CHAPTER - 6

EMPLOYEE REWARD SYSTEM

 CHAPTER - VI

EMPLOYEE REWARD SYSTEM

INTROPUCTION ;

Ultlioately, all HRD px^grammes az*e efforts to change

employee behavior. Rewarding the employees performance and

behavior is an important part of HRD, especially in this

difficult time. The start-up of an organisation is an existing

and crucial period characterised by a flurry of activity and

intense pressure to be productive. The future time period and

nurture of organisations are also shaped by the events of this

period. Some of the first decisions in any organisation must make

concern to its reward system. Employees expect to be paid from

the very first day of work and from the first day, they are

concerned about promotion, advancement, fringe benefits, and

perquisites.

Appropriate rewards not only recognise and motivate

employees, they also comDunicate the organisation's values to the

employees. In HRD systems, innovations and use of capabilities

are rewarded in order to encourage the acquisition and

application of positive attitudes and skills; Rao, (1991).

The main ob;)ective of any HRD system and any organisation is

to improve the organisational performance increasing shareholder

value, achieving comi>etitive advantage, adding value, improving

the rate of return on investment or whatever. All that mean doing

better than your competitors or delivering a good service or

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goods by making more effective use of your resources. As some

executives said “Money is easy to get, good people ai*e not“.

Improving organisational Performance is about Improving the

quality and performance of its people.

Organisations must reward employees because in turn they are

looking for certain kind of behavior, they need competent

individuals who agree to work with a high level of performance

and loyalty. Individual employees. In exchange for their

commitment, expect certain extrinsic rewards in the form of

promotions, salary, fringe benefits, perquisites, bonuses, or

stock options. Individual also seek intrinsic rewards such as

feelings of competence, achievements, resi>onsibllitie8,

significance. Influence, personal growth, and meaningful

contribution.
DEFINITION OF REWARD :

Rewarding an employee means giving him something more than

what is usually given to him or other employees at the same

level. If he Is reward with something as a mark of recognition

for something he has done, then it is motivating to the employee.

Rewards and Incentive t

The system provides for both rewards and incentives and it

can be distinguished. Armstrong (1993) makes a distinction

between them as follows :

* Rewards : Recognise past achievements and provide

remuneration and other financial and non-flnanclal benefits
in accordance with individual and team contributions and
competences.

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* Incentives : Encourage and energize people to do iDore and to
do better in the future by offering the opportunity to earn
financial and non-financial rewards.

Rewards and incentives are mutually supportive. Rewards

provide incentives by creating the desire for higher levels of

remuneration and other benefits, or at least more of the same.

Incentives hold out the promise of future rewards Mamoria (1995)

using the two words Interchangeably, and he has discussed that

“Incentive'' or "reward" can be anything that attracts employees

attention and stimulate them to work.

Definition of r ewards for this study as follows :

"Rewards Is the benefits that arise from performing a task,

rendering a service or discharge a responsibility in the form of

financial and nonfinancial benefits, and it is designed to obtain

and keep the type of people the organisationneeds and to

encourage behavior which will contribute directly to the

achievement of organisational goals or services."

The previous definition depends on the argument that

employees desired, that their efforts should be recognised, and

that means the organisation is taking note of Its employees.

Organisation is rewarding employees to reinforce desirable

behavior «^lch contributes to the execution of organisation

goals.

Aims and Objectives of Rewards System t

The objectives of a reward system as discussed by Fisher,

(1996), Armstrong (1993), and Duncan (1992) can be summarised as

follows :

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1. To motivate employees of the organisation to achieve high
levels of quality performance to maintain regular
attendance.
2. To show the employee his importance and his performance is
recognised and rewarded.
3. To attract competent persons from outside and retain skilled
and high quality person.
4. lasprove organisational effectiveness by supporting the
attainment of the organisation's mission and strategies and
helping to achieve sustainable competitive advantage.
5. Creating healthy competition climate among employees for the
development of both parties.
6. Increase coDmitiDent- ensure that members of the organisation
develop strong beliefs in the organisation and identify its
mission, strategies and values.
7. Support and change culture-underpin and, as necessary, help
to provide levers for changing the organisation's culture as
expressed through its norms and value for performance,
innovations-risk-taking, quality, flexibility and team
working.
8. Support manager-support individual manager and provide them
with the authority and skill needed to use rewards to
achieve their goals.
9. Empower Individuals and teams-use the reward system to raise
performance and quality through empowered people i^o have
the scope and skills needed to succeed and ara rewarded
accordingly. Reward process help to upgrade competence and
encourage personal development, and also help to achieve
continuous ijnprovement in levels of quality and customer
service by supporting such process as TQM.
10. Achieve integration- Integration is part of the management
process. Rewards consider as a key component or playing a
key role in a mutually reinforcing range of human resources
management and development processes.
11. Develop team working- improve co-operation and effective
team-working at all levels.

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12. Prompt fairness and equity- Rewarding people fairly and
consistantly according to their contribution and value to
the organisation.
13. Support new developments - help in the introduction and
effective use of new management techniques such as
computers, quality circles, TQM etc.
14. To reinforce good desirable behavior, retain values and
productive employees.
15. Give value for money for the organisation.
16- Encourage flexibility - help to achieve the most efficient
use of human resources through ;)ob-based, skill-based and
organisation based flexibility arrangements.

It is usual that the reward strategy is dependent on the

organisation or business strategy and the management style of the

organisation concerned. Some tijne there is a potential problems

accompanied with the design of the ob;)ective of the reward system

for example one potential problem is that these aims conflict or

contradict each other. It has a particular danger if the

responsiblity for the reward or remuneration policy is unclear as

to its specific objective or another potential problems is that

there may well be differences in the expectations of different

groups of the employees from the payment systems.

For avoiding these potential problems, Lawler (1984, p.131}

and Marchington and Wilkinson (1996, p. 303-304) suggest some

considerations when designing the reward system strategy. The

suggest that there are two dimensions to be considered which

includes a structural content dimension and a process dimension.

In relation to struc tural decisions, there are a number of

questions to consider :

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1. Basis for rewards ; Should employees be paid on the basis of
what the dobs they do (Job evaluation) or for what skills or
competencies they have ?
2. Pay for performance ; Should employees be paid on the basis
of seniority or performance ? Some employees prefer that
individual pay should be based on seniority because of the
problems in implementing performance based systems with
motivation to be achieved throu^ other means such as
(Personal gro%rth and recognition). If employees or
management prefer performance then they should decide about
the behaviors to be rewarded and how they should be awarded.
3. Centralised decentralised reward strategy : Organisation
with centralised reward strategy, usually have a corporate T
& D or P & I) Department which develops standardised pay and
wage guidelines and this creates a feeling of internal
equity, fairness and shared value. In decentralised
organisation flexibility allow for local options.
4. Degree of hierarchy : Does the organisation choose to pay
individual on basis of where they are in the hierarchy or a
more egalitarian approach where the climate is more team
based and there are fewer status symbols.
5. Reward mix : What types of rewards will be given to
employees (Benefits, Status symbols etc.) or the
organisation intend to give the choice employees can make-up
there own package ((^feteria approach). The reward package
or forms should reflect the culture or climate that the
employer wishes to create and reinforce.
6. Internal - External pay comparison, managements need to
decide on ^ a t employees should be paid. If they will be
paid on the basis or on the extent to which they value
internal equity. If someone doing similar things, they will
be paid the same even if they may be in different regions or
in different business - or external equity which focuses on
the labour market as the key determinant of what employees
should be paid.

356
7. Market position : The stance of the organisation and the
market position or the organisation effectiveness will
influence the organisation climate. If the manageioent
conaidera the organisation to be an elite and feels it
important to be leading player, there is a likely to be a
different reward system from one on t^ich staff are seen as
less critical to the organisation success.
In rolcLtion to tho process dimonsion of rewards th»r^ or«
two issu&s :

I. Comnunication policy : How far the employer wants to have an

open or closed policy on rewards depends on its philosophy

II. Decision-making practices ; Whether or not the management

will involve employees in system design and administration,
involving employees and their representatives helps
acceptance of any changes since there is a greater sense of
legitimacy bestowed on decisions.

