The Rationale of a Reward System Essay

The significance of wagess is someway related to the field of motive because motive is normally defined as the thrust to accomplish the organisations ‘ end. This brings the inquiry that why people should develop such a thrust and why they should care whether the organisations ‘ end is achieved or non ( Maltby and Day, 2001 ). The reply is the individual who develops such a thrust desires the wagess and benefits as a return when they achieved the end of the organisation ( Lefton et al., 1977 ). Furthermore, the wagess are strongly related to the degree of occupation motive, taking to the research inquiry: Discuss whether wages systems are related to motive at work?

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The aim of the present research is to look into the relationship between intrinsic and extrinsic wagess and motive at work. The empirical grounds of Tziner ( 1983 ) reveals that the better the correspondence between wagess and demands, the better the employees motive and satisfaction. Furthermore, this survey is accounting the relationship, between pecuniary and non-monetary wagess and motive at work, recognizing that human demands can be recognized as touchable and intangible. Therefore, correlating ends and needs provides a coherent understanding toward reward strength and motive at work.

The research would execute for Banking Industry in New Zealand. Equally long as the demographic factor of the employee ‘s inquiries would significantly impact research findings, the relationship of the demographic factors and motive at work will besides analyze.

Aim and Objective of the research

The purpose of this survey is to derive a greater apprehension on whether wages systems are related to motive at work of Banking Industry in New Zealand employees. A categorization of wagess in extrinsic and intrinsic, are presented to supply a superior bespeaking the relationship strength between types of wages and motive at work. The findings of this research would travel to be pass oning to the direction of Banking Industry in New Zealand, with relevant information needed, in order to better its bing wages system and prolong the motive of their employees.

The aim of this survey is to study the relationship between wagess and motive at work. It may be outlined as the followers:

The first aim of this survey is to look into the relationship between wagess ( intrinsic wagess, extrinsic wagess ) and motive at work.

The 2nd aim of the survey is to analyze the relationship between intrinsic wagess and extrinsic wagess.

The 3rd aim is to find whether demographic factors such as age differences and gender differences affect perceptual experience about intrinsic wagess, perceptual experience toward extrinsic wagess and motive at work of Banking Industry in New Zealand employees.


The work motive portion consists of definition of motive, procedure of motive, theories of motive. The wagess systems portion comprises of types of wagess which are intrinsic and extrinsic wagess. Furthermore, the analysis of the relationship between motivational theories and wagess will analyse both content and procedure theories viz. Maslow ‘s Hierarchy of Needs, Herzberg ‘s Two Factor Theory, Alderfer ‘s ERG Model, and McClelland ‘s Learned Needs Theory ; procedure theories including Vroom ‘s Expectancy Theory and Adam ‘s Equity Theory.

Work motive

The globalisation and the rapid technological revolution have an impact on the concern competitory environment. This leads to the acknowledgment that human capital is the most indispensable capital of the organisation ( Lewis, 1996 ). Therefore, much attending has been given through what motivates employees and how persons can best be motivated through both intrinsic and extrinsic motive ( Armstrong, 1999 ). It is besides of import to understand that motive in the workplace is indispensable in constructing up an efficient organisation with effectual direction.

In order to explicate what motivates employees, it is of import to give a definition of motive. Besides, motive has been described as one of the most critical concerns of modern organisational research ( Baron, 1991 ).

“ Motivation is a psychological construct related to the strength and way of people. ” ( Torrington and Hall, 1987, p.351 ).

“ Motivation is the procedure whereby ends are recognized, picks are made ( consciously or non ) and energy is directed towards accomplishing the end. ” ( Hunt, 1992, p.5-6 ).

Procedure of Motivation

It could be argued that most directors need to actuate a diverse unpredictable group of people. The diverseness consequences in different behavioural forms that are related to different demands and ends ( Ivancevich and Matteson, 1996 ). So, it is helpful to look at the procedure of motive as describe below.

Figure 2.1: The procedure of Motivation

Wagess or penalties

Beginning: Adapted from Ivancevich and Matteson ( 1996 )

The figure above, procedure of motive, demonstrates that it is a need-related theoretical account that is initiated by the witting and acknowledgment of unsated demands. In add-on, needs dressed ore on the lacks which an person experiences at a peculiar clip such as physiological ( i.e. a demand for nutrient ), psychological ( i.e. a demand for self-esteem ) or sociological demands ( i.e. a demand for societal interaction ). Needs are considered as energies for behavioural responses. When the demand lacks are present, the person is more prone to a director ‘s motivational attempts. These demands create selected wants, which individual believed that it might fulfill their demands and wants, and it is expected that these will act upon end direct behaviour.

