The Impact of Using Prizes to Enhance Staff Motivation at Work

Chapter Two

A Review of the Literature

There is a large amount ofinvestigation on reward systems’ effects on motivation in the workplace ranging from the earliest of times.Companies fail to miss a low-cost, high return component in their business and that is establishing a reward plan that makes an employee and establishmentflourish. Bento and White (1998) explain incentives plans are designed to motivate employees to work hard in an organization, depending on how the individual values the reward. Cooper and Jayatilaka (2006) noteextrinsic motivation can decrease inspiration therefore, it is beneficial to have avaluable reward system in place. Allscheid and Cellar (1996) report offering a bonus enhances performance especially when the goals are demanding. Similarly, Rynes, Gekhardt, and Minette (2004) believe one certain incentive is not a primary motivator but a goal to be pursued in order to have a successful reward system. By contrast, Speckbacher (2014) discusses organizations using a reward system to support behavior by increasing effort and improving productivity. Employee motivationand productivity may increaseby having adeveloped reward system in the place.

Comprehending what motivates employees is just one of the strategic steps to a successful organization. Reward systems are incentive programs that are a part of that step to promote employee commitment and efficiency.Allscheid and Cellar (1996) acknowledge that rewards can increase the rate of motivation when employees are goal committed to the objective at hand, whereas rivalry did not affect either functioning or objective commitment.Agarwal and Singh (1998) state traditional reward systems are based on principles and procedures. There needs to be emerging rewards implemented to start growing innovative actions, joint effort, and creative thinking to be efficient. Aguinis, Joo, and Gottfredson (2012) claimwhen using rewards,some principles need to be followed.One of the principlesensures to make the reward contingent upon performance. Due to these issues, organizations should focus on a reward system that aligns employee performance with a suitable incentive plan.

Even though financial rewards seem to be the main factor in a reward system that invites a valuable candidate, it is the non-financial factors that help obtain significant employees. Neckermann and Frey (2013) observe employees above all are motivated by public award recognition. Correspondingly, Morrell (2011) remarks non-monetary incentives not only increase employee engagement but reduce organization overhead. On the other hand, Hammermann and Mohnen (2014) observe non-monetary rewards being less effective because they are not presented as a gift only as part of the payoff. Money was more effective in employee performance. Likewise, Pierce, Cameron, Banko, and So (2003) mention tangiblerewards, such as money, are offered to meet levels and help increase motivation in an employee.The research broadly examines motivational theories and outcomes in relation to monetary and non-monetary rewards. In the following sections, the focus will be on theories, rewards, motivational types, and variation of rewards concerningtheir impact on enhancing employee performance.

Theories of Motivation

There are many theories that have existed over periods of time that effect motivational behavior. A few theories being discussed are Abraham Maslow’s motivation theory, self-theory, two-factor theory, leader-member theory, and expectancy theory. Each theory involves some aspects of motivational behavior occurring in relation to rewards. Despite the number of theories, the determination of precisely what motivates an individual to strive for a reward is far from being established. Some theories outlined below are just a few beliefs pointing out an individual’sbehavior on increasing motivation using a reward strategy.

Abraham Maslow's (1954) book Motivation and Personality, introduces the Hierarchy of Needs. The foundation of Maslow's stimulus theory with human beings seemto be motivated by unfulfilled needs, and that specificsubordinate aspects need to be fulfilled before greater needs can be pleased. According to Maslow, there are kinds of needs such as basic, survival, safety, love, and esteem that must be gratified before a person can be selfless. As long as employeesmove to gratify these longings, they are progressing toward self-actualization.For this theory,one would need to know which reward possesses the most encouraging factor to the employee and to the extentit will increase their work effort. However, self-theoryfocuses on the extent to which an individual’s behavior is self-motivated and self-determined. Snyder and Williams (1982) report unless the needs are compatible with self equally then other needs will not be complete. Self-theory has an effect on the individual and his/her want for the reward. Self-theoryemphasizes the personal side of human existence, and regards an individual's self-concept asbeing more essential than environmental conditions.Furthermore,the needs must maintain satisfaction by self for this theory to work.

Fredrick Herzberg’s (1959) book The Motivation to Work, presents the two factor theory that compares on the distinction between dissatisfaction and low motivation.Motivator factors are recognition, responsibility, and personalgrowth. Hygiene factors are salary, interpersonal relationships, and working conditions. Hygiene factors are to ensure an employee is not dissatisfied. Motivation factors are to motivate an employee to higher aspiration. Hence, this theory assumes the employment is exciting and rewarding so the employees are motivated to work and perform better. This theory highlights upon job-enrichment so as to motivate the employees. Yet, Sinha and Trivedi (2014) describe leader-member exchange theory, or lmx, the quality of interpersonal relationship between employees and manager. This theory would work well when changing rewards or asking for additional thoughts from the member about their reward that are in place. With this theory in place, companies improvecommunication which helpsproductivity advance in the workplace.

