot conclude how big of a reward should be given in

the general case. Armstrong (1993) also describes this and states that the outcome of

using money as a motivator is depending on the situation.

According to Maslow humans have needs and when a lower basic need, such as safety,

is fulfilled we aim for a higher need (Maslow, 1954). Having needs that is unfulfilled

89
motivates people. So according to this, the respondents have an unfulfilled need when

it comes to money and therefore are motivated by it.

Two of the respondents point out that also non-financial rewards motivate them, those

two work at Company X fulltime and our reflection of this is that they feel more

attached and have more obligation to their manager, work and co-workers. We find some

support for this in Herzberg’s two-factor model that states that financial reward give

positive feeling in a short-time and non-financial has a positive effect in the long run.

The long run may be more relevant for fulltime workers than for part time workers.

Two of the respondents say that the amount of reward in relation to the extra work is

essential for the motivation. This has support from the Expectancy theory that states just

this, that the correlation between effort and reward must be clear if money can be used as

a successful motivational tool (Vroom, 1964).

Only one of the respondents tells us that he/she has an impact on setting the goals but

only when the main goal is met. So none of the respondents feel that they have any

influence over their goals. This goes against the Goal Theory that states that motivation

has a positive effect when the employees are involved in the goal setting (Latham &

Locke, 1979).

When we asked about disadvantages of reward systems and rewards one of the

respondents said that it is important that the reward, in this case a financial reward, has to

be of some value. The respondent tells us that one time he/she got rewarded with a, for

him/her, useless reward and that this had a negative effect on the motivation. We find

90
support for this in Herzberg‟s Two-factor model of motivation that states that a financial

reward that is not present in a suitable value can have a bad impact on the motivation,

which was the case in this scenario. (Herzberg, 1957)

Survey

The first question on the survey “Do reward systems motivate you?” 86% answered yes

and only 2% answered no. We found support for this in the Needs Theory. An unfulfilled

need can motivate behaviour; this should mean that the specific factor motivates all

individuals with a need that is not completely fulfilled. According to Maslow (1954) a

need does not have to be completely fulfilled for another need to occur, which implies

that almost all humans have some needs that are not totally fulfilled and therefore get

motivated by rewards and reward systems.

On our second survey question we asked the employees “What kind of reward motivates

you the most?”, and 52% answered financial rewards, 20% acknowledgement, 14%

promotions and 14% other. Even though 50% answered financial rewards there is quite a

big spread in the answers.

The spread is quite even between intrinsic and extrinsic motivation. Half of the

respondents are motivated by extrinsic factors. One out of five are motivated most by

intrinsic factors, which are internal factors, that individuals motivate themselves. 14 %

are motivated by promotion, we see this as a mix of extrinsic and intrinsic motivation.

As Maslow states: different people have different needs. According to Maslow,

unfulfilled needs are what motivates individuals. Which means that these people, that

91
answered the survey, have different needs or/and are in different places in the hierarchy

of needs. Therefore the answers here have a big spread. (Maslow, 1954)

This spread also goes against Taylor‟s (2005) theory, which states that the use of

economic reward is the only factor that motivates individuals. We can clearly see in our

result that economic rewards are not the only motivating rewards at Company X. The

theory states that employees can be treated like machines and in that case do not

need/want non-financial rewards, which the result from this survey contradicts.

Reward system

Interviews

All respondents said that there is a use of reward system in Company X and that this is

something that is used systematically on every day basis. The purpose of the reward

system was mainly to motivate the employees to work accordance with the company‟s

goals and maintain important labour.

All interviewed employees have a positive view of the reward system and they believe it

is a central part of their desire to perform well and be efficient. This is something we also

found support in the theory. (Bengtsson & Hedberg, 2012) Mentions that the employees

are motivated

directly by the reward system when they choose to contribute to their organization's

effectiveness because they want to be rewarded. For example, this motivates the seller to

make an extra visit on a Friday afternoon, instead of taking that early weekend. The seller

does this by himself in order to hopefully achieve the monthly sales quota. The reward

92
system becomes a direction tool in this case. The organization can lead their employees

towards the direction them want them to move towards.

