To extend the knowledge about the topic ‘rewards’ and to add academic value to the already existing topic-related publications, the research aim of this study was to explore the improvability of reward mentalities in the shipping sector. Specifically focusing a shipping company located in Germany, the research question was based on how they could optimise their reward and benefit systems in the future.
To get a deeper analysis and also to combine given literature to the topic with the current reality, an interview as a form of qualitative data collection was conducted with 14 full-time employees of different hierarchical management levels in four different departments: Sales, Customer Service, IT and Human Resource; deployed in two German offices. The researcher chose the Non-probability Sampling approach focussing on Purposive Sampling and the results were reviewed with thematic analysis through which five main themes came out as a result: overall satisfaction, extrinsic rewards, intrinsic motivation, innovativeness and areas of improvability.
These links significantly helped to combine the findings with the critically discussed literature so that further conclusions were generated. The results showed that the effective strategic use of rewards, especially of extrinsic nature both in a monetary and non-monetary way, have a key role in increasing job satisfaction and enhancing innovative mind-set which can be fuelled into company’s success. Moreover, the findings brought a new perspective on the commonalities and differences of employee’s and management’s view on rewards at work and also delivered new impulses in anticipation on how this and conceivably other companies can improve their reward mentality. In the end, different recommendations were given both for the company and future research.
Table of Contents
Statement of originality
Abstract
Acknowledgement
List of abbreviations
1 Introduction
1.1 Problem definition
1.2 Aim
1.3 Research Question
1.4 Research Objectives
1.5 Dissertation structure
2 Literature review
2.1 Introduction
2.2 Rewards as drivers for motivation at work
2.3 Importance of reward systems for employees
2.4 Relationship between rewards and a successful Corporate Culture
2.5 Different reward systems
2.5.1 Individualistic rewards
2.5.2 Cooperative rewards
2.5.3 Monetary rewards and benefits
2.5.4 Non-monetary rewards and benefits
2.6 Impacts of reward and benefit systems on employee satisfaction
2.6.1 Psychological and emotional effects
2.6.2 Positive and negative effects of extrinsic rewards
2.6.3 Positive and negative effects of intrinsic motivation
2.7 Innovative mind-set: Rewards as influencers of innovative thinking
2.8 Rewards as decisive factors for long-term competitiveness
2.9 Summary of findings
3 Methodology
3.1 Research philosophy
3.2 Data collection methods
3.2.1 Primary data: Semi-structured interview
3.3 Sampling techniques
3.4 Ethical considerations
3.5 Methodological limitations
4 Data analysis
4.1 Introduction
4.2 Primary data
4.2.1 Qualitative data analysis and discussion with links to literature
4.3 Summary and discussion of key findings
5 Conclusion and Recommendations
5.1 Conclusion
5.2 Recommendations
5.3 Limitations of the overall research
Reference list
Appendices
Interview Themes
Ethics Application Form (signed)
Statement of originality
Herewith, I confirm that this Master dissertation/thesis, is the final product and result of my own work. Furthermore, this dissertation has neither been previously published nor submitted, neither for academic assessment to get a higher qualification nor for any other purposes.
To the best of my knowledge, I herewith certify that this dissertation/thesis presents no other person’s ideas, academic content, opinions or any other form of intellectual content except for the one acknowledged in the provided reference list, including all of its authors and citations.
Dimitri Tsiganovski Date:
Abbildung in dieser Leseprobe nicht enthalten 17.05.2021
Word count: 14973 (including references)
Abstract
To extend the knowledge about the topic ‘rewards’ and to add academic value to the already existing topic-related publications, the research aim of this study was to explore the improvability of reward mentalities in the shipping sector. Specifically focusing on the shipping company Evergreen Marine located in Germany, the research question was based on how Evergreen could optimise their reward and benefit systems in the future. To get a deeper analysis and also to combine given literature to the topic with the current reality, an interview as a form of qualitative data collection was conducted with 14 full-time employees of different hierarchical management levels in four different departments: Sales, Customer Service, IT and Human Resource; deployed in two German Evergreen offices. The researcher chose the Non-probability Sampling approach focussing on Purposive Sampling and the results were reviewed with thematic analysis through which five main themes came out as a result: overall satisfaction, extrinsic rewards, intrinsic motivation, innovativeness and areas of improvability, exclusively focusing on Evergreen in Germany. These links significantly helped to combine the findings with the critically discussed literature so that further conclusions were generated. The results showed that the effective strategic use of rewards, especially of extrinsic nature both in a monetary and non-monetary way, have a key role in increasing job satisfaction and enhancing innovative mind-set which can be fuelled into company’s success. Moreover, the findings brought a new perspective on the commonalities and differences of employee’s and management’s view on rewards at work and also delivered new impulses in anticipation on how Evergreen and conceivably other companies can improve their reward mentality. In the end, different recommendations were given both for Evergreen and future research. One of them is the implementation of a new reward model known as ‘balance scorecard’ that should provide clear performance goals while measuring employee success with regard to their work results. Further recommendations included a stronger focus on further education at work about job-related topics which may lead to a stronger delegation of authority, higher transparency for reward structures and performance expectations for employees, and more proactivity from employee side.
