Analysis of Effective Recognition and Reward Strategies on Employee Motivation at OAESB

Analysis of Effective Recognition and Reward Strategies on Employee Motivation at OAESB 1

Analysis of Effective Recognition and Reward Strategies on Employee Motivation at OAESB

A. HARIS AWANG MBA2016-04-1001 MBA 6223 Total Quality Management

Submitted to: Mr. Kumaran Raman

Deputy DeanFaculty of Business

Asia Metropolitan UniversityMalaysia

14th Jan, 2017

A. HARIS AWANG

TERM PAPER REPORT

Analysis of Effective Recognition and Reward Strategies on Employee Motivation at OAESBA. HARIS AWANG

Table of Contents

INTRODUCTION...........................................................................................................................1

Problem statement.......................................................................................................................1

Research objectives.....................................................................................................................1

LITERATURE REVIEW................................................................................................................2

Reward and Recognition..............................................................................................................2

FINDINGS.......................................................................................................................................5

Methodology................................................................................................................................5

Findings.......................................................................................................................................5

RECOMMENDATIONS.................................................................................................................7

CONCLUSION................................................................................................................................8

ACKNOWLEDGEMENT...............................................................................................................8

APPENDIX......................................................................................................................................9

REFERENCES..............................................................................................................................10

Analysis of Effective Recognition and Reward Strategies on Employee Motivation at OAESB i

INTRODUCTION

This article analyzes the role of reward and recognition strategies in influencing employee

motivation which corresponds to the organization performance at OAE Sdn. Bhd. (OAESB).

OAESB is a Japanese multi-national company (MNC), located in Bandar Baru Bangi, Selangor,

Malaysia, manufacturing audio-video products for export markets. It currently has 500

employees and has been in operations since 1990.

Problem statementIt is quite a conventional belief that by increasing individual employee motivation subsequently

increases organization performance. However, increasing individual employee motivation is not

an easy task. A large number of studies have been conducted to by various researchers to

determine factors that could lead to employee motivation. Research has shown that

organizational reward and recognition can change or predict employee motivation thus leading to

individual, team and organization performance.

However, many organizations’ reward strategies are targeted for individuals which contradict the

human resource policy that puts emphasis on team building and team skills development. It is

still believed that reward strategies relate to individual work performance.

Research objectivesThe research objectives are summarized in the following proposed hypotheses to test the

independent variables against employee motivation as a dependent variable.

H1: Reward (R1) has positive effect on employee motivation (M).

H2: Recognition (R2) has a positive effect on employee motivation (M).

Hence, the theoretical framework proposed is as the following:


Reward (R1)

Recognition (R2)

Employee Motivation (M)

H1

H2

Figure 1. Research Theoretical Framework.

Each of the variables may have antecedents which are subject to further studies. The test for

organization performance will be a subject of another research. The theoretical framework can be

a kick-starter to further studies within the context of other industries in Malaysia.

The scope of this research is within OAESB.

LITERATURE REVIEW

A review of literature on previous studies to examine possible variables for the theoretical

framework and hypotheses are discussed under this chapter. The independent variables of

interest are reward and recognition while the dependent variable is motivation.

Reward and RecognitionThe Oxford Dictionaries defines reward as “a thing given in recognition of service, effort, or

achievement” and recognition as “appreciation or acclaim for an achievement, service, or

ability”.

Webster’s Third New International Dictionary defines reward as “something given in return for

good done; recompense, remuneration, compensation for services.” As an example, a person

might promise a reward for the return of something they have lost. Similarly, we reward young

people for achieving something and withhold the reward if they do not.

On the other hand, Webster’s Third New International Dictionary also defines recognition as

“special notice or attention, formal acknowledgement, acknowledgement of something done.”


One familiar example of recognition is when an employee receives the “Employee of the Month”

plaque for good performance.

Allen & Kilmann (2001) is their study to examine the impact of reward practices on the

relationship between an organizational strategy based on the principles of total quality

management (TQM) and perceptions of firm performance find that when the reward system is

made part of the change strategy, it can positively contribute to the change effort. It is exactly

because of the nature of organizations that almost any change effort has implications for the

reward system. They also come up with a research model as in the figure 1.