Because all organizations have goals and visions they have to get their employees to

work towards the same goal in order to become successful. It is not just about getting a

reward, it is also about what kind of reward you get. The theory states that we as

individuals, employees have different drivers and motivations. An example about this

dilemma is discussed by Nilsson & Ovle (2013) were they mention that a reward for an

employee can be a punishment for another co-worker. If the employees receive a

weekend trip as a reward, some may find it as a great reward while other sees it as a

punishment to be away from their families during the weekend.

The reward system looses its purpose in this case. This problem was also mentioned by

one of our respondent during the interview. Respondent B did not appreciate all rewards,

he/she mentioned that it is important to receive a good reward or no reward at all. “I got

a individual useless reward one time, that just made me bitter and not motivated to

perform the next time”. In this case the reward system has lost its main purpose, which is

to make their employees motivated to work towards a goal.

Bau & Micheal (2001) states that there are two different kind of rewards both external

rewards as something financial like a bonus or a internal reward as a acknowledgement

that leads to self satisfaction. They also mention in their article that it is important that

they really consider the different factors before they start implementing a reward. One of

our respondent said during the interview that Company X has a broad mix of reward

system they have both financial and non-- financial rewards and that the rewards both are

directed to individuals and to groups. Some of the respondent only felt that financial

93
rewards motivate them while non-financial rewards such as credit also motivated two of

our respondents. It is therefor very important to understand what kind of rewards that

motivate your employees in order to get the desirable result. Four out of the

five respondent answers yes on the question if the reward systems at the call centre

motivate them. The four says that it is financial rewards that motivate them the most. But

respondent A and E think that non-financial rewards can be motivating as well. Our

reflection of this is that A and E has this as a fulltime job and therefore maybe feel more

“attached” and have more obligations to their chef, work and co--workers. This can vary

from situation to situation, for instance the two respondents who work fulltime has more

experience from the reward systems and one of the respondent D, who works mostly

nights, do not feel as included. “Because I work almost only night I can not get

evaluated on most of the requirements that is included as factors in the reward systems,

for example, they do not have the customer survey running during the night”. It is

therefor essential for the company to customize the reward system so it suits employees

with different work situations.

Another negative aspect that we found with the reward system in company X is that one

of the respondent feels like it is always the same employees that receive the rewards.

Which makes them loose hope and these results to an ineffective reward system. “It is

often the same persons that wins, which make me give up before it even started”. In the

theory, it is mentioned that the reward system is used to stimulate employees, which is an

important factor in motivating employees. When we held the interviews was an employee

who explained that in the long run will work unilaterally, and every day is not so

different from the other. Four out of five respondents mentioned that the reward system is

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extremely important for their daily performance and also the desire to remain in the

company. (Nilsson & Ovle, 2013)

5.2.3 Survey

In this section we have linked the empirical data from the survey to the theoretical

background that we compiled regarding the reward system. We asked the question “do

reward system motivate you”. There was a very clear answer that it did. On 50

employees 43 answered yes while only one employer answered no. The other six

answered “no answer”. This was not a big surprise, according to the theory, employers

get motivated by reward system, based on the idea that we strive after our goals to

achieve what we want. The reward system can be considered as an achievement.

(Bengtsson & Hedberg, 2012) The second survey question was “what reward system

motivates” the lasting majority answered financial, this is something that prevails in the

five interviews we conducted.

In the third question, we asked if the employees perceived that they got a reward for

good performance. The majority answered even in this case that they got it, which

clearly demonstrates that the company X systematic use reward systems. The employees

who answered no, could very well be a night worker as one respondent we interviewed.

The night workers usually feel more excluded when it comes to reward systems.

In our fourth question, we asked if employees felt they would perform as well without

any reward. Even in this case the answers was not far from the theory we have compiled.

27 people said they would not perform as well, while 14 say that they would perform

equally regardless. 14 people are more than we expected. The reason that these 14

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employees responded that they still would perform as good is unknown. However, it may

be because they feel that the salary they get at the end of the month is a reward and that it

is sufficient to other rewards. Or maybe keeping their jobs is a reward in itself.

