Reward Management and Motivation Theory

Published: 26th February 2010
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Before embarking on the discourse about reward management, it will be important to contextualize it within the field of management as a whole. Management can be defined as the act of organizing people together with the aim of attaining desired and predetermined goals and objectives laid down by an organization or individual. It involves planning, organizing, staffing and a myriad of other activities that are carried on a group of people with the aim of attaining a certain goal that has been predetermined.

Reward management on its part, deals with the establishment, maintenance and development of a system that has at its core the aim of rewarding the work done by employees within an organization or a business firm. On a broader context, reward management concerns itself with formulating and implementing strategies and other policies that are geared towards rewarding employees of the organization. To this end, the rewarding is aimed at being fair, equitable and consistent on account of the particular employee's value to the organization that is in question. In a nutshell, those employees that are valuable to the organization are compensated highly than those whose value is deemed to be low.

In recent years, academicians have been very much concerned with the issue of rewarding management in organizations. This is especially so for those academicians involved with the study of human resource management in twenty first century organizations. This has seen the emergence of many academic theories that seek to explain this phenomenon of reward management.

An academic theory can be defined as a theory that is seen as contributing to a discourse within any academic environment. One such theory that addresses reward management is the motivation theory. This is the theory that is of the view that for employees to be more productive and beneficial to an organization, they have to be motivated. There are several forms of motivations, including both monetary and non-monetary. Reward and recognition of the worker can be conceptualized as one form of motivation.

Objectives of the Study
Throughout this study, the writer will be guided by one major objective. This is the analysis of reward management within the context of the motivation theory. To achieve this major objective, the writer will be guided by several specific objectives. It is by addressing these specific objectives that the writer will have effectively addressed the major one. These specific objectives are as listed below:
1. a brief overview on employee motivation
2. motivation theories
3. aims of reward management
4. achieving reward management aims and goals

Employee Motivation
The term motivation can be traced back to the Latin society. It stems from the word movere, which is Latin for to move (Geoff & Druker 2005). It can be viewed as an internal drive "that activates and directs human action" (Geoff and Druker 2005).

The manager can be conceptualized as the most important cog in the organizational wheel. He is tasked with the duty of getting work done and goals of the organization achieved through the employees that are under him (Lloyd 2008). In order to achieve this goal, it is very important for the manager to be able to motivate the employees. But many managers find this to be very difficult. This is because to be able to motivate their employees, the managers must be grounded in human nature. This is because, according to Lloyd, "to understand motivation, one has to understand human nature itself" (2008).

From the pedestal that the manager will assume, human nature can be deemed to be difficult or easy to understand. But whichever the case, the manager has to be able to understand it in order to be able to motivate his/her employees. Employees who are motivated argues Pierce (2007), are more satisfied and hence more productive than their unmotivated counterparts.

There is an old adage that contends that people will do what they wish to, or what they are motivated to do. This is the case with employees in an organization. The manager and the organization can provide them with everything that they require in terms of the working environment but the employees will do what they wish to, or what they are motivated to do (Geoff and Druker 2005). The employees can be put under strict rules, or given freedom to do what they want but at the end of the day, they will do what they want and what they are inspired to do. This is the reason why the importance of employee motivation cannot be downplayed.

Pierce (2007) is of the view that performance is always a function of ability and motivation. Pierce gives the equation below to underscore his argument:

Job Performance=f (ability) (motivation) (Pierce 2007).

In this respect, ability can be considered as being a function of several factors on its turn. These are the education of the employees, their experience, their expertise and such other. The acquisition and improvement of ability is accumulative and takes a long process to be materialized. On the other hand, acquisition and improvement of motivation is quick (Pierce 2007).

Motivation can be achieved through various means. They include equality, positive reinforcement, discipline and punishment among others. But perhaps the major source of motivation is the reward system. Employees who feel and believe that their actions and efforts are effectively rewarded are highly motivated. This is as opposed to an employee who feels and believes that his efforts are not rewarded at all.

Motivation Theories
There are many academic theories that exist within the field of employee motivation. Some of the arguments of the theories are identical and the differences are the proponents of the same. However, the provisions and arguments of some of the theories are different, depending on the motivation of the proponents and their worldview.

