To conclude, the results of the study may be helpful for exploring the utilization and motivational potential of the reward management in the SME sector of Pakistan. doi: 10.1371/journal.pone.0247598, Manzoor, F., Wei, L., and Siraj, M. (2021b). Bus. 26, 1424. With 60% of UK workers planning to look for a new job in 2022 and over 70% of UK employees wanting their employers to make more effort to motivate them, theres never been a better time to focus on your reward system. With most workforces being a diverse range of demographics spanning multiple generations, its impossible to second-guess their preferred rewards. Furthermore, the outcomes of the existing study revealed that intrinsic reward has a significant and affirmative correlation with employee motivation. Plus, from an economical point of view, digital rewards are a low-cost alternative to physical rewards as there are no printing or postage costs. Table 2 showed the findings of the goodness of fit indices of CFA, where the values of Goodness of Fit Index (GFI) = 0.897, Adjusted Goodness of Fit Index (AGFI) = 0.870, Normed Fit Index (NFI) = 0.945, Relative Fit Index (RFI) = 0.937, Incremental Fit Measures (IFI) = 0.972, TuckerLewis Index (TLI) = 0.968, Comparative Fit Index (CFI) = 0.972, Standardized Root Mean Square Residual (SRMR) = 0.064, and Root Mean Square Error of Approximation (RMSEA) = 0.057. Unhappy employees transfer the negative energy to business clients leading to loss of customers and business losses in the long run. doi: 10.1007/BF02723327, Barber, A. E., Dunham, R. B., and Formisano, R. A. This can be done by holding meetings or surveying all employees on their satisfaction with the current reward systems offered to them. A. Org. LW reviewed and improved the manuscript. The prime goal of this study is to analyze the impact of intrinsic rewards on the performance of an employee. 80% of employees agree that employee rewards positively impact their job satisfaction and performance. The recognition of their achievements may be translated into intrinsic rewards; and through these rewards, the employees may motivate and perform up to their maximum capacity. These factors crucially influence the efficiency and profitability of a firm. Intrinsic rewards refer to those incentives that have been given to the employees of an organization. Keep your weary workers engaged and motivated. Likewise, van der Van Der Kolk et al. Our Receiving Incentives and Rewards from Your Employer study also highlighted that receiving a reward from an employer would increase 84% of employees loyalty to a company. Research suggests that employees in fields such as health care, social work, and education tend to be more motivated to do work that has a positive impact on others, to place a higher value. For the same reason, employees are more likely to remember rewards if they are presented ceremoniously or if they are a complete surprise, as unexpected events are easier to recall than regular daily routines. 19, 18421863. Does dopaminergic reward system contribute to explaining comorbidity obesity and ADHD? doi: 10.3200/JRLP.138.1.35-48, Nix, G. A., Ryan, R. M., Manly, J. Table 3. The studies involving human participants were reviewed and approved by the research Ethical Committee of Zhejiang University, Hangzhou, China. A reward system is essential to the organisation as it has become. 88:588. doi: 10.1037/0033-2909.88.3.588, Berdud, M., Cabass, J. M., and Nieto, J. Besides, motivation is completely related to enthusiasm and commitment (Van Den Broeck et al., 2013), thriving (Spreitzer et al., 2005), and well-being (Nix et al., 1999). Curr. Psychol. The COVID-19 pandemic has been a traumatic year and a half for countless employees, and it is very important that employers recognize this and act accordingly. aims to explore the reward system in Normet and its impact on motivation and performance of its employees. KPMG. Int. Employee recognition plays a great role in trust-building. The major results of the study disclose that intrinsic rewards have a significant positive impact on the motivation of the employee and employee performance. Companies prioritized mental health during Covid, so why are we still so burned out? Sustainability 11:4489. doi: 10.3390/su11164489, Bagozzi, R. P., and Yi, Y. The authors ensure that, if organizations recognize the worth of intrinsic reward actions as honestly as possible, they would get best performance from workers. Adv. Reward systems are identified as one of the human resource management (HRM) practices that may impact motivation. The literature has conceptualized PMSE in many ways. J. Proc. (2017). All authors contributed to the article and approved the submitted version. Ajila and Abiola (2004) explained that intrinsic rewards have a positive and significant influence on the performance of the employee in an organization. (2011) explored the complex relationships between intrinsic and extrinsic motivations, pay satisfaction, and job satisfaction of the retailer who uses a pay-for-performance plan for front-line employees. 