Employee Incentives and Rewards

Employee Incentives and Rewards

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Table of Contents

TOC o “1-3” h z u HYPERLINK l “_Toc389634775” EXECUTIVE SUMMARY PAGEREF _Toc389634775 h 3

HYPERLINK l “_Toc389634776” PART 1- INTRODUCTION PAGEREF _Toc389634776 h 4

HYPERLINK l “_Toc389634777” PART 2 – LITERATUE REVIEW PAGEREF _Toc389634777 h 5

HYPERLINK l “_Toc389634778” PART 3- RESEARCH METHODOLOGY PAGEREF _Toc389634778 h 9

HYPERLINK l “_Toc389634779” Qualitative research methodology PAGEREF _Toc389634779 h 10

HYPERLINK l “_Toc389634780” Interviews PAGEREF _Toc389634780 h 10

HYPERLINK l “_Toc389634781” Limitations PAGEREF _Toc389634781 h 11

HYPERLINK l “_Toc389634782” PART 4 – RESULTS PAGEREF _Toc389634782 h 11

HYPERLINK l “_Toc389634783” Quantitative research PAGEREF _Toc389634783 h 11

HYPERLINK l “_Toc389634784” Qualitative research PAGEREF _Toc389634784 h 12

HYPERLINK l “_Toc389634785” Surveys PAGEREF _Toc389634785 h 12

HYPERLINK l “_Toc389634786” PART 5- ANALYSIS PAGEREF _Toc389634786 h 15

HYPERLINK l “_Toc389634787” Staff Appreciation Day PAGEREF _Toc389634787 h 16

HYPERLINK l “_Toc389634788” Staff discounted Rewards PAGEREF _Toc389634788 h 17

HYPERLINK l “_Toc389634789” Monetary rewards PAGEREF _Toc389634789 h 17

HYPERLINK l “_Toc389634790” PART 6- SUMMARY AND CONCLUSIONS PAGEREF _Toc389634790 h 18

HYPERLINK l “_Toc389634791” PART 7- RECOMMENDATIONS PAGEREF _Toc389634791 h 19

HYPERLINK l “_Toc389634792” REFERENCE LIST PAGEREF _Toc389634792 h 19

EXECUTIVE SUMMARYThe purpose of this report is to explore the motivation needs of the NBCU employees in order to recommend the most suitable rewards and incentives for these employees. The key hypothesis is that by implementing rewards and incentives schemes for NBCU’s workforce, employees will be more motivated resulting to increased productivity and better performance

Northern Beaches Credit Union’s (NBCU’s) staff members lack motivation. The company has faced difficulty in motivating its workforce, since it is a small organisation, made of mostly middle-aged women who are second-income-earners in their households. Based on the research findings, there is the need for NCBU to introduce the staff appreciation day, initiate staff benefits scheme and introduce tangible non-cash rewards.

This report identifies the challenges faced by NCPU and its organisational situation to offer the context for the research. It also presents literature review to explore the incentives and rewards related to effective reward and incentive schemes within an organisation.

Accordingly, the research used primary research in the form of in-depth interviews and web-based surveys. The research findings and analysis are further presented to examine and interpret the data acquired through web-based surveys and in-depth interviews. This section interprets the findings. Lastly, recommendations are made for NBCU. It is concluded that the most appropriate recommendation for NBCU is staff appreciation day.

PART 1- INTRODUCTIONThe significance of incentives has been widely explored. Indeed, studies have showed that incentives matter. According to Gneezy et al. (2011) the basic law of behaviour is that the higher the incentives, the more the employee effort and the higher the productivity. Recent studies have pointed to the benefits of using extrinsic incentives to influence employee behaviour and motivation (Ledford et al 2013; Suliman & Al-Hosani 2014).

Essentially, monetary incentives trigger two types of effects. These include the standards direct price effect, which manages to make incentivized behaviour attractive, and the indirect psychological effect, which effects function in the opposite direction to that of incentivized, such as crowding out effects (Almutairi et al. 2013; Gneezy et al. 2011).