Companies choose to reward their employees have staff that perform better than

companies that do not use any incentive system. They also believes that a reward system

would be able to get more people to become interested in working of the company and,

above all, it means that they have employees who want to stay in company. (Bau &

Dowling 2001) In the fifth and final question we asked about the reward system is

essential in order to exceed their goals, ie do more than what is expected from the

employees. In this case, we got a better hit rate on yes. For then you have to do more than

just your goals, you need to actually make an effort and go the extra mile and that is

something most of us do not like to do without getting any kind of reward ever. In order

to ensure the effectiveness of an organization it is highly required that workers are

motivated and which you can achieve with the help of reward system. Rewards

may also get an individual to perform better and create motivation and satisfaction. It

may also be a good way to retain important people in the organization and the reward

can also get the employee to feel important and needed. If good performance in the

organization is rewarded, it will most likely happen again. (Nilsson & Ovle, 2013)

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 DISCUSSION

We got many answers and reflections from the interviews and the survey that have

support from the theoretical framework. But there are areas we think that the company

can develop to be more effective.

Company X uses both financial and non-financial reward and both have good effect in

different ways. Financial rewards have positive effect on the motivation on all of the

respondents and non- financial rewards only on the two respondents that work fulltime.

In this area we think that Company X can develop their reward systems in a way so the

rewards are more adapted to the individual and their employment status to get the most

effective results. For the fulltime employees they could lay more focus on non-financial

rewards and for the part time employees they could focus on financial rewards.

In the survey we got a big spread in what motivates the employees the most. This also is

something that shows that it is important to adapt rewards for each individual due to the

fact that people get motivated by different things/rewards. In the survey we did not ask

about background, age or employment status and therefore we cannot evaluate who gets

motivated from what factor. We think that Company X should investigate in this to se if

there is any general pattern in motivation factors among employees. If there is a pattern,

they can use that information to adapt the rewards more to take advantage of this as a

motivating tool as much as possible.

One of the respondents tells us about the disadvantages of getting a reward that does not

have a suitable value. Only one mentions that he/she experienced it, but how many did

he/she spread the negative experience to? We think that this is something that co-workers

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 talk about and therefore this kind of information is easily spread. The useless reward only

gave an effect on the individual that got it but the negative experience that it lead to

probably gave an effect on many others. So even though there is only one that mentions

this we think that it is an important factor to take into consideration for the company.

Only one of the respondents feels included in the goal setting and only when he/she

already achieved the main goal. According to Latham & Locke (1979) it is important

that the employees are involved in setting goals and that they accept the goals for them

to be effective as a motivating tool. In this area we think that Company X has a

opportunity to develop their process and start to include the co-workers in the discussion

and setting the goals.

Designing a reward system is difficult and in this essay we have realized that there is no

reward system that can be implemented in every situation and company. There is no

reward system that will work for all employees. The company should use a system that

fits the needs of the employees to get the outcome they seek. Because most of the

rewards are individual and performance-based, rewards should be adapted to different

individuals. It is important to ensure that these rewards are good enough for the specific

person that the reward is intended for. For instance a 65 year old man may have a

different need than a 18 year old girl. If a company wants their rewards to be coveted

they should consider these factors.

It is revealed from the current scenario of SZABIST and International Islamic

University, Islamabad (IIUI) that, if proper Rewards are given, the turnover ratio can be

decreased to the minimal level as in case of the above mentioned organizations. In many

other types of organizations, where proper motivation through rewards are not implemented

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to recognize the performance of employees, high level of turnover ratio recorded in that

organizations like most of the private organizations.

In addition, if performance recognition system is properly implemented, employees

are more satisfied with their jobs and improvement in their output increased. Resultantly,

required level of productivity can be gained and strategic goals be achieved.

CONCLUSION

Keeping in view of the above discussion, it is clearly evident that if any organization would

like to increase their productivity, job performance standard, and output of their workers,

they should emphasize on performance recognition and rewards to motivate their workers.

After implementing the above, such organization will surely feel that the performance

level of their workers is increasing gradually and the productivity as well. If any organization

will not properly reward their employees, the chances to achieve required results,

productivity and performance/job standards come to the low level. It is proved that

employees are motivated through rewards.