64, 363423. James, L. R., and Brett, J. M. (1984). doi: 10.1007/s11846-019-00340-9, Rai, A., Ghosh, P., Chauhan, R., and Singh, R. (2018). Employees that have more flexible working hours will be able to take care of personal necessities that may arise due to the pandemic and will not be worried about it affecting their job performance (KPMG in Nigeria, n.d.). To examine the objective of the study, a sample of employees of SMEs has been collected through the questionnaire. PDF Study on Effectiveness of Reward System on Employee Motivation in Bpo Herzberg, F., Mausner, B., and Snyderman, B. Psychol. HBS Working Knowledge. Amoatemaa and Kyeremeh (2016) emphasized that management should provide resources to implement employees' reward and recognition programs. J. Econ. Sci. It is possible only when motivated employees use their full potential to do the work. Mediators, moderators, and tests for mediation. 16, 537549. Workers were petitioned to rate their level of performance via a 5-point Likert scale, where 5 displays strongly agree and 1 displays strongly disagree. An example item is My performance is much better than the same qualified colleagues.. 82, 6978. doi: 10.1016/j.jwb.2009.09.016, Vallerand, R. J., and Blssonnette, R. (1992). than not poorly practiced. A categorized list of motivation definitions, with a suggestion for a consensual definition. Because those feelings drive commitment and loyalty just like it would in any relationship, said Barbara Fredrickson, University of North Carolina psychology professor. Second, only a few studies discovered the relationship between intrinsic reward and employee performance and used some mediators such as organizational commitment (Taba, 2018) and reward system (Riasat et al., 2016), but no study has employed employee motivation as mediators. The mediating effect of employee motivation on the relationship between intrinsic reward and employee performance is our main finding. J. Soc. Motivation is a drive that influences people to work hard. Four in five employees gain satisfaction from this type of peer-to-peer recognition. These values are greater than the suggested cut-off point of 0.60 and confirm the existence of inner consistency reliability between each construct (Fornell and Larcker, 1981; Asif et al., 2019a). Reward management system and participation of employees in decision-making are frequently used practices by organizations to accomplish their objectives (Gngr, 2011). Introduction One of the greatest challenges for the manager to keep their staff motivated and committed. Econ. PDF Impact of Rewards on Employee Performance: A Case of Indian Oil 89:991. doi: 10.1037/0021-9010.89.6.991, Mosquera, P., Soares, M. E., and Oliveira, D. (2020). MA contributed to the methodology of this study. Bus. The study concluded that training has a high frequency in non-profit organizations, and these non-profit organizations have lower base wages as compared with for-profit organizations. 8, 712. They recommended adopting confirmatory approaches like SEM to test mediation. Reward system is an important mechanism that makes it happen. http://www.berjournal.com/wp-content/plugins/downloads-manager/upload/BERJ%203(3)12%20Article%203%20pp.29-48.pdf, Perera, D., and Chand, P. (2015). (1988). These rewards are the most essential thing for every organization, and reward is a huge part of motivating, retaining, and attracting employees. The earlier literature has concentrated on different dimensions of motivation and its effect on the performance of the employee in the manufacturing sector and large organizations but according to our best knowledge, none of the studies have discussed this relationship in small and medium-sized enterprises. FM would like to express special gratitude to my academic supervisor LW (Professor in School of Public Affairs, Zhejiang University China) for his guidance, constant support, funding, and orientation. High work morale results in better customer service hence better client retention. 37, 6575. J. Appl. Figure 1. To attain maximum achievement in the organizations, it is inevitable that the employees must perform optimally. This can help them feel valued and boost their commitment to your organisation. With the help of a reward management system, enterprises can appeal, retain, and motivate employees to attain high performance of the employee (Liu et al., 2008). Structural equation modeling mediation effects. Methods 40, 879891. Econ. One survey disclosed that 90% of employees rewarded increased their trust in their bosses, and less than half of those not awarded confirmed they trust their bosses. challenges and more eagerness to be innovative. Sustainability 11:2263. doi: 10.3390/su11082263, Manzoor, F., Wei, L., Nurunnabi, M., and Abdul Subhan, Q. doi: 10.1016/S2212-5671(14)00187-7, Schunk, D. H. (1989). Sci. According to Bagozzi and Yi (1988), the CR ensures the minimum cut-off of 0.60, whereas the AVE crosses the threshold of 0.50 (Fornell and Larcker, 1981). Second, the intrinsic reward should have a significant relationship with the predicted variable (job performance). doi: 10.1108/02756661311310422, Taba, M. I. 76, 188199. Factors for increasing the competitiveness of small and medium-sized enterprises (SMEs) in Bulgaria. 