Acknowledgement
It is an honour, great chance and my moral duty to express my gratitude to the people who helped me during this Master dissertation.
First of all, I want to thank my family, my wonderful girlfriend and my friends who have continuously and unrelentingly helped me through the whole process of this dissertation and beyond. The value of such invaluable people unquestionably reveals and grows in difficult times. Even though this Master dissertation was a process of mental joy since it gave me the chance to acquire new knowledge, develop my English language skills and educate myself about its subject, it nevertheless represented challenges as finding the most effective time management to handle every task besides a full-time job. Having my family, my girlfriend and my friends during these challenging times was my ‘elixir’ that helped me to achieve my goals and ultimately to finalise this Master thesis with a positive attitude.
Secondly, my gratitude extends to the University of Salford and my supervisor Dr. Lynn Thurloway. Without her guidance, support, honest criticism and helpful advice this Master dissertation would not have been possible.
In addition to it, I would like to thank all employees of Evergreen who participated in the interview for this Master thesis as it helped me to collect the necessary primary data for this research and also made me more knowledgeable about leading interviews and getting different views about a topic.
To put it in a nutshell: Thank you all very much!
List of abbreviations
Abbildung in dieser Leseprobe nicht enthalten
1. Introduction
In the modern era and especially in business environments, one prevalent topic is the correlation between the effectiveness of corporate reward mentalities in companies and the desired effects of such systems on the company’s competitiveness, employee satisfaction and the innovative mind-set being key factors for a continuous success with long-term value (Güngor, 2011). Furthermore, according to Rashid et al. (2003), a company’s financial success is often mirrored and ‘catalysed’ by the effective implementation of a well-thought- out combination of Corporate Culture and the employees’ commitment to work for such an organisation. Therefore, as such a committed and performance-giving attitude depends on the employees’ satisfaction, compensation and development at work (Silaban & Syah, 2018), certain strategic tools such as rewards and employee’s benefits become vitally important to maintain and intensify a company’s long-term favourable results.
Rewards and benefit systems at work are generally perceived as indicators that a company recognises the value of dedicated, ambitious and high performance employees. Moreover, an employee who experiences the feeling of being appreciated and rewarded for showing exceptional work ethic and outcomes, receives a psychological stimulus to perform with higher enthusiasm and more satisfaction (Ibrar & Khan, 2015) while knowing that their work will be strongly valued. Therefore, such systemised reward and benefit packages often have the power to effectively influence employee behaviour and work ethic both in monetary and non-monetary ways. Besides, such systems can be beneficially utilized to contribute to the employees’ professional and personal growth (Salah, 2016) while simultaneously improving a company’s success by giving the employee an aspiration to show a higher organisational commitment as by providing incentives, promotion opportunities, options to work abroad or including him in decision-making processes more frequently.
In addition to that, reward and benefit systems can be used as strategic tools to strengthen a company’s competitiveness in particular in the labour market (Resurreccion, 2012) as these systems both increase the internal satisfaction at work and bring reputational value, for example through word-of-mouth. As potential employees in the labour market often pre-collect and rely on exchange of personal information as through communication with a company’s employees rather than relying on external sources (Hong & Yang, 2009), word-of-mouth becomes a very important element of credibility and company’s competitiveness. Thus, a company’s competitive position is supremely influenced by satisfaction of its employees and its verbalisation both internally and externally which is also a strong part of the company’s Corporate Culture. Nevertheless, as employees have a different perception and expectation on what the most effective recognition is for them as individuals, it can be a challenge for companies to individualise its rewards effectively to enhance employee satisfaction.
