Employee Incentives And Rewards

Running Head: EMPLOYEE INCENTIVES AND REWARDS 1

Employee Incentives and Rewards

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EMPLOYEE INCENTIVES AND REWARDS 2

Employee Incentives and Rewards

The organizations have the responsibility of creating a work environment that recognizes

and appreciates efforts. The incentives and rewards are used by the human resource to motivate

the employees to be productive. Each firm has its plans that are aimed at motivating the

personnel to increase their effort while at work. The incentives and rewards vary across

organizations, but they are aimed at increasing performance and influencing the behavior of the

employees in the work environment.

Types of Reward System

Intrinsic. The intrinsic rewards are aimed at increasing the satisfaction of an individual.

They give the employees a sense of pride that helps them feel accomplished with the current

circumstances in the work environment (Fulghieri & Sevilir, 2010). The type of rewards a

chance for personal growth, which is significant in helping the employee to be productive in the

work environment.

Extrinsic rewards. They are incentives given to the employee to encourage them to

work hard, and they include money or a work promotion. The management provides the rewards

to the employees (Fulghieri & Sevilir, 2010). Each wants work in an environment that

understands for example, that when the profits increase the firm also gives the salaries of the

labor force some consideration that will help them to be productive in the future.

Financial. They are aimed at enhancing the financial ability of the employees. If, for

example, during the close of the year the firm realizes that they made more profits they can

encourage the employees by giving them a bonus or an increase in wage (Fulghieri & Sevilir,

2010). When the employees are aware that the organization has taken into consideration their

EMPLOYEE INCENTIVES AND REWARDS 3

needs, it will encourage them to be productive, and this will increase the number of profits that

are generated by the enterprise.

The nonfinancial rewards. The type of reward is aimed at increasing the attractiveness

of the organization. Research indicates that the nonfinancial reward systems attract more

employees as compared to the other forms that are available. The type of reward may include a

good pension plan for the employees, proper medical care insurance, and staff restaurant

(EASTERN, 2012). The rewards show that the employer is concerned about the overall well

being of the employees.

Performance-based. The rewards are based on either the performance of the employees

or the criteria of membership. The performance-based can be exemplified through the use of

group bonuses and performance plans of the employees.

Membership Rewards. The rewards take into consideration an increase in salary and are

based on the status and seniority level of the individual entitled to receive the compensation.

They are important for the organizations that want to retain the future potential of the employees

in the work environment.

A Comparison of the Reward System of Organizations.

Amazon

At the beginning of the year 2018, Amazon Corporation announced a plan to improve the

services of the employees of the company who work in the United States. The procedure

involved a partnership with JPMorgan Chase, Berkshire Hathaway in a bid to cut the cost of

health care and thus improve the service of the employees. In Germany Amazon has a monthly

EMPLOYEE INCENTIVES AND REWARDS 4

bonus that is given to the employees of the organization who work in Germany and the rates

range from (6 to 10%). The bonus depends on the number of sick days an employee has used

during the month of operation. The intention is to minimize the number of people who are absent

from work because it affects the normal operations of the organization (LaVito & Cox, 2018).

The reward system has helped Amazon achieve its goals as productivity is increased and it is

reflected in the revenues of the organization. At present, the total income generated from the

foreign operations by Amazon has exceeded (30%). It is evident that in Amazon improving the

working conditions of the employees involves the minimization of costs as a way to reduce the

overall costs in the working environment.

MC Donald’s

At the beginning of the year 2018, The McDonald corporation introduced a new reward

system that is aimed at improving the education system of the employees. The company has

pledged $ 150 million over the next five years to support the school college tuition of the

employees. The causes are as a result of the changes that have taken place in the tax laws of the

United States. The benefits that were previously tied in the tax reform will be used to benefit the

employees of the organization. The incentive is an addition to the company’s “ Archways to

opportunity” program that has been supporting education. The crew members of the restaurant

will thus get a raise from $ 700 to $ 2,500 annually in tuition. The store managers will get

$3,000 from $1,050. The hourly requirements will also be lowered from 20 hours annually to 15

hours per week. The additional incentives are aimed at helping the employees to study,

especially with the increased cost of tuition fee, many people are not in a position to afford the

school fees. As a result, the MC Donald stands a chance to attract the best employees in the

EMPLOYEE INCENTIVES AND REWARDS 5

industry who will be motivated to work for the organization and thus contribute to the increased

revenues that will aid in the growth and the performance of the enterprise.