Needs lacks energize a hunt procedure for ways to cut down the tenseness caused by these lacks? Directors so evaluate the behaviour and public presentation in order to measure suited types of wages or penalty for employees. However, each person will hold different alone features as Robbins ( 1990 ) said:

a ) Each single develop different forms of demands, values, and perceptual experiences.

B ) Each single feature is non changeless, but continue to develop as they encounter new jobs and experiences.

Theories of Motivation

Curtis and Curtis ( 2005 ) stated that theories of motive originate from two chief attacks including thoughts about what motivates single to work in the yesteryear every bit good as research about payment systems and how they affect people ‘s willingness to work. There are many motivational theories that attempt to supply accounts of the relationship of behavior and result. Individual theories can be classified into two contrasting attacks which are the ‘Content ‘ and ‘Process ‘ Theories as shown in Table 2.1

Table 2.1: Theories of Motivation

Contented Theories

Theorists ( Year )

Key Points

Hierarchy of Needs

Abraham Maslow ( 1943 )

– Five degrees of demands: physiological, security, societal, esteem, and self-actualization motivate people.

– Move up when lower demand satisfied.

Two-Factor theory

Frederick Herzberg ( 1957 )

– Intrinsic occupation factors motivate.

– Extrinsic factors merely prevent dissatisfaction.

ERG Theory

Clayton Alderfer ( 1972 )

– Three basic demands:

Being, Relatedness, and Growth demands.

Learned Needs Theory

David McClelland ( 1975 )

– Three demands: Power,

Affiliation, and Accomplishment.

– Higher demand to accomplish relates positively to higher work public presentation.

Procedure Theories

Theorists ( Year )

Key Points

Expectancy Theory

Victor Vroom ( 1964 )

– Motivation is a map of valency of effort-public presentation wages relationship.

– Person ‘s behavior is affected by the strength of the individual ‘s desire.

Equity Theory Stacy J. Adams ( 1965 )

– Employees ‘ ain appraisals of whether they are being reasonably treated are a major motivational factor.

– Wage satisfaction is closely related to feelings about equity and equity.

Beginning: Adapted from Dessler ( 1988 ), Adair ( 1990 ), Steers and Porter ( 1991 ), Donnelly et Al. ( 1992 ) and Armstrong ( 1995 )

Contented Theories of Motivation

Contented theories focus on what motivates ( Naylor, 2004 ), and connote an apprehension that motive based on an apprehension of human demands ( Certo, 2003 ). There are four major content theories of motive which include:

I. Maslow ‘s Hierarchy of Need Theory

II. Herzberg ‘s Two Factor Theory

III. Alderfer ‘s ERG Model

IV. McClelland ‘s Learned Needs Theory

I. Maslow ‘s Hierarchy of Need Theory

Harmonizing to Maslow, people work up to the hierarchy demands but each flat links with the old degree ( Beardwell et al., 2004 ). Maslow ‘s hierarchy of demands consists of five types of demands as illustrated in figure 2.2

Figure 2.2: Maslow ‘s Hierarchy of Needs


Esteems demands

Beginning: Certo, S.C. ( 2003, p.359 )

From the figure above, it shows demands were being organized in a hierarchy with a basic physiological demands at the underside, runing up through safety, societal, and self-esteem demands to self-actualization demands at the top. When the first degree has been satisfied, the person will try to fulfill the 2nd degree demands, and so travel up the hierarchy before the higher needs come into drama ( Torrington and Hall, 1987 ). As a consequence, one time a demand is satisfied, it is non considered a incentive since it can non act upon behavior ( Torrington and Hall, 1987 ). One of the deductions of Maslow ‘s theory is that the higher-order demands for regard and self-actualization provide the greatest drift to motive ; hence, directors should endeavor to make an organisational clime which provides chances for independency, acknowledgment, and duty ( Steers and Porter, 1991 ).

II. Herzberg ‘s Two Factor Theory

Herzberg et Al. ( 1959 ) developed a content theory of occupation satisfaction related to work motive. This theory includes two different sets of factors: Hygiene Factors and Incentives as shown in figure 2.3

Figure 2.3: Representation of Herzberg ‘s Two Factor Theory


Job security

Working conditions

Degree and quality of supervising

Company policy and disposal

Interpersonal dealingss

Sense of Accomplishment



Nature of work

Personal growing and promotion

Incentives and Growth Factors

Beginning: Mullins, L.J. ( 1999, p.422 )

Hygiene Factors or Dissatisfiers

The hygiene factors include “ money, working conditions, occupation security, company policy and quality of supervising and interpersonal dealingss. ” ( Beardwell et al., 2000, p.508 ). Naylor ( 2000 ) besides stated that hygiene factors need to be making the expected degree. This can be explained as the wage should be equal, the office should be comfy and the on the job environment should be clean and quiet.