Considering the above-mentioned correlation between reward systems, employee satisfaction and the company’s competitiveness, this research focusses on contributing stronger impulses and knowledge for companies in the business sector on the effective use of reward and benefit systems. Furthermore, this research should contribute to reveal which impact such reward systems and its lack might have on employees with a specific focus on the shipping company ‘Evergreen Marine’. Founded in Taiwan in 1968, having an active fleet of about 200 ships (Statista, 2021) and offices in over 100 countries worldwide, as among others in Germany, the internationally operating shipping enterprise ‘Evergreen Marine’ is now one of the leading global players when it comes to container transportation on vessels. Due to globalisation, the ‘boom’ of online businesses like Amazon and the influencing demand of transportation to deliver products to customers, the shipping business world has become one of the most competitive environments in view of transport activities. As a result, being in a highly competitive business environment and having the pressure to succeed financially and developing a Corporate Culture that coherently would contribute to the company’s success, this research explored how Evergreen marine can improve its reward system. As Spanja et al. (2017) conducted, shipping liners such as Evergreen Marine are continuously aspired to find new strategies to optimise their daily and long-term competitiveness and performance, aside from the already existing ways. Therefore, a well-developed research about Evergreen Marine’s reward mentality and strategy opens the way for improvability and a potential to achieve more desirable outcomes for the company.
1.1 Problem definition
In order to explore and analyse how a company can effectively and successfully use a well-thought-out reward and benefit system to intensify and improve its competitiveness, satisfaction among its employees and their innovative mind-set at work for the long-term, the Taiwanese globally operating shipping company ‘Evergreen Marine Corporation’ was chosen as the main partner to discuss the dissertation’s relevant aspects.
In certain industries as the shipping industry, there is a very strong demand of staying competitive (Lee et al., 2014) to provide an excellent service to its customers, to increase its market share and its financial power, international growth and employee satisfaction as elements of long-term competitiveness. Hence, the pressure to stay competitive and still strongly present. Being in such a competitive environment, shipping companies focus on their main competitive advantage, namely the employees as they are one of the main driving forces for a company’s corporate culture and success. As the shipping industry is a highly competitive area, the satisfaction of employees becomes even more important, as especially high-qualified employees are always comparing opportunities on the labour market if they are not satisfied with their current employer (Bhattacharya, 2015).
While working in the Sales Department for an Evergreen office in Germany, the pressure to maintain or improve Evergreen’s competitiveness has been noticeable on a frequent basis. Such employees in Sales regularly have to fulfil a given KPI, acquire new clients, keep their professionalism in critical situations to stakeholders and close long-term contracts to maximise the company’s success. However, after closing deals and improving the company’s success, the instinctive desire to get quickly noticeable, transparent and individualised rewards for great work results, such as sales commission on every closed business deal, often becomes prevailing, as it values and stimulates employee satisfaction and motivation to continue such working which is not uncommon in sales environments. An absence of such reward mentality or the lack of knowledge on how to individualise rewards on certain employees might often result in opposite effects as less motivation or less interesting in innovative thinking, lower performance and feeling of working without ‘getting something back’. As the shipping business becomes more competitive, the pressure to succeed and to maintain employee satisfaction at work in order to strengthen competitiveness and to stimulate innovative ideas on how to improve the daily or long-term business by employees is becoming higher as well. Therefore, ‘Evergreen Marine’ has to develop strategies on how to beneficially treat its employees to enhance their job satisfaction and also keep them motivated to contribute to the company’s success in a long-term scale.
Besides personal working experience, since employees, especially from individualistic countries such as Germany, have their own individual expectations for rewards (Webb Day et al., 2014), ergo certain reward systems can result in personal dissatisfaction as many employees might feel more like ‘a number’ instead of an individual whose personal satisfaction is respected or valued. Moreover, a company’s understanding of certain rewards, such as an adequate remuneration or career development, can immensely differ from an employee’s individual perceptions (Ismail & Ahmed, 2015). In addition, from personal experience, many Asian shipping companies, as for example Evergreen Marine, do not seem to consider certain benefits as working abroad as a career development option but rather prefer to keep their staff members in the domestic headquarters which might also be a reason for many people to get more dissatisfied and less motivated as well. A result from such an accumulated dissatisfaction might not only be a lower productivity but could also stimulate the employee to leave the company (Hoboubi et al., 2017) which would be a detrimental loss for a company’s competitiveness. Even though it is difficult to consider every employee’s expectation, it might be risky for an employer to only apply cooperative systems while ignoring or refusing to consider personal preferences as it might push certain valuable employees to search for another professional opportunity.