19, 16671682. An examination of sustainable HRM practices on job performance: an application of training as a moderator. Extrinsic rewards and intrinsic motives: standard and behavioral approaches to agency and labor markets, in Handbook of Labor Economics, eds O. Ashenfelter and D. Card (San Diego, CA: Elsevier), 701772. employee's commitment, develop a positive employment relationship and psychological contract align reward practices with both business goals and employee values. (2021, October 14). A., and Fallatah, S. (2019c). 11:19. Soc. Soc. Laker, B. 26% of employees were dissatisfied completely. Rev. The results of the study show that there is a strong positive correlation between positive feelings about the company and the benefits the company offers (Naud, R., Kruger, S., Saayman, M., Jonker, C., & Uysal, M., 2016). J. Acad. Abor, J., and Quartey, P. (2010). Every business should develop a reward strategy and a functional reward policy. Brookings global economy and development. Another important result is that the motivation of the employee plays a positive and significant mediating role in the association of intrinsic rewards and performance of the employee. (!rMI]EN:T;eGrEU7yS?%]e]U.f_7 , Third, the mediator variable must be significantly correlated with the predicted variable. Benefits and reward systems are integral to the attraction of a job, the wellbeing of employees, and retention in general; who would want to work for a company with no benefits? Heliyon 7:e06340. Jovanovic and Matejevic (2014) argued that once the pay exceeds the subsistence level, intrinsic factors are the stronger motivators, and staff motivation requires intrinsic rewards such as satisfaction at doing a good job and a sense of doing something worthwhile. Sci. What are reward systems? (With benefits and examples) Positive effects of rewards and performance standards on intrinsic motivation. Bull. After reward, most of the employees are keen to deliver better results. 8.4 Reward Systems in Organizations - OpenStax Received: 17 May 2020; Accepted: 10 June 2021; Published: 15 July 2021. Soc. J. endstream endobj 48 0 obj <>stream Based on the above, we hypothesize the following: H1: Intrinsic reward and employee performance have a significant and positive association. the average employee exit equates to 33% of their annual salary, Receiving Incentives and Rewards from Your Employer, recognising employees has a positive impact on retention (68%) and recruitment (56%), companies that recognise their employees multiple times a month are 41% more likely to see increased employee retention, employees want to be recognised for their achievements, the majority of employees (85%) prefer individual incentives over group incentives, an experience that they will never forget, An estimated 27.1 billion devices were connected to the internet at the end of 2021, Almost 67% of the global population uses a mobile device, 70% of employees keep their phones within eye contact, Barbara Fredrickson, University of North Carolina psychology professor, they engage multiple senses, which creates a memorable emotional reaction, 80% of employees agree that employee rewards positively impact their job satisfaction and performance, Four in five employees gain satisfaction from this type of peer-to-peer recognition, receiving gift card rewards motivates most employees to work harder, 71% of employees without company reward systems said that rewards are likely or somewhat likely to affect their motivation to perform better at their jobs, companies that recognize their employees multiple times each month are more likely to see an increase in employee engagement, When we asked remote workers how they wanted their employers to engage with them, the majority said via rewards and incentives, 84% of them said that they prefer to receive their rewards in the form of prepaid and gift cards, 60% of UK workers planning to look for a new job in 2022, over 70% of UK employees wanting their employers to make more effort to motivate them. doi: 10.1177/0734371X11421495, Cronbach, L. J. How ethical leadership influence employee creativity: a parallel multiple mediation model. As mentioned earlier, many researchers have identified that employee rewards directly attach to employee performance. doi: 10.1016/j.gaceta.2016.04.013, Calvin, O. Y. doi: 10.5897/JPAPR2014.0300, zutku, H. (2012). Small and medium enterprises (SMEs) are considered as the fundamental tool for economic growth, and they are playing an essential and vital role in the economic and social configuration of the nation (Ahmedova, 2015; Manzoor et al., 2021b). Give employees input into company goals as well to make them feel like they are working toward a greater cause. Manage. CNBC. As