The Role of the Reward and Recognition System in Enhancing Employee and Organizational Performance

 The Role of the Reward and Recognition System in Enhancing Employee and Organizational Performance

The reward management system is the main function of personnel management and a strategic partner of enterprise management. Besides, it plays an important role in employee performance (Güngör, 20211). The reward system includes the organization's policies, processes, and practices for rewarding employees based on their contributions(Güngör, 20211).

The rewards strategy provides the motivation to design and operate the rewards system in order to achieve three main objectives such as performance, competitiveness, and fairness  (ARMSTRONG, 2014).

The reward means something that externally or intrinsically enhances, maintains, and improves the attitude of employees in an organization (Tze San Ong, 2012). The reward system must be aligned with the company's strategy, business environment, and culture. Group-based reward systems effectively improve the performance of the organization more than individuals (Sufyan Mehmood, 2013). The organization provides rewards to its members in the form of wages and salaries, promotions, long service awards and certificates, year-end bonuses, and other benefits. These rewards are intended to motivate behavior that contributes to the achievement of organizational goals (Bello Olaide Wasiu, 2014).

 Employees need both financial and non-financial rewards. These two basic rewards can be utilized to increase the performance of employees positively (Muhammad Ibrar, 2015). According to  (Muhammad Ibrar, 2015) Organizations tend to focus on financial rewards, and non-financial rewards have become increasingly overlooked.An effective reward system is not static, but it is constantly fine-tuned and its effectiveness is frequently evaluated to keep employees motivated (Walters T. Ngwa, 2019).

The change in service provision is complemented by the improvement of the human resource management (HRM) system with performance-based reward systems, which are designed to enhance the service provision and serve to communicate an organization's goals, values, and priorities to employees and are applied in both private and public sector organizations  (Kealesitse, 2013).

 The reward schemes act as a tool to test an employee's ability to do the job and are offered by the organization to provide favors for its performance and employee recruitment and retention(Sufyan Mehmood, 2013). Employees are rewarded based on short or long-term time. Short-term rewards drive one-year performance goals (e.g., one-time cash rewards). Long-term compensation, on the other hand, is aimed at achieving various long-term goals and specified strategic objectives and drives performance over a period of one year or longer (e.g. stock compensation or long-term salary increases) (Yinghong (Susan) Wei, 2009). The long-term reward system can provide opportunities for employees to think about how their work will be useful to the company in the long run  (Yinghong (Susan) Wei, 2009).

Rewards can be divided into two basic groups, material and immaterial. Material rewards include any kind of remuneration received in cash by an employee. Immaterial rewards include various monetary and non-monetary compensation intended to provide safety to employees and their families and to protect employees from various risks (Došenović, 2016).

According to (ARMSTRONG, 2014), reward systems are categorized as Financial and Non-Financial. Financial rewards consist of wages tied to the value of the job and non-financial rewards that focus on people's needs in varying degrees for recognition, achievement, personal growth, and acceptable work conditions  (ARMSTRONG, 2014).

Recognition

Recognition is constructive and authentic feedback based on the recognition that people are loyal, respectful, have needs, and are equipped with their personal experiences. (Dr. Baskar, 2014). Organizations value their employees for the fact that they support high self-esteem and retain enthusiasm. Employees who have received recognition in their organizations are well-motivated and work well (Dr. Abdul Khaliq, 2019).

Employee recognition is a decision about the employee's contribution, to the conditions of the work process, as well as commitment and inspiration (S. Meena, 2019). The practice of recognition is to let employees know that the company genuinely appreciates what they do. The recognition reflects the performance of an employee (Alka Rai, 2017).

 According to (Abena Serwaa Amoatemaa, 2016), Employee recognition has been found to be a highly effective motivational tool that can have a significant positive impact on employee job satisfaction and performance, as well as the overall performance of an organization. Lack of recognition is the second largest risk factor for psychological stress in the workplace (Jean-Pierre Brun, 2008). Also, it is further mentioned that recognition contributes to employee job satisfaction and has a positive impact on organizational productivity and efficiency.

In my working place, there were no rewards or recognition systems in early 2020.Few staff involved in all matters and functions on behalf of the company. This makes real frustration among other senior and junior employees. With the results of that time, there were two groups of employees, and most of them were not engaged with the job function well. Later the new management introduced a new reward system and same time established a KPI system. Employees who are getting more than 90% mark were offered an additional one-month performance bonus. Also when achieving more than 80% as a whole, the company’s annual trip will be organized in star class hotel in Sri Lanka. Employee recognition is also in getting to a higher level.

References

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