The Effects of Reward System on Employee Performance

  • Nurul Asyiqin Noorazem
  • Sabiroh Md Sabri
  • Eliy Nazira Mat Nazir

Abstract

Reward system which consists of financial rewards and non-financial rewards has become essential to an organization in managing employees' performance. Motivated employees can be a significant factor in organizational success. When employees are motivated to work at higher levels of productivity, the organization as a whole will run more efficiently and is more effective at reaching its goals. Literature review of the previous studies has proven that a reward system can motivate and subsequently increase employees' performance. Reward system comes in many forms, for example, intrinsic rewards and extrinsic rewards. Thus, the organization must critically understand what types of reward system can motivate the employee to perform well in their job. The purpose of this research is to investigate the effects of a reward system in an organization on employee performance. The variable tested in this study includes salary, bonuses, appreciation and medical benefits. This study adopted a quantitative approach where 132 sets of questionnaires were distributed to the participants selected using convenience sampling. Data were then analyzed using SPSS software and a few analyses were carried out such as correlations analysis and regression analysis. The results show that all variables have a significant impact on employees' performance. The results of this study can be used by the organization to improve its reward system and to ensure it could help in increasing the employees' performance.

References

Anitha, J., (2014). Determinants of Employee Engagement and Their Impact on Employee Performance. International Journal of Productivity and Performance Management, 63(3), p. 308-323.
Agburu, J. I. (2012). Recent Trends in Wage and Salary Administration in Nigeria: A Synopsis on Theoretical and Empirical Challenges, International Journal of Basic and Applied Science, 1(2), 257-268.
Barber, A.E. and Bretz, R.D. (2000), ``Compensation, attraction, and retention'', in Rynes, S.L. and
Gerhart, B. (Eds), Compensations in Organizations: Current Research and Practice, Jossey-
Bass, San Francisco, CA.
Barber, A.E. and Bretz, R.D. (2000), ``Compensation, attraction, and retention'', in Rynes, S.L. and
Gerhart, B. (Eds), Compensations in Organizations: Current Research and Practice, Jossey-
Bass, San Francisco, CA.
Barber, A.E and Bretz, R.D (2000). “Compensation, attraction, and retention’, in Rynes, S.L. and Gerhart, B. (Eds), Compensations in Organizations: Current Research and Practice, Jossey-Bass, San Francisco, CA.
Barber, A.E., Dunham, R. And Formisano, R.A., (1992). “The Impact of Flexible Benefits on Employee Satisfaction: A Field Study”, Personnel Psychology, Vol. 45, p. 55-75.
Bardot, S., (2014). What Is the Difference Between A Bonus and An Incentive? Compensation Insider. http://Compensationinsider.Com/What-Is-The-Difference-Between-A-Bonusand-An-Incentive/
Bari, N., Arif, U and Shoaib, A., (2013). “Impact of Nonfinancial Rewards on Employee Attitude &Performance in The Workplace” A Case Study of Business Institutes of Karachi. International Journal of Scientific & Engineering Research, vol 4 (7).
Christensen, A. L., (2011). “Linking Ethical Leadership to Employee Performance: The Role of Leader Member Exchange, Self-Efficacy, And Organizational Identification”. Organizational Behaviour And Human Decision Process. vol 115. Number. 2. p. 204-213.
Coggburn, J.D., Daley, D.M., & Kearney, R., (2012). Public Sector Retiree Health Care Benefits: A View from The American States. Personnel Management, 41(2), p. 219-240.
Dulebohn, J. H., Molloy, J. C., Pichler, S. M., & Murray, B. (2009). Employee benefits: Literature review and emerging issues. Human Resource Management Review, 19(2), 86–103.
Edirisooriya, W. A. (2014). Impact of Rewards on Employee Performance: With Special Reference to ElectriCo. Reshaping Management and Economic Thinking through Integrating Eco-Friendly and Ethical Practices Proceedings of the 3rd International Conference on Management and Economics. Faculty of Management and Finance, University of Ruhuna, Sri Lanka
Edward, E. L. III, Christopher, G. W., (2006). Winning Support for Organizational Change: Designing Employee Reward Systems That Keep on Working.
Fagley, N. S. (2016). The Construct of Appreciation: It is So Much More Than Gratitude (chapter 5), In D. Carr (Ed.), Perspectives on Gratitude: An interdisciplinary approach. Routledge