shown in Table 7, we found that the indirect effects of employee motivation on the intrinsic reward and employee performance (estimate = 0.191, p < 0.01) are significant. Financ. The remainder section of the article consists of the following. Behav. COVID-19 has changed the working environment substantially with more employees working from home than ever, a need for more time off, mental health issues presenting themselves within the workplace, and a need for a more transparent corporate culture. It is also useful to understand the problems which organizations may face if they do not have a good reward management system. The Impact of Incentive and Reward Systems on Employee Performance in Leadership styles, emotion regulation, and burnout. The benefits of reward systems. 32, 382406. review the impact of positive reinforcement on the performances of employees in organizations. Effects of Benefits and Rewards on Employee Happiness. Motivation and performance in higher education. Econ. This study emphasizes on the significance of employee motivation and the impact of rewards system on employees motivation, satisfaction, and performance. A universal definition of small enterprise: a procrustean bed for SMEs. J. Bus. Figure 2. Does intrinsic motivation fuel the prosocial fire? Employee turnover is a costly business. Table 3 shows that the value of alpha is above 0.70 (Cronbach, 1995), which represents the greater internal consistency of the constructs and validity. (PDF) Impact of Rewards System on Employee Motivation: A Study of a They concluded that intrinsic rewards like employee development, recognition, and pay/salary have a significant and positive effect on the performance of employees in the public service of Anambra. Besides, analyzing the motivation of employees as a mediator helps us better understand how and why intrinsic incentives can improve the behavior of employees at work. As recommended by Preacher and Hayes (2008), we measured the confidence of the interval of the lower and upper bounds to assess the importance of indirect effects. (Yang, 2008). PDF The Impact of Reward System on Employee Performance : a Case Study of Rewarding employees creates stronger bonds within the business environment. 35, 266284. like rewards job design traits have a positive impact on employee motivation. Many people respond well to tangible intensive rewards, such as a monetary bonus. Hair et al. J. Hosp. The last recommendation is to provide benefits that focus around COVID-specific issues that employees may face. PDF Title: The impact of reward systems on employee performance Employees ranked monetary reward at first place, followed by job security and Mamula, K. B. J. https://journaldatabase.info/articles/relationship_between_rewards_employee.html. They found the best effects of employee motivation toward performance appraisal. The prime goal of this study is to analyze the impact of intrinsic rewards on the performance of an employee. Employee rewards breed happiness and contentment at their places of work. A key focus of recognition is to make employees feel appreciated and valued. 45, 5574. Manage. These findings were confirmed by previous studies of Pierce et al. Psychol. J. Org. Third, very limited research has been performed to examine intrinsic rewardthe performance of the employee in the Pakistan context by using mediating mechanisms, but no study has explored that in SMEs. Employee engagement is a key factor in employee retainment. No use, distribution or reproduction is permitted which does not comply with these terms. 1.3 Problem Statement To stay competitive in the industry and increase market share, Normet needs to have efficient and effective strategies in different areas of operation. What company benefits contribute to positive feelings about the company as well as happiness at the workplace?, Do good feelings about the company have an impact on happiness experienced at work?. Revised Rewards Systems & Benefits for Employees. Hum. Lawler (2003) found certain design factors responsible for PMSE, for example, ongoing feedback, use of behavior-based measures, preset goals, trained raters, and equitable rewards. In a 2020 study conducted by Pratima Singh, 240 IT industry employees were surveyed on whether or not they were satisfied with the current reward systems offered by their company, to which only 59% agreed. COVID-19s Effect on Employee Morale and Motivation. doi: 10.1108/02621710510627064, Bedarkar, M., and Pandita, D. (2014). Defining SMEs: A Less Imperfect Way of Defining Small and Medium Enterprises in Developing Countries. To date, very few studies have explored the reward management system and its effect on employee performance in the Pakistani SME sector. This study contributes by filling the gap in reward literature in the context of the SME sector and identifies whether the SME sector employees in Pakistan value intrinsic rewards the most or not; it tries to explore the attitudes of employees toward the reward policy of their organization.