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EMPLOYEES PERCEPTION ON EFFECTIVE REWARD SYSTEM AND
MOTIVATING INCENTIVES TO ENHANCE PERFORMANCE IN IRISH OWNED
RESTAURANTS
A Case Study of Reward Management System in Comet Restaurant Dublin.
Dissertation Submitted in part fulfilment of the requirements for the degree of
MBA Human Resources management
At Dublin Business School
Aremu Adetunji Q.
10364650
MBA- HUMAN RESOURCES MANAGEMENT
2018
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DECLARATION
Declaration: I, Aremu Adetunji Quadri do declare that this research Study is my original
work and has never been presented to any institution or university for the award of degree or
diploma. In addition, I have referenced correctly all literature and sources used in this work
and the work is fully compliant with Dublin business school academic honesty policy.
Signed: Aremu Adetunji Q.
Date: 5th January 2019
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ACKNOWLEDGMENT
The completion of this research work is a great achievement for me in my academic
career. In the entire journey of completing this research work, the moral support rendered by
some people and guidance provided by the supervisor proved a valuable source for me to
complete the project successfully. I want to thank all those people who encouraged me and
supported me morally and emotionally. Firstly, I want to show my sincere gratitude to my
immediate supervisor who provided me valuable time and guidance. The direction and tips
provided by the supervisor proved a guiding path for me to accomplish all the defined
research activities and task within the defined timeframe and required degree of success.
Furthermore, I want to thank from deep heart to all my friends and relatives who encouraged
my moral and gave emotional support during the research journey to be confidently involved
with this project and attain the desired level of success. My sincere thanks also goes to my
parents who were proved a great inspirational source for me to accomplish the research
project with full dedication and devotion. I also want to thank my almighty God in the end for
bestowing me with great intellects and skills, competence and traits that are required for
accomplishing large academic projects with good standard and in efficient manner.
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Abstract
This research study primarily focuses on the aspects of human resource management which is
directly related to employee benefits and motivation. The research study is primarily focused
on two aspects namely reward system and motivating incentives. The prime objective of the
research study is to determine the employee perception about the two aspects namely
effective reward system and motivating incentives for enhancement of the overall employee
performance. The research setting selected in this research study is Irish Owned Restaurants.
The case study of Comet Restaurant Dublin has been selected in this research study for
exploration purpose. In order to address the selected research problem and key objective of
the research study, the qualitative research method of semi-structured interview and case
study method have been applied in this research study. The semi-structured interview has
been conducted with 5-8 employees of Comet Restaurant Dublin. The data analysis of the
interview data has been governed with the help of thematic analysis method. The thematic
analysis method has presented the key data findings that have presented the employees have
distinct perspectives towards effective reward system and motivating incentives. The findings
have also reflected that all employees in the Irish restaurants seek to have good rewards and
incentives as a part of motivation to be engaged with the job and having high degree of job
commitment. The research concludes that though currently varied range of benefits are given
to the employees, however still the rewards and incentives are not adequate to render required
degree of motivation to the employees. In the end of the research study, a series of
recommendations are provided for the restaurant industry of Ireland as well as for the future
researchers.
