Impact of Money and Other Financial Rewards

Question: Discuss about the Impact of Money and Other Financial Rewards. Answer: Introduction In the contemporary society, financial rewards such as bonuses and incentives have played a pivotal role in creating a sustainable environment within the workplace. The rewards are likely to inspire and motivate the employees thus increasing their productivity. Moreover, financial rewards make the workers to feel that the organizations have recognized their presence and contribution in the workplace (Osterloh Frey 2014 p. 549). The allocation of money and other financial rewards is therefore likely to ensure that the employees work harder so as to gain more money in the organization. Through working hard, the operations of the organization will be improved tremendously resulting in the achievement of the goals and objectives. The paper critically examines both the positive and negative effects of monetary rewards on employees in an organization. Advantages of using money and other financial rewards for employees There are several benefits that a company can realizes through rewarding employees with money in the workplace since money motivates the employees. The benefits include: The main benefit that both the employees can experience from monetary rewards is improved performance. Financial rewards such as bonuses, incentives and handouts to skilled workers can motivate them thus resulting in an improved performance. According to Luthans Stajkovic (2015 p. 55) through giving out of money and other financial rewards, the employees will develop a positive attitude towards work. The workers will realize that their efforts are being recognized and appreciated in the company. Therefore they will work harder so as to continue getting cash handouts and bonuses from the business. Improved performance also plays a critical role in increasing the productivity of the employees. Motivation has brought a significant impact on the employees productivity. The motivation of workers through financial rewards is more likely to result in the completion of assigned tasks according to the goals and objectives of the company. Workers who are not given monetary rewards are less mo tivated thereby demoralizing them hence they cannot effectively undertake the companys assigned duties and projects (Aguinis et al 2013 p. 238). For instance, multinational organizations such as Johnson and Johnson Pharmaceuticals have embraced the practice of giving employees cash handouts as well as bonuses and incentives so as to improve their work performance. Therefore money and other financial rewards are fundamental in enhancing employment relationship within an organization. Enhances sustainability within the organization Another long-term benefit of monetary rewards is sustainability. One of the major goals of business organizations is to achieve sustainability. Through giving cash handouts and incentives to employees, the workers will feel motivated and therefore effectively undertake the assigned roles and projects. Enhanced operations in the organization will lead to the achievement of organizational goals. Employees who are motivated therefore become more productive. According to Kaplan Norton (2013 p. 95) after the goals of the business have been achieved, the firm can therefore venture into other roles such as corporate social responsibility and environmental conservation. Through such measures, the firm can attain sustainability since the local community will feel the positive impact of the business on them. Moreover, through giving of financial rewards, the business increases the income of each individual employee leading to a satisfied workforce. Therefore giving financial rewards such as b onuses and incentives helps an organization to attain sustainability in the long run. Through attaining sustainability, the business can have a significant impact on the society. There has been an increasing need for both small and multinational business to embrace sustainability so as to have a positive influence on the community. Reduces employee turnover Giving money and other financial rewards to employees can also lead to a reduction in the number of employees who are leaving the business. Employees who are not well paid in the business tend to look for better pay in other organizations. The practice results in the decrease in performance and productivity of the organization. However, through giving financial rewards, the employees will become motivated since the monetary rewards will boost their income (Durant et al 2012 p.547). An increase in income will also result in a rise in economic sustainability among the workers. The employees therefore will be in a position to afford the basic needs as well as the secondary wants. Employees who are given financial rewards will therefore become hesitant in moving away from the company. Employee turnover is one of the greatest setbacks that contemporary business organizations have been facing. It results in the loss of skilled workers who can improve the operations of the business. However , through giving financial rewards, the business can retain the employees thus achieving its goals and objectives. Moreover, through giving of financial rewards, the business will be developing a vital employment relationship within the organization. Results in innovation and creativity Rewarding employees with money and other financial rewards such as bonuses also results in innovation in the long term. According to Finkelstein et al (2012 p.932) employees who are constantly given