The particular section is most important part of the thesis. This is referred to as literature review. It is considered as the most crucial section. In this part the opinions as well as views of analysts with respect to specific investigation are demonstrated. The data in the particular section is being collected by means of secondary sources which acts as basis with which further investigation is being conducted. Thus through the assistance of literature review gap is the researches by authors is past is being assessed. Apart from this the chapter critically makes evaluation of the views of researcher in brief manner. Therefore such acts as an aid in building stronger theoretical base for the subject matter in the investigation. In the present thesis review of literature would involves analysis of impact of reward system on the employee's performance. Further it involves the factors that affects the compensation of the employees. This further affects the productivity as well as efficiency of the business to a greater extent.
Explore the concept of reward system and its importance
Reward is regarded as the thing which is being given to any individual as he has made contribution to the business. In accordance with the views of Allen and Kilmann, (2001) rewards and incentives assist in contributing towards towards the implementation of the strategy through shaping of individual behavior within the business. It has been assessed that well designed system of reward is consistent with goals of the business, its vision and job performance. Reward that is being gained by the person is in form of pay. In managerial term reward is regarded as the total return that is being given by the employee to the personnel in order to render the services towards the objectives of the business. It is considered as the return from the work. As per the views of Armstrong and Stephens, (2005) it has been assessed that every individual desires towards gaining the return from the business before getting involved in any kind of activity that is related with the business. This is referred to as reward. It acts as an aid in attracting the attention of the worker and also inspires them in performing the task in an effective manner. Further a reward is pay off for the performance that is directly related with the motivation level as well as job satisfaction.
It has been assessed that reward management within the firm assist in motivating and retaining the personnel at workplace. It is important aspect of HRM as well designed reward system would result in increasing the productivity as well as satisfaction among the personnel. Further reward management is the procedure of creation, implementation as well as controlling an effective system of reward within the organization that assisting in maintaining as well as bringing improvement in the performance of the firm. In accordance with the views of Buller and McEvoy, (2012) it has been gained that reward management is considered critical aspect of human resource management that is revolving around designing as well as execution of suitable pay system. This system acts as an aid in enhancing the performance of business and increase the motivation level of the employees at work. Rewards management is regarded as the motivational practice which the organization use for rewarding the personnel in order attain success. The firm is engaged in setting goals as well as make establishment of the rules for its personnel in order to comply with so as to attain those targets. It ensure that personnel have clearly understanding of the goals, rules as well as rewards so that they can get higher performance. All the personnel complies with similar type of reward system.
In the present era people have the tendency that they do not remain in the job for longer period of time. Every time a new employee is being recruited the firm is spending greater amount in recruitment as well as training which can have spent in any other activity. By possessing good reward system assist in keeping the personnel happy, as well as loyal towards the organization. This has greater role in increasing the trust of the employees towards the business to a greater extent (Chang, 2016). The reward such as public recognition as well as additional pay provides greater motivation to the personnel in working harder. There is greater importance of reward system. This is comprised of retaining the personnel. Along with this it offers greater attraction for the new employees. Further the reward management has importance in avoiding the cost of hiring as well as training to the personnel.
In addition to this it has effectiveness in creation healthy working environment. Moreover it assist in encouraging positive attitude as well as behavior. Thus the work performance can be carried in an effective manner. In accordance with the views of Rees and Smith, (2014) it has been assessed that reward makes the personnel more likely to seek for the advancement. This has greater effectiveness in increasing the strength of the image of the organization. An important part of the procedure of the management is towards giving proper attention towards effective utilization of resources. Human resource management is one of the important part of management strategies as it has significant role in increasing the performance of the business. In the present era there is presence of wide number of methods that can assist in influencing and motivation the personnel in an effective manner.
Different types of reward system
Rewarding means valuing the employees hard work and offering them motivation in other ways. This should be done by every organization in turn of getting the good production. Its very important part of the business that should be done very month. If the employee is given proper direction towards the achieving the target it becomes easy to them. Company can also give employee of the month to encourage other employees and increase the productivity.
There are many different systems of rewards which include:
Intrinsic versus extrinsic rewards
Financial and non-financial rewards
Performance based rewards
Team based reward
Employee of the month
In team based reward are the rewards which are given on the bases of the total performance by the team or the group done to achieve the goals in the uplifting of the business (Renwick, Redman and Maguire, 2013). The incentives and rewards are likely the yield of approaches to performance that can be more effective in reaching the shared success. When a organization keeps competition in the teams then the teams also start to work hard and achieve the goals according to the results.
This is the increment in the salary for the employees that makes them satisfied and valued in the organization. Its also increases the enthusiasm of the person by awarding them in different ways according to their needs. If organization will think about them then he employees will also think about the business production. Its a type of extra money given to the employees. If the person is working hard then their give the title of good faith as a bonus.
Employees are given cash as rewards which keeps them motivated and encouraged. Organization pays awards in cash so that the employees can use then according to their use. In case the personnel is being rewarded financially for their performance then this is referred to as financial reward. Such kind of reward related with enhancing the financial well being of the personnel. In accordance with the views of Rose, (2014) it acts as an aid in fulfilling the basic and other need of the personnel. Therefore it is regarded as most significant as well as effective tool for motivation. Financial reward includes profit sharing, paid leave, salary and wages, bonus, pension, gratuity, insurance facility, accommodation as well as participation in the share of the organization.