The conclusion that we can make is that rewards and reward systems motivate most parts

of the employees at Company X. Financial rewards motivate the majority most, but there

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is a quite big spread. Therefore we think that the direct answer to the question is a simple

yes, but to develop this answer and making conclusions about what rewards that

motivates and especially how much is very hard, probably impossible. There are

individual factors that affect this; we think that making a conclusion about this, you

would need to investigate all the employees at the specific workplace and you would

have to do it regularly and often since peoples life situation and preferences changes.

We also came to the conclusion that it is important that the “extra work” is worth the

effort of getting the reward and that it is important for the workers to feel involved in

setting their own goals, if reward systems could be used as a motivational tool. The

employees are not going to make an extra effort if the reward for them is not interesting

or if they do not feel that the goal is reasonable and fair.

What reward systems are in use at Company X?

We have come to the conclusion that Company X uses several different types of reward

system to motivate their employees. The main and most effective ones are the financial,

in the form of bonuses, shares and increased salaries. However, much of the financial

bonuses are not individual performance-based rewards. As previously mentioned these

bonuses are depended on

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how much the employee work in time and therefore we did not go into it in this study.

However, this is a way for the company to keep their employees in the long run.

Another reward system that is systematically used is the so-called internal rewards.

These are everything from acknowledgement and honour to promotion. These are

especially important for those who work full time, while those who work part-time

prefer the financial rewards more.

Another conclusion we have drawn is that the reward system is more than just getting a

direct reward in your hand or some acknowledgement. Reward system can also be

indirect. Some of the employees were not as eager to receive a reward for everything

they did. We interpret this as some of them consider the job itself as a reward. To receive

a salary at the end of the month may be what keep them going. Even if they did not win a

competition on two movie tickets one week this did not affect their performance that

much. To keep the job, which then leads to a salary in end of month, was motivating

itself.

Finally, we believe that if an employee is satisfied in the company and have good

working conditions, the small rewards are not as essential. Obviously, they can

motivate and stimulate employees to perform, but the difference is not crucial.

How can Company X make their reward systems more effective?

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We think that Company X has an opportunity to make their reward system more effective

by investigate more in which individual motivates by which factor. If there is a

possibility of finding a pattern for this we see a big opening to develop the systems that

they already using to maximize their results.

During our studies we already found a possible pattern that fulltime workers get

motivated more from non-financial reward than the part time workers. We think that the

company can and should use this to their advantage due to the fact that non-financial

reward probably is more profitable for the company. Therefore we think that the

company should focus on non-financial rewards when it comes to the reward systems that

apply on the full time employees.

As mentioned those who work part-time prefer the financial rewards more. Our

reflection of this is that maybe the ones that work part-time feel that they need to

compensate for the safety that the permanent full time worker has. It can also be because

the part-time employees have lower salary than the full time workers and therefore think

that financial rewards are bigger motivating factors. If it is the latter one, we think that it

could be relevant to investigate what is most effective for the company, raising the salary

or keep using financial rewards.

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We also think that the employees should be more involved with setting the goals and

determining the rewards, this will lead to more acceptance towards the goals, which in

turn lead to getting the employees motivated. If the employees get to have an impact in

deciding what the reward should be there will be less risk of negative feelings about

useless rewards. We think this can have a huge effect on the view that the employees

have on the company‟s reward system and are therefore important to take into

consideration.

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 BIBLIOGRAPHY

th
1. Organizational Behavior (Book), 13 Edition, by Stephen P. Robbins, Timothy A.

Judge, and Seema Sanghi.

2. Performance Management (Book), Second Edition, by Herman Aguinis, 2009.

3. http://www.answers.com/topic/employee-reward-and-recognition-systems

4. Glasscock, Sue, and Kimberly Gram. “Winning Ways: Establishing an Effective

Workplace Recognition System.” National Productivity Review. Summer 1996.