Work motivation and eventual retention within the workplace is crucial for the greater organisational performance. Within the increasingly variable business environment, systems and processes that ensure workforce motivation are crucial for organisational performance, since employees are arguably the most valuable assets in an organisation (Ayfranci 2011; Ayub 2011). In the case of Northern Beaches Credit Union, it is expected that employee incentive schemes have the potential to bring about the desired behaviour that is aligned towards achieving the corporate objectives of ensuring higher productivity and profitability.

Northern Beaches Credit Union (NBCU) is confronted with several issues that affect its overall productivity and performance. The organisation’s staff members lack motivation, as illustrated by how they have failed to display organisational citizenship behaviour. The company has faced difficulty in motivating its workforce since it is a small organisation made mostly of middle-aged women who are second-income-earners in their households. Additionally, opportunities for promotion are limited. The company’s limited finances also affect its ability to build motivations.

However, the NBCU seeks to sustain its competitive advantage. This implies that it has to restore excellent services and performance by motivating employees. Therefore, there is need for increased and sustained employee motivation and morale at the company. The purpose of this report is to explore the motivation needs of the NBCU employees in order to recommend the most suitable rewards and incentives for these employees. The key hypothesis of the report is that by implementing rewards and incentives schemes for NBCU’s workforce, employees will be more motivated resulting to increased productivity and better performance.

PART 2 – LITERATUE REVIEW

Part 1 identified the challenges faced by NCPU and its organisational situation to offer the context for the research. This section consists of literature review to explore the suitable incentives and reward schemes.

Well-managed, human resources can help in ensuring competitive advantage for any firm, especially within the current competitive and dynamic operational environment (Zhou, Zhang &Montoro-Sanchez 2011, p.92). Rewards are the main avenue through which organizations can stimulate and reinforce desired behaviors within their workforces (Peltokorpi 2011, p.2507). According to Mikulic, Simunic&Nikolic (2013, p.56), such recognition is a standard for organizational performance and because most people spend most of their lives working, their compensation is a significant matter. To Dzuranin& Stuart (2012, p.2-4), rewards comprise basically everything valued by employees and which will have an impact on productivity, through motivating the workers. When implemented properly, an incentive and reward program is therefore one possible way through which overall organizational performance may be boosted, through motivating employees to be more productive.

An incentive and reward program can facilitate the attainment of organizational interests (Mikulic, Simunic&Nikolic. 2013, p.56). Employees can be motivated by such programs through creation of an environment in which they will thrive (Deeprose 2006, p.20). The rewards system should be able to cater effectively for both the intrinsic and extrinsic aspects of motivation. Intrinsic motivation relates to behavior that will be inspired by an internal reward, where even if not given anything tangible, an individual simply enjoys a task or considers it to be a chance to learn and exploit some potential (Wei, Frankwick& Nguyen 2012, p.549). Mikulic, Simunic&Nikolic (2013, p.56) on the other hand view intrinsic rewards as relating to the feelings of satisfaction with the job while extrinsic are the tangible ways of compensation, for instance money. In a similar view, extrinsic rewards include benefits, salaries and any other material compensation. Upon being rewarded, employees should importantly be able to know why they are being rewarded, and why management feels his or her contribution helped in pursuing the organizational strategy. Therefore, implementation of an incentive and reward program should be done with moderation.

There are a number of identifiable theories relating to the building of an incentive and rewards program. Wei, Frankwick& Nguyen (2012, p.548) explain that at the basic level, the expectancy theory indicates that motivation depends on what employees anticipate to benefits from their effort. Commitment and morale are facilitated when everyone feels that they are fairly earning. According to Deeprose (2006, p.22), motivators vary across individuals in line with Maslow’s model of needs, in which socialization, security, achievement, esteem and power can occur in different combinations for different individuals, and the most valued offers the greatest incentive to work, and correlates with the fulfillment of the strongest need. Dzuranin& Stuart (2012, p.2) on the other hand discuss the Standard Agency Theory in relation to such programs. In this theory, the employer and the employee seek to maximize utility, and non-cash incentives will affect both effort and motivation in the same way as cash incentives. In the Self-determination Theory (SDT), a feeling of autonomy and competence at work affect motivation. A non-cash reward will thus affect motivation more than cash incentives, in case it alters the two perceptions. The Cognitive Evaluation Theory on its part argues that the employee will value perceived autonomy and competence more than money and externalities such as rewards (Dzuranin& Stuart 2012, p.2). Related to the theories, Dunlap (2010, p.12) suggests that employees must be helped to understand the goals that they have to meet, in addition to having an effective appraisal system comprising of effective measurement, communication and feedback that will help in assessing whether the desired direction is being pursued. These theories essentially build a case for communication to identify the unique needs of individuals, so that they may be motivated in the right direction.