monetary rewards due to exemplary performance will strive to perform better so as to continue receiving the monetary awards. Through the process of improving their performance within the organization, the employees can develop an idea into an innovation that can have a tremendous impact on the operations. According to Rowlinson Procter (2013 p.388) most of the multinational organizations such as Apple Incorporation have created an enabling environment for innovation through giving their employees monetary rewards. The company gives the employees monetary rewards and assigns them duties that they are expected to produce efficient end results. In the process, the workers become innovative and apply the knowledge in improving the operations of the organization. For example, if the company i s the automotive industry, the employees can develop an innovation of modern and sophisticated motor vehicle brands and models. Alternatively, in the telecommunication industry, the workers can develop new designs of cell phones or operating systems of computers (Loveman 2013, p.24). However, employees are likely to lose morale and therefore fail in accomplishing their tasks as well as developing new ideas and innovations. Dynamic and far-reaching Another important benefit of giving money and other monetary rewards to the employees is that the method is far reaching and can motivate all types of employees within the organization. Money can be used to motivate all level of employees from the lowest ranked to the highest ranked in the business. Unlike other forms of motivation that are only targeted towards a section of the employees, monetary rewards can serve all kinds of employees within the organization (Gardarsdattor et al 2014 p.1112). The firm therefore it is easier to plan for the allocation of monetary rewards unlike other forms of motivation. For example, the assistant public relations officer can be given monetary rewards to boost his or her morale. Alternatively, the security officer and the managing director can also be given financial rewards so as to motivate them. The impact of the financial rewards will be the same since all of the workers will strive towards improving on their performance so as to continue gree ting the bonuses and incentives from the organization. Most modern organizations therefore have recognized the benefit of using monetary rewards unlike other rewards such as health insurance. Through the provision of monetary rewards, the organizations can initiative an efficient employment relationship. Expansion of the business in the long run Moreover, giving financial rewards result in the expansion of the business operations in the long run (Kreps 2015 p.267). Employees who are motivated through monetary rewards are likely to improve their performance unlike the employees who are not given financial rewards. Therefore the workers will work hard so as to continue getting financial rewards. Through working hard, the performance of the business will improve thereby resulting in the achievement of business goals and objectives. When the business achieves its goals and objectives, it can now expand its operations and even attain global operations. Many industries have attained global operations after expanding their operations that had been triggered by motivating employees through giving financial rewards. For example, modern multinational organizations such as General Motors Company have expanded its operations globally due to improved performance and productivity by the employees. The automotive industry has embraced the ideology of giving employees financial rewards so as to motivate them. Through the measure, the firm has been in a position to expand its operations and therefore it has become one of the best automotive manufacturers in the world. Broad options for rewarding Another benefit of giving financial rewards to the employees is that it there are broad options in which it can be allocated to the employees. For example, the organization can decide to give cash handouts, incentives, cash bonuses or pay for recreational travels. Unlike other forms of rewards such as promotion, it is easier to give monetary rewards since the firm can chose an ideal method to use in allocating money and other financial rewards to the employees. Most organizations prefer giving incentives and bonuses to employees who have displayed sterling performance in their area of work (Lin 2011 p.61). However, some employers prefer giving cash handouts to workers who have recorded a positive progress in the organization. The availability of diverse options makes it easier for the company to choose the most appropriate method of rewarding specific employees. For example, the junior employees can be given cash handouts while managers and the chief operating officer can be given in centives and bonuses so as to motivate them hence leading to the improvement of the operations of the business. Although giving monetary rewards to employees have several benefits on employees and the organization as a whole, the practice has brought some setbacks within the organization: Discourages teamwork The practice of giving out money and other financial rewards to employees has a limitation of discouraging teamwork. Most contemporary business organizations now prefer developing working teams that can accomplish tasks collectively. Teamwork is seen as a viable practice in most organizations. However, in a case where the monetary rewards are given in a group, the lazy and uncooperative members will benefit from the financial rewards yet they efforts