Incentives and satisfiers

The incentives include “ a sense of accomplishment, an chance for personal growing, the sense of holding done a occupation good, holding duty, and accomplishing acknowledgment for your work. ” ( Beardwell et al., 2000, p.508 ).

III. Alderfer ‘s ERG Theory

Alderfer ‘s theory follows an ‘open system ‘ attack which helps to understand human personality ( Armstrong, 1999 ). The construct of an open-system, developed by Maltby and Day in 2001, suggested that an person can be viewed as a system of biological demand, psychological motivations, values, and perceptual experiences ( Armstrong, 1995 ). Alderfer managed to polish Maslow ‘s theory successfully by cut downing Maslow ‘s hierarchal theoretical account from five to three demands. ERG is an acronym for Alderfer ‘s ( 1972 ) theory:

Being Needs concern the physical being of the being including nutrient, vesture, and shelter and the agencies provided by work organisations to achieve these factors. Examples are hungriness, thirst, wage, periphery, and working conditions.

Relatedness Needs are the interpersonal demands that are satisfied through interactions with others both on and off the occupation. These demands include credence, apprehension, verification and influence.

Growth Needs are personal-development and betterment demands. They are met by developing whatever abilities and capablenesss, of import to single, for case, drive people to do originative or productive attempts for themselves.

IV. McClelland ‘s Learned Needs Theory

McClelland believed that demands were learned or acquired by the sort of events people perceived in their civilization. He developed three big leagues demands ( Steers and Porter, 1991 ; Armstrong, 1995 ).

Power Needs: the demand to exercise control over or influence others. This demand plays a dominant function for success in senior direction occupations.

Affiliation Needs: the desire for friendly and close interpersonal relationships.

Achievement Needs: the demand for competitory success steps against a personal criterion of excellence. This is of import in junior and in-between direction places.

Comparison of Four Contents Theories:

Figure 2.4: Relationship among Four Contented Theories of Motivation

Beginning: Ivancevich and Matteson ( 1996, p.16 )

There are some somewhat differences among the four content theories, but the chief construct is that they are all attempt to explicate human behavior ( Ivancevich and Matteson, 1996 ). However, Maslow ‘s hierarchy of demands and Herzberg ‘s two factors theory can stand for the major construct of content theories, since they cover the chief thoughts of motive, compared with the other two theories as shown in figure 2.4 ( Ivancevich and Matteson, 1996 ). For illustration, the three demand classs of Alderfer ‘s ERG theory are similar to Maslow ‘s hierarchy of demands.

Reward Systems

Motivation is the pick to impart energy into certain activities in the outlook that valued ends will be rewarded. As McKenna ( 2000, p.555 ) states that “ Reward systems are at the disposal of directors in order to pull, retain, and motivate people in the coveted way. ” It could be said that wagess are the most utile factor to actuate people in organisations. Motivational theories are straight relevant to honor systems and they frequently distinguish between intrinsic and extrinsic wagess ( Naylor, 2004 ). However, it is of import to first expression at the wagess valued by persons because most people will set in small attempt unless the wages has value ( Vecchio, 1995 ). Both intrinsic and extrinsic wagess are described as follow:

Intrinsic Wagess

Franken ( 1988, p.470 ) stated that “ Intrinsic motive merely means that a undertaking or activity is gratifying, independent of any extrinsic wagess. ” It can besides be defined as internal drivers that influence people to act in peculiar ways and waies. In other words, this type of motive refers to psychological wagess, which include duty, a sense of challenge and accomplishment, freedom to move, chance for promotion, development of accomplishments and abilities and interesting, and disputing work ( Calder and Staw, 1975 ).

Intrinsic wages is achieved by fulfilling single demands for accomplishment, duty, assortment, challenge, influence in determination devising, and rank of supportive squad. As Gruneberg and Wall ( 1984 ) pointed out, persons do non seek compensation or benefits but besides seek intrinsic wagess such as feelings of competency, accomplishment, duty, personal growing, and meaningful part. Intrinsic wagess, which are less seeable, associate to the design of occupations, which plays a important function in making chances for this sort of wages ( Wiersma, 1992 ).