An incentive and reward system should be able to identify and reward performers effectively and fairly. Deeprose (2006, p.12) advises that even while doing the identification and allocation, it should be remembered that pay is ultimately not the sole purpose for an employee’s engagement to work. Many workers seek other various returns, in order to justify their investment of energy, time, mental and emotional effort in an activity, hence a trend towards thinking of rewards, and not just pay packages. This includes learning and development, the work environment and a work-life balance. Bartol & Srivastava (2002, p.66) believe that to be effective, the approaches must include a perceived fairness in the system, the availability of opportunities for employees to develop self-efficacy to perform well and an ability of workers to identify and set their own goals towards the incentives. According to Dunlap (2010, p.13), top performers will have to be distinguished in a fair and not equal manner. Peltokorpi (2011, p.2507), however, argues that designing an effective reward program does not have a standard practice, as reward preferences and practices are influenced by culture, hence situational uniqueness will have to be considered. On the other hand, Deeprose (2006, p.12) confirms that equity is a major determinant of success and implementers should ensure that the rewards are strictly offered to each employee proportionate to the value of their efforts in overall performance. In rewarding performers therefore, it has to be noted that it is not only the presence of benefits that will determine success of a program, but also the perception that everyone has been deservedly rewarded.

An effective incentive and reward system should foster employee participation and teamwork. Ghorbani& Ladoni1 (2013, p.155) argue that consultation of employees will ensure proper preparation, ownership and action on tasks. According to Dunlap (2010, p.12), the objective should be to have a number of characteristics, namely specific actions, duties and intended outcomes, measurability of the components and achievable targets. Wei, Frankwick& Nguyen (2012, p. 547) argue that as a way of encouraging participation, a reward system should inculcate a sense of meaningfulness in the employee’s work, in which case, work should be believed to be worth the effort. However, Chen, Williamson & Zhou (2012, p.1889) observe that there are situations where individuals may either be anxious about sharing their ideas due to fear of negative evaluation or where one might feel that others are not also contributing to the efforts and therefore withdraw their own. To deal with such, a reward program should be able to measure and offer rewards at the individual level rather than to the group. Employees should in such cases be well motivated to be more creative and work better independently through the program.

The literature review points to the value of rewards in employee performance and therefore Human Resource Management. Both extrinsic and intrinsic types of rewards are identified as necessities in an effective reward program. However, the role of intrinsic rewards is highlighted more due to their ability to inspire the willingness to work. An incentive and reward program should be comprehensive and cater for individual needs of belonging, autonomy, competence and fairness. Employees expect to be valued and fairly rewarded at work, and this is possible within the framework of a good program.

PART 3- RESEARCH METHODOLOGYThe literature review in Part 2 consisted of a review of literature on incentives and rewards related to effective reward and incentive schemes within an organisation. This section justifies the research methodology to gather quantitative and qualitative data.

To come up with the right rewards and incentives for NBCU employees, a range of research methods classifiable into qualitative and quantitative methodology were used.

Primary and secondary data were explored. The secondary data comprised mostly scholarly articles. Emphasis was on the kinds of rewards and incentives that have previously been used effectively in organizations. This formed the basis of the questions investigated in the primary research. The primary research comprised two phases. Qualitative research consisted of in-depth interviews with the NBCU employees. Open-ended questions were used since the intention was to make the employees to converse freely concerning their needs, experiences, concerns and individual viewpoints on varied incentive and rewards schemes existing at NBCU. The responses provided pertinent data to identify the three incentives and rewards programs suitable for NBCU.

Qualitative research methodologyQualitative method is a kind of empirical research that does not quantify data in terms of numbers. The method employs interpretative approaches where the respondents are studied within their contexts, in order to interpret certain phenomenon (Denzin & Lincoln 2000). In this case, the method provided a suitable method for studying the employee rewards and incentives within the work setting. As suggested by Mason (2001) concerning use of qualitative research methods, emphasis was placed on the employee’s personal experiences, visual text, observations and viewpoints.