The given situation suggests that there is a challenge but simultaneously potential for many companies to re-evaluate and understand the more effective implementation, usefulness and potential outcomes of reward and benefit systems. On top of that, there is a problem and widespread issue of how to utilize such systems so that the risk of destructive consequences will be minimised. Therefore, research cannot only be based on personal experiences but primarily on whether a problem and the reason for research has a research-worthy character (Ellis & Levy, 2008). The before mentioned problem clarification or rather definition shows that there is a potential to create a deep analysis under consideration of the research question and objectives. Therefore, the focus on this research was to analyse and outline ways on how companies can effectively and strategically improve their reward systems to enhance a more effective long- term competitiveness while increasing employee satisfaction and their innovative mind-set.
1.2 Aims
To analyse the current reward mentality and explore the improvability of the reward mentality in the shipping industry while focussing on Evergreen, specifically its German offices.
1.3 Research Question
The Research Question is:
How can ‘Evergreen Marine’s’ reward and benefit systems be improved?
1.4 Research Objectives
Subsequent to the before mentioned aim and research questions, there are different objectives for this thesis that should provide a facilitation for getting enough academic foundation as well as data collection in order achieve the aim in an understandable and demonstrable manner. The research objectives are formulated as per following:
a) To explore different perspectives of rewards and benefits within the literature and how they can impact on employee satisfaction and organisational competitiveness.
b) To identify the most valued and important rewards/benefits for employees at German offices at ‘Evergreen Marine’ that lead to the increase of their job satisfaction.
c) To clarify how reward and benefit systems can be effectively used to enhance ‘Evergreen Marine’s’ organisational competitiveness in the future.
d) To give recommendations on how ‘Evergreen Marine’ can use its reward/benefit systems to increase employees satisfaction and stimulate innovative thinking at work.
1.5 Dissertation structure
After the introduction and following the research question on how Evergreen’s reward and benefit systems can be improved, the researcher focused on specific areas of literature that would add value to answering the research question. First, in Chapter 2 the researcher critically analysed the main drivers for employee motivation and presented findings on the prevailing importance of rewards for employees in general. After that, different current reward systems (individualistic vs. cooperative, monetary vs. non-monetary rewards) were discussed on their effectiveness on employee satisfaction at work, while considering various academic theories, as among others Adam’s Equity Theory and Festinger’s Social Comparison Theory. Besides, positive and negative effects of different rewards were illustrated which was also fundamentally important for the further primary data analysis i.e. to analyse whether they were valid, present and noticeable at Evergreen and its employees. Furthermore, the researcher discussed rewards’ influence on innovative thinking at work and whether those are decisive factors for long-term competitiveness of a company.
In Chapter 3, the researcher showed his chosen research method which was Qualitative Research in connection to Interpretivism as the research philosophy to focus on participants’ subjective experience with rewards at Evergreen which was conducted through semi-structured interviews. The participants were sampled by Purposive Sampling and after collecting data, the researcher analysed the results gathered from the interviews with thematic analysis to find out whether some individual viewpoints and opinions were similar or different considering the professional position.
In Chapter 4, the researcher gave a short introduction on the correlation of rewards and satisfaction at work reinforced by academic literature. Further, the analysis included participant’s viewpoints and illustrative quotes by individual interviewees. Similarities and differences/conflicting positions, related to different professional levels, work experience and other factors, were presented, and the chapter was finalised with connecting findings to academic literature.
In Chapter 5, a Conclusion was demonstrated, based on findings of primary data collection, previously discussion literature and under consideration of the research aim and research question. The chapter ended with Recommendations for Evergreen and future research.
2 Literature review
2.1 Introduction
In this chapter, literature was gathered from academic articles as international peer-reviewed journals and recognised online libraries. Since the shipping business is a highly competitive market, companies often focus on the right strategies, policies, conduct and commercial acumen to achieve the results they want in the long-term. Thus, effective implementation of rewards such as appreciation of employees, financial incentives or social welfare packages sometimes tend to become secondary despite its strong impacts on the organisational long-term competitiveness, innovative drive and the satisfaction of the company’s driving force: the employees. The interplay between rewards’ effects on employees, recognition for employee performance, satisfaction, innovative thinking and the interconnection with corporate culture are going to be a noticeable focus in this research.
