The Influence of Rewards and Satisfactions on Employees' Performance in Organization
Rewards and Employees' Performance
Bachelor Thesis 2012 75 Pages
List of tables and figures
List of abbreviation
1.2 Background of the study
1.3 Problem statement
1.4 Research questions
1.5 Research Objectives
1.6 Significance of the study
1.7 Organization of the Thesis
1.8 Definition of Key terms
2.1 The employees
2.1.1 Employees’ Motivation
2.2 Work Performance
2.2.1 Organizational Citizenship Behavior
2.2.2 Organizational citizenship Behavior for Individuals
2.2.3 Organizational Citizenship Behavior for Organization
2.3 Theory of Work Performance
2.3.1 Pay level and Work Performance
2.3.2 Benefit Satisfaction and Work performance
2.3.2 Health Benefits
22.214.171.124 Employee Rights
2.3.3 Raise Satisfaction and work performance
2.3.4 Salary Administration
2.3.5 Employees’ Motivation towards Performance
2.4 Research Framework
RESEARCH DESIGN AND METHODOLOGY
3.1. Research Methodology
3.2 Research Design
3.3 Exploratory study
3.4 Importance of Research Method for Project Papers
3.5 Implications of worker’s performance if they are rewarded and Encouraged by their Employees
4.1 Objective One
4.2. Objectve Two
4.3 Objective Three
4.4 Objective Four
V. RECOMMENDATION AND CONCLUSION
5.2 Recommendation for organizations
5.3 Recommendation for future Research
“I hereby declare that I have read this thesis and in my opinion this thesis is sufficient in terms of scope and quality for the award of the degree of Bachelor of Business Administration with (Hons).
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I hereby to declare that this paperwork entitled “The Influence of Rewards and Satisfactions on employees’ performance in Organization” is the result of my own research except as cited in the references. This paperwork has not been accepted for any degree and is not concurrently submitted in candidature of any other degree.
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All praises be to Allah, for the blessing and the strength that he has given me while working on this research. As it is both my pleasure and obligation to acknowledge generous people who have provided me with the guidance and inspired to make this thesis. In particular, my deepest gratitude and sincere goes to my Supervisor Dr. Zaridah Bint Zakariya, her knowledge and guidance have greatly helped me at all steps in the process of preparing and submitting this research paper, her invaluable help of constructive comments, critics, friendship, advises and motivation was unforgettable. In fact, without her continued support and interest, this project paper would not have been the same as presented here.
I am also indebted to Insaniah University College (IUC) and the librarians at IUC. They also deserve special thanks for their assistance in supplying the relevant literatures. I would like also to express my appreciation to Professor Wan Suleiman Bin Wan Yusof, the former Dean of Kulliyah Muamalat (The Faculty of Business Management) at Insaniah University for his continuous advice and inspirational comments. I am obliged to record my sincere appreciation and thankfulness to my parents Mr. Mohamed Musse Farah and Mrs. Ibado Ahmed Mohamed; also I owe sincere and earnest thankfulness to all my brothers and sisters, particularly Abdirashid Mohamed Musse, Abdinur Mohamed Musse and their beloved families whom had granted me with support and encouragement throughout the process of completing this research paper, my large relatives also should be mentioned. Certainly, their endless love, prayers and encouragement will not be forgotten.
Last but not least, my sincere thanks to the many friends who provide support and advise me, and who are participating in the process of preparing this paper and give me a support from start until finish, Finally, I am grateful to all who had either directly or indirectly been very supportive and helpful in making this research a success.
