Background of The Study

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INTRODUCTION
Background of the Study
Rewards is one of the important elements to motivate employees for contributing
their best effort to generate innovation ideas that lead to better business functionality
and further improvise company performance both financial and non-financially.
According to Dewhurst et al (2010), there are other means to reward employees that do
not just focus on financial compensation. Some of these include the praised that
employees are able to acquire from their managers, the opportunity to take on important
projects or tasks, and even leadership attention. That is according to Prabakaran(2014).
Reward system: “Procedures, rules, and standards associated with allocation of

benefits and compensation to employees”. Reward: In this study, reward is more than
money. A reward is something which is offered in order to make employees contribute
to the firm. Chester Bernard writes: “The contributions of personal efforts which
constitute the energies of organizations are yielded by individuals because of rewards”
(Bernard, 1938). Financial rewards: For the sake of this study, the researcher considers
all financial rewards as rewards that can be linked to a cost for the organization. This is
done regardless if the reward itself will contribute any money in terms of cash to the
employee. Performance management can be defined as a continuous process of
assessing and measuring the performance of an individual and aligning it with
organizational goals. It is the job of the HR people to design an effective performance
management system stated by Jain. Reward management is one of the strategies used
by Human Resource Managers for attracting and retaining suitable employees as well
as facilitating them to improve their performance through motivation and to comply with
employment legislation and regulation.
Abraham Maslow (1954) defines motivation as the Cognitive, Aesthetic and

Transcendence aspects, which drives a man towards a developmental change. Another
definition of Motivation according to Baskar(2013) is, It is the process of boosting the
morale of employees to encourage them to willingly give their best in accomplishing
assigned tasks.
Njanja mentioned that the effect of cash bonus on employee performance. The
researcher sought to establish whether cash bonuses applied at KPLC have any effect
on employee performance while Ramzam stated compensation is very important for the
performance of the employees. Therefore they are very important for the organization
too. There is the same purpose of this research which is to measure the impact of
compensation on employee performance.
Therefore, with the gap, we, the current researchers aim to know if there is an
impact of intrinsic and extrinsic rewards to the employees. And what will the impact of
such rewards to the employees. Because time will come that we, the business
administration students, will have our own businesses soon and we are going to have
our employees too. With this study, we will be able to know how we are going to reward
our best performing employees too.
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RESEARCH OBJECTIVES
The purpose of this study is to determine reward system and impact to

motivation. In detail, it aims to identify which aspect of the reward system functions
better, and which aspects can be developed and improved to increase employee
motivation. employees are usually regarded as the most effective machinery through
which the organizational goals and objectives can be easily achieved. The following are
the major objectives of this research:
i. To identify reward system in service banks and non-banks

ii. To evaluate the relationship between reward system (wages / salary,
bonus, promotion, responsibility, meaningful work achievements) and
employee motivation;
iii. To identify the most influential factors of reward system towards
employee motivation.
RESEARCH QUESTION
1. What is the profile of respondent in term of

a) Age
b) Sex
c) Civil Status
d) Banks and non-banks
2. What is the relationship between reward system and employee motivation?

3. What are the factors of reward system that contribute to employee motivation
most?
SIGNIFICANCE OF THE STUDY
This study aims to know how do the managers of the different banks reward their
best performing employees and what are the reward system that they are giving to their
employees. Another thing is that, this research study wants to know the impact of the
rewards to motivation. The result of this study can be added to the literature of other
research paper related to this topic to better understand how do employers give rewards
to their best performing employees and what will be the impact to motivation. It will
serve as a basis to know whether the employees give a satisfactory reward to their
employees. This study will benefit the employers on what will be their basis on
rewarding their best performing employees, on how are they going to reward their best
performing employees and lastly, what will be the impacts of such rewards to
motivation.
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Literature Review
Underpinning Theory
The theory adapted for this study is the Frederick Herzberg Motivational Theory.
It was proposed on 1959. The theory is about satisfaction and dissatisfaction at work
nearly always arose from different factors, and was not simply opposing reactions to the
same factors, as had always previously been believed. This theory motivates people at
work and concerned with people’s well-being at work. It was basically attempting to
bring moiré humanity and caring into the workplace. People are only truly motivated by
enabling them to reach for and satisfy the factors that Herzberg identified such as
achievement, advancement, and development which present a far deeper level of
meaning and fulfillment. The relationship of this theory to the present study is
employees will be motivated to work well if they are being rewarded by their employers.
Because rewarding your employees can encourage them to do well at work.
Literature by Themes
So as to create a meaningful understanding of the theories used in this study, it

is logical to start with a general discussion of reward and reward system and the related
concepts. Then, the researcher has linked each theory to the intended position in both
the study as well as how the theories fit into the reward system.
As cited by Niemi and Pellas 2009, Michael Armstrong, in his book “Employee
Reward”, defined reward system as the tools available and used by the employers in
order to attract, retain, motivate and satisfy their employees. The concept of reward
system also includes all investment made in the organizations human capital and
everything that the employees find attractive in the employment relationship (Armstrong,
2003). A reward system is a combination of financial rewards as well as employee
benefit and these two elements combined together compose the total remuneration for
the employee. The total reward system also incorporates non-financial rewards which
also includes performance management processes. An important aspect of this is that
even if a benefit regards increased health care in form of medical attention, as an
example, this will impose as a financial reward since it is linked to a cost for the
organization. So for this study, the researcher has chosen to consider all financial
reward as rewards that impose a cost to the organization even if it does not generate
hard cash to the employee. A reward system is built around five main components that
all include financial rewards, benefits and non-financial rewards. There is a process of
measuring and evaluating the work of the individuals so as to decide the level of
employee benefits that need to be distributed. A reward system also needs a practice
for motivating using financial and non-financial rewards. These practices constitute of
the financial reward in form of payment, both base and variable, as well as employee
benefits. It also includes non-financial rewards that originate from the work itself and
Effective management
The aim is to bring together these steps so that the organizations gather all of the
competences and recourses that lie among the employees. The reward system’s sole
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purpose is to motivate the employees in order to maximize the efficiency of the