Some of these theories include Douglas McGregor's Theory X and Theory Y, Frederick Herzberg's motivation-hygiene theory and Elton Mayo's motivation theory (Redfern 2009). McGregor's theory is based on the premise that there are two types of managers. Managers who subscribe to theory x have a pessimistic view of their employees. They are of the opinion that the employees are people who will evade job at the least opportunity and thus need to be closely monitored. On the other hand, those managers who subscribe to theory y are of the view that employees are motivated and they just need further motivation to work effectively.

On his part, Herzberg conceives the workplace as made up of two sets of factors; satisfiers and dissatisfiers. Satisfiers are those conditions that motivate the employee to work hard, while dissatisfiers are those conditions that demotivate the employee.

But perhaps, the theory that well connects the idea of motivation and rewards is Vroom's Valence x Expectancy Theory.

Vroom's Valence x Expectancy Theory
This theory is about the mental processes that revolve around the choices that the employees make. This describes the processes which the employee goes through in the process of making any decision in the work place. This theory is associated with Victor Vroom, who is a business professor at Yale School of Management (Gellman 2009).

The theory argues that the strength of a predisposition to act in a certain way is directly related with the strength of the expectations or the rewards that are expected from this act (Geoff and Druker 2005). When it comes to employee motivation, this theory is of the view that an employee will be motivated to perform better when they are convinced that their improved performance will lead to "a better performance appraisal" (Pierce 2007). It is expected that this better performance appraisal will lead to the attainment of personal goals. The goals are conceptualized in forms of rewards.

Vroom uses the following formula to determine motivation of the employee:

Motivation = Valence x Expectancy

In a nutshell, this theory is of the view that for employees to be motivated, three conditions must be met. The employees have to believe that:
 putting in more effort in the job will result to a better performance of the same
 When the job is performed well, what will follow are rewards that are specific to the organization (Gellman 2009). These rewards may involve an increase in the salary of the employee or introduction of benefits such as bonuses.
 For the rewards to be satisfactory to the employee, they must be valued. In other words, the employee must hold those rewards in high regard. For example, an employee will not be motivated if he is sure that he will be rewarded by getting a pay rise and what he was after, or what he valued most, was a promotion.

From the above discourse, it is very clear that there is a direct connection between rewards, actual and expected and performance of the employee (Redfern 2009). This connection must always exist for the employees to be motivated and it is the duty of the managers to make sure that they do. If the connection is not there, or does not exist, they should make sure that they establish it.

Another tenet of this theory is the form of rewards that are availed to the employees. The managers should make sure that it is not just any form of rewards that are given, but rather the right form of rewards are given to the employees. The rightness or relevance of the rewards is determined by how much the employee values them. For example, the employees may value job status than remuneration. As such, it is not right for the organization to reward the employee by increasing their pay. Rather, they should reward them by promoting them.

Expectancy theory is of the view that behavior is a result of deliberate and conscious choices that are made by the employee (Geoff and Druker 2005). The choices that the employee makes are from a myriad of alternatives. The aim is to maximize on pleasure, or gains, while mitigating the likelihood of pain (Geoff and Druker 2005). The performance of the employee is determined by his personality, skills, knowledge, experience and abilities (Geoff and Druker 2005).

This theory has three variables. These are valence (V), expectancy (E) and instrumentality (I) (Lloyd 2008). These variables lead to the concepts that underlie this theory:

1. Valence
This is the strength of the employee's choice for a specific outcome that he expects (Lloyd 2008). There is a positive and a negative valence. Negative is where the individual prefers not attaining the outcome to attaining it. On the other hand, positive describes a situation where the individual desires to achieve the specific objective to not achieving it (Lloyd 2008).

For example, there may be choices like salary, increment and promotion. Positive valence for salary increment takes place when the employee prefers to achieve it than not achieving it.

2. Instrumentality
This, Lloyd opines, is the "means of the first level outcome in obtaining the desired second level outcome" (2008). In other words, this is the probability that the first level outcome will inevitably lead to the second level outcome. For example, positive performance appraisal may be the first level outcome. This outcome may lead to the second level outcome like promotion or increase in salary.

3. Expectancy
This is the third concept of this theory. It is the probability or "strength of belief" that a particular action will "lead to a particular first level outcome" (Pierce 2007). For example, the probability that beating deadlines will lead to a positive performance appraisal, this being the first level outcome.

