Importance of Reward System in HRM
Reward System and Recognition Importance in HRM
In every business organisation, Hr is an important function so that they can satisfy the customers by fulfilling their needs. there may be many ways through which they provide satisfaction to the customers and reward system is one of such ways. Reward system in an organisation is a set of procedures through which the management control the behaviour of employees at work. This system helps HR manager to determine the performance of the workers in context of the current goals of the organisation and also to attract the new employees that can join it in future. It may be noted that rewards needs to be positively values by the receivers otherwise there will be not be regarded as rewards. There may be various kings of rewards such as intrinsic, extrinsic, monetary or non-monetary rewards. It needs to be noted that rewards are generally subjective as they may not be perceived as same by the giver and the taker. To illustrate, promotion can be taken as reward but promotion by transferring to another place may not be taken as the reward.
In every business organisation, Hr is an important function so that they can satisfy the customers by fulfilling their needs. there may be many ways through which they provide satisfaction to the customers and reward system is one of such ways. Reward system in an organisation is a set of procedures through which the management control the behaviour of employees at work. This system helps HR manager to determine the performance of the workers in context of the current goals of the organisation and also to attract the new employees that can join it in future. It may be noted that rewards needs to be positively values by the receivers otherwise there will be not be regarded as rewards.
Functions of reward system:
Enhance employee motivation:
The major function of reward system is to enhance the employee motivation. Employee motivation can be understood as the level of commitment and energy efforts put by the employees. If the employees are given attractive rewards either financial or non-financial, the employees will feel motivated as they perceive that their work is values by the organisation (Inc.com, 2019). Employee rewards acknowledges the employees that their contribution in the company or to its goals is recognised and they are getting appreciation for its. This thing motivates the employees at work and also creates positive behaviour. All other functions of reward system are related to motivation feature.
Increase employee productivity:
When the employees will get something more in consideration of their contribution to organisational objectives, they will try to improve themselves so that they can perform better in future, this perception of the employees helps them to enhance their productivity and thus, to fulfil the goals of the organisation. in most of the organisations, the employees are provided rewards according to the units produced by them. It motivates the employees to enhance their productivity so that they could get more rewards.
Retain talented workforce:
The major reason why the employees left their existing workplace is they do not get satisfied from the pay scale or other incentives provided to them. Under reward system, the employees are provided with variable pay scales, extra incentives, monetary gifts, bonuses etc. which increases the morale of the employees and they get satisfied from the job. Satisfaction is the major factor that helps to retain the customer at the job. In the similar manner, it also helps to attract more employees at different positions in the organisation.
Reward and recognition:
In this competitive era, the business organisations are putting effort to increase their productivity so that they can increase their revenues. Employees are the major contributors in the company and thus, it is necessary to provide them with such rewards and recognition at the workplace so that they will get motivated (Inc.com, 2019). Rewards and recognition are the major factors that could help to control the behaviour of employees and change their work habits.
However, both the terms have the same motive but are quite different but can be used interchangeably. Reward system can be described as the programs under which monetary benefits are provided to the employees which are in addition of the basic salary. Further, the reward programs may be variable pay under which pay for performance is given in form of bonus and stock option etc. It can also be profit sharing under which some percentage of profits of the company are shared with the employees according to their contribution. In small businesses, there are also group rewards provided to the team as a measure of the team performance (Hanchar, 2018).
On the other hand, recognition refers to the intangible form of reward provided to employees for the efforts done by them. Recognition means to highlight the efforts of employees so that they will feel motivated and get satisfaction that the company values their efforts. This system is used as not in all cases employees need monitory rewards for the contribution but they want appreciation and most of the small businesses used this system to encourage employees. For an effective recognition program, there is need to separate it from reward system and should be focus on timing of recognition. It is necessary to provide recognition at such time that it will remain fresh in the minds. In order to motivate the employees for high performance under a project, there is need of frequent recognition. In addition to it, recognition can be regular or yearly, at company level or departmental level. Further, there can also be informal recognition under which the employees will get the privileges such as to work at home, long breaks and late starting etc.
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Thus, it can be said that reward system is an essential element in every company in order to motivate the employees so that they will work for the success of the company. Further, recognition is also an important system under which the employees are provided with appreciation for their work. Both reward and recognition are essential and the decision about selecting one of them depends upon the desire and want of the employees in return of their efforts for achievement of objectives.
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- Inc.com. (2019). Employee Motivation. Retrieved 27 December 2019, from https://www.inc.com/encyclopedia/employee-motivation.html
- Inc.com. (2019). Employee Reward and Recognition Systems. Retrieved 27 December 2019, from https://www.inc.com/encyclopedia/employee-reward-and-recognition-systems.html
- Hanchar, T. (2018). Retrieved 27 December 2019, from https://www.judgify.me/l/blog/retain-employees-team-recognition/
What is the importance of the reward and recognition system?
Rewards and recognition play a significant role in giving a motivational push to the employees. These are often taken as the source of encouragement by the employees. Employees of a company are always eager to receive rewards from the employer to value the efforts put by them.
How are the employees rewarded?
Employees can be rewarded by various means. Few of which can be promotion, giving incentives, perks in the form of rewards or even a letter of appreciation can help the employees feel happy about the recognition they receive in lieu of their hard efforts.