REWARD STRATEGY :

"The ultimate source of value is people”. Reward strategy

should be founded on the previous proposition and that explains

that the reward process should in harmony and respond creatively

to the people's needs as well as those of the organisation. In

the short term the basis of the strategy will be organisation's

requirements for performance. In the longer term is expressed in

its corporate strategy. In the public sector, reward strategy is

driven by the need of the organisation to improve its overall

effectiveness. In the private sector reward strategy should be

business driven responding to the need of the business to

compete, to grow and innovate. It also provides levers for

change-reinforcing and validating the thrust of the business.

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Also the reward strategy should concern with the development of a

right mix and levels of financial and non-financial rewards in

order to support overall effeotlvononn and buninenn

Fisher (1996) stated that the reward strategy will be concerned

with :

1. The demand of the need of the organisation to improve the

overall effectiveness or the business strategy (Private
sector), including cost constraints;
2. Achieving the right balance between reward for Individual,
team and organisational performance ;
3. Meeting the objectives of the attraction and retention of
high quality employees ;
4. How high level of performance and performance improvement
can be motivated and reinforced ;
5. Ensuring the reward policies are iised to convey messages
about the expectations and values of the organisation ;
6. Evolving total reward processes which incorporate the best
mix of financial and non-financial rewards and employee
benefits;
7. Fitting reward processes to the individual needs and
expectations of employees;
6. The development of pay structure which are competitive and
are performance-driven (Fisher, 1996. pp. 41-42).

REWARDS P O L IC IE S :

Rewards strategy Indicate broadly where you are going;

rewards policies tells you how you are going to get there.
Rewards policies will be influenced by the organisation's rewards

philosophy. It provides the main frame for the implementation of

reward strategies and the design and management of rewards

system.

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 According to Armstronfi (1993) the factors with which the

rew€Lrds policies need to be concerned as follows :

(i) Level of rewards

(11) Market rates and equity
(ill) Relating rewards to business performance.
(iv) Differential rewards;
(v) Flexibility;
(vl) Involving employees
(vll) Communicating to employees.

M O T IV A T IN G THROUGH REWARDS *

Reward policies and practices are largely fo^lnded on the

assumptions about the factors affecting the motivation of people

to Join and stay with the organisation, and to work hard and

effectively while they are there, Armstrong (1993).

Motivation is about what causes people to act or behave in

certain ways. To motive people is to ensure that they move in the

direction one wants them to go. Everyone has their own needs and

wants. The aim of motivation is to bring those In the line with

the needs of the management and the organisation''s requirements.

Integration of the employees needs, theorganisation

requii^ements and managers in the organisation should be the aim

of the rewards system (integration). Because the principle of

Integration means satisfying their own needs, employees will also

satisfy the needs of the organisation.

The recent literature on work motivation has established

that Individuals tend t o be have I n w a ys that they p e rc e iv e w ill

lead to valued rewards. This means that individual's expectations

o f how rewards such as pay and promotion can be obtained have a

359
crucial impact on their motivation. It is important to note that

it is the perceived means of obtaining rewards that leads to

positive behavior. Lawler and Olsen, (1977).

M O T IV A T IO N AND PERFORM ANCE s

Motivation is important for performance. It goes without

saying that if people do not feel inclined to engage themselves

in a work behavior, they will not put In the necessary effort to

perform well. Motivation by itself does not result in effective

performance unless employees have the necessary competencies or

skills and the right abilities and qualification to do the work

and perceive his or her role accurately. In addition to that, the

employees should know ^ a t is expected from them, what their goal

accomplishment should be, and the manager should provide the

right climate and environment provide the necessaz*y reso\irces and

the adequate support in the form of encouragement, offering

guidance whenever it is necessary. The employees will develop a

sense of competence so that both intrinsic and extrinsic

motivation and rewards should be developed and the employee do

the Job well.

For a sustained motivation and performance, of course,

valiant rewards should be given and the rewards have to be

perceived as equitable and fair.

It is possible to draw a diagram of intricate motivation-

performance relationship among various factors as in figure (6.1)

Figure (6.1) Motivation-Performance Relationship Contingencies

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 Tb« MutKaiioD'Performance RdaUonship Condn^nctes

Sources, Daftuar, C.N. "Organisational Behavior'

ISTD publication. New Delhi, pp. 30

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 From the d l a ^ a m above it can be noticed that the two headed

arrow between iDotivatlon and sense of competence indicates that

both variables mutually Influence each other. More motivation

will lead that person to interact with the work climate and

enhance his or her sense of competence through successful

experiences. This will in turn make the person desirous of engage
in work behavior even more.
PERFORMANCE AND REWARDS S

Rewarding performance is a very Important issue in the

organisational life. Most managers, especially in the public or

service organisations do not pay attention to this aspect of

management because of their preoccupation with aspects of their

organisation. Productivity in service and manufacturing

organisations and depends to a great degree on the effort put in

by ^nployees. If the employees know that their efforts will be

recognised by their bosses and that they will be rewarded for

their effort, they are likely to put more effort to finish the

work.

The ^ilosophy behind the performance rewarding as some

researchers have indicated is that the need for some recognition

is very important in order to direct employees behavior. As

mentioned that every employee feels that his effort should be

recognised and he should be treated as an important being in the

organisation. If the existance of the employee start to

disappear, then he will try to aways attract attention of his

superiors to his existance. Thus performance rewarding is a way
of communicating employees that every individual is considered as
an important and his performance is recognised; Rao (1992).

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 Identifying the factors effecting employee behavior is not

as easy as it might appear, because the factors effecting

behavior az^ very numerous, complex and difficult to ascertain.

Understanding these behaviors and its causes are crucial for any

HRD programs to be effective.

Motivation theories are used as the foundation for many

organisational rewards systems. They can also help to explain i^iy

reward systems sometiiDes fail. As expectancy theory and

reinforcement theory suggest, employees tend to do t^at they are

rewarded for. If management does not carefully design and

implement the reward system, then it intentionally reinforced

undesirable behavior In employees. The success of HRD programmes

and processes depend in part on whether individuals are motivated

to . participate, learn and use ^at is learned to improve

performance. The reason for a person choose to attend a training

progranme, then fails to use the skills learned In training back

on the Job nay be routed in motivation.

Motivation and financial. Non- /inancial r9warc£^ ;

Motivation is one of the basic elements of human behavior.

Motivational theories attempts to explain how effort is generated

and channeled.
Mitchell (1984 p. 81) synthesized many definitions of iDork
mxDtixfation as "the psychological processes that cause the

arousal, direction, and persistence of voluntary action that are

goal directed’*.

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 Motivation is about what causes people to act or behave In

certain ways. As Jones (1955) words that motivation deals with

"how behavior gets started is energised, is sustained, is

directed, is stopped and what sort of subjective reaction is

present in the organisation while all this is going on".

Types of nuotivation :

Motivation at work can take two types: First, employees can

motivate themselves carrying out, finding and seeking work which

satisfied their needs or at least they expect that their goals

will be achieved. Second, employee can be motivated by others

such as management, by pay, proiDotlon, recognition, praise, etc.

There are two Types of Motivation as follows :

1. Intrinsic motivation : It is a self-product factor created
inside the employee (self generated) i^lch effects the
employee to behave in certain ways or to move in a
particular direction such as feelings of competence,
achievements, responsibility feeling the work is Important
and having control over one'^s own resources, freedom to act,
scope to use and develop skills and abilities, personal
growth, meaningful contributions and interesting and
challenging work.

2. Extrinsic motivation : What is to make people to do

Intentionally and motivate them. This includes rewards in
the form of promotion, salary, pay, and fringe benefits,
punishments, praise, prerequisites.
The Intrinsic motivation lasts longer than Extrinsic

motivation, because it is deep and has long-term effect- They are

inherent in the individual and not imposed from outside.

Extrinsic motivators can have an iimnediate and powerful effects

but this will not necessarily last for long.

