Evaluating Employee Motivation and Reward Schemes Essay

A figure of surveies have concluded that money is non a main incentive for workers. Harmonizing to Abraham Maslow’s and Frederic Herzberg’s theories on compensation, salary, alternatively of actuating an employee, tends to dissatisfy them. In a hierarchy of demands, Maslow observed that people want to realize their possible and a wages system that provides the agencies to make so. There are other signifiers of acknowledgment that motivate workers better than net income sharing, hard currency fillips and stock options, among them the most of import being the work itself. In a corporate environment what motivates employees is a compensation bundle that satisfies a higher degree of demands than wage. After basic demands are fulfilled compensation is non a strong motive but what signifier of compensation motivates people?

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A key to a successful organisation is a motivated work force. It sounds simplistic but many companies get it incorrect when utilizing a wage back, an effectual method to retain and honor endowments. For many companies recruitment ends are more easy satisfied than keeping ends, which are disputing and requires supplying a honoring inducement program to employees. A study conducted in 2007 by the Charter Institute of Personal and Development indicates that 78 % of employers had troubles in retaining employees. Today’s coevals, frequently called coevals Y, with better educational backgrounds and normally fulfilled basic demands, has desires higher degrees of motive and anticipate more from employers. These outlooks may do a high degree of employee turnover, where the value exchange is merely one manner. In this environment, the concern organisations should be cognizant of the employee de-motivation mix when preparation plans cease in the organisation and employee acquisition degrees off, doing the calling of the employees with the organisation ill-defined and frequently ensuing in a salary freezing for the affected employees.

In today’s extremely competitory concern environment, it is of import to develop an inducement program within the organisation that accurately captures the degree of employee overall apprehension of the organization’s end and aims, their outlooks, and yet increases their motive. Obtaining this information may be done by either an employee study or a company customized partner profile. In the spouse profile, the employee behaves like a concern spouse and addresses the undermentioned standards: critical attitudes, behaviours, accomplishments, and apprehension of employee demands and outlooks. While developing an inducement plan, direction demands to be cognizant of employees’ apprehension of the concern scheme and, most significantly, their ain function in accomplishing ends for the organisation. In be aftering inducements, direction demands to cognize whether the employees understand how a net income is generated and more specifically their function in lending to the organization’s gross and net income.

A basis of company success is to hold employees closely connected to the company’s scheme and actuate them to accomplish the company desired ends. Ideally, the employees will make this by executing assigned occupations. While it may look obvious that employees look for motive in order to run into the company ends, employees work public presentation finally reflects whether the work and incentive wagess fulfill their demands.


Motivation can hold a fiscal or non-financial nature, every bit good as be positive or negative. It may be assumed that the fiscal motive is what truly influences employee public presentation, i.e., the higher the fiscal wages the higher employee public presentation. Surprising, this premise is non true because fiscal motive normally stops working when motive reaches certain sum, after which it stops act uponing employees. In order to present a needed public presentation, successful companies have a strong compensation system that motivates employees. As mentioned above, non-financial motive facets may be provided by an employer and employees value these types of motive excessively. A top non-financial incentive is the corporate civilization of the company. The corporate civilization of the company, aside from money and benefits, can be attractive to employees. An attractive corporate civilization may include an organization’s diverse work force, chances for professional development, growing and ongoing acquisition.

The Human Resources ( JR ) section of a company is normally responsible for presenting and advancing a public presentation direction system that delivers thoughts and instruments to actuate employees. One of HR’s aims in making an inducement program is pull offing the fiscal compensation system and presenting input for company strategic determinations.

Senior direction, along with line direction, is frequently responsible for puting up company non-financial motive inducements.

Financial Compensation System

A public presentation direction system for successful organisations is integrated with employee compensation that corresponds with carry throughing the ends of the company, every bit good as the ends of the squad and the person. Employee’s compensation should reflect an individual’s accomplishments, expertness, and cognition, every bit good as their long and short-run public presentation.


Graph 1, reproduced from depicts a relationship between an employee and the pay received by the employee. The pay compensation is based on the type of occupation and job’s description ; whereas the individual’s ends depend on his or her place in the company hierarchy. If the employee’s place in the organisational construction is higher, so there are matching higher strategic ends and the employee’s entire wages is greater.

