IMPACTS OF TESCOS REWARDING SYSTEM TOWARDS EMPLOYEE MOTIVATION AND PERFORMANCE

Document Type:Thesis

Subject Area:Management

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Organizational background …………………………………. Problem identification ………………………………………. Problem statement ……………………………………………. Problem justification ……………………………………. Objectives and aims …………………………………………………………………………10 1. Research question …………………………………………………………………………. CHAPTER TWO: LITERATURE REVIEW …………………………………………………. Introduction ………………………………………………………………………. Comparison between employee performance and motivation………. Rewards versus employee performance ………………………………………………. Reward system and employee motivation ……………………. Forms of reward system ……………………………………. Extrinsic rewards …………………………. Intrinsic rewards …………………………………………………………14 2. Theoretical application ………………………………………………………………………15 2. Maslow’s theory …………………………………………………………………. Herzberg’s theory …………………………………………………………………. Interrelationship between rewards, motivation and job satisfaction………………………. Interrelationship between rewards and job satisfaction ……………. Interrelationship between rewards and employee motivation …………. …………………21 CHAPTER THREE: METHODOLOGY ……………………………………………………. Research framework ………………………………………………………………………. Research approach …………………………………………………. Research design ……………………………………………. Research methods ……………………………………………………………. Questionnaire ………………………………………………………………………24 3. Interview ………………………………………………………………………. Data analysis …………. Sampling techniques ………………………………………………………………………. Ethical considerations ………………………………………………………………………. References ……………………………………………………………………………………… 27 CHAPTER ONE INTRODUCTION 1. Introduction Current businesses have numerous challenges to overcome so as to remain competitive and stable in the market. The 21st century has many challenges that require employee motivation in order to retain them as well as increase their performance so as to accomplish crucial organizational goals. As a result, many organizations have developed a variety of measures to manage employees from the diverse cultural backgrounds. The increased use of technology in communication, as well as internet penetration in the whole world, plays a crucial role in creating customer awareness regarding product information as well as their rights. Due to this, the modern business environment requires organizations to retain high quality and talented workforce to guarantee the organization's long-term sustainability which is a major challenge among many organizations in the contemporary business environment (Armstrong, 2013). According to Donald and Gail (2001), competitive advantage can be achieved if organizations productivity is improved as a result of employee's performance. A rewarding system is a program that is developed by an organization to appreciate high performers as well as supporting low performers.

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It is one of the most efficient tools of maximizing employee performance (Armstrong, 2013). Generally, effective rewarding systems are developed on the basis of management decisions to reward employees who meet and sometimes surpass the set standards. Some of the employee needs can be attained through monetary rewards such as bonus, commissions among others while others can be achieved through non-monetary rewards such as residential apartments, cars, paid holidays, increased job responsibilities among others. However, an effective rewarding system should include both the monetary as well as non-monetary incentives which adequately meet the employee's expectations. According to Wang (2004), an effective rewarding system indicates the benefits that employees are likely to earn as a payback for their excellent performance. Rewarding systems play numerous vital functions such as developing and sustaining employee's commitments in an organization as well as improving employee satisfaction in the workplace.

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A study conducted in 2009 by Ali and Ahmad discovered a positive interrelationship between rewarding workers and their job performance and also satisfaction and recognition. Moreover, employee discrimination on the foundations of race, gender, education level, religion, age among other factors is highly restricted by well-established organizational policies and practices thus making employees more satisfied. In this situation, the global retail industry is highly competitive and the only sure method of maintaining success is creating an outstanding rewarding system that motivates employees. Every organization is keen on maintaining the appropriate employee turnover. In most cases, high employee turnover is mostly connected with employee's dissatisfaction which also has a close relationship with inadequate motivation. As an attempt of addressing this problem, numerous organizations in the retail industry have discovered recognition of employees is a crucial measure of improving their performance.

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Therefore, this is an issue that needs to be researched through this study. Problem statement According to a report published by BBC in 2015, Tesco has witnessed a decline in its market share within the last 6 years. As a result, Tesco PLC requires efficient and effective performance to retain its competitive advantage in the global market. Sufficiently rewarding systems motivates employees particularly those with poor performance as well as increasing higher performer’s job satisfaction (Terera & Ngirande, 2014). However, as a result of varying personal preferences as well as personal traits, a section of employees prefer to be motivated through non-financial rewards while another section is normally motivated through use of monetary rewards. The second goal of this study will be to create awareness among employees on the basis of the impacts of the rewarding system on their overall performance which creates the organization’s competitive advantage.