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Need T h e o r i e s :

Several popular motivational theories are rooted in the

concept of needs. These theories suggest that the desired outcome

of behavior In Individuals Is the satisfaction of Innate needSo

Haslow's need fxierarchy (1954) is the best-known formulation of

this theory.

Maslow believed that all individuals have a set of hierarchy

of needs which they want to be satisfied. Maslow pointed out that

most individuals pursue with varying intensities following needs

1. Psychological Needs : starting point needs such as hunger,

thirst, sleep, sex.
2. Safety Needs : Freedom from threat, security order,
predlctabil1ty.
3. Love Needs : For relationships, affections, sense of
belonging.
4. Esteem Needs : For competence, achievement. Independence
confidence and there is a reflection in the perception of
others ; recognition, appreciation, status, respect.
5. Self Actualisatlon Needs : For fulfillment of personal
potential : The desire to become more and more what one is
to become; everything that one Is capable of becoming.

Attempt has been made to relate Maslow" s theory to

employees" requirements in the work place. Psychological and

safety needs are innate or natural needs. Others are acquired

needs. Psychological needs and all lower level needs are

concerned with pay or salaries and other frings benefits i^ich

satisfy the primary level such as foods, shelter and clothing as

well as safety and security needs, (linked to such matters as Job

security, sick pay and pension schemes, sufficient rest periods,

protection from unfair actions and physical safety).

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 Social needs are associated with a sense of belonging,

friendly and helpful colleagues and superiors. Self-esteemed

needs may be met by recoglnlton and praise from supervisors and

managers plus the prospects of transfer and promotion.

Self-actuallsatlon needs can be satisfied by providing,

fulfilling, interesting Jobs, where abilities are used

extensively, Maitland (1995). But under theory *'X" management

style satisfaction of self-esteem and actualisatlon received no

or little attention and the dob content as well as work

environment rarely recognized psychological needs of the

employees. This leads to general frustration of employees, Sharma

(1990)=

Goals associated with esteem needs such as status,

recognition are achieved by extrinsicrewards. But goals

associated with other egoistic needs such as achievement of

knowledge and skill or autonomy, of self-respect, are achieved by

intrinsic rewards, ^ployee's goals associated with his physical

safety and social needs are largely achieved by means of

extrinsic rewards that are controlled by other such as

management. One of the applications of the Maslow theory of needs

to reward Is that for those on low wages, and consequently

operating at the lower end of the hierarchy, money may loom more

Important than for those earning considerably more; those people

have satisfied their basic needs and may be move on to

higher-level needs, althoiigh the controversy over the executive

rewards.

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 Another widely discussed need base theory is Herzbergs

Two-factor tf^^ory (1966). He claimed that there are two Important

groups of factors or two basic needs relevant to motivating staff

as listed in figure (6,2).

Figure (6.2) Herzberg Two-Factor theory

HYGIENE FACTOHS OTIVATOR

(SURVIVAL) (PERSONAL GROWTH)

* Working condition * Work itself

♦ Pay * Responsibility
* Job security * Sense of achievement
* Work relationships * Recognition
* Supervisory and management practices ♦ Prospects of advancement
* Organisation policies and
administrations

One is concerning with survival and other concerning

focusing on personal growth- He argued that factors in the work--

place that satisfy survival needs, or hygi&n& factors, can not by

themselves provide Job satisfaction. They only prevent dis­

satisfaction. For eg. a safe and healthy work place will not in

itself encoiirage employees to work harder €md better but satisfy

them enough so that other factors can motivate them. If working

conditions are unpleasent to them, employees will be demotivated

and the other elements will simply not work. Alternatively,

nuDtivator factors which satisfy personal growth needs can create

feelings of ;}ob satisfaction, but their absence will not lead to

dis-satIsfaction.

367
 Herzberg claimed that If hygiene factors are all in place

satisfactory, five key factors are then able to motivate staff:

challenging and interesting work;

- responsibility for tasks and duties carried out;
a sense of having achieved something worthwhile;
- recognition of completed work, effort and performance;

the possibility of personal developments, transfer and

promotion-

Following the Two-factor theory, workers can be motivated by

ensuring that the hygiene factors are present thereby preventing

dissatisfaction and then adding motivator factors to create

job~satisfaction. This strategy refers to as dob—enrichment,

[Harris and DeSimon (1994).

* Also, Herzberg believed that the Job itself is the main

motivator in the work environment, and that all other possible

influences are of no more than secondary importance. He

encouraged managers to study the ;Job Itself (the type of work

done, the nature of tasks, levels of responsibility) rather than

conditions of work. Dissatisfaction arises from environment

factors, satisfaction can only arise from the Job.

If there is sufficient challenge, scope and interest in the

Job, there will be a lasting increase in satisfaction and the

employee will work well. Performance will be above 'normal' at

all-levels. The extent to which a Job must be challenging or

creative to a motivator-seeker will depend on each individual,

his ability, his expectations and his tolerance for delayed

success.

368
 The theory of Maslow and Herezberg have been criticized for

Inadequate research (Mitchel and Moudglll :1976),but they have

been very influential, and HRD programa baaed on need-base

theories, such as Job-enrlchment and achievement motivation

trainlxifi, have been used in organisations with some success,

Harris and De Simon, (1994).

The Implication of this theory is similar to the Implication

of Maslow**6 work, in that pay is only significant as a "Hygiene**

factors, and that an appropriate level needs to be found i^ich

meets employees expectations. It also has implications in

relation to the need to restructure or enrich Jobs to provide

satisfying work, as "true** motivation is seen to drive from

factors associated with the dob Itself and opportunity for

achievement, involvement and recognition. [Marchington and

Wilkinson (1996)].

Cognitive Theories :

A second group of motivation theory called cognitive

theories and sometimes referred to as process theories because

they attempt to explain the sequence of thou^ts and decisions

that energize, direct andcontrol behavior. These theories

recongnise that conscious thoughts play a role in how one behaves

and argues, that motivation is based on a person's thoughts and

beliefs (cognitions).

Cognitive theories have direct relevance to HRD. Most HRD

programs include attempt to change employee behavior by

influencing their thoughts, beliefs, and attitudes. Learning is

369
seen as a cognitive process, and learning lies in the heart of

HRD.

EXPECTANCY THEORY : tVroom , 1964, 3

In 1964, VrooiD American psychologist, worked out a formula

bjr ^ i c h human motivation could actuallsr be assessed and

measured, he based on an expectancy theory of work motivation.

According to this theory, people choose to put their effort

into activities they believe they can perform and that will lead

to desired outcomes. Expectancy theory argues that decisions

about which activities to engage in are based on the conbination

of three sets of beliefs : expectancy, instrumentality and

valence.

Expectancy beliefs represents the ^Judgment of individuals

about whether applying [or increasing] effort to task will result

In its successful accomplishment. In another way, a person with

high expectancy believes that increased efforts will lead to

better performance; while some other with low expectancy does not

believe their efforts - no matter how great will effect their

performance. All other things being equal, people should engage

in tasks about which they have h i ^ expectancy beliefs.

The second beliefs called Instrumentality is a Judgment

about the connection the individual perceives (if any) between

task performance and possible outcomes. Instrumental Judgment is

like asking “If I perform this task successfully. Is it likely to

get me something I want (or something I don't want) ?"

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 The third belief called valence refers to the value the

person places on a particular outcome, and it ranges fz*om

atrongly positive (for highly valued outcomes) throtigh Zero (for

outcomes the person does not care about), to strongly negative

(for out comes the person find aversive)^

Theory pred-ict that employee will choose to put effort into

behaviors they :
Believe they can perform successfully (high expectancy) and
Believe are connected (high instrximentality) to out conies
they want (high valence) or
Believe will prevent (negative Instrumentality) outcomes
they want to avoid (negative valence),

E Q U IT Y THEORY :

This theory suggests that motivation is strongly effected by

the desire to be treated fairly and employee's perception about

whether they have been treated fairly. It is based on three key

assumptions (CJarrell and Dittrich, 1978) :

1 People develop beliefs about what is fair for them to
receive in exchange for the contributions they make to the
organisations.
2 People determine fairness by comparing their relevant
returns and contributions to those of others.
3 People who believe they have been treated unfairly (Called
inequity) will experience tension, and they will be
motivated to find ways to reduce it.
The theory predicts that employees who believe they are
being treated fairly (With equity) will be motivated to continue

the present performance and behavior patterns. On the other hand,

employees who believe they are victims of inequity will search

for ways to reduce their feelings of unfairness.

