Effect of reward management on organizational performance

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Topic Description

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1.1    Background of the Study

Organizations are established with the aim of effectively utilizing various available human and non-human resources to achieve certain objective. Among these resources in human, which is commonly seen as the most valuable asset an organization could use to earn competitive advantage and achieve its objective, hence the need for human resources management to ensure optimum productivity and organizational continuous existence.

According to Sono (2014) organization is treated as a dynamic process and a managerial activity which is essential for planning the utilization of company’s resources, plant an equipment materials, money and people to accomplish the various objectives. According to Noe (2012) human resource has been tagged the most valued asset of any organization. Its strategic approach emphasized a “tight fit” between individual needs, rights, ambitions, and goals within the organization which make compensation system central in the affairs of emerging students, scholars and HRM practitioners in the world over. The emergence of human resource management posed great threat to the conventional personnel management and industrial relation because it evolved from the core approach or organization relationship. It is an asset that should be invested upon so as to provide long-term commitment and high performance in an organization. As organizations strive to achieve one or more objectives through exhaustive utilization of human capital, so also, the employees aim towards achieving individual purpose (objective) while working for the organization.

Reward Management is concerned with the formulation and implementation of strategies and policies that aim to reward people fairly, equitably and consistently in accordance with their value to the organization. Reward management also is the instrument used to increase employees’ productivity. It seeks to attract and retain suitable employees, encourages good management – employee relationship and commitment and minimizes tension and conflict as it deals with all forms of final returns, tangible service and mechanism for good relationship (Murlis & Armstrong, 2009).

Furthermore, the major case of industrial conflict is based on the fact that employees feel their benefit are denied or about to be denied thus the importance of compensation system is to provide a good platform for equity arid fairness. This provides a challenging environment and increase productivity of employees (Peters & Waterman, 2009). The compensation system ensures that both intrinsic and extrinsic needs of employee at all levels are adequately provided for compensation develops organizational integrity, policy, procedures and practices capable of improving organizational productivity. Reward is concerned with employees and organization performance development through which better result can be achieved by understanding and managing reward and compensation within an agreed framework, planned goals, standards and competency requirements.

The success of the industry rests so much on its human resources capability, which is the most valuable asset of any organization. The challenging tasks of every manager at all level are how to build a befitting reward and compensation system to incorporate both organizational goals and individual needs, thus, have a motivated workforce and improve productivity (Ouchi, 2014).

However, the study examines the influence of reward management on organizational performance, the basis of good reward and compensation structure, employees’ expectation at different levels and how the compensation structure is based on performance of individuals or job requirement of employees. The researcher therefore tends to draw attention all employers to the need for effective and efficient reward management capable of improving employees’ performance and enhance organizational productivity.


1.2     Statement of the Problem

Some organizations over the years see employee as additional cost as well as liability to their operations. These organizations do not remunerate employees appropriately, and where it is more appropriate, the reward is not commensurate with the efforts and skills that worker put into the organization’s activities. Instead of paying attention on how employees will be rewarded appropriately, some organizations concentrate more on other resource, such as materials, machines and money. The effort is more on how-to improve the production process with little or no consideration for human efforts.

This had led to the inability of such organizations to attain their set objectives. Organization success relies heavy on how much attention pay to its employees’ reward policies. It is in view of this that the study seeks to know the how the reward management in organization affect the performance of employees as well as that of the organization in general.


1.3     Objectives of the Study

The major objective of this study is to examine and assess the influence of reward management on organizational performance. The specific objectives include the following:

  1. To examine the effect of reward management on the performance of an    organization.
  2. To Evaluate the available reward package and how it affect employees and organizational performance.
  3. To Ascertain the need for management to create a conducive working environment by providing both physical and psychological incentives to make employees more committed to organizational goals


1.4     Research Hypotheses

H0:    Reward management does not have any effect on the performance of an organization.

Hi:    Reward  management  has  significant  effect  on  the  performance  of an organization.

H0:    The reward package does not affect the performance of an employee in an organization.

Hi:    The  reward  package  affects  the  performance  of an  employee  in  an   organization.

H0:    Conducive working environment does not make an employee committed in attaining organizational goals.

Hi:    Conducive working environment makes an  employee committed in attaining organizational goals.


1.5    Research Questions

For one to achieve a comprehensive research, there are certain questions that needed to be answered, therefore the research questions are:

  1. What are the effects of reward management on the productivity of an organization?
  2. To what extent does reward package affect the performance of an employee in an organization?
  3. How   does   a   conducive   working   environment   make   an   employee committed in attaining organizational goals?


1.6     Research Hypothesis