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Table of Contents
Acknowledgment ……………………………………………………………………………………………………………… 3
Abstract
…………………………………………………………………………………………………………………………… 4
Chapter 1: Introduction
………………………………………………………………………………………………………. 8
1.1 Introduction …………………………………………………………………………………………………………….. 8
1.2 Background …………………………………………………………………………………………………………….. 9
1.3 Research Question ………………………………………………………………………………………………….. 10
1.4 Aim and Objectives ………………………………………………………………………………………………… 10
1.5 Research Significance ……………………………………………………………………………………………… 12
1.6 Organisation of Research ……………………………………………………………………………………….. 133
Chapter 2: Literature Review
…………………………………………………………………………………………….. 15
2.1 Introduction …………………………………………………………………………………………………………… 15
2.2 Need of Rewards and Incentives in Organisations ………………………………………………………… 16
2.3 Evaluation of the current status of Irish Restaurant Industry …………………………………………… 18
2.4 Examining the concept of performance-based pay and its implications …………………………….. 20
2.5 Importance of Training and Development …………………………………………………………………… 23
2.6 Role and importance of Non-Monetary Incentives
………………………………………………………… 25
2.7 Relationship of Rewards and Incentives with Enhancing Employee’s Performance ……………. 27
2.8 Summary ………………………………………………………………………………………………………………. 29
Chapter 3: Research Methodology ……………………………………………………………………………………… 31
3.1 Introduction …………………………………………………………………………………………………………… 31
3.2 Research Design …………………………………………………………………………………………………….. 32
3.3 Research Approach …………………………………………………………………………………………………. 33
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3.4 Research Paradigm …………………………………………………………………………………………………. 35
3.5 Data Collection
………………………………………………………………………………………………………. 36
3.5.1 Primary Data Collection Method …………………………………………………………………………. 36
3.5.2 Secondary Data Collection Method ……………………………………………………………………… 38
3.6 Sampling ………………………………………………………………………………………………………………. 39
3.7 Ethical Consideration and Access to Data …………………………………………………………………… 40
3.8 Data Analysis ………………………………………………………………………………………………………… 42
3.9 Limitations of Methodology ………………………………………….……………………………..……………………….43
4.0 Summary ………………………………………………………………………………………………………………. 44
Chapter 4: Data Findings and Analysis ……………………………………………………………………………….. 45
4.1 Introduction …………………………………………………………………………………………………………… 45
4.2 Data Analysis and Discussion …………………………………………………………………………………… 46
4.2.1 Theme 1: Reward System and incentives being used in the Comet Restaurant in Dublin .. 46
4.2.2 Theme 2: Rewards and employee incentives systems impact on the employee motivation
(non-monetary category)
……………………………………………………………………………………………. 49
4.2.3 Theme 3: Rewards and Incentives system Impact in the Performance/Turnover
Enhancement of the Employees ………………………………………………………………………………….. 51
4.2.4 Theme 4: Perception of Employees regarding Incentive Programs and Reward Systems
Implementation in the Irish Restaurant Sector ……………………………………………………………….. 52
4.3 Summary ………………………………………………………………………………………………………………. 54
Chapter 5 Data Discussion
………………………………………………………………………………………………… 56
5.1 Introduction …………………………………………………………………………………………………………… 56
5.2 Discussion of the Key Results and Analysis – Primary and Secondary Data ……………………… 56
5.3 Summary ………………………………………………………………………………………………………………. 61
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Chapter 6 Conclusion and Recommendation ……….………………………………………………62
6.1 Introduction …………….………………………………………………………………..……62
6.2 Conclusions …………………………………………………………………………….…….62
6.3 Future Implication ……….……………………………………………………………………64
6.4 Recommendation …………………….……………………………………………………….65
6.5 Recommendation of future research ………………………….…………………………..….67
Chapter 7 Self Reflection …………………………………………………………………………….69
7.1 Introduction ……………………………………………………………………………………69
7.2 Learning styles ……………………….…………………………………………….…………..69
7.3 Skills Development …………………………………………………………………………….72
7.4 Problem encountered during dissertation………………….………………………..…………74
7.5 My course overview / experience during study to future……………………………..……….74
7.6 Conclusion …………..………………………………………………………………….…..….75
References……………………………………………………………………………………………………………………… 76
Appendix:Interview Questionnaire …………………………………………………………………………………….. 83
Table of Figures
Figure:1 Saunders’s Onion Model {Heerdt, 201} ………………………………………….32
Figure:2 David Kolb proposed Cycle of individual learning {Simply Psychology} ……….71
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Chapter 1: Introduction
1.1 Introduction
In contemporary business climate with increased competitiveness, the owners of
businesses are concerned for enhancing quality and performance while at the same time
cutting the costs. However, the strong economic scenario, meanwhile, has led to tighten the
position of job market. Therefore, if the small business expects effective productivity and
excellent performance from employees, in return, the employees expect to receive more
values and recognition (Shields et al., 2015).
