1. 1
UNIVERSITY OF BRADFORD
School: University of Bradford
Department/Division: School of Management
Module Tutor/Supervisor: Simon Kelly
Module Number: MAN4222M
Module Name:
Human Resource Management
Title of Essay Question:
Please provide the whole question:
What is the relationship between employee
reward systems and organisational
performance?
Your UB Number: 15014022
Date of Submission: 09/12/2015
Mode of Study (on site/distance Learner: On Site
Word count (not including bibliography
and appendices):
1541 words
Statement of Authenticity:
By submitting this assignment through Blackboard, I confirm:
 That this work is my own and that I have not plagiarised the work of others in any
form whatsoever.
 That I am aware of the University’s definition of Plagiarism and understand how it
can be avoided.
 That this work, or any part of it, has not been previously submitted to the University
of Bradford for assessment in any other module.
 That I have read and understood the information provided below.
Signed: NORIYUKI DOCHI

2. 2
In recent years, the development of technology has kept the world closer, which has resulted in the
increasingly demand of competiveness in virtually all business situation around the world. In order
to survive in the competitive situation, effective management of human resource is crucial to
achieve better performance with fewer employees. Reward system has been implemented as one of
the means that plays a popular role in managing human resource better, which can lead to improve
the organizational performance (Gerhart et al, 1995). Porter (1985) also pointed out incentive
systems as one of the means that can translate into organizational performance. This essay will
firstly define the rewards system, and then focus on how company evaluates the employee while
examining the relationship between motivation and performance. In the later of this essay, the
relationship between employees rewards system and motivation will be assessed from theoretical
perspective.
Almost of all companies introduce the rewards system. According to the brief definition of reward
systems provided by Bratton, “Reward system refers to all the monetary, non-monetary and
psychological payments that an organisation provides for its employees in exchange for the work
they perform” (Bratton, 2007 cited in ACCA, 2013: 2). Also, Howard and Dougherty (2004)
argued that reward systems are designed by certain strategy. Reward systems can eventually help
employees to develop their knowledge, skill, flexibility, and productivity when rewards are
connected to work outcomes that support the strategic policy of companies.
Rewards schemes are divided into intrinsic and extrinsic rewards. Extrinsic rewards are
components that employees receive as part of the job such as financial payments and working
environment. Intrinsic rewards concern to the psychological satisfaction that employees receive
through actually undertaking what they do, for instance, intimate satisfaction and a sense of
contribution to the community they belong to (ACCA, 2013). In order to retain, motivate and
attract employees, the company has to carry out reward systems in right way. This is mainly
because the main purpose of reward systems is to provide the guarantee of success of human
resource strategies to motivated employees (Yi and Hai, 2011). The explanation of rewards system
mentioned above indicates that the reward system is designed to motivate employees, which means
organizations can believe that motivation is important factor to increase the productivity. Next
paragraph will make it clear whether motivation can impact on the organization performance,
evaluating performance appraisal.
In order to associate the individual preference with the motivation, performance appraisal is
necessary. It is mainly used to clarify the expectation of company and identify the weakness and
challenges of employees (Bouskilla-yam and Kluger, 2011). Though the performance appraisal in
MNCs has been widely used, it has brought many drawbacks (Avery and Murphy, 1998). Maley
(2013) argued that the process of how to evaluate individual achievement and comment on
employees is significantly questionable. In fact, the article of Klunger and Denisi reported that at
least 30% of the feedbacks that manager had provided to employees eventually led to a decrease of
employees’ performance. This means that employees can suffer from the pressure from the
performance appraisals. This idea is backed up by the statistical data. The survey conducted by the
SHRM showed that 66% of employees say that the performance review process hamper the
productivity (Dori, 2015). Moreover, 95% of manager were unsatisfied with their companies’
performance management processes. Not surprisingly, around 60% of MNCs estimated that their
companies as inadequate or worse as for the efficiency of managing employees’ performance
(Kochanski and Sorensen, 2005 cited in Jane, 2013). When taking a look at these statistic data, it