Besides, it has to be understood how different forms of rewards, such as extrinsic, intrinsic, cooperative and individualistic reward types, can strongly impact the company’s ‘ecosystem’ which is often the corporate culture including value systems and satisfaction among workers that represents a decisive factor for the company’s organisational success.
2.2 Rewards as drivers for motivation at work
According to Njoroge and Yazdanifard (2014), companies used to (and still often do) take a very rational approach in terms of motivating employees with financial benefits only but often without considering their emotional condition and satisfaction. Therefore, they had to learn to include various other forms of rewarding tools to create motivational effects as they felt that employees’ satisfaction at work goes beyond the traditional monetary rewards. Nevertheless, Kerr and Heyns (2018) argued that many companies still have not developed a sufficient knowledge of how to develop and successfully implement motivational drivers such as rewards to maximise the employee’s well-being at work and company’s performance. On the other hand, the same authors Kerr and Heyns (2018) understanding its employees’ individual value and motivational preferences is not an easy task as every employee is individually different and there is also usually high generational diversity at work, including various different mind-sets, perceptions of rewards, personalities and performance attitudes. Furthermore, Shields et al. (2016) stated that rewards are mostly perceived as an equivalent ‘mirror’ of the employee’s performance and contribution. In other words, many companies primarily aim to reward high-performance employees and less the one who does not show an outstanding work contribution. In their study, Janis and Ziaran (2017) showed that it has therefore become a crucial topic for companies to acquire a deep know-how about the individual, motivational drivers of each employee in order to create an efficient and productive work environment but also to simulate innovative thinking. Besides, the authors emphasise about the importance of such know-how for a company’s competitiveness in a long-term if the company has the aim to strengthen its position in the market and to outperform competitors.
2.3 Importance of reward systems for employees
Previous studies as from Webb Day et al. (2014) indicated that a significant and noteworthy correlation between fulfilling employees’ needs and the enhancement of their satisfaction and performance can be found. Employees whose work ethic, intellectual property, skills and outstanding performance are not recognised by extrinsic rewards, such as financial incentives as salary raise or promotion, might develop an occupational frustration and might consider the employer’s corporate culture as dissatisfying. The comparative study of Bhattacharya and Mukherjee (2009) concluded that rewards are even the key factor for employee commitment, engagement and willingness to invest their mental, emotional and physical abilities into the company’s objectives and to maximise its success. This study has been reinforced by further, more current findings as among others the comparative study of Hoole and Hotz (2016) who reiterated that a successful employee engagement at work is strongly influenced by a well-advanced, individualised reward and benefit system provided by the employer.
As will be discussed below, there are theories and models who give indications on why rewards are important for employees in their daily life and also why rewards provide motivational value for employee’s performance. Whilst there are many models of motivation, a well-used model that shows which factors influence people’s motivation is Maslow’s hierarchy of need pyramid which states that there are five major needs that are decisive: physiological needs, security and safety, belonging and love, self-esteem and self-actualisation. According to their study results arguments, Taormina and Gao (2013) stated that all five factors have a positive interrelation to one another, however the lower-level needs are not considered as motivational drivers but more of a necessity that has to be fulfilled in order to generate financial stability and safety for example by getting financial rewards that are important for financial security. Jerome (2013) argued that by applying Maslow’s model on employee’s performance and satisfaction, it is noticeable that companies who internalise an adequate implementation of extrinsic rewards into their corporate culture have much higher chances to gain a competitive advantage through utilising their employees’ full abilities and by increasing their satisfaction at work. Hypothetically, it can therefore be said that if lower-level needs as well as recognition of employee performance are not satisfied, it will lead to an employee’s dissatisfaction and demotivation, less innovative mind-set while negatively impacting their performance and psychological condition. However, Lester (2013) claimed in his study that this hypothesis only shows limited credibility and that the before mentioned interrelation between the five fundamental needs, except for the physiological factor, does not have any validity let alone noteworthiness. In addition to this statement, King-Hill (2015) later criticised that Maslow’s theory is too simplistic and based on a wide generalisation as it excludes various important factors such as cultural differences or external circumstances that have an impact on a person’s need preferences. More importantly, the external events that have an influence on the employee’s life and emotional conditions, such as family death cases, political crisis or a company’s financial position, are not considered in this model.