Employee motivation is a crucial phenomenon in order to improve the productivity
level of the workforce. The employee motivation in the organisations can be rendered in
varied manner. The two most crucial management practices for enhancing the motivation and
productivity level of employees are reward system and motivational incentives. The rewards
and incentives are the vital catalysts to foster increased productivity level of the employees.
Employee recognition, as well as reward-related programs, has been considered as crucial
methods that encourage or motivate employees for enhancing their performance and work-
related habits to give significant profits to their businesses. From the prospects of human
resource, reward system for employees is determined as the program through which they are
rewarded for their work performance for further enhancing their motivation to give effective
performances for organisational benefits (Bratton and Gold, 2017).
Moreover, from managerial prospects, the pay incentives are also given to the
employees in regard to improve their productivity, enhance their level of commitment
towards organisational work and for them to attain satisfaction in job. Similarly, in food
industry of Ireland, strategies regarding the facilitation of financial benefits to the employees
for enhancing their motivation are common among the leading restaurants such as Tesco,
Ireland (BITC, 2018). However, there is still need of exploring employees’ perception
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regarding current reward system and incentive schemes of restaurants to identify whether
these schemes are effective in satisfying and motivating them or not. For this purpose, present
study is conducted to explore and evaluate perception of employees in regard to Irish owned
restaurants’ reward and incentive programmes for which the case study of comet restaurant
Dublin is undertaken in the study.
1.2 Background
From a considerable amount of time, employees working in the hospitality
management sector of Ireland are been provided with numerable benefits like paid leaves,
health insurance and specifically defined vacation. However, from the last decade with the
rise in the demand of the workforce in the hospitality sector, the need for recruiting and
selection of talented employees is identified crucial for fulfilling the growing competition.
Benefits are being provided to the employees currently offering their services in the
hospitality sector of Ireland. The workers are provided perks like gourmet meals, on-site dry-
cleaning and free alcohol. In the prominent Irish hotel chains like Diageo, the employees are
offered facilities like availing a three-course lunch without any additional charges. Free gym
and swimming pool facilities are also provided to the employees (Newenham, 2014).
However, it has been identified that these types of perks are not capable of motivating
the employees at a significant level. Therefore, there is a need to involve auxiliary rewards
systems in the hospitality sector. The rewards initiative such as profit sharing is being
practised in Ireland. This practice has benefited about 17% of employees (Eurofund, 2016).
The hospitality sector of Ireland is identified to face an issue regarding the optimum
performance levels of the employees. The employees of Ireland are in an urgent need to have
adequate motivational incentives in order to deliver efficient services to the customers. The
current employee turnover statistics of Ireland reveal that the restaurant and hospitality sector
accounts for about 30 % of the net turnover rate. The turnover rate of the employees in the
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hospitality sector is quite large. Therefore, the research will help in addressing the problem of
a reduced level of employee performance in the Irish hospitality and food sector due to less
effective employee reward system (Eurofund, 2016).
1.3 Research Question
Formulation of an applicable research question is necessary for directing the research
in the required direction and fulfilling the core purpose of the study. Therefore, the question
for this research is outlined as:
“How the employee performance in Irish owned restaurants is enhanced with the application
of reward system and motivational incentives?”
Following questions are defined for this research study:
“Which type of reward systems and incentives are being currently utilised for
motivating the employees in Comet restaurant and enhancing the employee
performance?”
“What is the perception of the employees regarding the implementation of incentive
programs and reward systems in the Irish restaurant sector?”
“What is the motivational impact of the reward system and incentives being currently
employed in the private restaurant sector of Dublin?”
1.4 Aim and Objectives
The research is directed for gaining a thorough analysis of the perception of the
employees on the effective reward system together with the motivating incentives for
enhancing the business performance of the Irish restaurants. The research is specifically
carried out in alignment with the case of reward management system incorporated by the
Comet Restaurant, situated in Dublin, Ireland. The specific objective of the current study is
focused on determining outcomes of rewards as well as incentives on the present work
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performance of the employees currently offering services in the Comet Restaurants,
established in Dublin.
