Stimulating employee productivity through the implementation of relevant motivating strategies is an important element of management strategies in organisations of various profiles and sizes. The abilities to create a high-performance labour environment and achieve subordinates’ high loyalty characterise quality leadership activities and an opportunity to manage the work process competently. Maintaining high performance is an important aspect, and to work in this direction, a reward-management strategy can be a valuable intervention programme. The purpose of this regulatory course is to encourage subordinates’ success through both tangible and intangible bonuses to stimulate high productivity and sustainable commitment.
For many modern companies, this strategy is one of the most successful ones due to high demands placed on employees, as well as the specificity and complexity of the tasks assigned. In addition, during the implementation of such an impact programme, challenges may arise, for instance, dissatisfaction with current bonuses or a biased attitude towards rewards distribution. In order to avoid these outcomes, a comprehensive assessment of the effectiveness of the reward-management strategy should be conducted. If successful, this course of personnel control allows achieving high-performance results and creating a productive work environment.
Goals of a Reward-Management Strategy
In the minds of modern leaders of organisations, there is a growing understanding that the search, stimulation, development and retention of competent employees are key success factors in business. The cost of staff incentives is increasingly seen as an investment in the development and progress of companies. Therefore, there is a link between the individual elements of the payment model and labour stimulation. According to Ledford (2014), the value of positions in the internal market determines the share of remuneration, and an intention to increase these bonuses is the natural desire of employees to advance professionally.
Modern organisations mobilise the potential of their subordinates who, in turn, are able to provide an advantage over competitors, and a reward-management strategy, as a modern leadership practice, is one of the suitable approaches. The key objective of this system is to ensure the achievement of the goals of the company by working with employees and stimulating their personal motives. Organisations form a system of bonuses to direct the focus of employees’ attention to the need for a certain type of production behaviour that is considered acceptable and necessary in a specific work environment.
In order for the remuneration system to stimulate the desired behaviour, it should satisfy the needs of employees. Such encouragement includes everything that subordinates can value, and what employers are able and willing to offer in exchange for the contribution of employees to achieve the strategic goals of a particular company. Engle, Festing and Dowling (2015) note that today, the reward system is one of the important components of human resource management (HRM) and forms the image of business organisations in the market.
Despite the fact that, as Tanwar and Prasad (2016) remark, monetary rewards are the highest incentive for most subordinates, bonuses can be different and may be aimed at meeting individual needs. The main purpose of such management tactics is to influence the productivity of employees. According to Mellahi, Frynas and Collings (2016), the individual performance of subordinates is the ultimate objective that company leaders want to achieve. Therefore, the willingness to offer specific bonuses can pay off in the form of significant production results. Thus, a reward-management strategy is a potentially effective system of influence on employees to increase their commitment and involve in the work process.
Principles of a Reward-Management Strategy Development
In the face of a business environment, a reward-management strategy is flexible. This approach solves the problem of staff incentives in two key aspects – effective support for achieving goals and maintaining productive labour resources. When developing a reward strategy, leaders need to consider some principles of its impact in order to ensure a positive effect on subordinates. Argote and Hora (2017) suggest paying attention to how this HRM practice will be consistent with a particular business course and support the achievement of organisational goals. The authors also note that, when forming a specific system of bonuses, it is crucial to consider how this approach can be integrated with other stimulating processes, for instance, career perspectives (Argote & Hora 2017). In addition, the management of organisations is to be sure that such tactics will increase the business ability of enterprises and will be able to increase performance outcomes. Meyers and Van Woerkom (2014) argue that control and reward systems should be linked closely to prevent any managerial mistakes. As a result, the leadership apparatus can take advantage of this approach if an enabling environment for all the changes is maintained continuously.
It is impossible to implement a reward-management strategy if organisations incur losses and cannot afford to spend additional funds on material incentives. In case losses are highly probable, it is essential to consider other tactics of motivating personnel. There are not only monetary but also other principles of promoting employees’ productive activities. Barak (2016) offers to maintain interpersonal interaction with subordinates and, in particular, the diversity strategy. According to the author, promoting professional behaviours, while taking into account the individual background of subordinates, makes it possible to increase employee loyalty and creates a high-performance environment to achieve business goals (Barak 2016).
It is also crucial to consider reward levels in order to prevent financial challenges. Perkins, White and Jones (2016) state that from the position of a manager, it is necessary to determine the amount and volume of those bonuses that are offered to employees. For this purpose, competent analytical and accounting activities are required. In case too low or, conversely, too high rewards are offered, there are risks of financial difficulties that, in turn, will not be easy to eliminate due to subordinates’ dissatisfaction with the cancellation of bonuses.
Challenges of a Reward-Management Strategy
Despite the potential benefits of introducing a reward-management strategy in business, some challenges may arise, which are undesirable, particularly, in the face of competition and financial instability. For instance, Bustamam, Teng and Abdullah (2014) consider the tactics of encouraging employees in the hotel industry and remark that determining the type of bonuses for subordinates is a difficult task.
When analysing this aspect, one can note that workers not only in this sector but also in other areas are ready both for tangible and intangible rewards. In this regard, the ambiguity of the proposed strategy for introducing premiums is justified and depends on a particular enterprise and its specifics. Xavier (2014, p. 38) cites the concept of “reward communication” and notes that this factor may become a cause for disagreement in a team. The peculiarity of this phenomenon is that the knowledge of the activities of a particular organisation and its work in the market can be a valuable resource. Consequently, the discussion of current issues with subordinates is one of the forms of remuneration, which can also affect the productivity of employees and their loyalty and increase mutual trust.
