CONTENT

• Topic

• Conceptual Framework

• Review of literature

• Objective

• Hypothesis

• Methodology

• Annexure

• Questionnaire
Topic:
Role of Monetary Reward System in Performance and Efficiency of Employees in
Corporate.”

Conceptual framework:
The success of any company can be determined by how well they are able to utilise and
mobilise their resources to give them the best results. Unlike other resources, human resources have
emotions and needs. It is therefore imperative that management recognises these emotions and
needs when developing their human resource management systems. Effective development of these
systems can provide a competitive human resource advantage. As access to capital and
information becomes a less important means of advantage so does the human resource
become an increasingly important means of differentiating oneself from one’s competitors. This is
the reason why a company’s human resources are considered to be its most important asset.

In order to stay competitive and ensure that the company has a long-term future, it is
important to improve these performances on an ongoing basis. These performances will only
improve with the buy-in of the employees into higher levels of performance motivated by
related rewards. The company will benefit because its labour productivity will increase, labour
cost per unit will decrease and it will become more price competitive. This is especially the case
where the manufacturing process is labour intensive. The researcher therefore realises the potential
benefit in researching the effectiveness of non monetary reward systems in labour intensive
companies. Improving job performance does not happen on its own, but gets driven by
people’s motivation. According to Armstrong and Murlis (1994:40) rewards and more
specifically non-monetary rewards normally drive a person. It is therefore important to look at the
payoffs of non-monetary rewards.

Managers are constantly searching for ways to create a motivational environment where
associates (employees) to work at their optimal levels to accomplish company objectives. Workplace
motivators include both monetary and non-monetary incentives. Monetary incentives can be diverse
while having a similar effect on associates. One example of monetary incentives is mutual funds
provided through company pension plans or insurance programs. Because it has been suggested that
associates, depending on their age, have different needs pertaining to incentives, traditional incentive
packages are being replaced with alternatives to attract younger associates.

Some researchers have argued that the motives that drive one to focus on money are more
relevant than the intensity of the focus itself, and they subsequently differentiate between
instrumental materialism and terminal materialism. Instrumental materialism describes using material
goods as a means for attaining personal goals and fulfilment; whereas terminal materialism involves
using material possessions to achieve social status and elicit envy from others. They also divide
motives for materialistic pursuit into three different categories: positive, negative and freedom of
action. Positive motives involve using money for basic necessities and as a measure of achievement.
Negative motives refer to using money to gain power or superiority over others. Negative motives
also include efforts to allay one’s self-doubt. Motives concerning freedom of action simply imply
spending money in any way that one desires. When the significant negative correlation between
subjective well-being and money importance was analyzed, while controlling for the influence of
motivation

To study the Role of monetary Reward system in performance and efficiency of employees in
corporate. , the correlation lost its statistical significance. In addition, when calculated independently,
the relationship between negative motives and money importance was both negative and statistically
significant. As a result, attributed the correlation between psychological well-being and money
importance to negative motives alone. This suggests that not all motives for wanting money lead to
decreased happiness. Their findings suggest that it is not the importance of money that contributes to
well-being; rather, attempting to use money to alleviate self-doubt and increase self-esteem leads to
problems. They add that such motives become problematic when money is used for things it cannot
provide, e.g., self-esteem, happiness and genuine friendship.

Personal accountability for high performance. Effective incentive programs that motivate all
employees, and reward those employees, teams, and organizational units whose performance exceeds
expectations. These elements include leadership support; clearly defined and transparent criteria; use
of incentive programs can be an important part of performance management systems because they can
serve to align employee performance expectations with agency missions and goals as well as reinforce
multiple awards for both individuals and teams; targeting only high-performing teams and employees;
publicizing awards; and regularly monitoring, evaluating, and if needed, updating incentive programs
on a periodic basis.

Range of incentives—both monetary and non monetary. Neither one incentive program is
right for all situations, because neither will motivate all employees under all circumstances.
Employees can have vastly different motives for acquiring wealth – including using money to fulfil
psychological needs. Thus, it is not surprising that money alone is less an effective motivator for
employees than when it is used in conjunction with non-financial
Reinforcements. We review the nuances of financial incentives and make basic recommendations that
can form the basis of best practice compensation and incentive policies.