George, K., (2015). The Impact of Reward System on Employee Performance: A Case Study of Bank of Tanzania
Hameed, A., Ramzan, M., Zubair, H. M. K., Ali, G. & Arslan, M. (2014). Impact of Compensation on Employee Performance (Empirical Evidence from Banking Sector of Pakistan). International Journal of Business and Social Science. 5(2);302-309
Heathfield, S.M., (2016). Bonus Pay. The Balance. https://www.thebalance.com/what-is-bonus-pay-1918069
Hernandez, B. McDonald, K., (2010). Exploring the Costs and Benefits of Workers with Disabilities. Journal of Rehabilitation 2010. Volume 76. No. J. 15·23
Kanzunnudin, M., (2007). Effect of Wages and Supervision of Employee Productivity: A Case Study on PT Tonga Tiur Son Zenith District Kragan. Fokus Ekonomi, 2(1), p. 11-20.
Kouzes, J. M., & Posner, B. Z. (2017). The leadership challenges. San Francisco, CA: Jossey-Bass.
Krejcie, R. V., & Morgan, D. W., (1970). Determine sample size for research activities. Educational Psychology Measures
Latham, G. P., (2012). Work Motivation: History, Theory, Research and Practice (2nd Ed.). Thousand Oaks, CA: Sage
Lawlar, E.E., (1981). Pay and Organizational Development, Reading M A: Addison – Wesley Publishing Co. p. 11 – 27.
Lee, L., Wong, P.K., (2006). Individual Attitudes, Organizational Reward System and Patenting Performance Of R&D Scientists and Engineers. Munich Personal Repec Archive, p. 595.
Mccraty, R. & Childre, D., (2004). The Grateful Heart: The Psychophysiology of Appreciation. In R. A. Emmons & M. E. Mccullough (Eds.), The Psychology of Gratitude (p. 230- 256). New York, NY: Oxford University Press.
Noe, R.A., Hollenbeck, J.R. Gerhart, B., & Wright P.M., (2015). Human Resource Management. Gaining the Competitive Advantage (10th Ed.). New York, NY: Mcgraw-Hill/Irwin.
Ojeleye, Y.C & Okoro, C.I., (2016). Job Stress and Employees’ Productivity in Telecommunication Sector of Nigeria (A Study of Globacom, MTN, Airtel And Etisalat). International Journal of Multidisciplinary Education and Research.
Ozutku, Hatice, 2012. "The Influence of Intrinsic and Extrinsic Rewards on Employee Results: An Empirical Analysis in Turkish Manufacturing Industry," Business and Economics Research Journal, Uludag University, Faculty of Economics and Administrative Sciences, vol. 3(3), pages 1-29
Paul, S., Peter, R., (2006). Selling Rewards Paying for Performance in Your Sales Force. UK: In Institute for Employment Studies
Porath, C. L., Gerbasi, A., & Schorach, S. L. (2015). The effects of civility on advice, leadership, and performance. Journal of Applied Psychology, 100, 1527-1541.
Romanoff, K., (2008). What Is the Difference Between A Bonus and An Incentive? The Perfect Pay Plan. http://Theperfectpayplan.Typepad.Com/The_Salary_Sage/2008/07/What-Is-The-D if.Html
Sajuyigbe, A. S., Olaoye, B.O. & Adeyemi, M. A (2013). Impact Of Reward On Employees Performance In A Selected Manufacturing Companies In Ibadan, Oyo State, Nigeria. International Journal of Arts and Commerce. 2(2); 27-32
Sansone, R. A., & Sansone, L. A., (2010). Gratitude and Well-Being: The Benefits of Appreciation. Psychiatry, 7(11), p. 18-21.
Sarin, S., Mahajan, V., (2001). The Effect of Rewards Structures on The Performance of Cross-Functional Product Development Team. The Journal of Marketing, 65(2), p. 35-53.
Surbhi, S., 2015. Differences Between Salaries and Wages. Key Differences. Https://Keydifferences.Com/Difference-Between-Salary-Andwages.
Umar, A., (2012). Effect of Wages, Motivation, And Job Satisfaction on The Performance of Workers in The Manufacturing Industry in The City of Makassar. Jurnal Aplikasi Manajemen, 10(2), p. 406-418.
World Health Organization. Constitution. WHO, 1948
Wilson, T. B., (2004). Innovative Reward Systems for The Changing Work Place. Mcgraw-Hill, Inc.
Xanthopoulou D., Bakker A. B., Demerouti E., Schaufeli W. B. (2009a). Reciprocal relationships between job resources, personal resources, and work engagement. J. Vocat. Behav. 74, 235–244.
Ying, Z. Y., (2012). The Impact of Performance Management System on Employee Performance. Unpublished Master Thesis.
Published
2021-01-31
How to Cite
NOORAZEM, Nurul Asyiqin; SABRI, Sabiroh Md; MAT NAZIR, Eliy Nazira. The Effects of Reward System on Employee Performance. Jurnal Intelek, [S.l.], v. 16, n. 1, p. 40-51, jan. 2021. ISSN 2231-7716. Available at: <https://myjms.mohe.gov.my/index.php/intelek/article/view/15947>. Date accessed: 16 sep. 2024.
Citation Formats
Issue
Vol 16 No 1 (2021): Jurnal Intelek Vol. 16 Issue 1 (February) 2021
Section
Journal Submission