3. 3
can be concluded to two aspects. One hand is that it seems to be difficult to make employees
motivated since the employees’ motivation can be influenced by many different factors although
companies try to identify factors through performance appraisals. The other hand is whether
organization productivity will be high or low can depend on how much employees are motivated.
In the later of this essay, the relationship between rewards system and employees’ motivation will
be assessed with using psychological concepts, focussing on Vroom’s expectancy and Maslow’s
hierarchy of needs.
One concept that can explain the relationship between rewards and performance is Vroom’s
expectancy theory. According to Vroom’s Expectancy Theory (1964), employees are affected by
their insight for themselves during their task. In other words, how much employees perform bases
on personal elements such as knowledge, identity, skills, background and capabilities. Ramlall
(2004) represented Vroom’s theory was consisted as three elements: Expectancy, Instrumentality
and Valence (figure 1). First, Expectancy is the belief that making more effort leads to the increase
of performance. Second, Instrumentality is the belief that showing high performance results in
receiving a valued outcomes. Finally, Valence is the comparison of individual choice for peculiar
reward. A reward includes a valence since it is associated with the needs of employees
(Lunenburg, 2011). The work of Vroom indicates that expectancy, instrumentality, valence and
motivation are linked to each other by the equation.
(Akshitha, 2014)
As this equation consists of multiplication, each components effect with each other significantly.
In other words, if one of three factors is zero, it affects others and eventually motivation becomes
zero. Thus, for instance even if effort that people make will lead to how they perform, which will
lead to outcomes, people will not be motivated if the valence of the outcomes that employee
supposes to obtain is zero (Lunenburg, 2011). Vroom’s theory has some striking association with
employees’ motivation, which supplies directions for boosting employee motivation by adjusting
individual’s performance-to-reward expectancy, effort-to-performance and reward valences
(Lunenburg, 2011). With regard to these guidelines, essentially, Lunenburg stated that leaders are
required to do the following attitude: (1) increase the belief that if employees show good
performance, they receive right rewards, (2) increase belief that employees have enough ability to
achieve their job successfully, (3) increase the importance of rewards that employees supposed to

4. 4
gain results from appropriate performance. On the basis of this theory, it may be inferred that it is
important for companies to contribute the right rewards in the right way to employees in order to
keep their motivation at a sustainable level.
Another theory that can show the relation between rewards and their motivation is Maslow’s needs
theory. Maslow (1943) suggested that people seek to obtain what they actually need. When people
fulfilled one that they need, people pursue to fulfil the next one. Maslow’s hierarchy of needs
(figure 2) is composed of five motivational needs, which usually described as hierarchical
pyramid. Maslow’s concepts are highly beneficial to identify what employees need and to make
decision what can be done to motivate them. In addition, the theory makes employers realize that
depriving employees of needs may affect characters and behaviours negatively (Zeynep and Mert,
2014). This hierarchical model can be categorized into basic needs such as Physiological, Safety,
Love, Esteem and Self-actualization. Intrinsic rewards thoroughly serve higher order self-
actualization needs. Intrinsic and extrinsic rewards serve esteem needs. Extrinsic rewards solely
serve lower order needs (Schermerhorn, 2001). This indicates that rewards system can be closely
related to the concept of Maslow’s hierarchy.
(Finkelstein, 2006)
Moreover, Ramlall (2004) argued that employees are provoked to accomplish and preserve the
components for each stage of needs. Therefore, managers pursue to construct schedule and
establish managerial circumstances that keep employees highly motivated to achieve their needs
fulfilment. This thought was supported by the practical fact that as Fast Company reported, Chip
Conley who is Head of Hospitality at Airbnb and founder of the Joie de Vivre hotel chain
introduced the concept of Maslow to his business, which led employees to recognize the value of
their roles in the workplace. This eventually affected the employees’ motivation and respect for
their work (Kermit, 2010). Not only the academic thought but also the fact can suggest that there is
relationship between rewards system and employees’ motivation. However, it is unsure whether
Maslow’s theory applies for everyone mainly because his methodology is very limited. He