Figure 2. Research Model (Allen & Kilmann, 2001)

Cacioppe (1999) finds that reward and recognition systems are an important part of the change

that is necessary for any organizational transformation to be effective. Companies that use

relevant compensation and rewards as their strategy are be able to materialize the true potential

of their employees, working together. However the reward and recognition strategy must also fit

in with the culture and values that the organization wishes to develop.

Hansen (2002) stresses that our everyday experience tells there is a difference between

recognition and reward. Moreover, effective compensation programs must distinguish between

rewards and recognition.

Bradler et al. (2015), in their investigation on the causal effect of unannounced, public

recognition on employee performance find that recognition increases subsequent performance


substantially, and particularly when recognition is exclusively provided to the best performers.

Workers who did not receive recognition are mainly responsible for this performance increase.

The study also shows that unannounced provision of public recognition to employees causes a

statistically and economically significant increase in performance. Furthermore, their results

suggest that recognition works best when it is provided exclusively, but not too exclusively.

From the recognition standpoint, Islam and Ismail (2004) mention one of the laws of Psychology

that says if you want someone to repeat a behavior, you should positively recognize the behavior

immediately. Recognition is positive reinforcement and positive reinforcement of actions gets

actions repeated. Their findings reveal that cash reward is the most preferred reward among

Malaysian employees.

Ali and Ahmed (2009) state that if more focus is placed on rewards and recognition, it could

have positive impact on motivation and thus result in higher levels of job performance. However,

results of findings may be specific only to the operation business unit under their study group

and may not be generalized to the other business units within the organization, or to other similar

business units outside of the organization.

Brun & Dugas (2008), in the analysis of different theoretical perspectives reveals that

recognition takes four main forms 1) personal recognition, 2) recognition of results, 3)

recognition of work practice and, 4) recognition of job dedication. They further define

recognition as a constructive response and a judgment made about a person’s contribution

reflecting not just work performance but also personal dedication and engagement. Finally, they

also conclude recognition as something engaged in on a regular or ad hoc basis, and expressed

formally or informally, individually or collectively, privately or publicly, and monetarily or non-

monetarily.

Saunderson (2004)’s survey finds that most respondents know the importance of employee

recognition but believe that the lack of leadership and organizational support prevents it to

happen in their organizations. The survey also find that effective recognition occurs in

organizations with a strong, supportive culture, and senior management participation in

recognition giving However, it is not seen as a reality in many organizations.


Jusko (2013) recommends companies trying to improve or implement their own reward and

recognition programs to follow these suggestions: 1) set the tone for recognition with senior

leaders and clear goals, 2) develop clear recognition criteria, 3) use Information Technology to

boost performance, 4) make recognition a multi-front offensive, and 5) provide recognition that

employees value.

Bartol & Srivastava (2002) state that the role of rewards is procedural and distributive fairness of

organizational rewards are important factors in the development of trust and recognitions are the

most appropriate means of fostering feeling of competence.

FINDINGS

MethodologyBased on the theoretical framework developed earlier, a survey is conducted to examine the

influence reward and recognition have on employee motivation. The survey with a sample size

of 9 includes employees of various ages and employee grades from shipping department at

OAESB is done following the casual sampling method.

FindingsFrom the survey (see appendix 1 for survey form), the following results are observed. The

sample size of 9 employees has an average age of 28.2. Only 1 is from category A (managerial),

3 from B (officers), 2 from C (clerical) and 3 from D (operatives).


A

B

C

D

0 1 2 3 4

EMPLOYEE CATEGORY

Figure 3. Employee Category

Employees are also asked about how they rate the importance of criteria related to reward and

recognition and the summary as in the figure 4.


Figure 4. What's important to employees.

In terms of how satisfied is employees with current reward and recognition offered by the

company, the majority of the employees (7) are neither satisfied nor dissatisfied while 2 are not

satisfied (Figure 5).

Not satisfied

Neither

Very Satisfied

0 1 2 3 4 5 6 7 8

OVERALL SATISFACTION WITH CURRENT REWARD AND RECOGNITION

Figure 5. Overall satisfaction.

When asked on the rating of criteria as qualification for an award, most indicate the moderate

level of importance (Figure 6).


Figure 6. Importance of criteria for award.