Apple

Apple has also announced that it will be adding extra benefits to the current offered by

the organization. Some of the benefits that will be offered to the employees include the

lengthening of the parental leave, reimbursement of the college education and the stock perks

that will be offered to the families in case an individual dies. The HR manager of Apple Denise

Young Smith confirmed the announcement to Fortune by sharing a memo. The benefits will

address all the four generations of the workforce. Apple at present employs about (98,000)

employees a majority work on an hourly basis at the retail stores of the organization. Some of the

new benefits that will be offered by Apple include the student loan refinancing program for the

employees of the United States that are aimed at easing the financial burden for the college

graduates and the parents who have children in colleges (Hein, 2018). The full-time employees

will be entitled to Maternity and new parental leave options which will be increased by four

weeks before the due date of the mothers. After the delivery, it will increase from (12 to 14)

weeks with full pay.

Google

The Google reward system includes a transparent corporate culture, international

opportunities and empowering the environment. Information released recently indicate that most

of the companies have copied the reward system of Apple ("Employee rewards and recognition -

what does Google do?", 2018). Facebook and other technology companies have also embarked

on a move of developing a culture at work that rewards the employees to increase motivation.

EMPLOYEE INCENTIVES AND REWARDS 6

Research carried out by previous scholars indicate that the traditional reward systems that

were used by the organization are no longer attractive to most of the employees because of the

changing needs of the present. The standards of living, for example, have increased and the cost

of health care is on the rise. With the increase in the number of people suffering from lifestyle

diseases at an early age, health insurance has become a priority for most of the employees. When

the employees have good insurance even if they are not paid the way they will also be assured

that if any of the family members fall ill, the patient will be treated and they will not have to

worry about the costs that will be incurred (Došenović, 2016). Because the future health of the

employee is prioritized, they will be relaxed at work, and they will be more productive in the

work environment. As a result, the organization will achieve the goals in line with the mission

and the objectives of the organization.

The other incentives that have become common in the modern work environment involve

the reimbursement of a college education. In the United States, for example, a majority of young

people are finding it challenging to graduate from college because of the increased cost of

education. The employers that reward the employees with reimbursement in college the

education, encourage young people to study, and in the process, they gain skills that if brought

into the work environment will increase productivity. Through study, the young people get

confidence which helps them to perform tasks well in the work environment and in the long run I

helps the firm to achieve its goals (Chapman & Kelliher, 2011). Management should thus

research to obtain information that will help them to decide the best reward for the employees

because in each organization the needs are different. If a majority of the employees are young a

reimbursement in education will motivate them if they are older a health care system should be a

priority.

EMPLOYEE INCENTIVES AND REWARDS 7

The Role of Rewards in Organizational Performance

Mutual benefit. The reward system is a two-way process because it benefits the

employee and the organization. The employees of the organization get motivated when they are

appreciated, and this increases their productivity and in the long run, helping the organization

achieve the goals. The employers must, therefore, understand that the reward system is a

necessity, especially in the modern organization where information sharing has become quicker,

and the employees of the corporations have information regarding the organization that offers the

best incentives and rewards (Chapman & Kelliher, 2011). If the management does not maximize

on this, it will lose the best employees to the competitors, and this will affect future performance.

Increased motivation. The reward systems put in place by the organization are aimed at

increasing the motivation of the employees and thus helping them to work hard so that they can

achieve the goals in line with the mission and the objectives of the organization. Most of the

reward system of the organization is based on the ability of the individuals to perform (C. Balaji,

2012). As a result, the employees will work hard to prove to the organization that they can

achieve growth in the long run.