are not felt in the group. There are some members of working teams who lag behind since they know that the group will be judged by its overall performance (Grant et al 2013 p.901). The practice can make the group to depend on a few hard working individuals in the group. During the provision of monetary awards, the group may divide due to the disagreement over non-performing employees. Hence giving money and other financial rewards cannot effectively result in the development of a viable employment relationship in the workplace. Business organizations should ensure that they implement measures that are aimed towards creating an effective team in the business. The practice can discourage semi-skilled and non-performing workers The adoption of monetary rewards among organizations can have a long term effect of demoralizing semi-skilled workers. In most organizations, only skilled and highly performing workers are given bonuses and incentives. Employees who are not yet skilled are therefore discouraged since they feel that the business does not recognize their efforts (Kale et al 2012 p.111). Although there is a need for employees to be highly skilled in their areas of operation, some workers take time to become experts. Such types of workers need constant encouragement through diverse ways such as training and giving of financial incentives. Therefore organizations should be giving out financial rewards even to the employees who have not shown sterling performance as long as they are focused on achieving the goals and objectives of the company. The use of monetary rewards to promote growth and development therefore discourages the semi-skilled workers therefore resulting in a slow growth in a business. Cont emporary business organizations should adopt measures that can be used to fairly allocate monetary rewards to both skilled and semi-skilled employees. Cash rewards can be seen as an entitlement In the workplace, some employees who are used to cash rewards can start seeing it as an entitlement rather than a motivator (Lantos 2013 p.615). Such workers therefore feel that they should be given the monetary rewards even though they have not effectively accomplished the tasks and projects in the organization. The workers who are used to cash handouts therefore can develop laxity in the business since they know that they will still be given the cash rewards. There are business organizations that have failed due to constant allocation of cash handouts to the workers. Although giving of monetary awards can be helpful in the short run, it can be disastrous in the long term since the workers will start seeing the practice as an entitlement rather than a motivator in the organization (Williams Windebank 2011 p.50). The practice can therefore fail to create an enabling environment for a viable employment relationship. Hostility and sabotage among employees Another limitation that can arise during the allocation of money and other financial rewards is hostility and sabotage in the long run. The desire to outdo one another so as to claim cash bonuses and incentives can make employees to develop hatred among one another. Moreover, the workers can sabotage the projects of their colleagues so that they can be declared highly performing workers in the organization. According to Wright Pandey (2012 p.519), the practice of giving money and other financial rewards to employees can result in unnecessary competition among the workers. Since companies only reward the best workers, the employees can sabotage the roles of other workers in a bid to get recognition and monetary rewards from the organization. Business organizations should therefore adopt transformational policies that can prevent the negative effects of monetary rewards. There have been reported cases in which workers have sabotaged the projects of their colleagues so that that can ea rn more monetary rewards from the management. Results in employees focusing on sales and rather than the quality of the products and services The practice of giving money and other financial rewards to the employees can also result in the employees focusing on producing large quantities rather than the quality of the products and services. In most companies, the employees are rewarded according to the quantity of the products manufactured and sold to the consumers (Zhou et al 2011, p.85). The employees, however, can exploit the practice and start producing low quality commodities and selling them so as to earn the monetary rewards. The employees will therefore focus on the quantity produced and sold rather than the quality of the products and services. The practice may hinder the relationship between the customers and the employees since the customers prefer high quality commodities. Moreover, the employees may embrace an unethical way of increasing the number of sales. Some workers may give wrongful information on a particular product so that the sales can increase leading to the allocation of more monetary rewards. Moreo ver, some organizations may produce substandard and harmful products with an aim of increasing the sales. The practice can therefore prevent the adoption of an efficient employment relationship in the organization. Conclusion In conclusion, money and other financial rewards play an important role in motivating employees hence resulting in an efficient employment relationship in the workplace. Research has shown that giving monetary rewards have a tremendous impact on the employees as well the organization (Hall 2013 p.610). 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