Reward System In human resource management, there is simply the management of the people who are working in an institution or an organization. This has to be done because employees affect how far or how successful an organisation will be. Human resource management involves the managers clarifying to the employees the organisation goals. Any organisation needs to attract, maintain and also manage its employees. These tasks fall under the human resource department. Reward systems are very essential in an organization. This aspect falls under the human resource department. This paper is dealing with how organisations can use reward systems to improve the performance of their staff. (Maund, 2001)
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There are various types of reward systems that are used in organizations. They may be as simple as a thank you statement from the management to employees. Reward systems can also include also include giving employees some tokens like free holiday trip. It can also include some payments which are given to employees that meet the set targets. Organisations can use reward systems to improve performance in several ways.
One of the ways through which organisations can use reward systems to improve employee performance is by setting targets in relation to the job. For instance an organisation that is dealing with sales can give sales agents a target. Any employee that meets the target is given a specific amount of money. This is in addition to the salary that the employee is given. Through this employees will always strive to improve performance so that they can get the money added unto their basic pay. This will automatically make the employees who normally have low sales to improve so that they can also receive the money. (Maund, 2001)
Managers always need to strategize so that they can tap the maximum potential of the employees. For example the reward systems should be in various categories. For instance the management can decide that any employee who attains a sales target of one thousand cards will get a bonus of ₤ 140,000 and then an employee that sells one thousand five hundred cards is given ₤ 210,000; any employee that attains or sells 2000 cards is given 210,000. This will make employees to strive and improve their performance so that they can get the rewards. (Sparrow, and Hilltop, 1994)
Another way through which organisations can use rewards to improve the performance of employees is through praise. This is also another form of reward that can be used in organizations. Research shows that when human beings are appreciated and praised then they always tend to improve their performance. Managers can strategize by ensuring that they keep the records of the performance of employees. Any employee who shows commendable improvement can be praised in the organisational weekly, monthly and also the annual meetings. Through this employees will always improve their performance so that they can also be praised. This should not just be carried out in the formal meetings only, but manages should make time to meet with individual employees with good performance and praise them for the good work. This plays a big role in improving the employee’s performance. (Torrington, and Hall, 2006) Organisations need to move away from the issue of rewarding employees once a year. Even the praises don’t just need to be carried out once in a year. When the rewards are often, employee’s performance is greatly improved as compared to having the rewards only once in a year. This is because when the reward is carried out often, employees tend to easily relate it to the performance than when managers wait to reward them later on. This is normally more effective. (Thomson, and Rampton, 2003)
For reward systems to be effective and to improve the performance of employees, then managers need to put in place meaningful measures and realistic ones. This is because when the measures are not attainable then the employees’ performance will not improve. Mangers have to be sure that that the measures are very realistic this helps employees to strive to achieve them. But once they realize that the laid down measures for them to get the reward are just not attainable and realistic, then it just doesn’t become effective. Another aspect is that the performers or employees always need to see that that the reward opportunities in the organisation are directly linked to the effort that they make. When the rewards are directly linked to the effort then the performance is bound to improve. (Maund, 2001)
Another way through which organisations can use reward systems to improve performance is through personalizing the reward. Many organisations put the rewards to be so general that the some employees don’t actually value it. By personalizing the reward there is the anchoring of the meaning of achievement more deeply than if it is treated as an administrative task that is mechanical. Managers need to carry out research on the employees in the organisation and know the rewards that would motivate them to improve their performance. When this is effectively carried out then the employee performance will automatically increase. (Torrington, and Hall, 2006)
Organisations can use reward systems to improve the performance of employees by incorporating appraisal or promotion for employees who have a good record of performance. This can be done by the managers being on the look out for employees who perform well. For instance cleaners who always arrive at work in good time and who carry out their responsibilities well without supervision can be promoted to become leaders of the entire staff in charge of sanitation. This makes the rest of the staff to improve their performance knowing that they would be rewarded by being promoted also. This plays a big role in improving the performance in an organization. (Legge, 1995)
Another aspect is that each reward needs to be fully earned by the performer before he or she is rewarded. This is because there are some organisations which reward employees and yet they have not fully earned the reward. For the entire performance of the employees to be improved, managers need to ensure that employees actually attain the laid down measures for them to be rewarded. When this is not effectively carried out, it works negatively on the employees’ performance. (Maund, 2001)
Research reveals that effective reward systems need to actually focus on the overall positive reinforcement. It is widely known that positive reinforcement is a very effective tool since it acts as a stimulator. It encourages the desired behaviour in organizations. It normally stimulates individuals to take positive actions since they would want to gain by getting valuable things which may either be external or internal in nature. When a program is effectively designed and managed, then it can help in the overall reinforcement of desired behaviour including performance. Organisations can use the SMART criteria when designing reward systems and this will help to improve the performance of their staff. (Torrington, and Hall, 2006)
Specific- organisations need to maintain a sight line between actions and rewards. Meaningful- Managers in organisations need to ensure that the achievements that are rewarded provide an important return on investment to the organisation and to the employee too. Achievable- managers have to ensure that the goals or the measures set are actually within the employees’ reach Reliable- The reward system has to operate according to its purpose and principles for it to be effective. Timely- the rewards or recognition have to be frequently provided so that employees feel valued for their various efforts (Maund, 2001)
Organisations can use reward systems o improve the performance of their staff by creating an environment where employees feel valued for their respective achievements. Managers need to identify what exactly needs to be improved or changed. The measures are in an organisation need to determine how much progress has so far been achieved by the staff. Feedback in this case is also very necessary. All the measures in an organisation need to be understood by employees. Managers have to ensure that a tracking system is used in the monitoring of performance. The progress of the performance has to be displayed in an area where all the employees can see. (Maund, 2001) Reward systems are very essential in every organization. They normally play a big role in improving the performance of the staff. Organisations can use reward systems to improve the performance by showing gratitude when they meet targets. This can be carried out by the human resource manager. Rewards in most cases have to be carried out often for then they achieve better results. Set measures in organizations should always be achievable. Reward systems need to be included in the planning stage of the organization so that they don’t inconvenience the budget of the day.
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Many organizations normally use reward systems so that employee performance is improved. One of the reward systems is through appraisal of employees with good performance record. Personalization of the reward can be used to improve employee performance too. It is important that management doesn’t generalise rewards so that every employee sees the overall value. This is because when it is personalised, there is anchoring of the meaning of achievement. Reward systems should be based on the SMART criteria which mean that they have to be specific, meaningful, achievable, reliable and timely. When this is effectively implemented helps in improving performance of staff in organizations.
Reference: Hook, M. (2005): Introduction Human Resource Management; London; Prentice Hall
Legge, K. (1995): Human Resource Management; Rhetoric and Realities; London; Macmillan Press
Maund, L. (2001): An Introduction to Human to Human Resource Management: Theory and Practice: Macmillan, Palgrave
Sparrow, P. and Hilltop, J. (1994): European Human Resource Management in Transition: Prentice Hall, New York
Storey, J. (1995): Human Resource Management; A critical Text; London; Routledge Press
Thomson, C. and Rampton, L. (2003): Human Resource Management; New York; Melbourne Press
Torrington, D. and Hall, L. (2006): Human Resource Management; London; Prentice Hall
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