Suitability of the research method in the case of NBCU rested substantially on the core values of generalisability and objectivity. The methodology underscores the need of getting closer to the participants, since its key purpose is to investigate the respondents’ perspective towards social reality (Gilbert 2008). Bryman (2012) suggested observation and interviews as the two methods to be used. For this particular research interview method was used.

InterviewsThe rationale for selecting this method anchored in a proposition made by Dean et al. (2009), who claimed that the research method is effective for application within the workplace environment, since it can effectively examine how the management system functions on a daily basis.

According to Runeson and Host (2009), interview consists of a controlled verbal exchange that relies on the effectiveness of the interviewer and the interviewee’s communication skills. This is specifically relevant for this particular study since its success depends on the interviewer’s ability to build rapport with the respondents, and to explore in-depth meaning on employee incentives and rewards. As stated by Bryman (2012), interviews are appropriate for studies within the work environment, since they present opportunities to generate rich data, the languages used by employees provide data for examination of perceptions, data generated is analyzable in a range of ways and lastly, the contextual and relational aspects are considered significant for exploring perception.

LimitationsBecause of time constraints, the participants were not interviewed exhaustively. Some researchers were also reluctant to give their views about certain aspects of employee rewards and incentives because of the fear of portraying the organisation in a negative light. Additionally, the data cannot be generalised due to the small sample population. Hence, future longitudinal and industry-wide research will assist in presenting more reliable and valid conclusions to NBCU.

PART 4 – RESULTSPart 3 delineated and rationalised the research methodology used in gathering qualitative and quantitative data in order to determine the suitable incentives and rewards schemes for NCBU. This section sums up the results acquired from the data collected.

Quantitative researchAn online survey was used as the quantitative research in surveying professionals in the financial sector. At this end, the survey was not restricted to the NBCU staff. The questionnaire used in the survey was tailored towards information acquired from the qualitative research. The responses were interpreted through statistical representation of the graphs, scales and percentages.

Qualitative researchFor qualitative research, eight NBCU staff members were selected for interviewing. Others selected included 5 respondents from the administrative sector and another 3 from other branches. Concerning questions on whether the participants would be interested in rewards and local discounts, 1 participant liked the idea of helping local business to help them, since they have always bought coffee from the local vendors. Of the 8 participants, 5 had used the NBCU’s loan discount despite the loan discount being a staff discount that is only used during the purchase of a home. Hence, assumptions were made that is a one-off discount rewards, which lost relevance or significance once the participants had paid off their loans.

The participants in the study also expressed positive feedback for the staff appreciation day. All participants showed interest in management that appreciated their efforts. The participants expressed that this type of incentive would interest them although there would be inadequate time for the event to occur without the relief staff.

SurveysAt the close of interviewing the NBCU employees, a survey questionnaire was distributed to the participants in the same industry. A total of 64 respondents were received, which covered the monetary and the non-monetary incentives and rewards. The findings included:

Figure 2 – Motivators at work90805011430

Figure 2.1 shows the key motivator. Findings indicated that 64.5 percent of the participants believed that a mix of monetary and non-monetary rewards would motivate the workers. Some 25.9 percent believed that pure monetary rewards would motivate employees compared to 9.7 percent who believed that non-monetary rewards are greatly motivating.

Figure SEQ Figure * ARABIC 1: Staff benefits (1)

Figure SEQ Figure * ARABIC 2: Staff benefits (2)

Figure 1 shows that 81 percent of the respondents can access staff benefits in the workplace. As indicated in Figure 2, 83 percent of them can exercise such benefits.

Figure SEQ Figure * ARABIC 3: Discounted services

Figure 3 shows that 87 percent of the respondents would be interested in discounted services within the organization. Discount services cover a range of products including the discounted gym membership and discounted coffee.

Figure SEQ Figure * ARABIC 4: Staff Appreciation Day (1)

Figure 3 indicates that 83 percent of the respondents are presently at the workplace that appreciates events, while 71 percent have participated in the staff appreciation events as indicated in Figure 4.