Research consistently substantiates the effectiveness of financial incentives on job performance,

although companies need to consider the issue of job quantity versus quality and also be aware of the
limitations of financial incentives. Employees can have vastly different motives for acquiring wealth –
including using money to fulfil psychological needs. Thus, it is not surprising that money alone is less
an effective motivator for employees than when it is used in conjunction with non-financial
reinforcements. We review the nuances of financial incentives and make basic recommendations that
can form the basis of best practice compensation and incentive policies.
LITERATURE RIVIEW:
In a much publicized study, Gupta and her colleagues analyzed thirty-nine studies conducted
over four decades and found that cold-hard cash motivates workers whether their jobs are exciting or
mundane, in labs and real-world settings alike. But the research team acknowledges that money is not
the only thing that concerns employees – noting that beyond a certain point higher salaries will make
employees happier, but it will not “buy” better performance. Still, Gupta warns that employers who
dole out small merit raises – less than 7% of base pay – may do more harm than good. According to
her, small raises can actually be dysfunctional in terms of motivation because employees become
irritated that their hard work yielded so little. Because of this, she advises employers who must give
small raises to be careful about linking them to results and to be scrupulous about being fair.

Financial incentives moderately to significantly improve task performance, but their

effectiveness are dependent upon organizational conditions. Differences in institutional
arrangements contribute to the feasibility and effectiveness of various monetary incentives, as do
differences in employees ‘preferences for specific incentives. Therefore, companies are wise to study
these issues before implementing changes to existing incentive plans. This is especially pertinent for
service organizations, where financial reinforcements tend to produce a stronger effect on task
performance than non-financial rewards used alone. Even stronger results are seen with a composite
approach. For example, one meta-analysis of 72 field studies found that monetary incentives
improved task performance by 23%, social recognition improved task performance by 17% and
feedback elicited a 10% improvement18. Simultaneously combining all three types of reinforcements
improved performance by 45%.

According to Carrell et al. (1995:348) performance management is a term that was developed
when the emphasis of performance appraisal was broadened to include all of the management tools.
Performance appraisal is there to ensure achievement of performance goals. The tools to be used
to improve performance should include reward systems, job design, leadership, training and
performance appraisal.

Armstrong (1999:427) says that performance management should be based on managing by

agreement or contract and not by command. He also states that performance management should be
designed to achieve individual and organisational objectives. It is during the course of this
research that the researcher wants to focus on the reward systems as a tool to motivate people to
improve performance.

Armstrong and Murlis (1994:205) define performance management as “a process or set of processes
for establishing shared understanding about what is to be achieved, and of managing and
developing people in a way which increases the probability that it will be achieved in the short and
longer term.”

According to Bruce and Pepitone (1999:38) it is important to remember that people

work harder and smarter not for the company but for themselves. It is management’s responsibility
to find the link between the employee’s needs and what will make them do exceptional work.

Bruce and Pepitone (1999:40) says management needs to help their employees feel more
motivated on the job and build the connection between their own interests and the interests of
the organisation

Hartle (1995:82) says that reward is an important part of the feedback loop in performance
management. Money is not necessarily the only reward. He says that a reward will only have a
positive effect if the individual values the reward and the reward is appropriate to the effort that
was put in and to the achievement.

Hartle (1995:82) mentions a wide range of types of reward:

 · Praise;
· Promotion;
· Individual bonuses;
· Merit pay;
· Team bonuses;
· Prizes, and
· Special awards.

Hellriegel et al. (1999:489) say that to be motivators, rewards must be aligned with the things
that people value. The rewards can be determined by simply asking the employees what things
they want. Employees will vary in their responses, because some employees value monetary
rewards, whereas others value scheduling flexibility, especially training and development
opportunities. Some people see their jobs as the source of a pay cheque and little else. Others
derive great pleasure from their jobs and association with co-workers. The subject of organisational
rewards includes, but goes far beyond, monetary
Compensation.

According to Satisfaction Compensation Programs for Growing Companies (1997)

recognition and celebration of achievement can build on job satisfaction felt by team members. It is
mentioned that there are various ways to recognise successful performance.

Kreitner et al. (1999:250) say these rewards can vary from subsidised lunches to stock
options, from boxes of chocolates to golf club membership. The most basic form of rewards is pay
and benefits, but there are less obvious social and psychic Rewards. Social rewards can include a
simple praise and recognition from others both inside and outside the organisation. Psychic rewards
are more from the inside, and include personal feelings of self-esteem, self-satisfaction, and
accomplishment. Despite the fact that reward systems vary widely, it is possible to identify and
interrelate some common components

According to Newstrom and Davis (1997:167) money has always been Important to employees
for the following reasons:
· Because of the goods and services that it will purchase;
· Because it can be regarded as a status symbol, and
· Because it represents to employees what their employer thinks of them.