While performing their duties in an organization, an employees’ performance can be viewed through the provision of rewards, benefits, pay levels and pay for their administration. It was named work performance. The study was based on conceptual method which is focusing on relation to the satisfaction of reward and employee’s performance; it has 4 items, which are pay level, Salary administration, raise and benefits satisfactions. Furthermore, benefit satisfaction has roughly three main items, namely training, health and rights. It is because; this research’s title is aimed to determine the Relationship between reward satisfaction and work performance. Moreover, the objective of this study is that to examine the influence between pay level and work performance, and to examine the influence between benefits and work performance, also to examine the relationship between raise satisfaction and work performance and to examine the influence between salary administrative and work performance. This study was conducted in a conceptual method. As we have intended to study about the influence of rewards and satisfactions on employee’s performance in organization, information that we have used were gathered from distinct areas such as text books, scholarly writing, research materials, journals, related articles and the Internet sources were resourceful in the process of gathering the information, however our point of view on those sources were also interpreted in a concept that we have aware to be relevant and potentially directed to this topic. In result, this study shows that the whole variables were significantly contributed with dependent variable, meanwhile, pay level satisfaction has substantively related to work performance, whereas raise satisfaction has also influenced with work performance. Salary administration satisfaction is also positive relation to employees’ work performance. However, the most significantly variable was benefit satisfaction which is extremely contributed to work performance.
LIST OF TABLES AND FIGURES
1. Table 1.1 Definition Key terminologies
2. Figure 2.1 Research Frameworks: Work performances
LIST OF ABBREVIATIONS
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Organizations today are very worried about the performance of their employees .This is because the performance of the employees will straightly affect the performance of the organizations. In essence, if the performance of a majority of the employees is low, this would certainly lead to low organizational performance, and vice versa. However, from the perspective of the employees, work performance is also important to them because there is a constant need among them to upgrade their standard of living or more specifically increase their income.
As human, improving the quality of life is a must for most people, and therefore, they will actively seek employment at organizations that provides higher salary, incentives and benefits, or in other words, organizational rewards. This situation poses a complication to the top managers and also the working environment because rewards are like a two-edge sword. Although reward generally has a good impact on the individual performance (Gregorio Billikop, 2006), it also is known to negatively affect performance. In short, though rewards are important for employee work performance, not much is known about the relationship between these two variables.
According to Human Recourse perspectives, rewards can be either intrinsic or extrinsic system. Intrinsic rewards system from rewards that is inherent in the job itself and which the individual enjoys as a result of successfully completing the task or attaining his goals. While extrinsic rewards are those that are external to the task of the job, such as pay, work condition, fringe benefits, security, promotion, contract of service, the work environment and conditions of work. Such tangible rewards are often determined at the organizational level, and may be largely outside the control of individual managers. Intrinsic rewards on the other hand, are those rewards that can be termed ‘psychological rewards’ and examples are opportunity to use one’s ability, a sense of challenge and achievement, receiving appreciation, positive recognition, and being treated in a caring and considerate manner. With this in mind, Chapter One presents the problem statement, purpose of this study, research objectives, research questions and significance of the study.
1.2 Background of the Study
In general, there are two implications of performance; mainly organizational performance and single performance. When discussing organizational performance, researchers often refers to organization’s financial performance such as profit, revenue, earnings per share, return on investment etc.(www.work-life-balance-tips.com). On the other hand, individual performance refers to behavior displayed by the employees (Campbell, 1990). In most organizations, more attention is directed at organizational performance because they are more objective and can be measured easily (Ball et al, 2010). Even though this is true, individual performance should not be neglected because it is an extremely important criterion that relates to organizational outcomes and success (Heil, 2011).
In other words, organizational outcomes are the result of an individual’s performance and of other influences. In general, let us take as an example that the performance of Malaysian companies, according to Dato’ Sri Mustapha Mohamed, 2010 are remarkable advancement in Government Efficiency rating, where Malaysia moved up 10 positions from 2009, Hence, it implies that the Performance of organizations and governmental agencies can be moved forward through the performance of their employees and workers.
1.3 Problem Statement
In order to increase organizational performance, one of the things that organizations must do is to increase individual work performance. Increasing individual work performance is not an easy task, nonetheless, a large number of studies have been conducted to by various researchers to determine factors that could lead to enhanced employee performance (e.g; William and Anderson, 1991; Jaafar, Ramayah, &Zaiunrin, 2006. Indeed, research has shown that organizational rewards are the one thing that can change employee’s performance or can motivate them to be more productive and efficient in their work. According to Nithy (2010), rewards in their very nature, cause the mind to concentrate and narrow the focus, because that is when the employee can see the organization’s goal and work towards realizing it.