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 Equity theory has aotoe implication for HRD prograsmea

especially to understand how employees perceive HRD programs and

their response to them. Equity theory will help mb to understand

or determine whether employees will use skills or knowledge they

have learned from HRD programs back at work.

GOAL THECT^Y * CLatham and Lock : C l0703 3 *

Goal theory stated that performance goals play a key role in

motivation. The presence of performance goals can mobilise

efforts, direct the attention, increase their persistence, and

effect the strategy they will use to accomplish a task (Lock,

1968, Lock and Lathem, 1981). Motivation and performance will be

higher when individual goals are set to specifics and achievable,

when goals are difficult, but are accepted and when there is a

feedback on performance, (Armstrong, 1993). According to Lock and

Lathem, goals influence the employee intention and that lead the

person to be committed to goals, this commitment will continue to

direct employee behavior towards the achievement of goals until

it is achieved- Participation in setting goals is very Important

as a way of getting the acceptance of the goals and the

commitment of both parties to achieve the goals, and setting

higher goals. Difficult goals must be agreed upon their

achieveiDent reinforced by guidance and advice. Research also

demonstrates that the presence of feedback enhances effectiveness

of goals setting and vital in maintaining motivation-

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COGNITIVE EVALUATION THEORY : (Deci, 1975; Dec! and Parac, 1978).

This theory explains vrfiy incentives and rewards don't always

increase motivation and performance. According to this theory,

the benefits of reward will depend on the perception of

individual on the rewards. The theory states that rewards has two

aspects, Information and control. When employees perceive a

reward as providing information about their performance, the

reward increases the employees feelings of control over actions

and that will enhance the intrinsic (Internal) motivation which

will ensiire that the performance will continue (Harris and

DeSimon, 1994).

On the other hand, if the employees perceive the rew€ird as

providing to control their behavior then the reward will increase

the en^loyees" feeling that they are being manipulated by rewai^-

givers and that decrease intrinsic motivation; t^ich will lead

the employee to decrease the performance or perform the

particular behavior only when the reward is present. (Cognitive

evaluation theory does have application for HRD, especially in

the area of learning during training programe, and in transfering

it back to the dob.

R E IN F O R C E M E N T THEORY : C N o n - c o g n itiv e theory?.

Reinforcement theory rooted in behaviorism (Skinner, 1993,

1974), which attempts to explain behavior without referring to

the internal forces such as needs and thoughts by focusing on

things ^ i c h can be directly observed. Reinforcement theory

argues that behavior is a f\inction of its consequences, (the law

of effect) (Thorndike, 1927), which stated that behavior is

373
followed by pleasurable consequences will occur more frequently

(a process called reinforcement). The opposite, a behavior

followed by undesirable consequences will occur less frequently.

According to the reinforcement theory a manager or someone else

can control an employee's behavior by controlling the

consequences that follow the employee'^s behavior.

Reinforcement theory had an Impact on HRD, method of instruction,

progrananed instruction and some approach to computer based

training, draw heavily from their theory. And the training in

structures. Managers can use behavior modification techniques

(positive reinforcement, Negative reinforcement. Extinction and

punishment), to motivate employees to learn.

MONEY AND M O T IV A IO N :

Money is the most intensive and widely used type of

motivation or reward in management history. Generally managements

tend to believe that what the worker wants most is more money.

Views about the relevance of money to the motivation of people at

work can often be very strongly held. Even the strength of belief

varies inversely with the knowledge of the sub;)ect. People

care greatly about money often cannot imagine that it is possible

for another to care very little.

The general theory of motivation described above has a great

attention to the pay was a great role in motivation theory. It is

not mentioned explicilty in any need list, but it may be the

means to an infinite member of specific ends offering the

satisfaction of many of the various needs.

374
 In Maslow's hierarchy of needs and Herzberg's theory of

difference between hygiene and motivating factors, the theories

predict that where lower oz^er needs have been satisfied, at

least to a degree* the higher order ones will emerge.

Furthermore, their emergence is inevitable. We are all of us

motivated. It is an extrinsic satisfaction, something satisfied

from factors outside, and thus related only to the lower order

needs, [Hewitt Associates) (1991)].

According to ArmstTOng and Hurlis, (1994) and Armstrong

(1993) the general theory of motivation has produced the

following explanations of the relationship between money and

motivation. The economic man approach, Herzberg's two factors

model. Instrumental theory. Equity theory and Expectancy theory.

The * E c o n o m ic M an* Approach :

This depends on the reinforcement theory. People are

primarily motivated by economic rewards. If the reward and

punishments are connected to the result they achieve (pay for-

result), the employees will be motivated to work. Pay awards are

contingent upon effective performance. In general it is assumed

that people will adjust their effort if offered money persist, in

payment-by-results schemes, bonuses, profit-sharing and other

cash incentives.
The H erzberg*s tw o facto r m odel i

This theory builts upon the analysis of unusually satisfying

or unusually dissatisfying Job event. Pay or money is one of

Herzberg^a hygiene rather than a motivator factors. It ia taken

for granted, and so is more usually a source of dissatisfaction

375
than satisfaction. Lawler (1984) suggested that in the absence of

information, about how much colleagues are earning. Individuals

guess their earning and usually over-estimate. This then leaves

them dissatisfied because they resent earning lees than they

think their colleagues are getting. Armstrong and Murlis(1994)

gives reasons for regarding salary as a "hygiene factorThat

is, a factor «^ich prevents disease rather than promotes health,

which because its Impact on favourable feeling was largely a

short-term whileits impact on unfavourable feelings was a

long-term extending over a period of several months.

However pay is the most important of the hygiene factors,

according to Herzberg. It is valuable not only for its power to

be converted into a wide range of other satisfactions (the only

way in which organisation can at least indirectly provide for

individual employees needs and wants through a common reward

system) but also as a consistent measure of worth or value,

allowing employees to compare themselves and be compared with

other individuals or occupational groups inside or outside the

organisation.
IN S T R U M E N T A L THEORY :

Money is a powerful source because it all linked directly or

indirectly to the satisfaction of all basic needs. It is a way or

tool for gaining desired outcomes and its effectiveness will

depend on :

The value and needs of the individual.

The degree to which people are confidant that their behavior
will earn the money they want to satisfy the need.

376
 Money provides the means to achieve ends. The instrumental

role of the money has been stressed by Gellarman (1963). He

suggested that "Money in itself has no intrinsic meaning and

acquires significant motivating power only ^en it comes to

symbolise intangible goals. Money acts as a symbol in different

ways for different persons and for the same person at different

times" =
E Q U IT Y THEORY j

This theory argues that the satisfaction with pay depends on

the perceptions of employees about a ratio between the outcomes

in the form of pay or what one receives from the Job to what

inputs in the form of skills or to what one put into it compared

with the ratios obtained by others.

The satisfaction with pay depends on the difference between

the pay people receive and what they feel they must receive

(comparisons).
EXPECTANCY THEORY t

This theory states that motivation will be powerful if the

employee's perception or expectation that their efforts and

contributions will lead to worthwhile rewards. Expectancy theory

as developed by Porter and Lawler (1975) suggests that two

factors will determine the efforts that the employee apply to

their Jobs.

- The value of the rewards If it satisfies their needs

(security, social esteem, atonomy and self actualisation).

The probability that the rewards depend on effort

(relationship between efforts put into Jobs and rewards).

377
Effort by itself is not enough. It has to be effective effort, if

it is produce the desired performance = Efforts and other

additional variables are necessary for the achievement of the

goal or task such as ;

— Ability individual traits such as intelligence, manual

skills and so on.
Role perceptions i^at the individual wants to do or think he
or she is required to do„ (Az*mstrong 1993).