LICENSE OF PUBLISHING RIGHTS

I hereby grant to the Journal exclusive publishing and distribution license in the manuscript identified above and any tables, illustrations or other material submitted for publication as part of the manuscript (the “Article”) in print, electronic and all other media (whether now known or later developed), in any form, in all languages, throughout the world, for the full term of copyright, and the right to license others to do the same, effective when the article is accepted for publication. This license includes the right to enforce the rights granted hereunder against third parties. Supplemental Materials With respect to Supplemental Materials that I wish to make accessible through a link in the Article or on a site or through a service of the Journal, the Journal shall be entitled to publish, post, reformat, index, archive, make available and link to such Supplemental Materials on a non-exclusive basis in all forms and media (whether now known or later developed), and permit others to do so. “Supplemental Materials” shall mean additional materials that are not an intrinsic part of the Article, including but not limited to experimental data, e-components, encodings and software, and enhanced graphical, illustrative, video and audio material.

SCHOLARLY COMMUNICATIONS RIGHTS

I understand that I retain the copyright in the Article and that no rights in patents, trademarks or other intellectual property rights are transferred to the Journal. As the author of the article, I understand that I shall have: (i) the same rights to reuse the Article as those allowed to third party users of the Article under the CC-BY-NC-ND license, as well as (ii) the right to use the Article in a subsequent compilation of my works or to extend the Article to book-length form, to include the article in a thesis or dissertation, or otherwise to use or re-use portions or excerpts in other work, for both commercial and non-commercial purposes. Except for such uses, I understand that the license of publishing rights I have granted to the Journal gives the Journal the exclusive right to make or sub-license commercial use.

USER RIGHTS

The publisher will apply the Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 International License (CC-BY-NC-ND) to the Article where it publishes the Article in the journal on its online platforms on an Open Access basis. For further information, see http://www.elsevier.com/about/open-access/open-access-options. The CC-BY-NC-ND license allows users to copy and distribute the Article, provided this is not done for commercial purposes and further does not permit distribution of the Article if it is changed or edited in any way, and provided the user gives appropriate credit (with a link to the formal publication through the relevant DOI), provides a link to the license, and that the licensor is not represented as endorsing the use made of the work.

The full details of the license are available at https://creativecommons.org/licenses/by-nc-nd/4.0/.

REVERSION RIGHTS

Articles may sometimes be accepted for publication but later rejected in the publication process, even in some cases after public posting in “Articles in Press” form, in which case all rights will revert to the author (see http://www.elsevier.com/locate/withdrawalpolicy).

REVISIONS AND ADDENDA

I understand that no revisions, additional terms or addenda to this License Agreement can be accepted without the Journal’s express written consent.

I understand that this License Agreement supersedes any previous agreements I have entered into with the Journal in relation to the Article from the date hereof.

COPYRIGHT NOTICE

The publisher shall publish and distribute the Article with the appropriate copyright notice.

AUTHOR REPRESENTATIONS/ETHICS AND DISCLOSURE

I affirm the Author Representations noted below and confirm that I have reviewed and complied with the relevant Instructions to Authors, Ethics in Publishing policy, Declarations of Interest disclosure and information for authors from countries affected by sanctions (Iran, Cuba, Sudan, Burma, Syria, or Crimea). Please note that some journals may require that all co-authors sign and submit Declarations of Interest disclosure forms. I am also aware of the publisher’s policies with respect to retractions and withdrawal.

Author Representations

1. The Article I have submitted to the journal for review is original, has been written by the stated authors and has not been previously published.

2. The Article was not submitted for review to another journal while under review by this journal and will not be submitted to any other journal.

3. The Article and the Supplemental Materials do not infringe any copyright, violate any other intellectual property, privacy or other rights of any person or entity, or contain any libellous or other unlawful matter.

4. I have obtained written permission from copyright owners for any excerpts from copyrighted works that are included and have credited the sources in the Article or the Supplemental Materials.

5. Except as expressly set out in this License Agreement, the Article is not subject to any prior rights or licenses and, if my or any of my coauthors’ institution has a policy that might restrict my ability to grant the rights required by this License Agreement (taking into account the Scholarly communication rights permitted hereunder), a written waiver of that policy has been obtained.

6. If I and/or any of my co-authors reside in Iran, Cuba, Sudan, Burma, Syria, or Crimea, the Article has been prepared in a personal, academic or research capacity and not as an official representative or otherwise on behalf of the relevant government.

7. If I am using any personal details or images of patients, research subjects or other individuals, I have obtained all consents required by applicable law and complied with the publisher’s policies relating to the use of such images or personal information.

8. Any software contained in the Supplemental Materials is free from viruses, contaminants or worms.

9. If the Article or any of the Supplemental Materials were prepared jointly with other authors, I have informed the co-author(s) of the terms of this License Agreement and that I am signing on their behalf as their agent, and I am authorized to do so.