The product of these three variables, according to this theory, is motivation (Geoff and Druker 2005).

Source 1:
Proponents of this theory are of the view that there is a need to improve and ensure the existence of the performance-outcome connection. To achieve this, the managers should come up with systems that connect rewards with performance very intimately (Redfern 2009).

Aims of Reward Management
There are various aims of reward management when practiced by managers within organizations. Some of them are as follows:
1) Create total reward processes (Redfern 2009). The rewards in this case are grounded on beliefs about the values and aspirations of the organization.
2) Reward employees for the value that they add to the company. What this means is that the persons are rewarded in accordance with the amount of value that they put into the organization. The higher the value, the higher the amount of reward.
3) Alignment of rewards with the aspirations of the business and the values that are held dear by the employee (Redfern 2009).
4) Another aim of the reward management system is to reward the right outcomes (Lloyd 2008). This will purvey the message to the rest of the employees as to the expected and valued behaviors and outcomes within the organization.
5) Perhaps the most important facet of the reward management is the attraction, retention and satisfaction of the most qualified professionals in the field (Pierce 2007). This will lead to the attainment of what Pierce calls the winning of the war for talent (Pierce 2007).
6) Motivating employees so that they can be committed and engaged in their job.

Achieving the Aims of Reward Management
There are cases where the reward management is introduced but it does not meet the aims that it was intended to. A case in point is where the managers were unable to match the rewards with what the employees value most. For example, the employees may value salary increment more than they do value promotion as a reward. This being the case, when the employees are rewarded through promotion, they will not be motivated. It is important to note that motivation is the major aim of rewards. It is after the motivation has been attained that the other aims are accrued.

It is very crucial for the managers to come up with a strategic reward management scheme. This means that the system is long term oriented rather than short term. Strategies of rewarding the employees have to be integrated into the business strategy, which means that they are not just spur of the moment decisions that are made by the managers. For example, it has to be clearly stipulated within the business strategy on how to reward an employee who attains a given or set or goals (Redfern 2009).

Methods of Reward Management
There are various strategies that are used to ensure that employees are rewarded by the organization. The strategies put into operation must ensure that the aspirations of the employees, together with what they regard to be valuable, are taken into consideration. This is because the success of the reward management will depend on the feasibility of the strategy that is adopted. In other words, the degree to which the reward management motivates the employees will depend on the effectiveness of the strategy that was adopted.

The methods that are adopted could be monetary or non-monetary rewards. They will depend on what the managers will regard as being important to the employees and as such, what is likely to motivate them more. Some monetary rewards include pay rise, commissions and bonuses and such other cash rewards. Non-monetary, on the other hand, include complements, promotions and others.

Pay and Compensation
Compensation is one of the most important facets of human resource management. It is also one of the most important motivators of the employee, albeit not the only one. It is the main drive behind an employee's performance. It is also regarded as the most sensitive and controversial elements in the field of worker motivation and human resource management.

The pay that is accrued to the employees is both monetary and non-monetary. It is a return in exchange between the two parties-employers and employees. The employees receive pay by virtue of them being workers in the organization, or as a reward for what they have done for the company, especially when the performance is exemplary.

Reward management can be conceptualized as a duality. It is a strategy and a practice of pay system, all rolled into one. It is the managers that determine the forms of payments and amounts of the same that will be awarded to employees, while the finance department is concerned merely by the function of processing these payments. As such, it can be seen between the human resource managers and the finance managers, it is the former that are directly tasked with motivating the employees. What the finance managers do is just to implement the decisions of the resource managers as far as motivating the employee is concerned.

Many reward system managers seem to favor two basic types of pay schemes. But there are cases where instead of adopting one scheme, some managers adopt features of both to some extent, to come up with something entirely new. These systems are as follows:

1: Fixed Levels Pay
In this instance, the wages and the salaries of the employees are constant. They do not vary from one period to the other. Exceptions are made when the salaries and wages are being increased. The increment is always done on an annual basis. Scales of payments are determined by the age of the employee, their responsibilities in the organization and their level of seniority. This is a motivation technique that had been used for employees in the white collar sector until latter years, when reward linked to performance was adopted.