The theory explains why extrinsic motivation such as

(incentive or bonus scheme) works only if the link between

efforts and rewards is clear and the value of the rewards is

worth the efforts. It also explains vrtiy intrinsic motivations can

sometime be more powerful than extrinsic because the outcomes of

Intrinsic motivations are more under the control of the

employees. Thus the greater the value of the rewards, and higher

the probability that of receiving each of these rewards depends

on the effort, the greater the effort that will be put forth in a

given situation. In conclusion nxsney is important to people

because it helps in satisfying a number of employee's most

pressing needs. Experience over the last fifty years with various

forms of financial or pay system has shown that money does not,

on its own, motivate higher level of performance. It appears that

meeting Maslow's "higher" level needs is more likely to engender

improved performance. Money or pays can satisfy "lower" level

needs; pay is a key of attracting and retaining employees. Pay

provides a major part of personal value and worth, pay also

delivers messages on what the organisation believes to be

important.

378
M O T IV A T IO N AND N O N - F IN A N C IA L REWARDS :

According to Armstrong (1993 and 1994), Non-fInaneial

rewards can bo forced on the needs most people have. Although for
different reasons, for achievement recognition, responsibility.
Influence and personal growth.
1 A c h ie v e m e n t :

McClelland's theory of motivation suggests that the presence

of three innate needs which are of primary importance : (1) the

need for achievement, (2) the need for affiliation, and (3) the

need for competitive success measured against a personal standard

of excellence (Hume, 1995). Achievement can be increased by

organisations through processes such as Job design performance

management and skill or competency-based pay schemes. McClelland

applied his theory to the field of management and suggests that a

high need of achieventent is Important for junior and middle Job

manageiDent while senior Jobs management require a high need of

power. He also found positive relationship between achievement

motivation and economic development of a given society, Sharma

(1996).
2* Recognition :

Recognition is one of the most powerful motivators.

Employees' work need to be valued by employers and hence

recognised by them. According to Crosby(1980), people really

don't work for money. They go to work for it, but once the salary

has been established, their concern is appreciation. Recognise

their contribution publicly and noisily, but don't demean them by

applying a price tag to everything.' He argues that it is much

379
more important to recognise achievement through symbolic awards

and prizes. Kohn (1993) argues that research shows that tangible

rewards as well as praise, can actually lower the levels of

performance, particularly in Jobs requiring creativity, interest

in the task (the sense that it is worth doing for its own sake)

tends to decline when the individual concerned is given an

external reason for doing it.

Recognition needs are linked to the higher level of Maslow's

hierarchy of needs. They are defined by Maslow as the self-esteem

need (the need to have stable, firmly based, highly evaluation of

oneself and to have the respect of others i.e. prestige).

According to Armstrong (1993), Recognition needs are

classified into two subsidiary sets :

(a) the desire for achievement, for adequacy, for confidence in

the face of the world, and for independence and freedom,
and,

(b) the desire for reputation or status define as respect or

esteem from other people and manifested by recognition,
attention,importance or appreciation. Praise one way of
recognition, but it is not the only way, but It should be
given Judiciously and it must be related to real
achievement.

The recognition processes in an organisation can be

integrated with financial rewards through performance
management and pay-for-performance schemes, CArmstrong,
1993]. The importance of recognition can be defined as a key
part of the value set of the organisation and this would be
reinforced by education, training and performance appraisal.

380
3. R e sp o n sib ility :

^ "P e o p le hxxve a d i f f e r e n t sense of and need fo r fr e e d o m . To

s o m e / r ^ e d o m \^ith r e s p o T u g ib i I i ty is scaury**.

* * L i b e r t y m ea n s r e s p o n s i b i l i t y That is w h y m en d r e a d it*\

George Bernard Shaw.

People like the idea of freedom, but for nany the burden of

responsibility is too great so they are prepared to sacrifice

their freedom to avoid responsibility. People can be motivated by

being given responsibility for their own work. It is related to

the fundamental concept that individuals are motivated when they

are provided with the means to achieve their goals. It is also

related the ideas of v^at empowerment is about.

To be intrinsically motivated, there are many

characteristics required in Jobs [Armstrong and Murlies, 19941.

First, Employees should receive a feedback about their

performance especially if the employee evaluating their own

performance and defining the feedback they require. Second, the

Job must be perceived by individual as requiring them to use

abilities they value in order to perform the Job effectively.

Third, individuals must feel that they have a high degree of

self-control over setting their own goals and over defining the
paths to their goals. The philosophy behind responsibility was

expressed by Me Gregor's theory (Y) : The average human being

learns, under proper conditions, not only to accept but also to

seek responsibility", [Bentily, 1996]. Through Job design and the

381
use of performance management process we can provide motivation

through responsibility. Also to get the achievement drive through

the training program, (Sharma 1990)

4. Influence :

The drive to exert Influence or to exercise power is one of

ways of motivating people. McClelland described the most

important need and a long side is the need for achievement; there

is the need for power, described as the need to control and

influence others. Men with strong need of power or influence will

usually attempt to influence others directly by making

suggestions, by giving them opinions and evaluations and by

trying to take others into things. The level or intensity of the

needs varies between each person. Some people can therefore have

a high level of need of achievement and low levels of need of

affiliation and need of power. McClelland in his application of

the theory on management, stiggests that senior management Jobs

require a high need of power and average in achievement. CHume,

(1995), and Sharma, (1990)]. The organisation, through its

policies for involvement, can provide motivation by putting

people into situations where their views can be listened to and

acted upon, Armstrong (1993).

5. Personal grow th :

In Maslow's (1954) hierarchy of needs, self-actualisation is

the highest need of all and therefore the ultimate motivator.

Self-fulfillment can be described as the need to fulfill one's

potential. It is not concerned with the views of others but is

only concerned with the satisfying oneself that one is doing the

382
beet he can, reaching what they believe to be their full

potential. Maslow defines self-actualisation as " the desire to

become more and more what one is, to become everything that one
is idiosynoratically capable of becoming". [Hume (1995)].

Alderfer (1972) emphasises the growth need as one of the three

important needs (ERG) existance, relatendness and growth). He

believed that growth needs imply people to make creative or

productive efforts for themselves- Satisfaction with growth needs

depends on a person finding the opportunities to be what he is

most fully and to become yAi&t he can. Ambitiousand determined

people will seek and find these opportunities for themselves.

Although the organisation needs to clarify the scope for growth

and development that it can provide because individual will go

away and grow elsewhere.

Many people are now considering access to training, to the

avalability of learning opportunities as part of the total reward

backage. Ambitions drive employees and they begin to recognise

the important of continually upgrading their skills and of

progressively developing their career. The selection of

individuals for high - prestige training programs and courses and

the emphasis placed by the organisation on the acquisition of new

skills as well as the enchancement of existing ones, can all act

as powerful motivators.
In conclusion, non financial rewards are powerful and they

will be more effective and more powerful if they are mixed with

financial rewards in an integrated total reward system. The

effective of non-financial rewards or the need vary from person

383
to person and their effectiveness will depend on psychological

make- up, background, experience, occupation and position in the

organisation.

PERFORMANCE AND REWARDS :

In m o d e m organisations. While employees or individuals are

one of the most Important assets, it is often one of the major

operating costs. Therefore, it is essential that in return for

expenditure on sal£U?ies, wages and other remunerative benefits,

employers are assured a high level of performance from their

employees. In other words, to be able to run an efficient and

productive org6miisation, entployers must receive value for money

from their employees.

In the rest of this chapter the focus will be on the

contribution of employees to the overall performance of

organisation. It will examined how employers attempt to improve

employee performance through rewards policies In particular, by

forming a correlation between such performance and subsequent

remuneration. The underlying assumption is that if employees

performance improves as a result of reward (remunerative

Incentives) this in t\irn will improve the performance of the

organisation.

