The effects of reward systems for employees

Written by tessa holmes
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The effects of reward systems for employees
Reward systems foster team building. (Jupiterimages/BananaStock/Getty Images)

A reward system is a system in which employees are offered special bonuses, privileges or benefits for performing or behaving in an exceptional manner. There are many types of reward systems, most of which are tailored to specific businesses, the needs of their employees and the goals of the company.

Motivation of Employees

Reward systems, whether monetary or other, can positively affect employees by increasing motivation. Workers who are aware that outstanding performance or behaviour in the workplace will result in desirable rewards are more likely to strive to meet the goals set forth by employers. This decreases monotony in the workplace and fosters ambition and hard work amongst employees.

Reaching and Retaining Good Workers

Employees are not the only ones who experience the positive effects of reward systems in the workplace. Employers who offer desirable rewards to their employees have a better chance of attracting good, motivated workers. They also have better chances at retaining their top employees, those who more than likely reap the rewards. Ambitious employees will be attracted to reward systems, but without rewards, may look for work elsewhere.

Improvement in Profit

When employees work towards their goals in hopes of earning rewards, business become more successful. Profit increases and some businesses also may witness improvements in office relations and behaviours and in customer service. The more successful a business is, the more they can expand and the more rewards they can afford to offer, creating a cycle that promotes hard work, good behaviour and increased profit.

Negative Effects

Not all reward system effects are positive. Some scholars argue that an overemphasis on business reward systems has a negative effect on intrinsic values. Intrinsic values are the values that a person, in this case an employee, has without prompting by an outside force. For example, dedication can be seen as an intrinsic value if an employee is dedicated without being offered a reward. If the employee is only dedicated because they know they will be rewarded, they value only extrinsic rewards. Some theorists believe that reward systems are completely diminishing employees' intrinsic value systems.

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