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Lastly, the study will provide special recommendations which can be used by Tesco PLC in the improvement of the company's rewarding system. Additionally, even though the recommendations will focus on how Tesco can improve its rewarding system, the recommendations can also be helpful in the retail industry since numerous organizations within this line of business have a common rewarding system. Objectives and aims • To find out the essential rewards used by Tesco PLC to motivate its employees • To examine the impacts of Tesco's rewarding system on employee performance • To find out the possible recommendation that can be used by Tesco PLC to improve its rewarding system so as to enhance the company's employee performance. Research questions • What are the essential rewards used by Tesco PLC in employee motivation? • Which are the impacts of Tesco's employee rewarding system on the company’s staff performance? • What are the improvements that Tesco can adopt in its employee rewarding system? CHAPTER TWO LITERATURE REVIEW These reviews of the existing works will emphasize on incorporating the findings of other relevant and current research so as to achieve significant information that is related to the area of study.

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Comparison between employee performance and motivation Kulchmanoy and Kaliannan (2014), identified employee motivation as unique influential factors for an effective and an excellent performance of employees. More support is given by Raza (2012) in which he argues that an employee's performance depends on how well he or she is motivated. Maximization of employee performance can be achieved through the creation of perceptions that their commitment is recognized and highly valued. Nielsen (2013) argues that providing training programs for employees can also be an excellent measure of maximizing employee performance. In some cases, managers lay off poorly performing employees at the expense of recruiting high performers. Therefore, their effectiveness of the organization's performance is depended on individual's performance while the individual performance is depended on the rewards given to the employee. Reward systems and employee motivation Investigations by Dewhurst, et al.

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demonstrated that an effective employee rewarding system is crucial for motivating both the poor performers as well as excellent performers. The reason behind this strategy is because an excellent rewarding system motivates high achievers to work harder while on the lower performs it acts as an incentive to support them. Even though the system of rewarding employees varies from one organization to another due to varying personal preference, rewarding systems work for all organizations. In that way, employee's morale is highly motivated and eventually, the employee will increase their performance hence the increase in the overall productivity of an organization. Generally, extrinsic rewards have the potential of increasing employee's performance as well as maintaining the high performance. intrinsic rewards According to a study carried out by Torrington, et al. it was found that nonfinancial rewards are also very effective in creating employee job satisfaction, especially among the high performing employees compared to low achievers.

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Intrinsic rewards include the non-financial items such as public recognition, provision of professional training among others. Maslow argued that people can only be motivated by various needs as outlined in the hierarchy. In this study, Maslow's theory plays a crucial role in highlighting the fact that, attaining the most basic requirements of an employee does not guarantee employee motivation. However, employee motivation can only be accomplished when the employee is aiming to achieve higher levels of improvements. Basically, the applicability of Maslow's theory in an organizational context provides that, to achieve an employee motivation, accomplishment of basic employee requirements such as salary does not guarantee employee motivation. Instead, the management should aim at targeting higher level of needs in order to maximize employee productivity and performance in the workplace. The analysis of this theory provides that motivational factors leading to job fulfillment are significantly varied from the factors that bring poor employee motivation.

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Herzberg, therefore, developed this theory to explain the effects of motivation-hygiene on the overall employee performance. According to Herzberg, motivators or satisfiers factors are normally factors that aim at maximizing the employee satisfaction. In contrast, dissatisfies are normally the factors that bring dissatisfaction among organization’s employees (Herzberg, et al. Additionally, Herzberg further argued that people have varied needs that must be accomplished to ensure they are satisfied. In contrast, extrinsic motivations are normally related to hygienic factors which include, organization policies, practices, rules and regulations, the managerial hierarchy as well as work environment among others. Generally, the extrinsic factors hold an essential part in inspiring worker’s job satisfaction. In the organizational context, Herzberg's theory emphasizes that the organization's top management must identify all the factors leading to employee satisfaction and dissatisfaction.

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The management should, therefore, improve any employee dissatisfaction within the organization as they optimize on satisfaction factors to advance employee’s performance while improving the company's overall performance. On the context of organization's rewarding system, Herzberg's theory should be developed on the foundations that it motivational factors that lead to employee satisfaction are encouraged while hygiene factors that lead to employee dissatisfaction are highly discouraged (Tooksoon, 2011). In the case of low performers, the management should not lay them off but instead, the management should use the organization's rewarding system as an incentive to support and empower the poorly performing employees. Offering rewards to excellent performers in an organization encourages poor performers to struggle so as to achieve high performance in the workplace. As a result, the management can make a perception among the organization's employees that the company values and recognizes employee's efforts and therefore having a possibility of developing as well as increasing employee loyalty within the company (Nyberg, 2010).