E M P L O Y E E P E R F O R M A N C E A N D R E W A R D C REMUNERAT2 ONS> :

The principle of rewarding employees for their service for

their employers is not new. The past twenty yearB have been

dominated by an increasing trend in the development and use of

systems of performance related remuneration, the primary aim is

384
this performance related reward remuneration is to improve the

organisation by improving the performance of employees. It is

also based on the assizmption that the motivation of employees

will be increased and the performance will be improved by the

attraction and receipt of financial and non financial incentives

Hume, (1995)»

Performance rewarding, according to T.V. Rao (1992), "is a

very controversial issue in organisations. Many chief executives

do not pay attention to this aspect of management partly, because

their limited time in their busy schedule of personal benefits or

political achievement or in some profit maximisation'*. People

would like to put effort on their work if they feel that their

effort will be recognised and rewarded. In service organisations

and manufacturing, productivity depends on to great degree by

v^at the employees put in.

P H IL O S O P H Y B E H IN D PERFORMANCE R E G A R D IN G :

Performance rewarding is a way of conDunlcating with

employees that every individual employee is considered important

and his performance is recognised.

Several writers and researchers indicate that the need for

recognition is a very important need directs employees behavior

and every employee has the desire that his effort should be

appreciated. He should be treated as an important figure or as an

important person for his work or for the effectiveness of the

task or job. If the existance of the employee is not taken note

o£, after a while he may resort to mechanians of drawing

attention of his superior and the top management to his

385
existence. Another purpose served by reward is to reinforce

desirable behaviors shown by employees so that they continue to

contribute to the organisation by exhibiting such behaviors. Also

Rao(1992) indicated that "rewarding also serves the purpose of

creating a healthy competition among employees by encouraging

less hard working ones to compete with more hard working ones.

Thus it is one of the ways of keeping an organisation alive and

dynamic.'*

THE REWARD ARGUMENT :

All performance bring reward in some kind or another, fz^m a

deep feeling of self-satisfaction to the rapturous applaiise of an

appreciative audience. Performance is often rewarded with

payment, and often it is not. The attentive loother nurturing her

child does not receive, nor seek, financial reward. The father

playing with his young children is more than adequately rewarded

with their loving smiles and gurgles of pleasure. The many

volunteers working with charities and helping community pro;)ects

find reward in being valued and in their own sense of worth,

Bentley (1996)-

Reward is found in a wide variety of forms, differing from

person to person. Creating and designing and implementing

performance reward systems call for imagination, awamess of

individual needs and attention to detail.

ELEM ENTS OF PERFORMANCE REWARD i

T.V. Rao, (1991,1992) indicated that there are several

mechanisms of rewarding performance are being used by different

organisation and these include the following :

386
1. Salary Increase,
2. Annual performance awards.
3. Outstanding performance Awards.
4. Promotions,
5. Change responsibilities and status.
6- Sponsorship to conferences, To\irs orvisits to other
countries.
7. Appreciation letters and certificates
8. Transfers
9. Advance training and development opportunities, and
10. Aimouncement in News letters, journals etc.

Pitts (1995), Armstrong (1993), Hume (1995), and Bently

(1996). divided the reward mechanisms into financial and

non-financial rewards.
F in a n c ia l rew ards :

Financial rewards consist of the base pay, differential

payments, i.e. extra pay, time and overtime, cost of living.

(Incentive and bonuses) such as pay for performance (performance-

related £>ay), skill/ competence pay, and payment for special

working assignments and conditions or additional responsibility,

X>ayment for result, financial security (such as life insurance,

personal accident, health insurance additional sick pay, etc.)

and financial assistant (such aa company loan, organisation car

and etc.).

NON- FINANCIAL REWARDS :

Non-financial rewards related to the needs people have for :

1. Achievement
2. Recognition
3. Responsibility
4. Influence

387
5. Personal growth
6. Participation
7. Freedom
8. Satisfaction.

Beer Spector, Lawrance, Mills, Walton (1985) and Schuster

(1985) divided the reward system into two factors :

1. Extrinsic rewards : In the form of pronotions salary, fringe

benefits, perquisites, bonuses or stock option.
2, Intrinsic rewards : Such as

a. feelings of competence e. significance

b. achievement f. Influence and
c- responsibility g. meaningful contribution.
d. personal growth

Pitts, (1996) provides a range of options available for the

entployers or the builder of rewards system is 8\imiDeri8ed in

figure (6.3) :

Basic Pay Income Results Status Long term

ImpTOvement improvement based benifits

Determined Performance Bonuses Perks Pensions.

by market related. At risk profit Promotion Life
rates and Job skill based sharing Privilege insurance.
evaluation service Share schemes Health Health/
element Gain sharing insurance insurance.
Productivity (Thild care C^ild care
Subsidised Subsidised
needs needs.

Figure 6.3 : Options for rewards

388
FIN AN C IAL REWARDS :

A - B A SE PAY ;

1. Basic pay :

Basic or base pay Is the rate for the Job with any

additional payments and signifies the relative value of the Job

with respect to others within the organisation and to external

local market. It does not reflect any unique skills or the

achievement of an individual or any targets or goals. It assumes

that all the incumbents in a particular Job are of equal worth

Pitt (1995).

The base rate is fixed by reference to market rates; what

other employees in the organisation are paid, the grade allocated

to the Job in a Job evaluated pay structure or by negotiation

with the trade unions nationally. The base pay may be linked with

the cost-of-living index. Not only is this inflationary of the

macro- economic level and uncompetitive at the company level, but

it has no iDOtivational value at all. The base pay may be related

to market rates in accordance with the policy of the

organisation. If it is to set an environment in which employees

are going to feel comfortable in their work, basic pay must be in

line with the going rate for the Job and to be felt fair in

relative terms to other Jobs. Beyond that it is the prospect of

improvement to rates of pay or to earning potential that is

motivating, CPitt, 1995].

389
2« Salary Increase :

The general type of salary is by assessing salau?y grades

with different positions. At the end of the year the salary

increase by fixed rate or amount associated with the grade, or

completing a year of service.

In some organisations the salary increase after the report

of the performance received from the supervisor; In other

organisations, employees whose performance rated higher than

others are also given additional Increments in salary as a mark

of recognition of their contribution. In some organisation, they

could not give additional increment to all employees and they

adopt criteria such as rewarding the top ten percent or so every

year. The criteria may involve some restriction that the same

employee may not receive the reward consecutively for two years.

Also some companies give more than one additional increment. Some

other companies may hold the annual increment from employees

who"8 performance rate is not satisfactory as a measure of

warning for improvement, Rao (1992).

The advantage of this approach is that people see financial

Incentives as valuable irrespective of the status and personal

wealth of the individual, even though that some employees has

less meaning or importance related to its values, but as a status

symbol value, Rao (1992).

390
 Basic pay is thus a minimum reward; it has no motivational

impact and all recipients will naturally be seeking to augment

it. There is an inherent drive to differentiate one's individual

contribution in some ways. What is toore, ther« is an expectation

that the mean of augmentation will be available. So, over the

years, ways of enhancing basic pay have evolved to include

elements of recognition within the reward system to motivate and

to encourage identification and ownership within the enterprise.

3. PERFORMANCE RELATED PAlf : CPRP3

Paying for performance means relating remuneration to some

measure of individual, group or organisational performance. The

basic purpose of PRP is to establish correltion between the work

performance of individual employee, or group of employees and

their subsequent level of remuneration,

PRP is linked pay progression to a performance and/ or

competence rating, and the rating could be carried out diiring a

performance review. Sometimea PRP said to be based on a merit

system. It usually provides for an increase in base pay which is

governed by a rating against such criteria an performance and

contribution outputs and skills and competence inputs.

OBJECTIVE OF PRP t

The main objective of PRP is to provide incentives and

rewards which will improve the performance of the organisation by

improving individual performance. Armstrong (1994) indicated that

to achieve this objective the aim of PRP is to :

391
1„ Motivate all employees, the most important ones whom the
organisation rely on and also the high performers.
2. Reinforce existing behaviors, culture and values which
foster high level of performance, innovation, quality and
teamwork,
3= Deliver a positive message about performance expectations of
the organisation;
4. Focus attention on key performance areas (KPAs).
6, Differentiate rewards to people consistently and equitably
according to their contribution and competence;
6. Helps to change cultures where they need to become more
performance result oriented or where the development of
other key values such as quality and customer services needs
to be encouraged;
7. Emphasize the important teamwork as well as individual
contributions;
8- Improve the recruitment and retention of high quality
employees who will expect PRP as a part of well-managed
working environment;
9. Flex pay costs in line with organisation perfonaance.
Central to the PRP systems developed in the early to mid

1980s was the assessment of performance based on merit ratings-

the rating of an individual's personal qualities such as

commitment, dependability and initiative. Such assessment is not

directly related to the ability to do a particular Job or actual

work performance but were based on the input to work by scoring

the personality determined remuneration rewards rather than their

actual work performance. In most of the developed countries, they

applied the assessment of performance baaed on work performance

and the achievement of working objectives as determinant for

remuneration rewards. But in Yemen and most of the developing

countries they still apply the approach of assessing the
personality attributes as way for assessing the performance.

