POSITIVE RELATIONSHIP BETWEEN COMPETITIVE REWARDS AND EMPLOYEE PERFORMANCE.

Due to globalization, business and organizations have become competitive because of a broad emphasis on quality improvement. These factors have combined to increase competition and pressure for a major market transformation. The human resources strategies have changed completely Companies in every industry are struggling to attract and retain employees. The working environment has undergone significant changes in nature and scope of work in recent years. With the ongoing covid-19 pandemic it has further impacted the market. 

This article focuses on the reward system and how effective it is in motivating employees to give their full potential and help in the growth of their organization. An important and constant factor has been the ways in which managers motivate their workers to help achieve not only the organizational goals but also that of their own personal ones. Companies and organizations everywhere need employees to work with. However, while getting employees can easily be done through the recruitment process, there is the more difficult task of keeping them motivated to work hard to achieve improved performance and to attain both organizational and personal goals. This is why a strong employee reward system is crucial for an efficient growth. 

Now research on job preference, career choice and turnover clearly show that the type and level of rewards an organization offers influences on who is attracted to work for an organization and who will continue to work for it (Lawler, 1973; Mobley, 1982). Overall, the organizations that give the most rewards tend to attract and retain the most people. It appears that this is because high rewards lead to a high degree of satisfaction, leading to lower turnover. This is apparently true because people who are currently happy with their jobs expect to remain satisfied and thus want to stay with the same organization. The main objective should be to design a reward system that is very effective in retaining the most valuable employees. In order to do this, the reward system must distribute rewards in such a way as to make more valuable employees feel satisfied when comparing their rewards with those received by individuals performing similar jobs in other organizations. The emphasis here is on external comparisons, because turnover means leaving an organization for better position elsewhere. 

However, there are two drawbacks to this strategy. It is very costly in the case of some rewards, such as money. It can also cause feelings of intra-organizational inequity, because better performers are likely to feel unequally treated when rewarded at the same level as poor performers in the same organization, even though they are fairly treated in terms of external comparisons. The solution to this lies in having competitive reward levels, rewarded on the basis of performance. This should encourage better performers to be satisfied and stay with the organization. It should also serve to attract achievement-oriented individuals. 

Reward plans are often a significant cost factor. ￡ Indeed, the pay system alone may account for more than 50% of the operating costs of the organization. It is therefore important for the reward system to be strategically designed to focus on how high these costs should be and how they will vary depending on the organization's ability to pay. Reward systems should be looked at in organizations from a cost-benefit point of view. The key is to identify the outcomes required to succeed and then develop the compensation system in a way that these outcomes can actually be achieved. 

Types of Rewards: 

Rewards fall in two categories, namely extrinsic and intrinsic rewards. Extrinsic rewards include money, benefits, bonuses, flexible schedules, promotions and so on. While the intrinsic benefits are internal to the individual, they are less tangible in many aspects. They are highly subjective and include things such as recognition, comfort, pride, personal fulfillment after an activity has been carried out Gain new abilities and feel like an important part of a team etc.  

In terms of extrinsic and intrinsic rewards, two schools of thought exist. One argues that extrinsic rewards are powerful and more effective at motivating and retaining employees (Perry & Angle1983) while the other argues that intrinsic rewards are best to adapt to motivate staff (Brief & Aldag 1983). Different studies over the years show the importance of both extrinsic and intrinsic rewards. Neither can be replaced by the other in order to achieve improved employee satisfaction. Employees who are highly rewarded but work in environments that are not suitable or are repetitive will leave for other organizations because of lack of intrinsic rewards just as employees who work in an interesting and work-friendly environment will leave because they are unhappy with extrinsic benefits. 

Link Between Rewards, Employee Motivation And Performance. 