5. http://globaljournals.org/GJMBR_Volume11/9-Reward-System-And-Its-Impact-On-

Employee.pdf

6. http://www.bizresearchpapers.com/22.Reena.pdf

7. Reward System And Its Impact On Employee Motivation in Commercial Bank Of Sri

Lanka Plc, In Jaffna District, by Puwanenthiren Pratheepkanth, Publisher: Global

Journals Inc. (USA), Global Journal of Management and Business Research, Volume

11, Issue 4, Version 1.0, March 2011.

8. The Impact Of Reward And Recognition Programs On Employee‟s Motivation and

Satisfaction: An Empirical Study, by Reena Ali and M. Shakil Ahmed, International

Review of Business Research Papers, Vol. 5, No. 4, June 2009, Pp. 270-279.

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 QUESTIONAIRE

I am a student of MBA and doing survey on “ THE IMPACT OF REWARD SYSTEM ON

EMPLOYEES MOTIVATION AT WALMART”. Please take a few minutes to answer the

following question as this will help in completing my research work.

PERSONAL DETAILS: (OPTIONAL)

NAME :

CONTACT NO. :

AGE :

SEX : MALE [ ] FEMALE [ ]

MARITAL STATUS : MARRIED UNMARRIED

ANNUAL HOUSEHOLD

INCOME (MONTHLY) Less Than 1.5 Lakhs

Between 1.5-3 Lakhs

Between 3-5 Lakhs

Above 5 Lakhs

105
1. Do reward systems Motivate you?
o Yes o No
o No answer

2. What kind of rewards motivates you the most?

1. Promotion
2. Financial
3. Acknowledge
4. Others

3. Do you get rewarded for your achievements?

o Yes
o No
o No answer

4. Would you perform as well without rewards?

o Yes
o No
o No answer

5. Are rewards important for you to exceed your goals?

o Yes
o No
o No answer

6. You know about Rewards and Recognition programme in your organization

a) Strongly disagree b) Neither agree nor disagree c) Strongly agree

7. Are you being appreciated for every six months?

a) Yes b) No c) Sometimes
8. Is the rewards system of your organization being followed genuinely?

a) Yes b) No c) Some extent

9. Spending special time with senior leadership team outside the plant is motivating?

a) Strongly agree b) Agree c) Neutral d) Disagree e) Strongly disagree

10. My supervisor cares about me as a team member?

a) Strongly agree b) Agree c) Neutral d) Disagree e) Strongly disagree

11. You are feeling that your work is valued and appreciated

a) Strongly agree b) Agree c) Neutral d) Disagree e) Strongly disagree

12. You feel support and guidance of your superiors is important for you to get Rewards

and Recognition

a) Strongly agree b) Agree c) Neutral d) Disagree e) Strongly disagree

13. It is important to you to be recognized for your work

a) Strongly agree b) Agree c) Neutral d) Disagree e) Strongly disagree

14. How did you come to know about any new Rewards and Recognition being introduced in

the organization?

a) Through superior b) Co-workers c) Through websites d) When necessary comes

15. Rewards and Recognition provided by your organization are satisfactory?

a) Strongly agree b) Agree c) Neutral d) Disagree e) Strongly disagree

16. Did you get any Rewards and Recognition for your performance in your organization?

a) Yes b) No

17. Which type of Rewards and Recognition do you prefer more?

a) Monetary b) Non monetary c) Both

18. What all products do you sell from your shop?

 Personal wash

 Lundry

 Skin Care

 Hair Care

 Orel Care

 Deodorants

 Clour cosmetics

 Foods

19.Which brands do you stock/sell?

 HUL

 P&G

 ITC

 Godrej

 Dabur

 Marico

 Any Others (P lease Specify) __ __ _ __ __ _ ___

 20.What is the total Counter Size/Sales of the following Products in your shop?

HUL P&G ITC Godrej Dabur MaricoOth ersTotal

HUL
PW

P&G
LW
DB
OC
MAR.
OC
Total

21.What is your annual/monthly turnover in :

• All products

22.Which are the important factors for you to stock a particular brand?

 Customer Demand

 After Sales Service

 Terms of Credit

 Sales Promotions

 Any Others(Please Mention)

23. Any suggestions/feedback for the Company?

_____________________________________

_____________________________________

_____________________________________

_____________________________________

Thank You for sparing your valuable time, Have a nice day!!!!!