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MG 3034, Managing People and Organizations.odt - 1...

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1Advantages and Disadvantages of Financial Reward Practices.MG 3034, Managing People and OrganizationsTable of ContentsEXECUTIVE SUMMARY...........................................................................................................................2INTRODUCTION.....................................................................................................................................3Advantages........................................................................................................................................5Disadvantages....................................................................................................................................6Case Study: McDonald’s.....................................................................................................................7CONCLUTIONS.......................................................................................................................................7REFERENCES..........................................................................................................................................8
2EXECUTIVE SUMMARYThe objective of this essay is to examine the importance of reward management within anorganization, to understand and evaluate the impact of the financial reward system and tofurther discuss about the relation between financial reward management, employeemotivation and performance.
3The research of this project has three parts. First it examines what is the concept behindfinancial rewards and the reason it has been under the spotlight among organizations,especially in sales department. Specifically, the main areas of research were to study thesignificance, advantages and disadvantages and its impact on employee’s motivation as wellas provide examples of real-life cases on why so many companies think it is vital to use it.Finally, further discuss about the theoretical and practical concepts.INTRODUCTIONBusinesses are one of the most competitive environments as they need to constantlyimprove and evolve their performance (Kuratko, 2016). Which lead to the realization thatthere is a strong connection among organizational performance and employee performance.Thus, the human resource sector has been upgraded.Employees through their abilities,skills, knowledge and values are the basic factors of success of the organization. The financialremuneration of employees is an essential and decisive factor on the one hand to create theappropriate motivation and on the other hand to increase loyalty.To truly engage theworkforce to be more efficiency, managers must first identify what type of motivation anemployee needs. There are two types, the intrinsic and the extrinsic motivation. Intrinsicoccurs when the employee pursuits knowledge, keep learning and develop new skills ontheir own, on other words rewarding themselves by themselves. Companies can triggeremployee’s intrinsic motivation by offering continuing training programs and helping thestaff to create and sustain personal development goals, to explain thoroughlythe company’s overall success and how each one can contribute to its achievement (Harter,1981). Whereas extrinsic motivation happens when the person is motivated by othersthroughperformance bonuses, awards and reminders from manager (Riasat & Farzana, 2016).
4According to common sense, those who are driven by rewards should perform well. Howeverrecent studies have proven that extrinsic motivation tends to decrease creative thinking(Gupta and Shaw, 1998).To further understand what motivates employees we should consider Maslow’s theory.Motivational factors may vary from employee to employee. Each have different needs andthus there are different ways to stimulate their productivity and the overall company’s

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