REWARDS
Meaning and Definition of Reward
A reward can be defined as any form of gratification that an employee gains from his or her employment with an employer . Reward is a dynamic instrument . It not only creates opportunities for the fulfilment of motivational needs , but also enhances the intensity of motivation . This means , employee motivation doubles every time he / she is suitably rewarded . Enhanced motivation leads to higher performance , which in turn leads to higher compensation .
According to White & Klein , " Reward can be defined as something that is perceived as beneficial or advantageous to a particular actor's interests " .
According to Miller and Steinberg . " A reward can be defined as any positively perceived physical , economic or social consequence " .
Types of Rewards
Rewards associated to work can be categorised into two basic groups .
1 ) Intrinsic Rewards : There are two most essential features that differentiate extrinsic rewards from intrinsic controlled by others . Secondly , intrinsic rewards are distributed at once , and they are direct , not dependent rewards . Firstly , intrinsic rewards are individualised and psychological , and they are not operated or on the approval of others or postponed until some consequent experiences are faced . Therefore , there is a strong correlation between the activity and intrinsic reward . It is not dependant on the operation of the external distribution system ; rather it is created entirely from the characteristics of the activity and the factors who are involved in it . Examples of intrinsic rewards include job enrichment , reduced week days . flexible timing , job rotation , etc.
2 ) Extrinsic Rewards : Extrinsic rewards have the contradictory features . They are objective or materialistic and they are also prone to be influenced and controlled by others . Recipients of such rewards do not entirely affect their distribution and are often improperly and wrongly related with the involvement in nominal activities . Some examples of extrinsic rewards are increase in pay and emoluments , promotion and fringe benefits .
Criteria for Rewards Distribution
One important way to retain employees is by having a fair system of compensation and distributing rewards . This involves fixing wages , deciding on job hierarchies , how much to pay , how to incentivise and so on . Some criteria for distribution are :
1 ) Performance : It is universally accepted that performance should always be rewarded . But the issues are i ) A near fool proof method of defining performance . ii ) An acceptable method of measuring performance- fair , objective and transparent . iii ) Striking a balance between quality and quantity of performance .
2 ) Effort : The effort an employee put - in , irrespective of results , is a reflection of his commitment . All rewarding mechanisms should invariably take into account the efforts put in by employees , irrespective of outcomes . Effort , as against lack of effort , must not be allowed to go unrewarded .
3 ) Seniority : Seniority or the length of service put in by an employee has for long been a criterion for dispensing rewards . However , this traditional criterion is gradually giving way to performance in most industries , especially the IT Industry .
4 ) Skills Set : The skills set , that an employee possess is also an important criteria . An employee who has taken pains and put - in effort to upgrade his skills set should be duly recognised and rewarded , whether or not those skills are used or required . For example , many organisations give an additional increment to those who become graduates .
5 ) Job Complexity : The difficulty or complexity of a job performed by an employee is also an important criterion . Jobs that require difficult skills are difficult to perform , needed to be performed under difficult circumstances or conditions , hazardous in nature , require the use of sophisticated and expensive technology . and should be rewarded over simpler routine jobs .
6 ) Discretionary Time : Certain jobs involve use of personal discretion , taking decisions , and therefore carry an involvement of risk . Such jobs should be rewarded over routine mechanical jobs that do not require these inputs , and therefore are relatively risk free . If this approach is not followed , employees would be unwilling to accept risk - carrying jobs and assignments .