Fredrick Hertzberg conducted numerous studies on motivating his employees. Hertzberg used the approach of critical incidents to determine how well or bad a person feels about their job. He interviewed 203 accountants and engineers in Pittsburgh, U. S. His analysis suggested that factors leading to employee satisfaction differed greatly from those leading to unhappiness. He defined this as a motivation two-factor theory and identified the motivators and health factors for the categories. The relationship between motivation and employment satisfaction was explained by these factors. Those who motivated the employee to improve their work percentage were the motivating factors. He asserts that managers need to include certain factors in the setting of jobs in order to develop intrinsic motivation for the workforce in order to achieve better performance. He notes that the following factors include:  

a. Accomplishment  

b. Recognition  

c. Growth / Progress  

d. Interest In The Job 

Factors of motivation result from internal employee instinct, which yields motivation rather than movement. Hygiene approach as well as motivation approach must be carried out at the same time, according to Hertzberg (1959). He points out that the lack of positive levels in hygiene factors does not result in de-motivation, but instead in dissatisfaction. High hygiene factors also don't lead to motivation, but to satisfaction instead.   

Other than that the path-goal theory also shows the direct proportionality between reward system and employee performance. It states that the behavior of a leader depends on employee satisfaction, motivation and performance. Motivation is an important part of this theory and plays an important role. After all, it is how leaders can motivate their employees to achieve their smart goals in the work environment. 

Use Of Reward System To Increase Individual Performance And Motivation 

• Introduce competitive rewards in your organization  

A little friendly competition among employees in the organization is healthy. It should however be moderate. Unhappiness and employee burnout can result in an overly competitive environment, which is opposite to a desirable rewards and recognition initiative. 

• Make both monetary and non- monetary blends of your rewards  

Reward systems that combine monetary and non-monetary rewards have a broader appeal and greater aspiration. A thoughtful, non-currency gift will have a stronger emotional pull While a monetary gift will give a more gratifying sense. 

• Ensure that employees know how to earn rewards  

 Ambiguous rules on rewards can frustrate employees and alienate them. When the recipients are announced, employees who are left behind on selection criteria may perceive unfairness or bias.  

• Bind the rewards to standards of performance 

Another key rule is to align reward and recognition with the performance of employees. Employees must understand how their productivity and conduct affect business results. Employee rewards are an excellent way to support this. 

• Recognize small and large achievements 

Companies are too often obsessed with big achievements Of course, it is important to celebrate major wins, but tunnel vision on major accomplishments can detract your recognition of all the work that went into smaller milestones which in the ended merged into one big milestone. 

• Match the employee's reward  

Let each employee choose their own reward or decide on which rewards employees under predefined circumstances should receive. This will improve their commitment to the reward by taking the necessary action. Understanding the needs of the employees is central to this process and is achieved through this corporate reward program. 

• Provide rewards immediately after the specific goal is achieved  

The longer the delay in awarding the reward, the less an impact it has on an employee’s successive behavior. Instant rewards and instant satisfaction are key to using corporate rewards most effectively to increase the motivation of your employees. 

 Benefits That Keep Airbnb's Employment Offers Competitive 

According to rewardgateway.com Airbnb has one of the best organization cultures. Airbnb is undoubtedly one of the largest disruptors in the hospitality and lodging industry. Its success speaks for itself, as Airbnb has 150 million users and since its launch in 2008, has accommodated 400 million guests. The human experience is also one of the outstanding advantages of Airbnb: the intimate interaction between the guest and the host cannot be copied by the usual hotels. It is a perfect example of application of rewards strategy. The company is very attractive to work for and the appeal comes from the employee benefit packages offered by it, thanks to the large-scale success of the company. The benefits are listed below: 

• Competitive Wages 

In all positions, Airbnb has built a strong base salary. Airbnb offers career development and technical skills training for all its employees in addition to competitive wages.  

• Outstanding Health Care Options  

According to many former and existing staff, the health, dental, vision, life insurance and disability benefits are all major benefits offered by the company. All of the aforementioned insurances are fully covered for the employee and up to 70% for dependents, according to Glassdoor reviews. Airbnb also gives 22 weeks of paid leave to birthing parents and 10 weeks non birthing parents  

• Generous 401K Plan 

The 401k matching policies can be a major priority in the world of technology. Airbnb offers a 401k plan where employees can be sure that the money, they’re putting aside will enable them to live in their retirement comfortably. Airbnb encourages its employees to invest up to 5% of their earnings in 401k while matching up to 75% of those contributions, according to BenefitsPro. 