392
 PRP is a replacement to the traditional annual pay award

with some system of PRP or with a minimal annual award along side

some system of PRP; [Hume (1995)]. The first situation means that
any improvement in an individual's remuneration package entirely

depends on their work performance. The second situation is less

severe and consists of annual pay award for all staff and the

possibility of an additional improvement in the remuneration

package dependent on the performance of the individual.

The study Cannell and Wood (1992) established that PRP has

become the main approach of determining the salary Increment of

non-manual workers. But now they extended and covered the

shop-floor employees. It introduced to the private sector in 1970

and it is also making in-road to the public sector. Where

traditional incremental “pay spines” are being modified to allow

some flexibility for PRP.

4, SKILLED OR COMPETENCE-BASED PAY :

It linkes pay to the skill or competence level achieved by

individuals as long as the skills or competences are relevant to

the Job. These recognise those employees with required skills and

in particular those that ax^ multi-skilled.

It is people-centred rather than Job-oriented. It is focused

on the inputs, the capabilities or qualities that the individual

brings to the Job.

There are many reasons for introducing skilled-based pay as

indicated by Richardson (1995), and Armstrong (1992) :

393
(a) some organisations try to achieve some particular shift in
their overall skill-set,

(b) some organisations wish to increase employee flexibility

because of the fast changing technologies and competitive
pressures.

(c) some organisations see skills-based-pay as a means of

helping to achieve efficiency and overall effectiveness.

(d) it is a way of achieving or increasing commitment of their

employees because they offer employees the opportunity to
enhance their skills and develop their careers within the
organisation.

There are many varieties of skilled-based pay but a typical

scheme for operatives is likely to have the following features :

(1) It is based on defined skill blocks or modules- sets of

skills which the organisation is willing to reward with
extra pay.
(ii) The type of number of skill-blocks %^ich individuals need to
learn and can learn are defined.
(ill)The successful acguisition of the skills contained in a
skill block or modules results in an increment to base pay.
(iv) The Increment will be limited to a defined hierarchy or
range of skills
(v) Training modules and programnes are defined for each skill
block to provide v^at is sometimes referred to as the
necessary "Cross-training"

(vi) The training or the acquisition of skills within a modules

is usually accredited by organisations CArmstrong (1993)].

The weakness of skilled- base pay is that they reward

employees simply for the acquisition of the skill, whether or not

it Is applied. The individual under these schemes are rewarded,

not simply for acquiring a particular skill but for

394
demonstrating, satisfactorily a way CRobertson (1995)]. An

increasing nxuaber of organisation are introducing this approach-

not least because this approach is seen as providing a relatively

tangible way of dealing with the cultural and stylistic aspects

of performance.
5. BOM USES j

Bonuses are lump sum typically paid annually and linked

directly to performance. It is result-base pay (RBP). The

performance recognised is sometimes related to specific elements

of the work and sometimes it reflects the overall contribution.

It includes various forms of executive bonus schemes emd

achievement bonuses. Some companies pay senior staff in kind

rather than in cash, in gold, diamonds etc. (to avoid tax). Also

some organisations also paid by- the-event; this is in effect

direct recognition but may be one the worse for that provided

that it does not conflict with non-cash recognition schemes and

is acceptable to the majority of non-recipients according to the

local culture. The more immediate a cash award the greater will

be the effect in terms of recognition. CPltt (1995) J. Many

organisations use the achievement bonuses as the major form of

reward above the basic pay on the ground that the most effective

form of financial reward is bonuses which focused to sustained

period of high level of performance. It can be argued that 5

percent of pay would make a powerful impact than 5 percent

increase in base pay, because the former can be spent on

something really needed now. But the latter will be absorbed into

the monthly expenditure [Fisher, (1996)].

395
 Organisation-wide bonuses paid out through profit sharing,

gain sharing, at- risk elements. Which are related to profits or

added value. They may not have provided direct individual

incentive but they can increase commitment and identification

with business, success or failure, and catalysing a real culture

change from time serving and wage taking to contributing and

improvement seeking,

6. ANNUAL AND OUTSTANDINe PERFORMANCE AWARDS :

In the annual performance reward, the organisation may

choose percentage of employees %dio should be given annual awards

i^ich are not linked to salaries. An organisation may decided to

give an annual award of money or reward in kind such as prize or

extra privilege and benefits, all that depend on the performance

report.

Outstanding performance award is a Lump-sum amount of money,

or non financial reward such as certificate and a momento. This

usually paid in addition to the annual salary increments and

other forms of rewards [Rao (1992)].

7. SPECIAL PAYMENT s

Special payment includes those made for working overtime,

shifts, holidays, or for risky or dangerous situation. They may

also include responsibility allowance for carrying out tasks

which are not normally part of the Job.

8. SENIORITY :

It is also possible to base pay solely on seniority. It has

been accepted as a valid criteria for pay in some countries

especially in Japan. Jai>anese organisations use seniority-based

396
pay along with other factors such as slow promotion to help

achieve a desired organisational culture, [Marsland and Beer]-

In the United States the opponent of seniority—based-pay is

the trade unions. Distrustful nvanagement unions feel that any pay

for-performance system will end up increasing paternalism,

tinfalrness, and inequities. For these reasons, they contradict

the seniority notion and keep the country's individualistic ethos

that maintains that employee effort and merit should be rewarded
above all else.

9. Promotion :

It is one way of advancing salary. It is an upward

advancement of an employee in an organisation to another Job,

which command better pay/ wages, better status/prestige, and

h i ^ e r opportunities/challenges, responaibility and authority,

better working environment, hours of work and facilities and a

higher rank, [Mamorla (1995)]. In some organisations promotion is

treated as a reward. The person promoted to a h i ^ e r position if

his performance is good or excellent. The limitation of this

approach is that the employee has to wait until a new position

becomes available and thus quite frustrating for an employee.

Some organisations such as most of the organisations in Yemen may

try to create special Jobs, whether the organisation needs it or

not. Another problem with this approach is that there is no

guarantee that past performance is and an indicator for future

potential in a new job, (may be the skill needed for the new job

is different from the previous ones). As a result for that thus

397
only those people ^^o have a particular aptitudes and

capabilities for higher-level-position should be promoted. (not

all high performer get promoted), Rao (1992).

Long term benefits are elements of the tx>tal reward package

which provide extra value for employees beyond their pay. These

are generally of the life sustaining kind such as pension

schemes, insurance, sick pay, company car and holidays, health

Insurance, child care.

Employee benefits are sometime referred to as "Fringe

benefits" but they are for most of the people an extremly

Important pairt of the reward package, even though it will not

provide direct motivation, but with being part of the ethos of a

decent employer. They create an atmosphere of care and value for

the individual employee. It can increase commitment and a general

feeling of satisfaction with the company-

The aim of employee benefit policies as indicated by

Armstrong are as follows :

(i) Provide for the actual or perceived needs of ei^ployees;

(ii) Demonstrate that the company cares for Its employees;
(iii) Provide an attractive and competitive total remuneration
package;
(iv) Add value to basic remuneration and performance-related-i>ay
policies by extending the purely financial provisions of
those policies into areas where the organisation will
benefit from providing additional rewards and which will
support the achievement of employee's si>ecific needs;

(v) Increase the cooBnitment of employee to organisation.

398
 Benefits can be divided according to Armstronge (1994),

Harper (1987) and Klatt, Murdick and Schiister (1978) into the

following categories.