Another potential challenge is defining reward criteria based on employees’ productivity. Hejase et al. (2016) state that many bonus programmes are interconnected with the performance of subordinates as a key factor determining the volume of rewards. However, such a system may cause disagreements in a team because often, the factors of evaluating immediate responsibilities are individual and depend on specific posts. In case too high or, conversely, low incentives are offered as compensation for high production returns, employees may be against such programmes. Finally, the inconsistency of bonuses to the interests of employees is a frequent challenge that is not addressed in business organisations. Nankervis et al. (2016) note that even if the management promotes the idea of encouraging subordinates, these motivational rewards may not satisfy their individual needs. Such a justification is objective in view of the current conditions of remuneration. Employees of low status are unlikely to be satisfied with intangible bonuses, for instance, free education opportunities, and will probably prefer them to cash rewards. Therefore, the analysis of subordinates’ interests is a must when planning a reward strategy.
Involving Available Resources
In order to avoid challenges in introducing a reward-management strategy in an organisation, it is crucial to take into account the aforementioned difficulties and involve all possible resources to achieve interaction with subordinates. According to Antoni et al. (2017), in HRM practices, professional specialists should be engaged in order to analyse the individual traits of employees and applicants, which, in turn, can help establish effective programme implementation. In case personal characteristics are taken into account, this will create confidence among subordinates that the management introduces the reward system competently. As Korir and Kipkebut (2016) argue, leaders’ behaviour is shaped by their ability and power to involve available resources and opportunities to encourage the growth of a certain business. In other words, if managers strive for rapprochement with their teams, for instance, by offering employees relevant and in-demand bonus programmes, this will become a productive factor for increasing performance outcomes. In addition, every employee will be convinced of his or her personal significance in a specific organisation, which will increase loyalty and trust. Therefore, collecting information about subordinates and engaging competent HR specialists are the important components of a reward-management strategy.
Engaging available resources implies not only material but also intangible opportunities that serve as value landmarks and help both managers and employees to benefit from a reward system. Brown (2014) reviews a non-financial compensation programme for employees of different sexes and notes that males and females have different preferences. Managers can use this knowledge and implement their bonus programme as efficiently as possible, for instance, by developing individual rewards in accordance with a gender attribute. This approach will provide an opportunity to increase leaders in the eyes of subordinates, thereby creating a more productive work environment.
In addition to intangible bonuses, drawing up a plan of intervention and implementing an effective bonus system may imply collaboration as a productive mechanism. Shields et al. (2015) note that teamwork can be no less valuable than individual activity that, in turn, allows creating a programme of mutual bonuses. Such a project may be successful if employees know one another well and can rely on colleagues. Nevertheless, if a team is unfamiliar and periodic conflicts arise, initially, it is essential to rally the collective in order to introduce the necessary changes and promote the optimisation strategy of rewards.
Evaluating the Effectiveness of a Reward-Management Strategy
The process of evaluating the effectiveness of any optimisation changes in organisations should be an integral working component because it can help determine the success of interventions and take appropriate measures if necessary. Many companies conduct such assessment programmes to determine how employees are satisfied with new bonus plans. For instance, Alam and Raut-Roy (2019) give an example of reflective activities in Tesco and argues that in accordance with the results of the survey, subordinates confirm the importance of a reward-management system in their work environment.
Ziyae (2016) confirms the idea that HRM specialists should implement projects to evaluate any changes promoted in business organisations. The author states that this activity enhances the contact of employees with managers and helps obtain objective data regarding the validity of specific optimisation solutions (Ziyae 2016). If such interaction is not encouraged, this may be fraught with the absence of productive changes due to various factors – subordinates’ discontent, the inefficiency of optimisation strategies and other nuances that are difficult to predict. Therefore, projects involving the promotion of bonus programmes should be accompanied by analytical work that may include surveys, feedback and similar reflective activities.
In order to evaluate the effectiveness of a remuneration strategy, it is necessary to analyse the compliance of the quality, completeness and timeliness of the fulfilment of functional duties by employees. Also, the results of companies’ work with their goals and objectives are to be assessed. For instance, when taking into account extrinsic and intrinsic bonuses that vary depending on business specifics, evaluating the productivity of changes allows determining the relevance of a new incentive system in a certain work environment (HH 2018). According to Zondo (2017), the assessment of both types of remuneration helps find out in which areas the success of employees is the most obvious and which areas deserve particular attention. In addition, a comprehensive analysis makes it possible to determine whether the attitude of subordinates to their immediate duties changes after introducing appropriate changes. In case this evaluation proves the effectiveness of a new strategy, this will allow asserting its importance in a particular organisation. Thus, a proper assessment system is an important and relevant component of the practice involving the promotion of a reward-management system.
Introducing an effective reward-management system in a business enterprise is a potentially valuable measure that may help to increase employee productivity and create a favourable work environment. Such a programme is aimed at encouraging both the individual and group activities to improve production results. There are a number of conventions that need to be considered when planning such an intervention. In particular, some challenges can affect performance negatively, for instance, the inadequacy of bonuses to the needs of subordinates or insufficiently high rewards. In order to avoid these consequences, managers should have enough power to involve all the necessary resources and opportunities. The evaluation of the success of a bonus program should be a mandatory part of the implementation project because relevant data may be obtained concerning employees’ approval and their perception of the changes made.
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