A study on types of rewards for employees and its impact on employee motivation

Abstract

Employee compensation is of one the major determinants of employee satisfaction in an organization. The compensation policy and the reward system of an organization are viewed by the employees as indicators of the management's attitude and concern for them. It is not just the compensation in total, but its fairness as perceived by the employees that determines the success of a compensation management system. Hence, it is very important for the management to design and implement its compensation system with utmost care and tact. A good compensation system should be able to attract and retain employees, give them a fair deal, keep the organization competitive and motivate employees to perform their best. The study aims at understanding the basic features and objectives of rewards and incentives, the short-term and long-term incentive plans, guidelines for effective incentive plans and the concept of non-monetary incentives and its impact on employee motivation. Incentives motivate employees perform better and enhance employee involvement in organization and positively affect the company bottom-line. The basic purpose of in centivising an employee is to retain and motivate employees and improve their organizational commitment. More and more organizations are designing and implementing innovative benefit schemes to attract and retain talent. The diversity in workforce gives rise to a need for different benefit schemes to match individual needs. Therefore, contemporary benefit programs try to provide flexibility to employees in designing their own customized programs, from a basket of benefit schemes. This is called the cafeteria-style benefit plan. The compensation program of any organization, including the salary, the incentives and the benefits contribute positively to both the employee and the employer.