Hartle (1995:195) uses the term reinforcement when he mentions the initial process of
recognising and praising behaviour. He says that it is a powerful motivational technique for shaping,
rewarding and encouraging the recurrence of certain behaviours. He says reinforcement should:
· identify both what the employee did effectively and why it is effective;
· provide big rewards for Herculean efforts;
· be sincere;
· be timely;
· be specific, and
· identify both the results and the competencies demonstrated in achieving those end results.

OBJECTIVE:
 • To study the role of monetary reward system in performance and efficiency of employees in
corporate.
• To study the contribution of Monetary Reward System in comparison to other benefits such
as Merchandise Awards, Sales Conference Trips, Recognition Awards, Personal Vacation
Trips, Status Awards.
• To study the effect of Monetary Reward System in the Retention of Employees.

Hypothesis:
Ho: There is significant difference in the performance & efficiency of employees in the corporate due
to incorporation of Monetary Reward System.

Ha: There is comparatively lesser significant difference in the performance & efficiency of
employees in the corporate due to incorporation of Monetary Reward System.

METHODOLOGY:
SAMPLING METHOD: Sampling Methods are the methods that are used for selecting the
sample out of the total population, from which the data is collected for the research work. In this
project work we have applied RANDOM SAMPLING for selecting the sample from the population.

SAMPLE SIZE: Sample size represents the number fo respondents that form the source of
information. In this project work the sample size is 250 respondents.

TOOLS FOR DATA COLLECTION: Data collection is done by two methods, primary
and secondary data collection. For Primary data collection, tools like QUESTIONNAIRE are used,
while for Secondary data collection INTERNET as a source has been used.

TOOLS USED FOR ANALYSIS OF COLLECTED DATA: For the data so

collected, various statistical tools are applied and thus interpretation and analysis is done. For this
project statistical tools like PERCENTAGE ANALYSIS and ANNOVA has been used, and thus
interpretation is drawn out.

ANNEXURE:
http://www.TheIRF.org
http://www.aspanet.org/sciptionary/staticcontent/t2pdown/pads/PeryArticle.pdf
http://www.skill.com
 QUESTIONNAIRE
RESPECTED SIR / MADAM,

We are the students Of MBA [FT] Prestige Institute of Mgmt & Research; we are doing our
research work on the topic of “The Role of Monetary Reward System on Performance &
Efficiency of Employees in Corporate”

PERSONAL DETAILS:
(Fill in the information in the blank & put tick mark in the boxes of appropriate options.)

A. Name:_____________
B. Age: _________________
C. Sex: Male Female
D. Company Name:__________
E. Department: ____________
F. Trained / Untrained: _____________

1. How many years total have you worked for this company?
Less than 1 year _____2-5 years _____more than 6 years

2. What region were you in before the recent regional realignment?

_____________________

3. What was your household income before taxes? (last calendar year)
____ Less than Rs29, 999
____ Rs30, 000-Rs49, 999
____ Rs50, 000-Rs69, 999
____ Rs70, 000-Rs99, 999,
____ More than Rs100, 000

4. What is your current education level?___________

5. What is your marital status? ____married ___single

6. What was the employment status of your spouse? (last calendar year)
____no spouse ____wage earner ____non-wage earner

7. Do you have any children? ___no ___yes

If yes, how many? ___

8. What are the ages of your children?____________________ (To the nearest whole
year)

For each question, write the appropriate number or check (√) the appropriate space.
 1. Have you received an incentive reward from this company in the past two years?
__No. __Yes. If yes, indicate the number of times in the past two years you
have received (from this company) the incentive rewards listed below.

A. How many times have you received a cash award(s)?_____

Total estimated monetary value of all cash awards received___________________

B. How many times have you received a merchandise award(s)? _____

What were the merchandise items? ______________________________________

C. How many times have you received another type of award(s)? _____
(i.e., blue vase, certificates, plaques, etc)

D. Please specify type of award(s) received______________________________

Some of the incentive rewards in the questionnaire are currently not being offered at Liberty.
Therefore, please use the descriptions of the incentive rewards provided below to assist you
in answering the questions. Your anonymity will be insured.