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The close association between rewards, motivation as well as employee job satisfaction is a significant tool in facilitating and enhancing organizational prosperity in any industry or sector (Fareed, et al. All employees in any company require either monetary or non-monetary reward to be motivated in the workplace. non-monetary rewards that include recognition and appreciation motivate and make employees feel valued by the management. When the top management gives power and authority to employee's close supervisors to determine the non-financial rewards to be awarded, employees have a very high possibility of maximizing their performance, improving their job satisfaction, reducing employee's absenteeism increasing their satisfaction (Kabak, et al. Interrelationship between rewards and employee motivation When organizations do not offer sufficient rewards to their employees, the employees believe their performance in the organization is ineffective and therefore they feel demotivated and tend to look for jobs that employers will offer rewards.

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Insufficient rewards demotivate employees hence the employee performance is significantly reduced. Therefore, management should always design rewards that retain employees through motivating them to accomplish higher performance ranks (Peters, et al. Normally, inductive approach is generally used in the development of theories while the deductive approach is normally used to test theories. This research proposal is focused on testing the relationship between Tesco's rewarding system and the employee's performance. The study will therefore, employ the use of the deductive approach that will begin by making a general observation from Tesco's employees and testing theories to find out the correlation between the rewards and employee performance. Research design These are the techniques to be used in the integration of varying components of a study in order to ensure the research problem is effectively addressed.

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Even though there are multiple methods that can be used in the research design, the most widely used methods are qualitative, quantitative as well as mixed-research design. The major benefit of this mixed-research design is it will ensure high reliability of the data as well as little biases that might affect the data analysis, findings, and recommendations. Research methods Primary data and secondary data are the two types of data in a research study. The primary data is popularly known for providing the first-hand information while the secondary data involves the collection of data from existing literature (Erickson & Kovalainen, 2008). Normally, the collection of secondary data involves summarization of the existing literature from academic journals, books as well as reports among other authentic sources. Primary data which can be utilized in collection of both qualitative and quantitative information involves the use of interviews, focus groups among others in the collection of qualitative data while questionnaires and observations among others are used to collect quantitative data (Reason & Bradbury, 2013).

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Additionally, the questionnaires to be used in this study will consist of both open-ended as well as closed questions. Interviews In this study, interviews will be used for the collection of qualitative data. Even though interviews are more time consuming than focus groups, the major advantage of interview is that it maintains confidence as well as anonymity of the respondents (Peters, et al. As part of the ethical consideration in this study, anonymity of the respondents is our first priority. Additionally, it is also very easy to conduct interviews either online or through use of telephones. However, since it is not possible to gather data from a population of more than 400, 000 employees working for Tesco, therefore a non-probability sampling technique will be used since it is impossible to reach the entire population of employees.

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In this case, the research will gather information from the nearest Tesco store. Furthermore, this technique is normally cost-effective and requires little time since it will be easier to access employees. A maximum of 50 questionnaires will be developed and emailed to the sampled population. Ethical considerations These are the moral code of conduct as well as values to be used throughout the study to demonstrate integrity to the participants and other stakeholders. Effects of motivational factors on employee’s job satisfaction a case study of University of the Punjab, Pakistan. International Journal of Business and Management, 5(3), p. Ali, R. and Ahmed, M. S. and Usman, A. Impact of reward and recognition on job satisfaction and motivation: An empirical study from Pakistan. International journal of business and management, 5(2), p. Denzin, N. K.

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C and Gail D. H. Managing compensation (and understanding it too): a handbook for the perplexed. London: Greenwood Publishing Group Eriksson, P. Kovalainen, A. and Traianou, A. Ethics in qualitative research: controversies and contexts. London: SAGE Harmon, P. Business process change. Morgan Kaufmann. Küçüksöylemez, S. and Tuncer, G. Strategies for Employee Job Satisfaction: A Case of Service Sector. Procedia-Social and Behavioral Sciences, 150, pp. Khan, I. and Ullah, M. I. The relationship between rewards and employee motivation in commercial banks of Pakistan. Research journal of international studies, 14, pp. Kim, B. Hum Resource Health, 8(1), pp. Liu, B. C. and Tang, T. L. In Detdanskeledelsesakademi 2013. Terera, S. R. Ngirande, H. The impact of rewards on job satisfaction and employee retention. Job satisfaction and motivation of health workers in public and private sectors: cross-sectional analysis from two Indian states.

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Hum Resour Health, 8(1), p. Peters, L. D. Pressey, A. Reason, P. Bradbury, H. Eds. The SAGE handbook of action research: Participative inquiry and practice. Sage. Johns, R. Robinson, J. O'Leary, P. and Plimmer, G. Managing Employee Performance & Reward: Concepts, Practices, Strategies. Asian Academy of Management Journal, 16(1), pp. Tesco. Tesco UK. available from; www. tescoplc. Pearson Education Limited. Tsai, C. Reward and incentive compensation and organizational performance: evidence from the semiconductor industry. In Performance and Reward Conference, Manchester UK. Wang, Y.

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