Sub-Objectives:
To identify the presently incorporated reward systems utilised in the private food
industry situated in Dublin
The rationale behind the formulation of this objective is that it helps to identify the
reward system incorporated in the private sector and the problems associated in this
sector.
To critically examine the motivational impact of the rewards and employee incentive
systems that are of non-monetary category within the privatised food domain of
Dublin
The reason behind the formulation of this objective is to determine whether the
rewards are the key driving force behind the performance of employees.
To actualise the employee’s perception regarding the rewards practices incorporated
in the private sector
This objective is outlined for examining the preference of the employees due to
incentives and rewards offerings like training, development and feedback.
To gain an insight into the reward mechanism of the private restaurants in alignment
to the staff for achieving a good turnover and motivation in the workforce
This objective is defined for studying different kinds of employee rewards and
incentives.
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1.5 Research Significance
The research proves highly significant in understanding the performance levels of the
employees who are currently employed in the hospitality segment of Ireland. The research is
highly useful for the management scholars and human resource managers in understanding
the perspectives of employees regarding the reward systems and incentives. The research is
new and unique in terms of its informational capability. The research study is highly fruitful
in presenting the employee’s perspective and their productivity. Information regarding the
employee reward systems and incentives and their motivational impact over the employees is
also identified with the help of the research study. The research is also highly efficient in
describing the current strategies adopted by the Irish hospitality organisations for enhancing
the performance and inductivity levels of the employees.
The research provides information on the perspectives of the employees. Previous
research works such as Armstrong and Taylor (2014); Malik, Butt and Choi (2015) are
focussed for delivering the useful information regarding the employee rewards mechanism
and the motivational incentive system from the perspectives of the Human Resources
Management unit. Different from the above studies, this research is distinct as it highlights
the views of the employees regarding the introduction of the motivational incentives and
reward mechanism. This research provides the business enthusiasts useful details regarding
the establishment of the employee reward programs. The research is also fruitful for the
future business entrepreneurs as it helps them to offer useful information regarding the
attitude of the employees towards an employee incentive program.
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1.6 Organisation of Research
Research work is a lengthy process which requires a definite amount of time for its
successful accomplishment. Research cannot be carried out in a single phase without proper
distribution of the distinct activities in a well-defined time frame. Therefore, there is a need to
accomplish a research work in individual phases. These structured steps are being described
below:
Chapter 1: Introduction
This chapter constitutes the preface of research work. It provides information
regarding the developed aim, objective and applicable questions that seem important in
fulfilling the motive of the research. It also provides the rationale and background behind the
execution of the research.
Chapter 2: Literature Review
Under this chapter, various academic publications and informative content are
critically compared and contrasted. The arguments of the scholars are also critically
compared with each other under this chapter.
Chapter 3: Research Methodology
Within this chapter, multiple crucial methods and approaches are described along with
the rationale for their selection. These methods are data collection, sampling, design,
approach, analysis method and paradigm. All the methodological approaches contribute
towards obtaining relevant data and analyse it in effective and systematic manner to generate
desired results or outcomes for the research. Further, ethical considerations, as well as
research limitations, are also explored within this section.
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Chapter 4: Data Analysis
The data analysis section comprises the analysis and evaluation of data collected from
the primary or secondary method in the research. Further, the analysed findings are discussed
with the support of literature to ensure the authenticity and validity regarding the results.
Chapter 5: Discussion:
This chapter has presented a detailed discussion of the key data findings that are
generated from the previous chapter. The findings are discussed with the consideration of the
literature data findings in order to verify their authenticity and validity.
Chapter 6: Conclusion and Recommendations
The final chapter of the research involves concluding information of overall findings
of the research. Thus, this chapter comprises all the key findings and results generated in the
study to reflect that these results are in line with the objectives of the research. Based on
identified issues regarding the research context in the conclusion, the recommendations are
given to address those issues. Further, there are also some suggestions provided for the future
research works, within this research section.