However, Stredwick (2000) stated, today so many organizational reward schemes are related to individual performance, which is actually a conflict builder. This is because the scheme is devised to give a reward for the individual achievement, whereas human resource policy puts great emphasis on building up of the team skills and practices. Beyond that, organizational rewards are still believed to relate to individual work performance. Hence, in order to exhibit high performance, the employees must like the rewards that they receive from the organization. In other words, they must be satisfied with the rewards (Stredwick, 2000) in order to achieve the organizational goals and with this case; it seems in a condition that both organization and employees can be benefited.
1.4 Research Questions
In general, it is agreed that organizational reward plays a very important role in enhancing individual’s work performance. However, organizations need to know which component of the organizational rewards has the highest impact on employee work performance. Therefore, the question here is what is the relationship between organizational reward (pay level, benefits, raise and salary administration) satisfaction and work performance?
And what is the role of employees on organizational performance if they are well rewarded and satisfied by the organizations?
1.5 Research Objectives
Hence the objectives of this research are:
1. To examine the relationship between pay level satisfaction and work performance
2. To examine the relationship between benefits satisfaction and work performance
3. To examine the relationship between raise and work performance
4. To examine the relationship between salary administrative and work performance.
1.6 Significance of the Study
As work performance to the significant of reward satisfaction, especially to the organization and employees perceive, their experiences are differential satisfaction with the dimension of pay level, benefit, and raise and structure (Heneman III & Schwab, 1985). Findings and solutions of this study would provide to organizations to understand about the relationship between reward items such as; pay level, benefit, raise and structure with the work performance in the organizational tasks. Hence, it’s expected that this study will come out some ideals that can be matched the Organizational Rewards and employees’ performance.
1.7 Organization of the Thesis
Chapter 1 developed the basis and importance for the study of organizational rewards and employee work performance. For this purpose, this chapter has discussed the statement of the problem, research questions, research objectives, significance of the study.
Moreover, other chapters are consisted of four more chapters. Chapter 2, look into the body of knowledge on work performance and organizational reward satisfaction by reviewing relevant literatures; Chapter 3 discusses the research methodology, with a Conceptual method. While Chapter 4 offers a findings with what I, as a researcher of this study will discover or found during this research conducting, this chapter also will touch discussions that will also implicate those related areas of research and finally, Chapter 5 summarizes the research’s conclusion and recommendation.
1.8 Definition of Key Terms
Several concept definitions will be applied in the study. The concept been applied to maintain the uniformity and flows of the research. The definitions are as flows on table 1.
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Table 1-1: list of key terminologies
This chapter discusses of the reviews and the summaries of the previous study regarding the scope of the research. This chapter also includes a definition of the terms, discussion and the critically evaluating of past and current research. The main goals of doing literature are to gain enough information on area of research so that a researcher can make her own conclusion for the content of this project. Besides that, this chapter also discusses about the theory of work performance and the literature on the work performance. Besides that, this chapter also discusses about the theory of work performance and the literature on the work performance. Work performance is the dependent variables that will be analyzed with the independent variables. In addition, there is a description of the Organizational Citizenship Behavioral (OCB), which includes two cases for individual and for organizations. Each item specified in this chapter is related to definition, and theories that are also related to the item under review. Overall, this chapter includes all definitions and important things pertaining to the independent variable and dependent variables.
2.1 The employees
An employee contributes labour and expertise to an endeavour of an employer and is usually hired to perform specific duties and performances, which are packaged into ob. In most modern economies, the term "employee" refers to a specific defined relationship between an individual and a corporation, which differs from those o ustome lient. Other types of employment are arrangements such a ndenturin hich is now highly unusual in developed nations but still happens elsewhere. However, in this study we are since not conducting such explanations of what is the meaning of employees, but it’s an important to realize that we need a little touch about what are the employees’ duties and what they are employed to perform. Therefore, employee must take all reasonable steps to carry out what has been promised under the contract of employment. Sometimes this is described as the duty to obey the lawful and reasonable orders of the employer, which usually means getting on with the work when there is work to be done and fitting in, as far as is reasonable, with the employer's scheme of operation.
