Managing and Developing Reward in Next Retail Company

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ACKNOWLEDGEMENT

I would like to thank my supervisors, friends and family, without their support this research study would not have been possible.

DECLARATION

I adjudge that the entire content of this dissertation is entirely my own work; the content used in this dissertation has not been submitted before in any educational institution and represents my own opinion.

Signed __________________ Date _________________

TABLE OF CONTENTS

ACKNOWLEDGEMENTii

DECLARATIONiii

TABLE OF CONTENTSiv

CHAPTER 1: INTRODUCTION1

Background of the Research1

Compensation and Benefits1

Next Retail Company3

Aims and objectives5

Aims5

Objectives5

Research Questions5

CHAPTER 2: LITERATURE REVIEW7

Employee Appraisal System7

Employee Performance Management8

Reward system9

Rewards and Motivation10

Intrinsic and Extrinsic Motivators10

Theories of Motivation12

Maslow's Hierarchy13

Frederick Herzberg motivation theory13

Incentives, Benefits and Employees14

Monetary rewards15

Informal rewards16

Formal Rewards17

Fringe Benefits18

Profit Sharing18

Stock Options19

REFERENCES20

APPENDIX23

Questions from the Employees23

Questions from the Managers24

CHAPTER 1: INTRODUCTION

Background of the Research

For the success of any organization the employee motivation is extremely important and this can achieve by providing monetary and non monetary rewards and recognition to the employees. Employees may be motivated by both intrinsically and extrinsically (Yahye Yahye Goh 2003, 303). The concept that incentives influence both intrinsic and extrinsic motivation is an expansion of motivational theories that recognize that employees have needs that must be fulfilled internally and externally (Russell 2001, 66). The challenge for organizational leaders is to determine which factors will create the highest level of motivation. Extrinsic factors are tangible rewards given to employees based on their performance of specific tasks or on their behaviors (Wilson 2003, 35). Extrinsic factors can include compensation, company stock, merit bonuses, benefits, and promotions. Intrinsic factors are rewards that employee receives internally that are associated with performing a task or activity (Wilson 2003, 99). Examples of intrinsic factors are: feelings of responsibility, positive interactions with others, opportunities to learn new skills, recognition, levels of challenge and engagement, and having a work environment that is interesting and challenging. Of all the functions that managers perform, motivating employees to work to their highest level of performance may be the most complex and difficult task due to the fact that outside influences can affect motivation (Whiteley 2002, 35).

Compensation and Benefits

Many believe that the most important aspect of employment to workers is the compensation that they receive. While compensation is important, it is not the determining factor in the decision to continue to work for an employer or in the decision to accept a position with a new employer. Viswesvaran Ones (2000, 111) suggests that on a ranking of items that employees find important, money is not at the top of the list and is lower than items such as a good work environment, job security, benefits and the performance of an interesting job. He believes that in order to set up a proper compensation program, employees must be paid fairly, be paid above market value and the organization must do what is necessary to relieve the burden of thinking about compensation by diverting attention to the job that needs to be performed or completed.

Thornhill (2004, 109) conjectured that organizations are incorrect when designing incentive programs. They suggest that more ...