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Chapter 2: Literature Review
2.1 Introduction
The main aim of this research work is to examine the perception of employees towards
the effective reward system and motivating incentives that enhance employee performance in
Irish owned restaurants. In this relation, this section conducts an in-depth investigation of the
research subject in order to present authentic and relevant information. In a similar context,
the literature helps in accessing the approaches of incentive motivation and the reward
systems for the performance enhancement of the industry. The literature has also been
focused on the Non-monetary rewards and the performance related work that would
contribute to the effective development in the performance of Irish owned restaurants. The
effective integration of Non-monetary incentives also contributes to the overall productivity
and growth of the business. The study has also focused on exploring the varied means of
motivation that will assist in the alignment of incentives and the reward systems to the
individual employees working in the Irish owned restaurants. The reward system that is
adopted within the Irish restaurant industry is considered as the significant factor that helps in
motivating the employees of the industry. The reward system and the enhanced level of
motivation also develop an effective and positive environment within the workplace of the
employees (Hameed and Waheed, 2011). In the formulation and designing of reward strategy
for the employees is mainly focused on the motivation of the employees considering it as the
central point for the effective growth of the organisation.
In the views of Kvaloy, Nieken and Schottner (2015), the various kinds of reward that
are offered to the employees help in the performance enhancement of the employees. As per
the current market strategy, it is essential for the Irish restaurant industry to inculcate a
motivational environment using an effective incentive and reward system. On the contrary,
Hameed and Waheed (2011) has explored that the development of the satisfactory
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performance of the employees leading to be a profitable asset for the growth of the Irish
restaurant industry. Moreover, in regard to developing an effective relationship between the
employee and the organisation it is considered to provide an effective reward system for the
growth of the industry.
2.2 Need of Rewards and Incentives in Organisations
In the business organisations, employees are the core of the business sustainability. In
order to keep the employee productivity and performance up to the mark, the organisations
have to undertake varied kinds of strategies and policies that may motivate the employees to
keep engaged with the work and perform at their best. Among these policies, the provision of
the effective rewards and incentives is the most crucial policy under the human resource
management functional areas of the organisations. The rewards and incentives are the most
lucrative policies for the employees to maintain their performance to a good level (Greene,
2018).
In the views of Greene (2018), the need for incentives and rewards has always been
considered as the most effective external persuading component that is beneficial for
improving the level of motivation among the employees towards the welfare of the
organisation. It mainly provides the efficient and strategic path to the employees, who are
willing to work for the betterment of their organisations. The rewards and performance
incentives are found to trigger motivation among the employees and they influence them to
align their personal goals with the welfare of their organisations. The categorisation of the
incentives is mainly based on the needs of the employees, as well as their capability and
efforts for the organisation. The application of reward systems also improves the skills, as
well as satisfies the desires of the employees. The incentives and reward facility also
contribute to the enhancement of the life skills that enables the employees to overcome with
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the various issues that may arise within their workplace environment and their designated
tasks.
As per the study of Locke and Braver (2008), the organisation with efficient management
facilities provide an effective reward and incentive system that will contribute to the
betterment of the employee’s performance by motivating them via the performance-based
incentives and rewards. The prominent impact of the reward system is the improvement in
the level of employees’ loyalty towards their organisations. The incentive programs that are
developed by the organisations enables the employees to analyse the values of the company
and input that are applied by the employees towards the fulfilment of the needs of the
organisation. The appreciation of the efforts by the employees leads to the formation of an
allegiance to the organisation. The significant rate of incentives and reward which are
provided to the employees are also based on their loyalty with the organisation. The various
incentive programs that are offered to the employees are considered as the motivational factor
that helps the employees to achieve the most beneficial and higher degree of performance
based on their efforts.