Expectancy theory is much like self-theory except that it does not obtain a reason why outcomes obtain a specific value. Expectancy theory contends that the value of the reward becomes obtainable from two types of expectancy, effort-performance and performance-outcome (Snyder and Williams, 1982). The rewards that they receive are by their own effort and performance. According to Cinar, Bektas, and Aslan (2011), “Motivation is possible only when there is a clear relation between the work performance and its results and the results are means to satisfy a certain need” (p. 691).With this theory, individualswant to achieve maximum satisfaction and want to minimize dissatisfaction in their working performance. Therefore, all the theories have input into the motivation of the employee by rewarding the individual.

Rewards and Use of Rewards

Rewards come in various forms, tangible and intangible. For some, the intrinsic reward, such as satisfaction, enthuse employees, and for others the extrinsic reward, such as money, motivates employees. Aguinis, Joo, and Gottfredson (2012) suggest monetary reward examples include salary, raises, and paid time off. Presslee, Vance, and Webb (2013) believe the general impact of tangible rewards will depend on the relative strength of positive and negative effects. Non-monetary rewards include valuable training, development opportunities, and job security. Neckermann and Frey (2013) claim contributions are notably higher for rewards that have a publicized award with a ceremony. Due to these issues, both non-financial and financial rewards can sway motivation regarding an employee.

Attitudes toward rewards can be met with either positive or negative motivation. Allscheid and Cellar (1996) suggest a reward with goal commitment derives positive inspiration.As researchers Presslee, Vance, and Webb (2013) explain, rewards will have encouraginginfluence on goal commitment but will steer employees to set easier goals which will negatively affect implementation. Neckermann and Frey (2013) thought a moving attitude is derived from feedback and recognition. According to Neckermann and Frey (2013), the major reason why people leave companies is from lack of praise and recognitionhence,making it important to have guidelines to follow in place.According to Aguinis, Joo, and Gottfredson (2012), the principles or guidelines to follow for financial and non-financial rewards are: (1) do not limit the specification of nonmonetary reward, (2) provide noncash rewards that are pleasing to the individual, (3) allocate rewards in a timelymanner, (4) make rewards conditional upon performance, and (5) encourage volunteer participation that is favorable for the employee and organization.

Employee motivation can expand the organization’s revenues. Aguinis, Joo, and Gottfredson (2012) state “Monetary rewards can be a powerful influence on employee motivation and performance” (p. 247). Companies are constantly looking for reasons to increase profitand finding the incentive plan that benefits both the company and employee could be crucial. Neckermann and Frey (2013) observe non-monetary rewards have a significant impact on motivation and positive changes inbehavior which can grow the company’s bottom line. Allscheid and Cellar (1996) explain rewards can significantly intensify performance mainly with complicated goals.Incorporating a complex goal could boost company profits by making the employee strive for the incentive more. Therefore, employee motivation can be stimulated by rewards, attitudes, guidelines, and goal commitment.

Types of Motivational Outcomes

By glancing deeper into motivational theories, one may find motivation is typically addressed by two types: extrinsic and intrinsic. Cooper and Jayatilaka (2006) suggest extrinsic motivation results from a link between their behavior and the reward, such as pay or recognition. Intrinsic motivates one to engage in a job, for the most part, because they want to. Examples of intrinsic motivation are a desire to feel appreciated, meaningful, and satisfied. Rewarding employees with the right reward so the individual can produce both internal and external drive. Allscheid and Cellar (1996) note rewarding for goal attainment promotes intrinsic motivation.Goals and rewards usually go hand in hand when striving for more inspiration. Incorporating both intrinsic and extrinsic in a reward system, may possibly improve positive motivation and productivity.

According to Pierce, Cameron, Banko, and So (2003), rewards can be used to enhance intrinsic motivation in every person. These four researchers consider rewards that are perceived as being more reasonable will cause intrinsic motivation to increase in the individual. Cerasoli, Nicklin, and Ford (2014) found a direct connection between intrinsic motivation and extrinsic incentives related to performance, mainly quantity-quality distinction. Cooper and Jayatilaka (2006) state reward reasonableness can be a huge factor influencing motivation and the degree of it. Cinar, Bektas, and Aslan (2011) reveal both intrinsic and extrinsic factors effect workers while they achieve tasks but intrinsic components are more motivating than extrinsic.