   “Whatever AIRBNB contributes, it becomes 100% vested after a 2-year period after which the employees can keep even if they leave AIRBNB.” 

• Basic PTO Options. 

Another important consideration is the amount of paid time-off (PTO) offered to employees during a calendar year. Airbnb offers 3-4 weeks of PTO to its employees, and recognized national holidays are also paid. When ranked by employees, Airbnb’s PTO and holiday policies are ranked as the third most important part of the benefits package, with 28% of employees ranking it as the most important benefit.  

• Perks In The Office And Across The Globe  

The eco-based office system created by Airbnb is impeccable, according to Glassdoor reviews of current and former employees. The in-house chef prepares top notch food, drinks and snacks every day. Office therapy dogs are common and Apple technology is widely and easily accessible. 

• Travel Benefits, Locally And Worldwide 

According to Insider, Airbnb offers its staff $500 per quarter ($2,000 per year), everywhere in the world, for stays in Airbnb listings. The options are really endless with listings in 191 countries. It does not only compensate its employees’ time off with Airbnb PTO benefits but also provides additional funding to fund living arrangements for their vacation. 

• Commuter Benefits 

Apart from personal travel, Uber and Lyft credits are common for business trips, and commuter benefits are offered to those with proven costs on a daily basis when they visit the office. Another commuter benefit offered by Airbnb is the deals with public transport for those without vehicles. 

• Other benefits provided by Airbnb are: 

1. Stocks 
2. Adoption Assistance Reimbursement Program  
3. Bonus Pay 
4. Childcare Discount 
5. Parental Leave 
6. Life Insurance And Disability Benefits 
7. Flexible Spending Accounts 
8. Company Sponsored Tech Talks And Happy Hours 
9. On-boarding Programs 
10. Recognition Programs 
11. Breakfast, Lunch And Dinner 

Conclusion And Recommendations 

The human resources provide the basis for the sustainable competitive advantage of an organization. It is a challenge for every organization to attract and retain competent employees. It is reflective that when the employees are motivated to achieve their goals, their performance can be improved. Research shows that competitive rewards strategy plays a major role in the performance of employees. Organizations need to improve their current compensation system by integrating reward strategy with human resources strategy to increase attraction and retention of their workforce. 

 Moreover, companies must consider reward as a driver of performance and part of the corporate strategy. It can be concluded from the above facts and figures that diverse reward packages can influence employees to perform the task in an efficient and effective manner. They must develop a unique reward strategy to achieve a competitive advantage in the long run. The reward package should include rewards that are both extrinsic and intrinsic. It should be a combination of several variables, not only salary but also recognition, opportunities for learning, responsibility, growth, commitment and work quality. 

Another important thing would be to integrate the reward system to the organizational business meaning that reward practices should be aligned to organization’s goals and its employees' values 

References 

Ajila, C.,  & Abiola  A. (2004). Influence  of rewards on work performance in an organization. J.Soc.sci, 8(1): 7-12.  

Armstrong, Brown  and  Reilly, (20011), Increasing  the  effectiveness  of  reward management:  an  incentive-based  approach, human relations, 33(1), 106-120 

Yapa, S. (2002).   An  examination  of  the relationship among job satisfaction, rewards and organizational  commitment. Journal of  the management science, 1(1), 46-66 

Herzberg,F (1959)    -    Motivational    Theory.    Retrieved    on    16.10.10    from https://www.envisionsoftware.com/articles/Herzberg_Motivational_Theory.html.  

Evans, M. G. (2002). Path-goal Theory of Leadership. Leadership, 115-138. 

Compare AIRBNB's Employee Health Insurance and Benefits https://www.benefitspro.org 

Katie Warren (2018) 16 mind-blowing job perks that real companies offer https://www.insider.com/best-job-perks-companies-twitter-facebook-google-2018-5#1-airbnb-offers-a-2000-yearly-travel-stipend-1