Furthermore, the theory of the US-American psychologist Festinger (1954) clarified in his theory that human beings and especially employees would determine the value of their status, opinions, skills, ideas and performance by comparing them to other people. Subsequent to that, according to the investigative study of Dai and Xiao (2016), employees who work in a competitive industry would intentionally or subconsciously create a social comparison on a permanent basis in order to boost their confidence, improve their results and enhance their own skills at work. However, Larkin et al. (2012) research showed that financially rewarding employees for their performances can often cause a strong collegial animosity, collective divisiveness and emotional despair which mainly results from the perception of financial inequity, sense of injustice and lack of appreciation which usually results in less satisfaction.
2.4 Relationship between rewards and a successful Corporate Culture
A positive Corporate Culture is the driving spirit and framework of the common beliefs and value system of a company and their employees which plays a significant role in a company’s competitiveness (Sadri & Lees, 2001). Additionally, according to Rohim and Budhiasa (2019), rewards for example of economic nature, such as remunerations but also others, within an organisation can strongly and positively influence on its corporate culture and employee performance, especially when it comes to knowledge-sharing between employees and management. Thus, when employees feel that their company’s philosophy is among others manifested in recognising, valuing and appreciating their performance, they not only develop contentment, but they also have a stronger organisational identity, plus they are more willing to fuel their knowledge and skills into the company’s success. This sort of knowledge is essentially important when it comes to other cornerstones of a successful corporate culture. One of them is the innovative mind-set within an organisation. Hogan and Coote (2014) carried out an empirical study based on testing Schein’s model of organisational culture and came to findings that innovation within a company is not only a component of a successful corporate culture but also improves its performance. These findings were later reinforced by the study of Taha et al. (2016) who conducted that especially in competitive business environments, companies strive to gain a competitive advantage through developing new products, applications or service techniques. For this reason, companies who both encourage and reward innovative thinking among its employees in form of stimulating creative mind-sets towards company’s aims and objectives will cause healthier relationships at work, propel company’s success and benefit from employee satisfaction in a long-term scale.
2.5 Different reward systems
2.5.1 Individualistic rewards
Various companies offer reward structures that are of individualistic nature, in other words only employees with an outstanding performance and skills would get a rewarding bonus, for example a financial incentive, salary increase or promotion according to their contribution to the company’s success. Obeidat (2018) emphasised that in view of the Vroom’s Expectancy theory, employees show a stronger individual motivational stimulus to perform at a high stage if an individualistic reward package is offered and desired. Considering the before mentioned social comparison of employees, this form of reward anticipation can be advantageous for a company as it enhances the self-reflection of employees on their work which often leads to their effort to improve their performance in order to get rewarded and to achieve a higher satisfaction. Hence, the constant self-evaluation and desire to be more successful than a co-worker can lead to a healthy competition and a better individual performance. However, previous studies as Eisenberg’s (1999) review have shown that implementing individualistic rewards can be very risky, particularly in companies that are based on collectivistic values. Companies that are rooted in a collectivistic culture, predominantly in Asian countries like China and Taiwan, focus more on group- rewarding mentality which might be beneficial to avoid a negative social comparison among employees as it might have a detrimental impact on the corporate culture, performance and their satisfaction. However, these findings were invalidated by recent studies as from Braje et al. (2019) as due to the globalisation and the correlated international labour mobility, many collectivistic companies show a higher acceptance to include individualistic reward systems that are focused on recompensing and honouring achievements on individuals rather than group-based accomplishments.
2.5.2 Cooperative rewards
Another form of rewards is the Cooperative Reward Structure where the emphasis is primarily put on rewarding group results, accordingly a cooperative achievement mentality becomes vitally important as such rewards are based on team accomplishments rather than on individual performance. Thus, these reward systems require a high form of cooperation between the employees and are mainly utilized in companies with collectivistic cultures (Leonard et al. 2012) since in such cultures employees prioritise the mind-set of working together rather than everyone working for himself. Besides cooperative behaviour, previous studies as the research of Beersma et al. (2002) demonstrated that to achieve rewards, a cooperative working style is also interconnected to a higher form of agreeableness, extrovert communication and integrity as employees with such characteristics are more likely to successfully perform in unity with other team members rather than on their own. Moreover, the same authors Beersma et al. (2003) in later studies added that a cooperative reward structure creates an enhancement of accurate results in contrast to a competitive team mentality where individuals are more aimed for speed and quicker results rather than meticulousness and collective conscientiousness. Therefore, such cooperative reward systems have the potential to improve precision and accuracy of results which might be an advantage for a company.