Moreover, the employee must exercise reasonable care and skill in the performance of the work; in other words, the employee has the duty to be efficient and to avoid negligence in doing the work. The employee must do the job honestly and faithfully. This includes the duty to account for any property used and to pass on to the employer any profits made through the employment. However, an employer cannot force an employee to be searched unless it is expressly agreed in the contract (South Australian’s Legal Service Commission law-handbook, 2007). Hence, beyond those above implications, it’s better to the employers to take into their accounts that encouraging, motivating and inspiring to employees through a satisfying them on work grounds and rewarding them as they perform in order to make sure that the employees are fully effective and hard workers that which are really fitted to their positions. So that, if those elements meet there is no doubt that employees will be explicitly effective and efficient contributors toward their work ground.
2.1.1 Employee’s Motivation
Since long time ago, Scholars and practitioners care about cultivating, increasing, and maintaining work motivation which is very momentum to the employee’s work performance. Apart from that, Employee performance is frequently described as a joint function of ability and motivation, and one of the primary tasks facing managers is motivating employees to perform to the best of their ability (Moorhead & Griffin, 1998). In this part, we are trying to emphasize that putting a high level of employees’ motivation is a right track to get and discover the workers ability to perform their works well and highly motivated way. Nevertheless, Pinder (1998) describes work motivation as the set of internal and external forces that initiate work related behaviour, and determine its form, direction, intensity, and duration.
Work motivation is a middle range concept that deals only with events and phenomena related to people in a work context. Hence, the definition recognizes the influence of both environmental forces (e.g., organizational reward systems, the nature of the work being performed) and forces inherent in the person (e.g., individual needs and motives) on work-related behaviour. Beyond that, an essential feature of these definitions is that it views work motivation is a stage which has a direct influence with employees’ performance. In other words, the better employees are motive and an active the more they can perform efficiently.
2.2 Work Performance
There were so many ways to evaluate employees work performance (Williams & Anderson, 1991 ). According to Williams and Anderson (1991), they discovered that the two measures to assess the performance of employees through the benefits offered to organizational citizenship behaviors of individuals and organizations.For current study, focus was on two purposes; the extra behavior and in-role behaviors. The organization citizenship behavior organization (OCBO) is generally gives a benefit for the organization, for example, give an advance notice when unable to come to work and adheres to informal rules devised to maintain an order. Besides that, the organization citizenship behavior, individuals are immediately giving a benefit for the specific individuals and indirectly through the means by a contribution to the organizations.
2.2.1 Organizational Citizenship Behaviors
Organizational Citizenship Behaviors (OCB) is defined as those extra works related behaviors, which go above and beyond the routine duties prescribed by their job descriptions or measured in formal evaluations (Bateman and Organ, 1983). Since these efforts are made beyond the requirements specified in the job description, their presence cannot be enforced (Organ, 1988), and their absence cannot be penalized (Van Dyne et al., 1995). Examples of these efforts include cooperation with peers, performing extra duties without complaint, punctuality, volunteering and helping others, using time efficiently, conserving resource, sharing ideas and positively representing the organization (Turnipseed and Rassuli, 2005).
2.2.2 Organization Citizenship Behavior for Individual
OCB for individual includes both behaviors that are directed toward specific person, and more impersonal forms of conscientiousness and workplace involvement that contribute to organizational effectiveness, for example, the sportsmanship, organizational loyalty, individual initiative and so on (Organ et al, 2006) (cited from Mayfield & Taber, 2010). The Individual differences include stable traits or values that create persistent variation among individuals. But then, some of the individual differences that have been examined as precursors to OCB include the personality, ability, experience, training, knowledge, indifference to rewards, and the need for autonomy (Podsakoff et al., 2000).