According to Haupt (2011), the effective implementation of reward and incentive system
is the major aim of any organisation to achieve the desired goal for the betterment of the
company is accomplished. In this context, the organisation provides the employees a desired
attached bonus or incentive with their assigned target. The major role of the rewards and
incentive is to increase the motivation among the employees to enable them to meet the needs
of the organisation effectively. The successful integration of the reward system and
incentives within an organisation lead to the reduction of company cost for recruitment
purposes, which help the organisation to achieve the goals. The cost required for the
recruitment of the employees is reduced, as the implementation of effective reward system
and incentive plans increase employee retention and loyalty, therefore, decreasing the need
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for hiring new recruits. The incentive plan in an organisation are mainly categorised into two
major types that includes, concrete incentives and moral incentives. The concrete incentives
are considered as the direct system of compensation, which are provided to the employees in
the form of salary and bonuses. In contrast to this, the moral incentives are observed to be the
indirect compensation that is provided to the employees in the form of awards and
certification regarding their performance.
As per the study of Greene (2018), the effective plan for the incentive and reward system
enables the employees of the organisation to recognise their efforts and acknowledge their
performance for effective rewards. The integration of reward system also contributes to the
development of the collaborative work that is performed by the employees of the organisation
in groups to achieve the high rate of performance. The incentives also play a vital role in
boosting the morale of the employees towards their assigned role in the organisation which
helps them to get rewarded for their performance. The primary function of the incentive plans
within an organisation is to keep the employees motivated so that they will work harder for
the betterment of the organisation by giving their level best performance. The reward system
also affects the productivity of the employees with the help of which the employees are
benefited with various incentives and rewards.
2.3 Evaluation of the current status of Irish Restaurant Industry
As per the report of Restaurants Association of Ireland (2018), the Irish restaurant
industry is based on the Restaurants Association of Ireland, which was founded in the year
1970. The Restaurants Association of Ireland is officially recognised by the agency of
government that mainly serves for the local, as well as the national restaurants of Ireland. The
major function that is associated with the Restaurant Association of Ireland is to promote the
motivation level of the employees for the effective growth of the food industry in Ireland.
The Irish restaurant industry has employs 72000 employees and low-management workers in
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the food industry of Ireland and also contributes €4 billion to the economy of Irish every
year.
As per the report presented by Statista (2018), the growth in the food and restaurant
industry of Ireland can be seen as per the revenue growth of the Irish food market. The total
revenue of the Irish food market is observed to be $7,603 million in the year 2018. Moreover,
the Irish food market is expected to have an effective growth of 1.8% annually. The major
segment of the Irish food industry is the high amount of consumption of milk products
contributing to the market volume of $1,419 million in the year 2018. The Irish restaurant
industry has also experienced growth due to the increasing population of Ireland that was
recorded approximately around 4.83 million in the year 2017. The increase in the population
leads to increase in the consumption of food products contributing to the growth of the Irish
restaurant industry.
According to the report of Restaurants Association of Ireland (2018), the Irish restaurant
industry has been observed to be a developing sector of the Irish market as per the effective
population of the country. In regard to this, the restaurant industry of Irish has also
contributed to the development of the people by creative and efficient employment
opportunities for the Irish community and society. The Irish restaurant industry has been
growing in the Irish market with the effective retention of the VAT at 9%, which was earlier
found to be 13%. As per the retention in the VAT, there has been an increase in the
employment for the food services sector. The Irish restaurant industry offers casual, as well
as fast food dining services in the Irish market, which has significantly contributed to the net
worth value of €7.8 billion. As per the news reports, the Irish restaurant market is effectively
growing at a rate of 4.9%. As per the data report of Board Bia’s food service, the Irish
restaurant industry is expected to reach at a net value of €9 billion by the year 2020.
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As per the report of Restaurants Association of Ireland (2018), the Irish restaurant
industry is mainly governed by the Food Safety Authority of Ireland (FSAI). The primary
aim of the FSAI is to provide effective assistance regarding the food business of Ireland,
which contributes to achieving the efficient hygiene standards of the food and restaurant
services. The Hazard Analysis and Critical Control Points (HACCP) and the food safety
training are provided by the Cater Care Ltd in the Irish restaurant industry. The Food Safety
Net Ireland has been established in the Irish restaurant industry that assists the restaurants to
operate in a safe and healthy environment.