Non financial reward-
These are referred to as the reward that are not related with the financial matter. Such are referred to as non financial reward. It has been assessed that financial reward does not always offer greater motivation to the personnel. Such kind of reward are not relating with the economic well being. It is important for the business to make suitable combination of financial as well as non financial reward. Non financial reward is comprised of favorable work environment, attractive position, responsibility of choice, work autonomy as well as job security etc.
The rewards are associated with the internal satisfaction of the personnel in order to carry out best performance that is being perceived from their side which is referred to as intrinsic reward. Such kind of reward is experienced by the employee perceived from the result of their job performance (Jiang and et. al., 2012). This kind of reward is not related to what the business is offering to the personnel. This kind of reward is one that cannot be seen or touched. This kind of reward possess following which includes interesting job, challenging job, job rotation, job autonomy, career development opportunity, participation in the decision making, shorter working hour as well as flexible hours of working etc.
This is referred to as the kind of reward that is received by personnel from external source. Salary, wages, bonus, recognition, praise, promotion are being offered by the business for the job performance. Such reward possess physical appearance and can be touched, felt as well as seen by personnel. This kind of reward affects many employees, special attention needs to be offered when making development of provision in relation with the extrinsic motivation.
Analysis of the impact of reward on employee's performance
Rewards are the types of motivation given to the employees and make then encouraged so, that their can do the work effectively with the hard work. Employees feel valued by which their think that organizations is seriously take care of their development and career. So, only these rewarding system is done for them which also makes feel them satisfied in the workers level. Every employees have different needs of the rewards like some people consider cash, shopping coupons, incentives may include holidays, car, house. There are two rewards basis that are financial and non financial, used in utilizing positive performance of the employees. Job, promotion, commissions, bonus, gifts are some of the pay for performance of the employees that are included in financial rewards. Appreciations, social recognition, work kind conditions that are included in the non financial rewards. There are some non material rewards like- intrinsic and extrinsic are the impacts on the employees performance. Overall satisfaction on the job are the increased rewards (Adam and Epel, 2007).
Motivation is the most important word in every ones life, it plays a encouraging part. Every employee needs encouragement to be motivated and perform at the best level to meet the goals of the business. Rewards which the individuals receives on the best work done by them and its the part of understanding motivation. To retain the high performance in the organization the rewards system should be effective, according to the productive. Many searches are done on the relationship between employees motivation and rewards. Policies and procedures are make by the organization to improve performance of the employee by formulating reward system, that will increase the motivation and employees satisfaction.
Organization must seriously pay attention to the performance of the employees and to keep them performing at the better level, they must introduces systems of rewarding that will also make them feel valued. If employees are motivated, monitored in performance, managed then that is also called as rewarding good performance. Employees attitudes and behavior are influenced positively by the strategies of rewards and recognition that are very meaningful.
Its very much necessary to every organization to keep the employees motivated and encouraged so that their will hard by they own efforts to reach the targeted goals. People should be motivated to do the task given to them (Di Chiara and Bassareo, 2007). If the employees are motivated by the rewards system then automatically the production will increase in the organization. Employees just needs appreciation for the hard work that keeps them engaged in achieving the targets for the success of business. To measure the the employees performance the company uses appraisals as the tools in order to achieve the goals.
This system helps to improve the performance in the organization as well as to full fill the objectives of the business. Objectives such as enhancement of employees performance to succeed in the levels of productivity and cost control of labours. To improve the employees performance the organization must organize different training sessions and then do the assessments according to the paying attentions. There is a very strong relationship between pay and the employees (Tsujino and Sakurai, 2009). If employees are motivated then the productive will increase and by that sales will go high of the product in the market. Every employee is measured on the bases of their performance and should be awarded accordingly and their must be given feedback also.
When the feedbacks are given to the employees their will try to improve the weak points and achieve the desired goal. Its very important for every person working in any business.
Rewards for the performance are as follows:
Increase in pay
Effective reward are the significant factors in the success of the organization. Motivated employees work at high level in the productivity and the business run more effectively and efficiently to reach at the targeted goals (Armstrong and Stephens, 2005). As a result of employees performance the rewards are the positive outcomes because the rewards are aligned with the organization goals. Rewarding means paying something good to the person over the performance and keep the motivation alive to work hard. Paying awards in return is called as rewards.
Factor influencing the employee compensation
The compensation can be monetary as well as non monetary that is being given to the personnel in return of the work that is being done by the firm. The compensation is in form of salaries as well as wages. There is presence of various internal as well as external factors that affects the compensation of the employees. There is presence of factors that affects the compensation among the personnel. It is comprised of internal as well as external factors. Such have been enumerated in the manner stated as under:
Ability to make payment:
Big companies can make payment of higher compensation in comparison with competing business. However small companies can make efforts to maintain their pay scale to the level of competing business or sometimes it is below the level of industry.
In accordance with the views of Allen and Kilmann, (2001) it has been gained that strategy of the business affects the compensation of the personnel. In situation when the organization needs skilled workers in order to get an edge over competitors. Thus in this regard they would make more payment in comparison with others. However in case the organization wants to go smooth and is able to manage with existing workers then it would offer lesser pay to what other are paying.
Job evaluation as well as performance appraisal: The evaluation of job assist in having satisfactory differential pay for the varied kind of jobs. The appraisal of performance assist the personnel in getting extra return based upon the their performance.External factors
Cost of living:
It has been assessed that cost of living index also affects the compensation of the personnel. This is in the manner that with the enhancement or fall in general price level the customer price index, the wage or salary also varies to a great