2: Reward Linked to Performance
The link in this case may vary periodically. It can be daily, weekly, monthly or annually. However, the compensation for any one of the periods differs from that of the previous one. This depends on the quantity and quality of the work that the individual performed. The higher the quality and the quantity, the higher the amount of rewards accrued to the employee. A case in point is commissions that are paid on sales. When the sale turnover is high, the rewards are high and vise versa. Manual workers may be paid on the amount of work that has been completed or the number of items that they have produced. Another category of this form of workers is caterers. These workers get rewarded by their clients based on the level of satisfaction that they give the client. This is the same for other employees in the service sector, for example beauticians and such others.

Both of the methods above have been known to work well. This is given that the scales are easy to comprehend both for the employee and for the manager. It also depends on the accuracy of the tools that are used to gauge the amount and quality of finished work. The methods are not only supposed to be accurate but also open and fair to all the employees. If some employees are favored, the reward system will be skewed and the motivation accrued to the employees affected.

Challenges Facing Reward Management
It has been realized that reward management strategies, despite their obvious attractive disposition, are not keeping in pace with the changes in the market and business forces. There are some shortcomings, some of which seem to be inbuilt to the strategy while others are seen to be external to it. Some of those shortcomings are as follows

1: Preoccupation with Tactics as Opposed to Strategy
Many of the reward system schemes seem to lack the ability to reach for the large scale strategies. These are the strategies that have the capability of making a difference in the performance of both the employees and the organization in extension. Majority of the reward managers are engrossed with the desire to focus on incremental changes that are visible in variable-pay plans that they have adopted. They are also preoccupied with changes to the performance management system and also the changes that are accrued to the new technology of the system.

2: Use of Pay as a Blunt Object
These managers seem to forget that the employees are not only motivated by pay but by a combination of many other facets in their lives. In fact, there has been evidence pointing to the fact that pay is not very crucial in attracting and retaining the best employees for the company. There are other rewarding strategies that the managers seem to ignore. These are for example skill-building opportunities, where the employee feels that his competence, and in extension his worth, is been enhanced. There is also another important facet of motivating and rewarding workers by creating an environment where they feel that the top management is interested in their well-being. This is for example through the opening of the communication channels between the two. When the employees feel that they stand a chance to advance their career, they will be more motivated than when they are assured only of pay.

3: Insufficient Address of the Human Side of Performance Management
Managers seem to be preoccupied with the technology side of performance management. This is whereby they are preoccupied with the out-put of the employee, the amount of work that they complete and the quality of the same. They reward what the employee has done. This is as opposed to the human side of performance management. This is the side that deals with the feed-back between the employees and the management. The employees feel motivated when they are of the view that they are able to communicate with the senior managers. They regard this as one form of their rewards. A one-on-one contact between the employee and the top-notch managers keeps them convinced of the fact that they are still needed in the organization. However, this does not mean that the other facet of reward management, the one dealing with out-put of the employees, is less important. The point is that there is a need to balance between the two. One should be emphasized at the expense of the other.

Reward management can be viewed as a form of management practice where employees are compensated for their performance. They are compensated for the value that they add to the organization; the higher the value, the higher the reward.

Reward management is inextricably interwoven with motivation of employees. As such, most academic theories that deal with reward management are grounded on motivation of employees. This is because motivation is viewed as one of the major outcomes of reward management. One such theory is the Vroom's Valence x Expectancy theory. This theory helps in explaining the motivation that lies behind the actions and performance of the employee. The central argument of this theory is that employees are motivated by the forms of rewards that they expect to accrue after they undertake a certain action.

Gellman, TE 2009. Reward Management: A Guide for Remuneration and Compensation Strategy. New York: Free Press, 278-289.

Geoff, FW and Druker, TJ 2005. A Critical Outlook on Reward Management. New York: Routledge Books, 65-59.

Lloyd, PW 2008. Strategic Management: Reward Management. Long Beach: Adeloitte & Adeloitte, 25-27.

Pierce, QW 2007. Motivation Theories in Business Management. 3rd ed. Vermont: Cengen Books, 278-298.

Redfern, SB 2009. Rewards Management in the 21st Century. New Jersey: Prentice-Hall, 189-193.

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