Work attitudes are emotions and cognitions that are based on an individual’ perceptions of the work environment and among those that have been studied are organizational commitment, perceptions of leadership and organizational supportiveness, perceptions of fairness (Podsakoff et al., 2000). Other than related to individual behavior, it is also closely linked with the job situation will affect the behavior workers themselves, for example, from the facilities and so forth. This would make the employee himself will give good performance and vice versa.
2.2.3 Organization Citizenship Behavior for Organization
The vital importance of organizational citizenship behaviors for organizational effectiveness has long been recognized by practicing managers, while it is evident that OCB is crucial determinants of an organization’s effectiveness, efficiency, productivity, and overall performance, research about the specific factors that promote OCB under differing organizational context is scarce. Therefore, present study will extend past research by considering all those attitudinal and behavioral dimensions (justice, trust and OCB) together regarding those relationships proposed above in a different cultural context and different profession (Erturk, 2007).
2.3 Theory of Work Performance
Paul R. Sackettand CynthiaJ. DeVore (2001), (cited from Carr et al, 2005) found the workplace justice theory that is forms of perceived injustice in the workplace can lead to counterproductive work behaviors, and, to that extent, to some de-motivation. Almost by definition, a type of injustice that is directly relevant to pay diversity and an issue of resources and resource distribution. Workplace “justice” is often a question of, perceived ‘breaches’ in an implicit psychological contract, and thereby of the psychology of workplace injustice. Hence, Sackett and De Vore (2001), (cited from Carr et al, 2005) from that it is shown that justify the workplace justice theory is more focusing on the payment and the relevant of payment based on diversity. It is also the one of psychological influence to the operational level coming from the top manager. Every action taken by the organizations come from what that the employees’ behavior while serving the company.
2.3.1 Pay Level and Work Performance
According to William et al (2006) (cited from Till &Karren, 2011), the actual pay level and satisfaction is probably a function of the discrepancy of perceive pay level and the amount that employees believe their pays should be. Meanwhile, Lawler (1991) (cited from Heneman& Schwab, 1985), had presented a perspective that views pay satisfaction as a discrepancy between how much pay one feels one should receive and how much one feels is actually received. Otherwise, according to the same author Lawler (1991) (cited from Heneman& Schwab, 1985) the primary goal of the present study is to seek a better understanding of the antecedents of pay satisfaction, and specifically, to focus on pay comparisons and the perceptions of fairness and organizational justice.
Pay level serves as function of personal characteristic of employees, is substantial evidence and as an illustration from the combinations of various pay level and benefit (Heneman& Schwab, 1985). Pay level also is related with aggregate pay satisfaction.And organizational performance, with the three points, which can be elaborated with the individual pay satisfaction or dissatisfaction leads to differential individual behavior outcomes. Second is a differential individual behavioral outcome becomes shared and produces an emergent collective structure that results in organizational attitudes, norms and behaviors. And the last one is, from the constructive behavioral based collective attitudes, norms and behavior will subsequently impact organizational performance and functions (Currall et al, 2005).
2.3.2 Benefit Satisfaction and Work Performance
As the training is another cornerstone to the employees’ skills and performance, Thacker and Holl (2008), identified actual behaviors that are linked to employees satisfaction, behaviors that can be learned, as opposed to general missives such as ‘communicate with subordinates’, and the manager trainees will be prepared to act in a manner conducive to good employee relations. Training also can be enhanced through role playing and behavior modeling of situations requiring manager trainees to exhibit effective behaviors.
Training program also can be dividing with the two sources, the individual and for the organization training (Thacker &Holl, 2008). Trainers gain benefits will get such as a financial or other cost. Clements and Josiam (1995) gave the example company that give benefits to their employees. For example, the hospitality industry based company utilized computer-aided instructional (CAI) self-tutorial package, along with a self-explanatory workbook with exercises for trainees.
The company also offers telephone support for the CAI package. The cost for the additional benefit is $50 per person. The CAI requires 24 hours per trainee. At the end of this period, it is estimated that each trainee will be able to conduct 75 error-free transactions per day (Clements &Josiam, 1995).