2.4 Examining the concept of performance-based pay and its implications
In the views of Gupta and Shaw (2014), the performance-based pay systems mainly
focus on providing effective compensation, which is based on the performance of the
employees that may be either individual performance or group performance. The
performance-based pay has been considered as an effective way to encourage motivation
within the employees of the industry. The efficient integration of performance-based
compensation provides the employees with the financial rewards that are linked to the
evaluation of their performance in their designated work. The performance-based pay is
found to be a widespread phenomenon within the organisations, which are provided to the
employees in the various forms such as bonus and incentives. On the contrary, Larkin, Pierce
and Gino (2012), the amount of performance pays that are given to the employees are based
on the productivity level of the employees and their capabilities, as well as their efficiency in
teamwork. Moreover, the performance pay is also determined by the rating done by the other
management officials of the company. The various ratings that are examined by the
department of the company are then used to calculate the performance pay value, which will
be given to the employees. The performance bonus is awarded to the exceptional performer
of the company, who displays excellent dedication and goodwill in his work and focus his
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activities towards the growth of the company. In regard to this, the performance pay within
the organisation is found to be an effective technique that contributes to the growth of the
company.
According to Shields et al, (2015), the provision for performance pays among the
employees of the organisation is a conceptual technique that uses a compensation method of
gain sharing. The gainsharing is considered as a compensation technique that helps in
distributing the financial rewards of the business among all the desired levels of the company.
The gainsharing focuses on increasing the productivity of the employees by providing them
with the pre-negotiated amount of the financial gains that are earned by the organisation. This
results in the enhancement of motivation level within the employees, as they observe the
benefits that the company have by their efforts.
In the views of Cerasoli, Nicklin and Ford (2014), the performance pay of the
employees is also determined by the skills-based reward that are provided to the employees in
order to improve the motivation level towards the growth of the company. In the skills-based
reward, the employees are rewarded bonuses and incentives based on the skills they have,
which, in turn, have been beneficial for the development of the company. Moreover, the
companies also provide additional training to the employees rather giving appraisals to them.
As per the additional skills gained by the training, the employees are then provided with an
effective amount of performance pay that is based on the skills that are obtained with the
effective training. On the contrary, Gupta and Shaw (2014), the employee can receive an
additional amount of compensation, and along with this the company also gain of the skilled
and productive employees which highly contribute in the effective growth of the company. In
order to foster an effective and motivational work environment, varied types of incentives
and performance-based compensations can be considered by any company to sustain market
growth. The major concern behind the adoption of performance pay method is to raise the
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motivation level of the employees towards their work in the company and sustain their
loyalty towards their respective employer organisation.
As per reports of Small Firms Association (2016), in regard to the performance-based
pay, various implications can be observed contributing in the effective development of a
company. The performance pay system within the working environment of a company helps
the managers to integrate a defined framework for setting their goals with the help of which,
the productivity and performance of an individual employee can be improved. The concept of
performance pay is considered as the most effective way of enhancing the poor performance
of the employees. It also leads to the development of a healthy and effective culture for the
working of the employees. With the involvement of the performance pay within a company,
the management of the company has effective employee engagement and employee
performance, which contributes to the overall development of the company. The performance
pay also helps in the development of hard-working skills among the employees, as the review
system for the performance pay is observed to be precisely aligned with the salary levels of
the employees. Moreover, with the effective implementation of performance pay, the
company will have efficient and increased revenue and the effective working capital.
Furthermore, the management of a company can also utilise the performance pay to attract
the desired job applicants, which, in turn, would effectively lead to the improvement of the
employee retention rate within a company.
