by Raymond Lim

Created on: June 01, 2008

There are various ways, approaches or methods employed to reward employees by an organization or management. Rewards management are continuously changing in tandem with the business environment, development in management approach, changes in organization structure, culture and reward system.

Rewards are given in terms of work done; appreciation of the employees contribution to the organization / management; or as a motivation tools utilized by the organization for its own benefit, etcetera. Depending on the situation/circumstances and reason for the rewards, there is no best ways to reward employees. All methods/ways to reward employees have their strength and weaknesses or their pros and cons.

Reward management is concerned with extrinsic and intrinsic rewards. Extrinsic reward comprising salary / wages payments, deferred payments such as pensions have undergone considerable changes in recent years. Intrinsic rewards associated with job satisfaction have grown in importance as delayering and tighter budget have reduced the role played by promotion and pay increase as motivational tools

Research carried out by the Top Pay Unit (1990) revealed the following:
Salary policy is increasingly seen as a tool for bringing about cultural change in organization
Much greater flexibility in salary systems is now required to enable employers to recruit and retain talented staff
Relating pay to performance will increase the responsibilities of line managers, who have to live with the consequences of their recommendations on salaries for their staff.

Paying for performance is one of the ways to reward employees based on extrinsic value over the past years. Personnel Today / Business Intelligence survey found that 67% of UK organization use this method to reward employees and there is overwhelming majority believe that it is an effective reward or one of the best way to reward employees. Even though Personnel Today / Business Intelligence survey were in favor of performance related pay (PRP) there are others who disagree such as Kohn based on the following reasons

i) Rewards undermine interest artificial incentives are no substitute for loving what you do. Bribing people does not produce as high a level of output as arises from those who are driven by intrinsic motivation.
ii) Rewards seeker tends to play it safe: "rewards motivate people to get rewarded" not to take chances or to innovate.
iii) Rewards punish two sides of the same coin. Withholding a reward is as unpleasant as administering

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