Extrinsic Wagess

This factor is relevant to touchable wagess, for case, salary, fringe benefits, publicity, position symbols, security, and the conditions of work, provided by the organisation to actuate its employees ( Wiersma, 1992 ).

Extrinsic wagess derive from beginnings that are external to the person, are provided by organisations, and are achieved by acknowledgment, accomplishments development and acquisition and calling chances. These include wage, rewards, fillips, committee payments, working conditions, company auto, and pension ( Vecchio, 1995 ). Some extrinsic wagess are explained as the followers:

Consequences of Motivation

There are close relationships between motive and occupation public presentation. Harmonizing to Spence et Al ( 1956 ), increased motive may better public presentation ; nevertheless, increased motive may do lowering of the degree of public presentation, as there should be other factors that affect employee public presentation. This means that motivational factors entirely can non vouch that people will execute good. Since public presentation degree is non a individual step of motive, there are some other factors such as acquired accomplishments, cognition, abilities, socio-cultures, undertakings, and organisational factors, which should be taken into consideration when measuring the public presentation as shown in figure 2.7 ( Maehr and Braskamp, 1986 ).

Figure 2.7: Motivation and other factors that affect work public presentation

Beginning: Maehr and Braskamp ( 1986, p.11 )

However, Go et al. ( 1996 ) believed that motive plays a important function in accomplishing high public presentation in an organisation. In add-on, intrinsic wages is more likely to be relevant to occupation public presentation than extrinsic wages since the extent of the relationship relies on the nature of occupation ( Osterloh et al., 2002 ).

Harmonizing to Milkovich and Boudreau ( 1995 ), the best acting employees might non ever be deserving to the organisation if they miss work often. Therefore, it is of import for the direction to see backdown behavior. Generally, withdrawal behavior occurs when employees are absent and separated ( Milkovich and Boudreau, 1995 ).

McKenna ( 2000 ) suggested that deficiency of appropriate motive can be the chief cause of absence and turnover. Furthermore, satisfaction with both intrinsic and extrinsic motive straight influences employee turnover and Porter et Al. ( 1975 ) supported that supplying higher intrinsic and extrinsic wagess might be a manner to cut down turnover rate. Nevertheless, reward offering can non vouch that employees will go on to be a valued staff member or attend because it depends upon other factors as good ( Porter et al., 1975 ).



This portion will show research model, research design, and research methodological analysis that this research will utilize, based on the analysis of the motivational theories in Banking Industry in New Zealand to find the research aims. Besides, informations aggregation methods, questionnaire design and sampling will be discussed. Additionally, a pilot survey will be used to give dependability and cogency to the survey.

Data Collection Method

To achieve the aim of this research, both primary and secondary informations were used to supply accurate consequences. The research worker will get down with secondary beginnings in order to happen relevant information for composing the research inquiries. This is because these informations would easy to roll up besides a immense clip and money economy. These informations could obtain through assorted reappraisal of literature. The literature reappraisal would establish on past research, diaries, articles, and text book from libraries and the cyberspace.

There are four major ways to garner primary informations: questionnaires, interviews, steps, and observations ( Ghauri and Gronhaug, 2002 ). However, Oppenhiem ( 1992 ) and Chrisnall ( 1997 ) suggested that questionnaires are among the most popular methods of informations aggregation in societal and concern studies. Therefore, questionnaires were used for the intent of this survey because they are effectual in mensurating the facts, cognition, and sentiments and easy to utilize. Furthermore, they allow informations to be standardized, whereas other attacks such as experimentation and observation provided a limited sum of utile, but largely inappropriate information ( Hussey and Hussey, 1997 ; Saunders et al., 2000 ).

The personally administrated questionnaire attack was adopted to roll up the primary informations, because the usage of self-administered questionnaire allows the respondent to enter their ain replies. Besides, self-administered questionnaire allows aggregation of a big sum of informations from a figure of persons, which is less time- devouring uncertainty, can be clarified and about 100 per cent response rate ensured ( Sekaran, 2003 ).

Research Plan:

The full research consists of five stages.

Phase 1: Literature Review ; Proposed Duration 12 Calendar months

Phase 2: Data Collection ; Proposed Duration 06 Calendar months

Phase 3: Datas Analysis/Research Design, Structure ; Proposed Duration 06 Calendar months

Phase 4: Results/Findings ; Proposed Duration 06 Calendar months

Phase 5: Writing-up Research ; Proposed Duration 06 Calendar months


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