Introduction
A reward system is an official or informal program that organizations utilize in recognizing the achievements of workers, including successful completion of corporation’s aims or missions. Additionally, an organization might decide to recognize a member of staff for submitting an ingenious idea that contributes to the development of a new product. Through the system, the organization is expected to set principles, regulations, and measures related to reparation and distribution of benefits or rewards to workers for a job well done.
In the modern organizational culture, the reward system is viewed as the process of gathering brain structures that attempt to manage and standardize behavior through induction of gratification. Several theories of motivation exist, but a number of them are outdated since they insist on the financial rewards yet research shows that not all employees are money oriented meaning that they prefer other forms of incentives other than money.
If a holistic view of motivation is to be developed, researchers should engage in extensive studies to develop a theory that explains the impacts of non-financial rewards on the performance of workers in various organizations at different levels. As Tidd and Bessant (2009) observe, many organizations share an important aspect, which is the respect of employees since they came to the realization that they cannot achieve their objectives without the human resources.
Boxal and Purcell (2003) noted that the performance of any employee in the organization is partly reliant on his or her ability, motivation, and available opportunities, something confirming that the reward system plays an important role towards employee effectiveness1. From this perspective, motivation is defined as the force that provides impetus to employee behavior since it stimulates, sustains, and directs the worker towards goal achievement.
Several theorists have come up with ideas through which an employee can be motivated to produce the best results. Maslow’s hierarchy of needs, Mc Gregory’s theory XY, and Herzberg’s theory are some of the ideas that modern managers apply in encouraging their members of staff to deliver the much-needed results2.
Unfortunately, a number of these theories are defective in the sense that they only insist on financial rewards and as Wilson observe, they are inapplicable in the modern organizations. The ideas of Vroom seem to be valid as far as non-financial rewards are concerned given the fact that it is based on the assumption motivation is reliant on different variable. Unfortunately, such theories are not clear since they do not consider important interrelationships that take place in the work set up3.
Company Analysis
Apple
The company is one of the multinational giants that operate in various economies, having managed to outshine its competitors. The organization is known to attract top class employees because of its reward system that mainly stresses on non-financial benefits. Fortune conducted a study in 2009 to establish what really attracts employees to remain or join the company and his analysis confirmed that the reward system, which is based on non-financial rewards, is the main reason, even though other factors contributed as well.
For instance, the organization allows its employees to obtain products at a discount meaning that they pay less for goods and any other service received from the organization. Each employee is allowed to run an insurance policy of his or her choice without chipping in something, irrespective of the cost. Recently, life insurance was introduced whereby employees are entitled to quality healthcare4.
Many organizations encourage its employees to join the health insurance plan run by the government since such programs might be cheaper as compared to those offered by the world’s leading insurance companies. Apart from providing insurance plans and offering discounts, the organization has an attractive and creative culture that allows each employee to conduct his or her activities without much interruption.
As Burrow observed, the CEO once argued that the creative culture in the organization is the gravitational force that pulls all the bright and creative people together. Apple is the only company that facilitates imaginative thinking and sustains high inspiration through non-financial rewards. The management of Apple appreciates the ideas of Gilmore noting that the management of the reward system is a critical element as far as encouragement of flexibility, leveraging performance, and targeting a knowledgeable workforce is concerned, particularly in the competitive market.
The company came to the realization that money is an important incentive since it facilitate the satisfaction of human needs as suggested by Maslow, but it later realized that this type of motivation is short-lived since employees would not reach the self-actualization stage. Based on this, it is observed that monetary rewards are unsustainable in the competitive market. In the first year of operation, Apple rewarded its executives with a 3-5 percent bonus of their salary, even though the organizational targets had not been met.
This was aimed at retaining the best performance workforce having understood that fundamental attribution error exists and this could have contributed in missing the target. Consequently, many employees renewed their contracts, as they had been motivated to commit their future with the organization. In the subsequent year, the organization realized that the promise of financial rewards was one of the reasons why the targets were not being met. Consequently, a new reward system that was non-financial was adopted having observed that money does not have a symbolic value given the fact that an employee would have nothing to boost of after consuming the money.
Wal-Mart
The company is the leading chain supermarket in the world, with an approximated employee base of two million. Globally, the organization runs at least nine-thousand stores, including departmental stores, warehouses, and retail stores. The company runs its operations in at least twenty-seven countries with fifty-five different names. Studies show that the company is among the largest private employers in the world.
Many people think its global financial reputation attracts peopled to join, but the secrete lies with the reward system that the management employees in motivating employees. The company has a lengthy list of employee benefits, which are mainly non-financial, which have propelled it to where it is now. All Wal-Mart employees are expected to join a unique program under the title Wal-Mart Associate.