5. 5
researched the biographies and writing of 18 people who were classified as self-actualized. In
other word, his analytic method can be very subjective (McLeod, 2014).
Since the business environment has changed dramatically, many companies have been required to
increase organizational performance to compete with rivals. Companies expect employees to be
motivated by the reward system, which shows that highly motivated employees are crucial to
increase productivity though it is difficult to find the particular factor that impact on individual
motivation. Also, given statistical data for performance appraisals, it can be shown that the
productivity can be low level when employees are not motivated. Then when observing the
concepts of Vroom and Maslow, it can be seen that the evaluation of employees in the right way
boosts the employees’ motivation. In other words, through the rewards system companies try to
motivate employees with the purpose for the increase of organizational productivity. Interestingly,
Paul Hawke explained that the relationship between employee rewards system and organizational
performance in following way, “Good management is the art of making problems so interesting
and their solutions so constructive that everyone wants to get to work and deal with them.”(Avis,
2015: 71) It suggests that through the right implementation of rewards systems, companies could
try to advance their productivity by motivating employees.
References
Akshitha, R. (2015) Hypothetical case study on vroom’s expectancy theory
http://www.slideshare.net/akshitha95/hypothetical-case-study-on-vrooms-expectancy-theory-
39661918 Accessed 15 Nov 2015.
Arvey, R. D., and K. R. Murphy. (1998) 'PERFORMANCE EVALUATION IN WORK SETTINGS'.
Annual Review of Psychology 49(1) 141-168.
Association of Charterred Certified Accountants. (2013) Reward schemes for employees and
management. ACCA. http://www.accaglobal.com/content/dam/acca/global/PDF-
students/2012s/sa_jan13_p5_reward_a.pdf. Accessed 15 Nov 2015.
Avis, E. (2015) ‘Gorooming Future Leaders’. Independent Banker 65(1) 71, 74-75
Bouskila-Yam, Osnat, and Avraham N. Kluger. (2011) 'Strength-Based Performance Appraisal
And Goal Setting'. Human Resource Management Review 21(2) 137-147.
Bratton, John, and Jeffrey Gold. (2007) Human Resource Management. Basingstoke [England]:
Palgrave.
Dori, M. (2015), Is It Time to Put the Performance Review on PIP?. Society For Human Resource
Management.
http://www.shrm.org/publications/hrmagazine/editorialcontent/2015/0415/pages/0415-qualitative-
performance-reviews.aspx. Accessed 15 Nov 2015.

6. 6
Finkelstein, J. (2006) Diagram of Maslow’s hierarchy of needs
https://commons.wikimedia.org/wiki/File:Maslow%27s_hierarchy_of_needs.svg Accessed 15 Nov
2015.
Gerhart, B., Minkoff, H. and Olsen,R. (1995) Employee compensation: theory, practice and
evidence, New York, United States: Center for Advanced Human Resource Studies (CAHRS)
Howard, Larry W., and Thomas W. (2004) Dougherty. 'Alternative Reward Strategies And
Employee Reactions'. Compensation & Benefits Review 36(1) 41-51
Kermit, P. (2010) Chip Conley Took The Maslow Pyramid, Made It An Employee Pyramid And
Saved His Company. Fast Company. http://www.fastcompany.com/1685009/chip-conley-took-
maslow-pyramid-made-it-employee-pyramid-and-saved-his-company. Accessed 15 Nov 2015.
Kluger, Avraham N., and Angelo DeNisi. (1996) 'The Effects Of Feedback Interventions On
Performance: A Historical Review, A Meta-Analysis, And A Preliminary Feedback Intervention
Theory.'. Psychological Bulletin 119(2) 254-284.
Kochanski, J. and Sorensen, A. (2005), Managing performance management. Workspan, 48(9) 20-
27
Lunenburg,F. (2011) 'Expectancy theory of motivation: motivating by altering
expectations', International Journal of Management, Business and Administration,15(1) 1-3.
Maley, Jane. (2013) 'Hybrid Purposes Of Performance Appraisal In A Crisis'. Journal of Mgmt
Development 32(10) 1093-1112.
Maslow, A. H. (1943) 'A Theory Of Human Motivation.'. Psychological Review 50(4) 370-396.
McLeod, S. A. (2014). Maslow's Hierarchy of Needs. Simply Psychology. Available at:
http://www.simplypsychology.org/maslow.html [Accessed 10 Dec 2015]
Porter, Michael E. (1985) Competitive Advantage. New York: Free Press.
Ramlall, S. (2004). A review of employee motivation theories and their implications for employee
retention within organizations. Journal of American Academy of Business, Cambridge, 5(1/2) 52–
63
Schermerhorn, John R. (2004) Management. Milton, Qld.: Wiley. Print.
Vroom, Victor Harold. (1964)Work And Motivation. New York: Wiley. Print.
Yi, H. H, and Hai, M. C. (2011) STRATEGIC FIT AMONG BUSINESS COMPETITIVE
STRATEGY, HUMAN RESOURCE STRATEGY, AND REWARD SYSTEM. Academy of
Strategic Management Journal 10(2) 11-32.

7. 7
Zeynep, O, and Mert, O. (2014) ‘A Managerial Point of View on the Relationship between of
Maslow’s Hierarchy of Needs and Herzberg’s Dual Factor Theory’, International Journal of
Business and Social Science, 5(7), 208-215