A item integrating of fulfilled ends into the single sum wages system incorporates a part of the individual’s income, the competitory environment, and besides the company’s and HR’s scheme.

Graph 2 below shows the interrelatednesss between fulfilled ends and entire wages, which varies from moderate to aggressive and can hold an impact on an individual’s behaviour in making the ends of the single employee.


As we can detect, both horizontal and perpendicular axes image per centum in carry throughing ends and sum of the wages. Wagess are paid when ends are fulfilled and standards met. In other words, when the company achieves its fiscal ends, than employee wagess can be acknowledged.

Graph 2 besides shows that after ends are reached at certain degree, there are no higher wagess that will drive end fulfilment. This degree of wages grading is called a wages or compensation cap. The wages cap applies against qualitative ends that are ever above the fulfillment degree and non covered by fiscal financess. In successful companies where ends and aims are exhaustively planned, the maximal employees can transcend their ends is normally approximately 10 per centum.

Non-Financial Motivation.

Another signifier of motive is referred to as non-financial motive Non-financial motives are less touchable than fiscal motives and are typically determined by both corporate civilization and other values. Measuring corporate civilization begins with measuring the communicating channels and relationships among employees in all degrees of the company.

Basic company values such as, for illustration, ethical attack, trueness, empathy, bravery, leading and squad spirit are the features of non-financial motive. Non-financial motive plays an built-in function in the full procedure of company end scene and employee ratings, including set uping the employees’ ain ends. There are other non-financial motive tools that company direction can utilize such as, for illustration, giving employees more duty and power through determination devising chances, self-fulfillment chances, relationships in the group, acknowledgment monetary value, regard in footings of authorization and more, if desired. Prosecuting employees in the success of the company concern by moving like concern spouse instead than hired-for-labor may do them a extremely motivated and valuable company plus. It is a manager’s duty to find and turn to the specific scheme of persons under their supervising and choose the chief incentive class of their subsidiaries, in order to accomplish a motivated work force that besides maximize s the company’s ends.

It is of import to indicate out that a cardinal to non-financial motive is to hold attractive and diverse work. However, there are other non-financial motive inducements that make company attractive, such as chances of ongoing acquisition, calling and professional growing while being portion of corporate development. These inducements are attractive to today’s coevals of workers that are largely focused on developing their ain professional accomplishments and calling.

From a psychological base point position, Mihaly Csikszentmihalyi in his book aa‚¬A“Flow-The Psychology of Optimal Experienceaa‚¬A? explained that people are wholly involved when the following four elements takes topographic point, people have to ( 1 ) face regulations that require acquisition, ( 2 ) have set up ambitious and clear ends, ( 3 ) receive timely feedback, and ( 4 ) possess appropriate accomplishments to execute assign undertakings good. Any system or organisation that maintains these four elements is likely to do every participant’s experience extremely gratifying. If the workplace is losing extremely engaged employees it means that direction has to plan a strong wages system.

There is another signifier of non-financial motive called authorization that is addressed to all degrees of direction through apportioning duties and let go ofing control by direction. It is necessary to increase people’s capacity to bespeak more duty and do them more motivated. That means that a successful company has to put in direction by offering instruction plans and preparations to develop accomplishments such as critical thought, end scene, job resolution, hazard analysis, and training relationship and influencing accomplishments. Empowerment motivates people even more if they can vie on actions and duties with others in the organisation. The best consequence is achieved when people have a wide apprehension of the company ends and aims and their function in the attempt of accomplishing them. Authorization goes along with answerability to avoid pandemonium in the facet of duty. Trust and swearing employees are the signifiers of answerability which by and large motivates them. To hold employees experience more sceptered, the organisation frequently encourages them to be more confident, autonomous, autonomous and responsible persons.

Authorization is a signifier of compensation that is portion of the civilization of partnership, where each employee is a concern spouse. Employees will be extremely involved in a high-performance environment when the appropriate compensation is provided to them.