organization by creating a steering- and management instrument. Using the right
rewards can help the managers and the employers to stimulate the employees to create
job satisfaction and to act in a certain way. If the employees respond as intended, this
can ultimately increase the organizational efficiency, hence, create competitive
advantages. The system also needs structure so that the level of reward meets the
value of the positions in the organization and schemes for providing the individuals with
financial rewards that meet their performance. It is also necessary to create appropriate
procedures in order to maintain the system so that the reward system creates efficiency
within the human capital.
Research Paradigm
REWARD
SYSTEM
Intrinsic and Impact to

Extrinsic Reward Motivation
The diagram shows that the Reward System have a relationship with the
independent variable which is the intrinsic and extrinsic reward and dependent variable
which is the impact to motivation.
Methods
Research Design
The research will utilize descriptive quantitative method.

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Locale of the Study
The study will be conducted in different banks and non-banks in Tuguegarao

City, namely, PS Bank, BDO, China Bank, Security bank, Robinson Bank, Remittances
and Pawnshops.
Respondents of the Study
The respondents of the study will be three employees and one manager in each
bank and non-banks. The research will use questionnaire to gather data about the
study.
Data Gathering Tools/Procedures
The research will use a self-made questionnaire. The research will utilize
descriptive quantitative method. The study will be conducted in the financial institutions
like banks and non-banks within Tuguegarao City. The questionnaire consists of two
parts wherein the first part is the profile of the respondents such as name, age, sex, civil
status. The second part contains the questions for the respondents. The researchers
will go to the different financial institution to gather information and will administer during
the most convenient time of the respondents. If the managers will approve, the
researchers will be floating the questionnaire to the respondents. After answering those
questionnaires, the researchers will appreciate the effort and time of the respondents.
Data Analysis
The data that will be gathered will be analyzed using descriptive statistics. The
profile of the respondents will be analyzed using frequency count and percentage. The
rewards and reward system: impact to motivation will be analyzed using frequency
count, percentage and mean to test the significant difference, T-test & ANOVA will be
employed.
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References
Ahlgren, A., Anderson, I. & Skold, H., (2007). Individual versus Team based Rewards
System. School of Business Economics and Law, 2-
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Burma, Z., (2014), Human Resource Management and its Importance for Today’s
Organization. International Journal of Education and Social Science, 1,
2, 85-94
Dawit A., Tilahun Teklu., (2011). A Comparative Study of the use of Reward System
between Production and Service Sectors. School of Graduate Studies of Addis
Abada University in Partial Fulfillment of the Requirements for the Degree of
Masters of Business Administration (MBA), 2, 1-65
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Eshak, E., Jamian, N. & Zakirai, N., (2016). The Relationship between Reward system
with Employees Performance. Faculty of Business & Management Universiti
Teknologi MARA.
Jain, M., (2014), Performance Management: Linking Rewards to Performance,

Journal of social welfare and management
Nassazi, A., (2013). Effects of Training on Employees Performance. Business
Economics and Tourism, 10-53
Njanja, W. L., Maina R. N. & Kibet L. K., Kageni N. (2013). Effect of Reward on
Employee Performance. International Journal of Business and Management,
8, 21, 41-49
Ovidiu, D., (2013), Employees Motivation and Organizational Performance. Review of
Applied Socio-Economic Research, 5, 53-60
Prabakaran et al, (2014). A Study on Workers Reward System in Banking Sector. IOSR
Journal of Business and Management (IOSR-JBM), 16, 23-25
Ramzam, M., Kashif, H. & Ali, G., (2014). Impact of Compensation on Employee
Performance. International Journal of Business and Social Science, 5 2, 302-
309
Robertson-Smith, G., Markwick, C., (2009). Employee Engagement a Review of Current

Thinking. Institute for Employment Studies, 1-52
Shariful, A., Ahmed, S. & Akter, S., (2013). Relationship between Employee
Recognition and Employee Contribution in Service Industry. International
Journal of Business and Marketing Management, 1, 1, 1-8
Yazdanifard, R., Hamukwaya, S., (2014). How a proper performance related reward
system can contribute to work performance excellence. Open Journal of Business
and Management, 2,189-1842

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1

Reward system: “Procedures, rules, and standards associated with allocation of

Abraham Maslow (1954) defines motivation as the Cognitive, Aesthetic and

The purpose of this study is to determine reward system and impact to

i. To identify reward system in service banks and non-banks

1. What is the profile of respondent in term of

2. What is the relationship between reward system and employee motivation?

SIGNIFICANCE OF THE STUDY

So as to create a meaningful understanding of the theories used in this study, it

purpose is to motivate the employees in order to maximize the efficiency of the

Intrinsic and Impact to

The research will utilize descriptive quantitative method.

Locale of the Study

The study will be conducted in different banks and non-banks in Tuguegarao

Respondents of the Study

Data Gathering Tools/Procedures

Jain, M., (2014), Performance Management: Linking Rewards to Performance,

Robertson-Smith, G., Markwick, C., (2009). Employee Engagement a Review of Current

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