The non-financial benefits are mainly given in form of health while financial benefits are given out in cash. Since the company is listed in the major stock exchange markets globally, an employee has the privilege of acquiring shares without going through a broker. This makes an employee proud to an extent that he or she associates him or herself with the organization at an individual level. Once an employee makes payment for a certain amount of shares, the company chips in by adding at least fifteen percent of the first $1800 share bought. Another benefit is shopping allowance whereby an employee receives some discount upon shopping in any of the stores5.
Regarding non-financial benefits, the organization runs a health reimbursement account (HRA) and Health Savings Account (HAS) that allows employees to contribute at a minimum charge. The company supports the two programs by dedicating certain funds to its management. Whenever an employee is in need of preventive care, he receives it at the company’s cost since the organization enters into agreement with healthcare providers to offer quality medical services at reduced costs.
All dependents of the employee are provided with healthcare services until they attain the age of twenty-six. At the same time, the company offers insurance covers on accidents and serious illnesses. For female employees, they are entitled to Life with Baby Maternity Program that seeks to offer support to mothers after they give birth.
Non-Financial Rewards
Bibliography
Adair, John. Leadership and Motivation: The Fifty-Fifty Rule and the Eight Key Principles of Motivating Others. London: Kogan Page, 2009.
Armstrong, Michael. A Handbook of Employee Reward Management and Practice. Philadelphia: Kogan Page, 2007.
Armstrong, Michael. Managing Reward Systems. Buckingham: Open University Press, 1993.
Boxall, Peter and John Purcell. Strategy and Human Resource Management. Houndmills, Basingstoke, Hampshire: Palgrave Macmillan, 2011.
Brooks, Ian. Organizational Behavior. Essex England: Pearson Education Limited, 2009.
Cole, Gerald. Management Theory and Practice. London: Thomson Learning, 2004.
George, Jennifer. Understanding and Managing Organizational Behavior: George. Harlow: Pearson Education, 2011.
Herzberg, Fredrick. “One more time: how do you motivate employees?” Harvard Business Review, (2003): 87-96.
Hogg, Michael and Vaughan, Graham. Social Psychology. Harlow: Prentice Hall, 2007.
Latham, Gary. Work Motivation: History, Theory, Research, and Practice. London: SAGE, 2011.
Maslow, Abraham. Motivation and Personality. New Delhi, India: Pearson Education, 1987.
McGregor, Douglas. The Human Side of Enterprise. New York: McGraw-Hill, 2006.
Phillips, Jean. Organizational Behavior: Tools for Success. Mason, OH: South-Western Cengage Learning, 2012.
Sims, Ronald. Human Resource Management: Contemporary Issues, Challenges, and Opportunities. Greenwich, Conn: Information Age Publication, 2007.
Stredwick, John. Introduction to Human Resource Management. Oxford, United Kingdom: Elsevier Butterworth-Heinemann, 2005.
Footnotes
- Boxall, Peter and John Purcell. Strategy and Human Resource Management. Houndmills, Basingstoke, Hampshire: Palgrave Macmillan, 2011.
- Herzberg, Fredrick. “One more time: how do you motivate employees?” Harvard Business Review, (2003): 87-96.
- Abraham Maslow, (Motivation and Personality. New Delhi, India: Pearson Education, 1987), p. 98.
- Adair, John. Leadership and Motivation: The Fifty-Fifty Rule and the Eight Key Principles of Motivating Others. London: Kogan Page, 2009.
- Armstrong, Michael. Managing Reward Systems. Buckingham: Open University Press, 1993.
- Phillips, Jean. Organizational Behavior: Tools for Success. Mason, OH: South-Western Cengage Learning, 2012.
- Armstrong, Michael. A Handbook of Employee Reward Management and Practice. Philadelphia: Kogan Page, 2007.
- Sims, Ronald. Human Resource Management: Contemporary Issues, Challenges, and Opportunities. Greenwich, Conn: Information Age Publication, 2007.
- Brooks, Ian. Organizational Behavior. Essex England: Pearson Education Limited, 2009.
- McGregor, Douglas. The Human Side of Enterprise. New York: McGraw-Hill, 2006.
- George, Jennifer. Understanding and Managing Organizational Behavior: George. Harlow: Pearson Education, 2011.
- Latham, Gary. Work Motivation: History, Theory, Research, and Practice. London: SAGE, 2011.
- Cole, Gerald. Management Theory and Practice. London: Thomson Learning, 2004.
- Hogg, Michael and Vaughan, Graham. Social Psychology. Harlow: Prentice Hall, 2007.