On the contrary, considering the before mentioned social comparison theory as well as Vroom’s expectancy theory where employees strive for their own individual results and rewards, it might represent a significant challenge to implement such cooperative reward systems into companies and cultures that are influenced by a strong sense of individualism. According to Willer (2009), individuals must show a high amount of sacrificing their own individual aims and ambitions for the sake of the group’s successful performance. Thus, in individualistic cultures and companies, where employees behave more autonomously and independently of a group (Luthans et al., 2006) and are more focused on being rewarded for their own individual performance, such self- sacrificing behaviour might lead to a feeling of undermining one’s own individual achievements and might also cause a lower individual self-esteem.
2.5.3 Monetary rewards and benefits
A company can use and categorise rewards into different incentives such as performance-based salary, bonus packages for achieved results, the option to receive company’s stocks, vouchers for restaurants or retirements benefits. Novianty and Evita (2018) argued that rewards with monetary character play a crucial role on job satisfaction and employee motivation to perform on a higher scale and simultaneously to provide financial stability. Considering the previously mentioned correlation to Maslow’s theory, an employee’s satisfaction is among others based on safety and security that can be particularly influenced by financial resources and the ability to satisfy physiological needs by using financial power. In addition to it, Adams (2008) claimed that under consideration of the equity theory, employees typically has a strong sense of fairness when it comes to the ratio between their organisational commitment as well as contribution and the company’s recognition of their work, and the appropriate compensation equivalent to their results. Hence, employee satisfaction at work is distinctly influenced by fair rewards for their committed performance, ergo every discrepancy might have a negative impact on their work attitude which might also simultaneously decrease their inspiration to contribute innovative ideas that would help the company to become more competitive. Furthermore, research findings as from Mickel and Barron (2008) showed that monetary rewards are also enhancing the perceived symbolic value of rewards within a company in general. Ergo, if employees understand that their work will be financially appreciated by monetarily-based rewards, they would both develop a higher comprehension of why productivity and work ethic is important in their organisation and also be mentally motivated to strive for the company’s desirable outcomes such as increase of sales revenue.
However, Kollmann et al. (2019) argued in their research that both the equity theory and monetary rewards cannot be equally applied to all employees since the workforces have received a strong age-diversity over the last decade, ergo the perception of monetary rewards has become more diverse as well. Besides, according to Twenge (2010), younger employees, also categorised as Generation Y, are more willing to prioritize financial incentives as they usually have less financial security and more materialistic desires whereas the older workforce primarily strives for task contribution such as sharing knowledge with co-workers rather than focusing on financial values. As a consequence, companies nowadays often have a challenge to enhance employee satisfaction since their perception of monetary rewards is diverse.
2.5.4 Non-monetary rewards and benefits
Besides the financial incentives, there are numerous rewards that has non- monetary character such as flexible working hours, welfare packages and career development opportunities, such as job security or working abroad that significantly influence a well-being of an employee. Based on the research findings of Waqas and Saleem (2014), more and more organisations and companies recognise the long-term value of non-monetary benefits as a reward for their employees and as an enhancer for their satisfaction at work. Particularly, for globally operating companies it has become vital to become more competitive (Schlechter et al., 2015) by both acquiring highly qualified and skilled employees and by offering them advantageous opportunities beyond financial remuneration to keep them in the company. According to Schlechter et al. (2015), monetary rewards are easily replicable by other competitors, therefore a company who contemplates how to diversify reward structures, for example by implementing non-financial benefits, has much higher chances to keep its competitiveness and to increase employee satisfaction. Additionally, based on the research of Abdullah and Wan (2013), employees focus a lot on non-monetary rewards as it shows that a company is able to put an emphasis on their emotional, psychological and physical well-being at work instead of exclusively rewarding their productivity. This only leads to a higher organisational commitment and employee engagement but also represents an interdependence between non- financial benefits and job satisfaction. Markova and Ford (2011) emphasised in their research findings that rewards with a non-monetary character create a more influential, positive impact on resourceful thinking and intrinsic motivation. As a consequence, employee who notice that their employer values him beyond their productive capacity will subconsciously develop intrinsic motivation (Meyer, 2012) to self-sufficiently innovate business practices and add a competitive advantage by bringing forward new ideas that might help a company to grow and save resources such as the use of additional financial rewards to stimulate the same mind-set. Nevertheless, it is questionable whether such non-monetary rewards will have an equal importance for all employees in a company as it might depend on different factors such as age (Tausif, 2012), sex, individual perceptions and hierarchical positions within an organisation, also considering their career ambitions.