Reduced level of absenteeism. The incentives and rewards offered by the organization

are aimed at encouraging the employees to provide better services thus reducing low labor

turnover. Appreciating the employees increases their confidence, and this helps them to work

hard to achieve the goals. The employees of the organization will be clear regarding the

intentions, and they will work collectively to attain the goals of the organization. When the

employees are absent from work they are not able to finish their work in time, and this will affect

productivity. If you consider the situation in the work environment all people work as a team and

EMPLOYEE INCENTIVES AND REWARDS 8

an input of a junior employee is used by management to make strategic decisions of the

organization. When people fail to give reports in time, it will affect all the activities and in the

long run, affect the performance of the enterprise. The reason why most people are absent from

work is that they are unsatisfied with the working conditions and thus cannot offer better services

affecting the ability of the organization to achieve the goals in line with the mission and the

objectives of the organization (C. Balaji, 2012). The human resource must research, obtaining

formation that relates to absenteeism and implements measures that are aimed at increasing the

progress and promoting growth in the long run.

Increased morale of the employees. Research indicates that organizations that have

implemented reward system boost the morale of the employees. It is quick for the leaders to

convince them to work for a common goal because they are aware that the firm has taken into

consideration the needs of people and in return, the productivity of the organization is increased

(Barrabi, 2018). Most people will work well when they are appreciated and when the

organization makes more revenues the rewards should be even more so that they do not have the

feeling that the organization has not taken into consideration their needs.

Teamwork. The reward system increases the spirit of teamwork. The current

environment of business is competitive, and the organizations need to coordinate the employees

and encourage them to work in teams because they come up with ideas that help the organization

to achieve the goals in line with the mission of the organization. Their own needs motivate each

firm, and it is the responsibility of the employer to put in place the mechanisms that are aimed at

increasing productivity (Hein, 2018). Some organization monitors individual progress, but

teamwork has proved out to be the most effective in meeting the goals of the organization within

a short period.

EMPLOYEE INCENTIVES AND REWARDS 9

Conclusion

The goals of the organization are aimed at increasing revenues that will aid in the growth

and the expansion of the business. The firm achieves growth by the effort made by the

employees because they contribute to the ideas that if implemented will help the enterprise to

achieve the goals. When the human resource takes the initiative to appreciate the effort of the

employees, it increases the motivation and as a result, helping the management of the

organization to achieve the goals in line with the mission and the objectives of the organization.

In the present technology has increased information sharing and the employees share information

and have ideas about the organizations that reward their employees in the work environment.

The companies that want to experience growth in the future should invest in the needs of the

employee because it will help the organization to retain them for an extended period and hence

help the firm achieve the goals.

EMPLOYEE INCENTIVES AND REWARDS

Reference

Barrabi, T. (2018). Tax reform windfall: These companies are hiking pay, delivering bonuses.

Retrieved from https://www.foxbusiness.com/markets/tax-reform-windfall-these-

companies-are-hiking-pay-delivering-bonuses

C. Balaji, C. (2012). Employee Welfare and Rewards on Job Satisfaction and Productivity – A

Pragmatic Approach. International Journal Of Scientific Research, 2(1), 20-21. doi:

10.15373/22778179/jan2013/8

Chapman, J., & Kelliher, C. (2011). Influences on reward mix determination: reward consultants'

perspectives. Employee Relations, 33(2), 121-139. doi: 10.1108/01425451111096677

Došenović, D. (2016). Employee Reward Systems in Organizations. ECONOMICS, 4(1). doi:

10.1515/eoik-2015-0024

EASTERN, J. (2012). Employee Rewards. Skin & Allergy News, 43(1), 27. doi: 10.1016/s0037-

6337(12)70027-x

Employee rewards and recognition - what does Google do?. (2018). Retrieved from

https://www.rullion.co.uk/employers/knowledge-hub/blog/employee-

engagement/employee-rewards-and-recognition-what-does-google-do/

Fulghieri, P., & Sevilir, M. (2010). Mergers, Spin-Offs, and Employee Incentives. SSRN

Electronic Journal. doi: 10.2139/ssrn.1710230

Hein, B. (2018). Apple rolls out cushy new benefits to its 98,000 employees | Cult of Mac.

Retrieved from https://www.cultofmac.com/298545/apple-increases-benefits-keep-top-

talent-happy/

LaVito, A., & Cox, J. (2018). Amazon, Berkshire and JPMorgan Chase to team in landmark new

health care company. Retrieved from https://www.cnbc.com/2018/01/30/amazon-

berkshire-hathaway-and-jpmorgan-chase-to-partner-on-us-employee-health-care.html

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