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2.5 Importance of Training and Development
In the views of Hameed and Waheed (2011), the role of training and development is
considered as the most effective and efficient component that helps in the growth and
development of a business. The effective training for the employees contributes to expanding
the skills and knowledge regarding the various products and the technology, which helps in
gaining success in the business. In regard to the development of the business, there are
multiple categories of training such as management training, sales training, and the project
management skills that contribute to the effective development of the employees. On the
contrary, Kulkarni (2013), the training provides an efficient opportunity to the employees to
expand their knowledge base leading to the development of the business associated within a
company. Training is considered as an essential element for the personal, as well as,
professional growth of the employees. For the effective development of the business-oriented
company, adequate corporate training is provided to the employees that help in the
competitive advantage for the company. The corporate training that is provided to the
employees helps them to frame their career prospects and also have an impact on the growth
of the business.
According to Storey (2014), the corporate training significantly helps in boosting the
skills of the employees for the effective growth of the business. The corporate training is also
responsible for examining the weaknesses among the employees using the well-designed
training program, which helps in addressing the solutions to overcome the shortcomings of
the employees. The effective corporate training also leads to the improvement of employees’
satisfaction by ensuring their adequate training, which would help them understand company
values and vision, and thus, would lead to overall organisational growth. In order to reduce
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the attrition rates of the employees, a well-planned training helps in maintaining the stability
of the employees within the organisation.
According to the views of Khan (2011), the training and development programs that
are provided to the employees of a company also contribute to the improvement of
performance of the employees within a company. The training provided to the employees
help them have a greater understanding of the responsibilities that are beneficial for the job
role in the company, and it also helps in developing the efficient level of confidence within
the employees for performing in the best way possible for the growth of the business. This
will contribute to the overall development of the employees leading to several benefits for the
company by developing a valid standard for the company that will lead to intense competition
in the business market. On the contrary, Cardy and Leonard (2014), the training for the
employees of the company helps in maintaining the desired consistency of the background
knowledge and experiences that are required for achieving success in the business. The
ongoing training and development of varied skills lead to the growth of creativity using the
new ideas and techniques that are obtained with the help of effective training programs for
the employees.
As per the study of Cardy and Leonard (2014), the requirement of training and
development programs for the employees can be observed for the varied reasons that affect
the growth of the business associated with a company. The primary reason for the training is
the indication of the performance appraisal regarding the improvement in the performance.
The training is also required for the overall development of the company. Moreover, the
training is also necessary for testing the operations of the new and upgraded performance
management system. The primary concern regarding the training of the employees is to
enhance the skills regarding the new technologies that will contribute to the active growth of
the company.
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According to Gruman and Saks (2011), the significant focus of the employees training
is on the communication as with the increasing workforce diversity; there is a wide variety of
different customs and languages that are required to be known for the growth of the business.
Moreover, the training for the employees is also focused on the improvement of quality
initiatives such as total quality management, benchmarking and quality circles that require
basic training for the execution. The integration of the effective training program for the
employees of a business company leads to various benefits which mainly include the growth
of job satisfaction and the morale of the employees, increasing the efficiencies in the process
of financial gain, leading to varied innovative products and strategies for the economic as
well as the overall development of the business.
2.6 Role and importance of Non-Monetary Incentives
In the views of Fisher (2015), the various organisations use bonuses, promotions and
other monetary incentives for the motivation growth within the employees, but this strategy is
not considered an effective way for the development of the business associated within a
company. On the contrary, Walsh (2011), the non-monetary incentives are found to highly
influence the motivation level of the employees which results in the betterment of the
company. The non-monetary incentives are considered as compensation that is given to the
employees of a company in varied forms rather than cash.
According to Walsh (2011), the non-monetary incentives are mainly called non-cash benefits
that are provided to the employees for enhancing their motivation level towards their
professional career. In regard to this, the non-monetary incentives are primarily classified as
three separate categories which include psychological benefits, medical benefits and the
lifestyle benefits. The psychological benefits focus on the mental health of the employees
which help in raising the motivation for their work in a company. On the contrary, Abdullah
and Wan, (2013), the psychological benefits to the employees mainly consist of employee