Figure SEQ Figure * ARABIC 5: Staff Appreciation Day (2)

PART 5- ANALYSISPart 4 presented the research findings acquired through web-based surveys and in-depth interviews. This section interprets the findings.

Staff Appreciation DayIt is evident from the results that the workplace at NBCU is confronted with busy routines, daily schedules and high workloads, which make it necessary for the management to continually, show acknowledgement and recognition for employees on continual basis.

It is also clear that appreciation is significant in promoting an employees’ job satisfaction. As Indicated by the findings, participants frequently receive formal and informal appraisals, which they also give high regard to. It is further indicated that employees in NBCU substantially believe that the degree of appreciation promotes motivation and morale of employees within the workplace.

It is recommended that for the NBCU management to promote and nurture the employer-employee relationship, it is critical that Employee Appreciation Days have to be conducted regularly. This will enable the management to incentivise the workforce, as well as promote sustained motivation of the employees. Additionally, the event should permit all branches to socialise and to freely interact and form a relationship within the workplace. Among the other benefits include increase in employee morale, loyalty and productivity.

The Findings also indicated that the NCBU’s management should take part in creation of Employee Appreciation Days that aligns with the employees’ interest.

As indicated in the findings, all participants showed substantial interest in staff appreciation day. They also believe that such an incentive has the potential to exert team spirit, as well as break barriers between the administrative and sales workforce.

Additionally, from the web-based surveys and in-depth interviews, it is established that the benefits and partiality of employee appreciation day among the employees in the financial sectors and the team members from NBCU is comparatively high. Hence, it should be incorporated in the company’s annual calendar.

Staff discounted RewardsFrom the findings, it can be inferred that initiating staff discounted rewards to show appreciation to staff efforts has the potential to motivate them at the workplace.

As indicated in the results, a majority of the participants acknowledge that discounted services would work for them. Basing on NBCU’s current staff, it was established that staff loan discount could only be used once, specifically when purchasing first home and would not be used afterwards.

From the quantitative research, it was established that majority of the participants have staff benefits at their workplace, while most of them used them. It is recommended that discounted staff benefit schemes, such as discounting health care plans, mobile phone plans and coffee shops should be initiated in order to motivate the NBCU workforce.

It is further suggested that introduction of coffee services from the local vendors would enable the employees to established better connection with the community, as well as ensure steady profit flow of the coffee shop.

It is also recommended that the management should as well give discounts for boot-camps and gym membership, since majority of the participants expressed concerns of high workload and that recreational activities provided great stress relief.

Monetary rewardsFrom the findings established in the in-depth interviews, it is clear that tangible cash rewards can significantly motivate the workforce. Further results from the work-based survey indicated that a majority of the participants looked forward to having cash rewards at the workplace.

It is therefore recommended that in order to motivate the workforce, NBCU’s management should provide the employees with tangible cash rewards, such as tickets to events or shopping vouchers. Mainly, they are earned rather than purchased. This makes them suitable for motivating workers.

To implement the reward, it is suggested that the process should consist of a range of competitions during the selected periods. They should be able to motivate the workforce to align their behaviours and efforts towards achieving organisational goals.

PART 6- SUMMARY AND CONCLUSIONSPart 5 analysis interpreted the research results presented in Part 4. This section summarises the key findings of the report and the recommendations for NBCU.

The objective of this report is to explore the motivation needs of the NBCU employees in order to recommend the most suitable rewards and incentives for these employees. It is expected that employee incentive schemes have the potential to bring about the desired behaviour that is aligned towards achieving the corporate objectives of ensuring higher productivity and profitability. Based on the research findings, several conclusions were made. This include the need for NCBU to introduce the staff appreciation day, initiate staff benefits scheme and introduce tangible non-cash rewards.

PART 7- RECOMMENDATIONS

Based on the research findings, several recommendations were made. First, NBCU should introduce staff appreciation day. This will enable the management to show recognition to the workforce. Second, initiating staff benefits scheme. This will enable NBCU to increase employee motivation through reward schemes. Third, introduction of tangible non-cash rewards. This will enable NBCU to reward employees for their efforts in company activities. It is submitted that each of the three recommendations is tailored to the needs of the NBCU employees and therefore appropriate for immediate implementation. It is concluded that the most appropriate recommendation for NBCU is staff appreciation day.

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