It is important for the top
management to develop strong relationship between the organization and
employees to fulfill the continuous changing needs of both parties.
Organization expect employee to follow the rules and regulations, work
according to the standards set for them, and the employees expect good working
conditions, fair pay, fair treatment, secure career, power and involvement in
decision making. These expectations of both parties vary from organization to
organization. For organizations to address these expectations, an understanding
of employee’s motivation is required.
According to Petcharak (2004),
Workplace dissatisfaction and poor performance may lead to high employee turn
over in an organization, particularly in less developed countries where little
opportunities are available to people to join other organizations, but it may
affect employee’s performance adversely.
Deeprose (1994) in his contribution
opined that “effective reward system enhances employee motivation and increases
employee productivity, all of which contribute to improved organizational
performance.
Organization needs skilled and
dedicated employees with the determination and ability to succeed; to attract
and retain this caliber of people, the organization must be willing to reward
the employees fairly.
According to Nel (2001),
Strategic success for the organization lies in focusing attention at all levels
on key business activities, which can be achieved through effective performance
management”.
Contribution on objectives of
reward or compensation, Grobler et:al (2007) posited that:
The primary goals of any organization is
designing
a reward
system should be to attract and retain good
employees…
The system should be motivational for
employees
and should be comply with all legal requirement.
Commenting on why employees join an organization, Wheather
and Davis (1993:220) contended that:
An employee joins and stays with an
organization
which guarantees
attractive fringe benefits. More so,
retirement, health-care
and disability benefits may
allow workers to be more
productive by freeing them
of concerns about
medical and retirement costs.
To this effect, according to them, it is quite accurate to
state that indirect remuneration may:
§ Mitigate
fatigue
§ Discourage
labour unrest
§ Satisfy
employees objectives
§ Aids
recruitment
§ Reduce
turnover and,
§ Minimize
over time cost.
Echoing the view of other experts, Robert (2005:304) averred
that:
Reward management is the process of
developing
and implementing
strategies, polices and systems
which help the
organization to achieve its objectives
by obtaining and keeping
the people, it needs and
by increasing their
motivation and commitment.
In agreement with Robert’s view, Deeprose (1994:186) posits
that:
Effective reward management can help an
organization to achieve
its business objectives
by attracting and
retaining competent people.
Reward management system
can therefore be
seen as a set of
relationship between the various
reward management
process and the cooperate
strategy.
After the organization has attracted and hired new
employees, the rewarding system should not hinder efforts to retain productive
employees. While many factors may cause employees
to leave an organization; inadequate reward is often the
cause of turnover (Grobler et:al, 2007).
If employees
perceive that they are being treated inequitably by the organization, tension
results. The perception of inequity causes an unpleasant emotional state that
may cause employees to reduce their future efforts, change their perception
regarding rewards for their work efforts or, as often is the case, leave the
organization (Martocchio, 1998).
According to
Arthur (1995:155) while contributing on effective reward/compensation programme
noted that:
The primary goals of any reward programme
should
be to attract, retain and motivate
maximally
productive employees, usually
with
limited payroll dollars, to make the
organization
more effective and efficient.
He went
further to state that the following steps must be taken in order to achieve
these lofty objectives.
§
It should offer competitive rates for comparable
job with salary levels and practice prevailing in the labour market in which a
company competes.
§
It should be internally equitable
§
It must be supported by senior management, with
this support clearly communicated to the employees
§
It should allow for growth and development of
employees
§
It should be easy to administer and flexible
enough to change over-time without requiring a major overhaul.
§
It should contribute towards motivating
employees to perform their responsibilities as effectively as possible, and in
a manner that support organizational goals.
§
It should take into account the level and talent
needed or wanted by the company
§
It should be defensible against legal challenges
§
The ranges should be broad enough to recognize
varying levels of performance
§
It should install a sense of confidence that
salaries are not established at the whims of management etc.
Nickel et:al;
(1999:330) maintained that:
Companies don’t just compete for customers,
they
also compete for employees. Compensation
is
one of the main marketing tools companies
use
to attract qualified employees… the com-
petitive
environment is such that compensation
and
benefit packages are being given special
attention.
They went
further to reveal that “a carefully managed compensation or reward and benefit
programme can accomplish the following objectives”.
§
Attracting the kind of people needed by the
organization, and in sufficient numbers.
§
Providing employees with the incentive to work
efficiently and productivity
§
Keeping valued employees from leaving and going
to competitors, or starting a competiting firms.
§
Providing employee with sense of financial
security through insurance and retirement benefits etc.
Reward
packages can be linked to business structure, employee recruitment, retention,
motivation, performance feedback and satisfaction.
Accordingly
Cascio (1995:270) advised that:
Actual reward plan should not be strictly a
matter
of what is being paid in the market
place…
Wage and salary plans must be derived
from
an assessment of what must be paid to
attract
and retain the right people, what the
organization
can afford, and what will be
required
to meet the organization’s strategic goals.
In a nutshell,
from all the literatures reviewed, It is clear and one may be right to conclude
that effective reward system helps an organization to recruit and retain an
efficient labour force. In other words, equitable rewards system will help an
organization to reduce labour turn over and also to improve productivity of
individual employees, which translates to improved organizational performance.