Compensation Scheme

Compensation scheme is use as a tool to actuate people. The purpose of compensation scheme is to give the right award to the right employee. Compensation in footings of additions in wage is an of import incentive but frequently merely until the following wage addition is due. Compensation scheme can excite organisational civilization through the clearly defined aim of public presentation wage. An Organization compensation scheme offers non-cash benefits can besides actuate people. If we use a compensation scheme to retain valuable employee, so its chief aim is to offer higher wage. It is of import to avoid wage secretiveness that can bespeak a weak compensation system, cause misgiving and yet cut down motive and organisation effectivity.

A chief function in compensation scheme includes rates of wage that are based on the undermentioned factors. First, a wage addition based on an employee’s length on the occupation, which is good in retaining the employee is non considered as a wages for public presentation. Second, we recognize a performanceaa‚¬ ” based wage that motivates employees to execute better. This manner of acknowledgment is the most sensible and achieves the highest consequences by promoting directors and employees to pass on organisation ends and public presentation standards. A 3rd factor is wage additions based on job-related accomplishments and cognition, besides called competency-based wage, that motivates employees to obtain new accomplishments and to broaden their cognition.

A salary addition is a portion of an overall compensation scheme and reflects employees’ accomplishment of the company ends and aims. It is of import to reexamine wages sporadically ( e.g., yearly ) including times when the house can non afford the addition salaries to avoid de-motivating employees. It is perfectly unacceptable to increase salary for under-performing employees. For illustration, some organisations maintain a policy that includes allowing travel of employees who are in the public presentation bracket below the bottom five per centum. On the other manus, the wages for the best employees has to be large plenty to actuate in order to be genuinely effectual.

It is non recommended to give all-embracing additions because employees will swear in the compensation system and be less motivated to increase their productiveness or parts to the company. That’s why it is necessary to separate outstanding, mean and non-performers among employees in public presentation ratings and wage additions.

Another signifier of salary additions, referred to as automatic salary patterned advance, is typical in the populace sector. This type of salary addition does non act upon public presentation betterment and is given in regard of addition of the cost of life.

There are two anomalous wages, one where the employee’s wage is below the lower limit and an accommodation has to be made and the 2nd when the employee is overpaid and freezing of future wages is necessary to make an appropriate wage degree. In both state of affairss, direction has to pass on the determination with the employee in order to efficaciously pull off outlooks of the employee.

In hard economic times where many houses face fiscal troubles and battle to simply last, direction has to pay close attending non to lose talented, committed and focused employees by implementing an effectual compensation scheme. The scheme should distinguish between top, non-performance and mean, reward merely top public presentation, look into the market ( s ) to find whether the offered compensation system is competitory, explicate the value of the compensation bundle, make programs to actuate employee in the short-run and, eventually, terminate nonperformers in order to better header with the fiscal hard times.

Organizations in the private sector are free in specifying their compensation bundles but could be forced by national and/or province authoritiess to alter their compensation patterns during times such as a recession to avoid negative public sentiment in sensitive affairs such compensation. Private organisations oftentimes have no pick but agree to proposed statute law and adjust the compensation policy to either enforce a minimal pay or increase salary when the cost of life is acquiring excessively high.

There are besides unwritten regulations in compensation systems that are guided by the market that reflects salary systems and the common jurisprudence that shapes compensation determinations.

Organizations may utilize different compensation systems for specific groups of employees because they are more of import than others and lend more to the organization’s fight. These types of employees are difficult to be replaced and that’s why the compensation bundle has to be tailored to their demands and outlooks. This is common for Research and Development ( R & A ; D ) employees in high-technology houses. In these organisations, the strategic employee compensation is based on three dimensions: ( 1 ) wage construction when the wage degree for R & A ; D employee is different than other employees, ( 2 ) compensation clip skyline, and ( 3 ) wage design in footings of stock options and enthroning period’s lengths.


Employees are the most valuable plus of the company so the key to retaining and actuating the most valuable employees is to actuate them decently by offering an attractive inducement program that entreaties and fulfills their desires. The successful company needs to hold direction that knows employees’ degree of apprehension of the company’s end and aims and their ain outlooks. Human Resources directors need to understand how to organize compensation programs with corporate scheme because compensation programs are indispensable constituents of a strategic human resources direction program.


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