RECOMMENDATIONS

Due to time constraint, the survey is only conducted on a very small sample size. Therefore it is

recommended that a comprehensive survey consisting of at least 300 employees to be conducted

for future research since the sample is easily available within the same organization.

Another recommended future research is on how reward and recognition influence the overall

company performance. There are many performance measure of interest e.g. productivity,

efficiency, profit, defect rate, customer complaint, etc. that can be exploited.

While this research may be interesting to researchers and practicing managers, it has several

limitations. This research is based on a very small sample. Future research should undertake

empirical studies of factors influencing motivation or company performance. This can be done

using a more extensive survey method or case study methods. Case studies will explain the

reasons as to why people behave in the generalized way.


As far as recommendations are concern, the theoretical framework developed in this research can

be a basis for future studies involving reward, recognition, motivation and performance. More

influencing variables can be explored to see their interrelations with one another as well as other

dependent variables of interest. More empirical studies to test the theoretical framework should

be needed in the future. This study is beneficial to researchers or students who are interested in

motivational studies.

Furthermore, each of the variables may have antecedents which are subject to further studies.

The theoretical framework can be a kick-starter to further studies within the context of other

industries Malaysia.

CONCLUSION

In conclusion, the reviews on past literature suggest that the variables under study are significant

and warrant for future studies of empirical nature. The two independent variables under this

research have the potential of influencing employee motivation. However, more studies need to

be conducted as the context of situations or conditions may be different among industrial areas.

Authors of each literature may yield mixed results, but it is believed that a carefully constructed

battery of behavioral questions can have a great potential to capture deeper underlying

characteristics that affect motivation. I hope that future research can put my belief at test.

Furthermore, the hypotheses developed in this study have to be tested and analyzed statistically.

Another limitation faced during this research is time. The two weeks period to do and write a full

research is very short which makes it almost impossible for any real-time data collection,

statistical or mathematical analysis or survey by questionnaires. So the research is somewhat

limited to online searches, classroom interactions and desk tasks.

ACKNOWLEDGEMENT

My special thanks and gratitude go my Total Quality Management lecturer, Deputy Dean Mr.

Kumaran Raman for sharing his knowledge and expertise in this field. This, I believe will guide

me throughout my present and future career development in the industry I am pursuing.


APPENDIX


REFERENCES

Ali, R & Ahmed M S. (2009). The Impact of Reward and Recognition Programs on Employee’s Motivation and Satisfaction: An Empirical Study. International Review of Business Research Papers. 5(4). 270-279

Allen, R.S & Kilmann, R.H. (2001). The role of the reward system for a total quality management based strategy. Journal of Organizational Change Management, 14(2), 110-131.

Bartol, K & Srivastava, A. (2002). Encouraging Knowledge Sharing: The Role of Organizational Reward Systems. Journal of Leadership & Organization Studies. 9(1). 64-76.

Bradler et al. (2015). Employee Recognition and Performance: A Field Experiment. Management Science. 1-15.

Brun J.P & Dugas N. (2008). An analysis of employee recognition: Perspectives on human resources practices. The International Journal of Human Resource Management. 19(4). 716-730.

Cacioppe, R. (1999). Using team – individual reward and recognition strategies to drive organizational success. Leadership & Organization Development Journal. 20(6). 322-331.

Hansen, F, Smith, M & Hansen, R. (2015). Rewards and Recognition in Employee Motivation. Compensations and Benefits Review.

Islam, R & Ismail, A. (2004). Ranking of Employees’ Reward and Recognition: A Malaysian Approach. Journal of International Business and Entrepreneurship Development. 2(2). 113-124.

Jusko, J. (2013). The ROI of Employee Recognition. Industry Week. http://www.industryweek.com

Merriam-Webster. (2017). Dictionary & Thesaurus. Retrieved 13 January, 2017, from https://www.merriam-webster.com/

Oxford. (2017). Oxford Dictionaries. Retrieved 13 January, 2017, from https://en.oxforddictionaries.com/

Saunderson, R. (2004). Survey Findings of the Effectiveness of Employee Recognition in the Public Sector. Public Personnel Management. 33(3). 255-275.


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Analysis of Effective Recognition and Reward Strategies on Employee Motivation at OAESB