Please use the following incentive reward comparisons when completing this
questionnaire:
A. Cash Awards - up to Rs1000 in cash
B. Merchandise Awards - answering machines, calculators, cameras, pens, etc.
C. Sales Conference Trips - annual trips to sales conference
D. Recognition Awards - trophies, plaques, company rings, desk sets, publicity, etc.
E. Personal Vacation Trips - weekend excursions or get-a-ways to selected destinations
F. Status Awards - induction into special Liberty club, upgrades on business cards,
automobile leasing, etc.

1. Listed below are various incentive reward combinations. Select the one reward in
each pair that is most attractive to you by ticking the reward choice.

Personal Vacation Trip vs. Cash

In this example, personal vacation trips are preferred over cash (since personal vacation trip
is ticked),

A. Status vs. Recognition

B. Cash vs. Status
 C. Cash vs. Recognition
D. Status vs. Personal Vacation Trip
E. Merchandise vs. Status
F. Cash vs. Personal Vacation trip
G. Merchandise vs. Cash
H. Merchandise vs. Personal Vacation Trip
I. Recognition vs. Personal Vacation Trip
J. Merchandise vs. Recognition

1. Assume that this organization uses only non-cash incentive rewards. Which incentive
rewards would be most attractive to you? Please circle your response by allocating 1
for very high preference,2 for high preference,3 for average preference,4 for low
preference and 5 for neutral.

A. Personal Vacation Trips

B. Merchandise Awards
C. Status Awards
D. Recognition Awards
E. Sales Conference Trips

Next, we would like to ask you some questions about your attitude toward the
incentive rewards. Please check (√) the response that best reflects your attitude
toward each of the four adjectives following questions 1 through 7.

1. I feel this company’s incentive rewards are:

Desirable, undesirable
Bad, good
Useless, useful
Motivating, not motivating

2. Receiving cash as a reward would be:

Desirable, undesirable
Bad, good
Useless, useful
Motivating, not motivating

3. Receiving merchandise as a reward would be:

Desirable, undesirable
Bad, good
Useless, useful
Motivating, not motivating

4. Receiving personal vacation trips as a reward would be:

Desirable, undesirable
Bad, good
Useless, useful
Motivating, not motivating
 5. Receiving status awards would be:
Desirable, undesirable
Bad, good
Useless, useful
Motivating, not motivating

6. Receiving recognition awards would be:

Desirable, undesirable
Bad, good
Useless, useful
Motivating, not motivating

7. Qualifying for sales conferences would be:

Desirable, undesirable
Bad, good
Useless, useful
Motivating, not motivating

1. Assume that there is only one type of incentive reward offered at this organization.
For each of the rewards listed below, indicate how much additional effort you would
be willing to exert in order to achieve that reward by allocating the appropriate
number. Answer for each reward by choosing 1 for the very much effort, 2 for good
effort, 3 for satisfactory effort, 4 for average effort, 5 for least effort and 6 for neutral.

A. Sales Conference Trips

B. Status Awards
C. Cash Awards
D. Merchandise Awards
E. Recognition Awards
F. Personal Vacation Trips

1. Next, we would like to ask you some questions concerning the incentive rewards at
this company. Please circle your response using the following scale:
Strong Disagree SD
Moderately Disagree MD
Slightly Disagree SD
Neither Disagree nor Agree ND
Slightly Agree SA
Moderately Agree MA
Strongly Agree SA

1. The rewards are appropriate given the levels of performance required to obtain them.
SD MD SD N SA MA SA

2. The requirements for the sales conferences make it impossible for me to qualify.
SD MD SD N SA MA SA
3. I can perform at the levels required to win most company rewards.
SD MD SD N SA MA SA
4. The incentives reward those behaviours that are important to this organization.
SD MD SD N SA MA SA

5. I feel employees should have more input into the incentive reward process.
SD MD SD N SA MA SA

6. I would rather have one major incentive contest as opposed to several small contests.
SD MD SD N SA MA SA

2. What other types of rewards would you like to see offered at this company?

3. What is the greatest strength of the incentive rewards at this company?

10. What is the greatest weakness of the incentive rewards at this company?

Thank you for completing this survey. Please use the space below for any comments you may
have about the incentive rewards at this organization. Your comments are very valuable to us.