Aguinis, Joo, and Gottfredson (2012) claim paying employees more money does not essentially improve their job relevant knowledge or enrich positive impressions on others. Presslee, Vance, and Webb (2013) show results that cash rewards lead to better performance. Whereas, Neckermann and Frey (2013) believe recognition not tangible rewards play apart in employee productivity.Positive incentives are those rewards which provide an optimisticassertion for fulfilling the needs of the employee. Some examples of positive types of rewards are promotion, praise, acknowledgement, and perks. The purpose of negative incentives is to correct the mistakes of employees. Negative incentivesareusually an option when positive incentives do not work and a mental set back has to be given to employees. For example, some negative incentives are demotion, transfer, and penalties.These negative incentives can cause a dip in morale which causes lack of production. Allscheid and Cellar (1996) declarecompetition could derive into a negative incentive. Negative incentives need be avoid unless deemed necessary. Therefore, positive outcomes point out a reason, an organizationneeds to implement a pronounced reward system.

Variations of Reward Plans

Researching all types of incentives, there are two distinct kind of rewards usually offered either financial or non-financial. Every employee has a different need so not just one reward is suitable for everyone. The rewards in an organization should be researched to find which one has the majority effect on motivation. While both are very different, in some aspects both can work at achieving productivity in the same way.

There are a variety of reward plans. Businesses need to find which rewards work best to motivate the entire team of workers. The difference between monetary and non-monetary rewards is that the first involves cash, whereas the second can be categorized noncash rewards. Aguinis, Joo, and Gottfredson (2012) entail that offering a monetary reward can improve performance but getting decision-makers to notice this is sometime a struggle. Whereas, Speckbacher (2014) notes nonmonetary incentives not only reduce company expenditures, they also increase employee engagement and motivation. Hammermann and Mohnen (2014) discuss monetary rewards may outperform non-monetary regarding effort levels but quality can decrease. Neckermann and Frey (2013) claim non-monetary incentives such as a public award is the most powerful motivator of all. So finding the most accurate reward plan, could be a very powerful tool for management if it is used in the right way.

Organizations should focus on having greater incentives to increase production. The reward plan should involve management and the employees to make sure everyone is on the same page. Sinha and Trivedi (2014) note leader-member exchange theory involves both management and employee working together to be a key to success including involvement in reward policies. Variables to each situation and individual need to be consider when developing a new or changing reward plan. Rynes, Gekhardt, and Minette (2004) demonstrate importance of monetary rewards involving performance levels and pay variability. So, there are variations of reward plans but when considering an incentive plan or policy change in a new plan financial and non-financial rewards need to be measured.

Discussion and Conclusion

Reward systems are more than just monetary plans and exceptional benefits. Companies need to consider incorporating new or adding-onto existing incentive plans when productivity is lacking.This gives one a goal to strive for making goal attainment rewarding either in rewards or recognition. Whilerewards often include both financial and non-financial incentives, plans can also include awards and other appreciation, such as advancements, relocation, non-monetary perks, or praise. The conditions and arguments of some of the theories and outcomes are different, depending on the motivation of the support and their views.Reward policies should take into account goals, strategies and values for every employee.

Snyder and Williams (1982) suggests that the expectancy theory needs more data because the model fails to show the effort-performance expectancy theory alone. Allscheid and Cellar (1996) declare that motivational rewards can affect an employee’s performance along with including a difficult goal. Neckermann and Frey (2013) emphasize that there needs to be additional research on recognition in the form of rewards expressing praise and gratitude. Presslee, Vance, and Webb (2013) think cash rewards have a direct effect on employee performance but recognize more research is needed. Despite these objectives, the above researchers all agree rewards motivate employee’s behavior in different aspects.

Valuestake share in a significantpart in motivation. An organization with anuprightreward system has the potential to promote. Values such as honesty, empowerment, determination, and responsibility, when included in the organization, are enthralling motivators.Aguinis, Joo, and Gottfredson (2012) highlight the value of monetary rewards are not among the most important motivating factors. Cooper and Jayatilaka (2006) wrote reward fairness can be a very important value in the degree of motivation of an employee. Furthermore, when the employee values the reward, they will be more motivated to strive for it.

In conclusion, it is beneficial to have a reward system in place because as motivation and morale fall, so does quality and productivity in the workplace. There needs to be more tempting rewards such as a combination of the rewards, gifts, or better benefits that will produce enthusiasm.This research also has group consequences that employees will know the influence of both monetary and nonmonetary rewards in their motivational level and productivity by seeing the result in this research. Snyder and Williams (1982) determine whenself-valueof the employeebecomes obtained thenambition will stir. There is no grand theory that will be the same for each person and every situation. Motivational power though can occur with the precise reward system in place. Productivity and rewardsare imperative to the success and development of an organization’s profit. In closing, ablending of intrinsic and extrinsic rewards produces the results organizations need to drive employee motivation.