2.6 Impacts of reward and benefit systems on employee satisfaction
2.6.1 Psychological and emotional effects
Due to the fact that most deployed employees spend time at their workplace, the psychological and emotional satisfaction plays a major role for their well-being and work ethic. For this reason, Amundsen and Martinsen (2015) presented in their research findings that companies who incorporate a strongly motivational leadership style and who empower their employees to gain more autonomy, self- determination and professional responsibility carry out a strong form of emotional rewards which results in innovative working style and employee satisfaction. In addition to it, a more recent study of Abdullah et al. (2016) reinforced the argument that besides a rewarding leadership style, it is essential to reward the employee by recognising as well as appreciating positive work attitude as it is one of the determinants factors for job satisfaction and increasing productivity. Furthermore, according to Victor and Hoole (2017) rewards in general but especially combined with an encouraging leadership create a higher trust between workers and increase both satisfaction and cooperation as employees are more willing to work together by sharing information while knowing that their work will be appreciated and valued by superiors and co-workers.
Even though every employee is individually different, and such reward types might be perceived differently, Brun and Dugas (2008) emphasised that the absence of rewards, recognition and appreciation would create a detrimental impact on an employee’s psychological condition and might result in higher emotional distress, job dissatisfaction and lower performance. However, considering the previously mentioned equity theory, there might be some complications. First, it might become quite challenging to estimate an employee’s individual perception of whether a reward or appreciation is fairly distributed or not, which can lead to a negative competition between workers. Additionally, as Al-Zawahreh and Al-Madi (2012) argued, employees’ perception of inequity is not only based on a subjective judgement but can also cause a higher sensitivity by the feeling of for example being financially underpaid or overpaid as it conflicts with the proportional input-outcome ratio and distributive justice of giving rewards. Hence, it would be recommendable for employers to dose appreciation and rewards in order to clearly conceptualise equality (Morand & Merriman, 2012) with regard to rewarding outcomes for employees.
2.6.2 Positive and negative effects of extrinsic rewards
Extrinsic rewards can be understood as usually physically tangible incentives from an external source for an achievement. Such rewards are primarily based on monetarily valuable incentives (Özutku, 2012) such as a salary raise, bonus packages, achievement-related gifts, performance-based pay or commission on every closed sales deal. Considering the previously mentioned argument that for example performance-based payments can often lead to a negative atmosphere between colleagues and can be a cause for emotional distress due to the intercollegiate rivalry, Ponta et al. (2020) oppositely argued in their recent study that financial incentives enhance employee performance and high contribution to results. However, Ponta et al. (2020) also claimed that such incentivised financial rewards are only meant to be a successful stimulating mechanism for the short term and not for a longer period of time. Accordingly, there might be a risk that employees would put their productivity and satisfaction in a very strong interdependent relationship with such monetary incentives which might also create a possibility to get emotional dissatisfaction as soon as these rewards cannot be provided anymore. Conversely, and grounded on the cost-benefit concept of the Social Exchange Theory by Homans, previous studies as by Yousaf et al. (2015) have shown that extrinsically or financially rewarding employees creates a stronger emotional connection between them and their company, plus it increases organisational identity and a higher commitment as there is a feeling of a reciprocal exchange between input and outcome. Besides the financial incentives, Gkorezis and Petridou (2012) emphasised the importance of other extrinsic rewards, such as promotion opportunities, career development and recognizing as well as publicly praising achievements at work, psychologically empowers employees to feel more self-confident about their own accomplishments and adds a higher meaningful purpose to their performance. Nevertheless, the authors also claimed that extrinsic rewards also often rely on the positive relationship between employees and higher superiors which might create a strong pressure by realising that one’s achievements are not enough to get rewarded.
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