10. Pension schGm^s It is finance diirlng the employee's

working life time to provide guaranteed Income for employees
or their dependents during death or retirement;

11. Firmncial assistance : Loan, mortgage assistance, company

discoimt or relocation assistance;

12. Personal security : It will enhance the employee and family

security with regard to Illness, health, accident,
redundancy or life insurance;

13. Personal needs : Such as holidays, child care, other forms

of leaves, career breaks, retirement, consulting and etc.
All these are elements «^icb recognise the interface between
work and outside or responsibility needs.
14. Company car and petrol :

15. Other benefits : %rtiich help the employee to face the raising
of life expenses and improve the standard of living such as
subsidised meal, clothes, allowance, refund of telephone
costs and educational allowances for expatriates;

16. Intangible benefits : (Characteristics of organisation ^ich

make it an attractive and worth while place in which to
work;
A study conducted by a U.S. chamber of commerce showed that a

sampling of 742 companies paid an average of 30 percent of the

companies total employees costs for what is called fringe

benefits.

399
 Non financial re w a r d s

Non financial rewards are related to needs, which people

have for achievement, recognition, responsibility, influence and

personal growth. The reward system should be designed and managed

in a way v^ich provides the best mix of all types of motivators

according to needs of the organisations and its members.

Non financial rewards also called intrinsic rewards. The

degree to which their needs are powerful motivators will vary

from person to person and will be effective only if they have to

be used selectively on an Individual basis.

Ac hi evement :

Achievement can be defined as the need for success measured

against a personal standard of excellence. Research conducted by

Me Celland^ the American scientist, on the needs of management

staff on successful managers and resulted that there are three

major needs-achievement, power and affiliation i.e. wanting to be

on good terms with other people. The strongest motivators, one of

the three on successful managers is achievement. The need for

achievement reward will be more or strong in sales* marketing,

research and developinent dobs and where individuals are involved

in project work. But it applies in varying degrees to all people

in all dobs [Armstrong, 1993].

Achievement motivation can be increased by organisations

through process and system such as dob design, performance

management, and skilled or competence based pay schemes.

400
(a) Job design : Structuring Job to give people the maximiiro
scope to use their abilities

(b) Empowerment : Giving people more control over and

responsibility for their work. Ensuring that they have the
knowledge and skills to do it to the satisfaction of both
the organisation and themselves«

(c) Performance management : a process of managing performance

which uses the agreed set of objectives on mutiial basis
between employee and employer. Standard and performance
Improvement and development plans which relies on feedback
and reinforcement as a means of motivating people.

(d) Skills/'con^jetence based pay ; rewarding people according to

their skill/competence they achieve

Recognlti on :

exist. I matter. P eo p le know 1 cun h o r e . I w an t to

ack no w lo dg o d . W h^n I p e r /o r m . I vt>ant to fee n o t i c e d a n d I

w an t to b e a p p r e c i a t e d f o r what 2 do**

**The g r e a t e s t h u m ilia tio n in It/e, is to w o rk hard on

s o m e th in g fro m w h ic h y o u e x p e c t great a p p re c ia tio n ^ and

then get none**

Edger Watson Howe

Recognition is one of the most effective means of rewarding and

therefore motivating people [Erosby and Deming, 1980] indicate

that "people really don't work for money. They go to work for it

and once the salary has been established, their concern is

appreciation. Recognise their contribution publicly and noisily

but don't demean them by applying a price tag to everything".

Recognition or receiving appreciation or getting noticed is one

of the higher level needs of Maslow‘‘s hierarchy of needs under

the heading of self-esteem and before the last need

401
self-actulisatlon. Recognition confirms our existance and forms

our view of ourselves. If we are not noticed by others who can be

noticed by ourselves. According to Bently (1996), there are five

aspects of recognition that have to be present in any successful

management of reward system.

I. Being Seen :

It is important that people see you that you are here. Some

people attract the attention of others by paying attention to

their appearance and dress. Some want their appearance and

existance by and through the way they contribute to work, their

performance, what they and how they do it. If they want to

achieve this they might have to be assertive, make their voice

heard and participate in what is going on. Being present can

create a strong sense of who they are.

If managers acknowledge people and notice they are there to

reinforce their sense of self. There are many simple ways of

acknowledgment such as mention peoples name when addressing them,

to see thank you for the smallest thing they do, to formal

recognition for some major achievement. Regular and si&all

indications of recognition is more appreciated by people than

occasional acknowledgment.
II. Being valued :

Being valued is usually happened after they are noticed. It

means that some appreciation is added to the acknowledgment.

Appreciation may be a very simple way and it is necessary. Casual

or simple words of appreciation dropped into a conversation will

achieve enormous motivation. It is quite sufficient to say

402
something like "Thank you, your help has been most helpful in

wining the contract” or *’I want to come over to have a award with

you to say how much I enjoyed that piece of work you did last

week". In both of these examples there is recognition. If a

manager says to his employees, "I like the way you deal with the

customer". If the comment is specific about such a event, they

know that they did well- This will reinforce the good feeling

about oneself and a sense of worth will be enhanced. Appreciation

should be specific, not more general to be effective. If one

starts to hear or get acknowledgment and appreciation one is

encouraged to discover more of one's potentials. To grow and

develop that will enhance one's performance.

Ill* Being respected :

When one gets recognised, acknowledged and appreciated one's

wings start to spread out. One gets respected from their

colleagues and that is reflected on the opinion that is sought,

when one speaks to everybody, is listened to and one becomes more

involved by the management in what is happening. The sense of

respect has a distinct and significant effect in ones performance

for three reasons :

First, respect increases confidence and that leads to take

more risks and try out new ways of doing things. Secondly,
decreasing self-esteem and self-worth and that will increase the

commitment to self-development. Finally, it starts to influence

the environment around us, that high performance becomes more

achievable.

403
IV. Being inqaortant :

After reaching the point of being noticed, valued and

respected as a result of that^ one ia making an important

contribution to what is going on.

V. Being best t

Not all people aspire to being best at anything but some do

and achieving this accolade can, for them be a significan't

performance driver [Bently, 1996]. There are public recognition

that some people dream about and others do not.

Responsi biIi ty :

According to Armstrong (1990) that "People can be motivated

by being given more resposibilty for their own work- This is what

empowerment is about and is in line with the concept of intrinsic

motivation, which is related to the fundamental concept that

individuals are motivated «^en they are provided with the means

to achieve the ;)ob'*. It is related to the content of the ;;)ob, by

enlarging or enrich their jobs (giving them more

responsibilities) you can provide people with the opportunity to

achieve, to excert influence and to grow by empowering them, or

by progressively extending the scope of the assignments you give

them to provide additional challenges which stretch and developed

them.
Fiaher (1996) stated that for Job to be intrinsically

motivating, individuals :
(a) must receive meaningful feedback about their performance;

(b) muat feel that they are able to use their abilities to
perform the job well;

404
(c) should have a high degree of self-control over setting their
own goals and over defining the paths that they should
follow to achieve these goals.

Responsibility in a Job can be zoeasured by the amount of

authority requires the exercise of discretion in making decision

making about task on deciding onthe course of action, its timing

and the resources required, carrying out the plan and monitoring

performance and progress and taking corrective action when

required. If people take full responsibility for their own

performance and make arrangements that help them to achieve their

expectations, they will usually have the freedom to do so. Taking

care of the performance factors of environment, conditions,

personal desires, personal state and personal competence and

doing whatever is possible to lmpi:*ove all of them in a

responsible way lead to both more freedom and improve

performance, [Bently 1996]. Providing motivation through

responsibility is a matter of Job design (Job enrichment) and the

use of performance management techniques.

Influence :

People can be motivated by the drive to excert Influence or

to exercise power, the latter being one of the prime motivators

for many people with ambition. Through its policies for employee

Involvement, perhaps through participation in quality circles or

merely by involving employees more In day-to-day matters,

[Marchington, 1996]. Organisation can provide for motivation and

increased commitment by encouraging people to express their views

and by listening to and acting on those views. This is another

aspect of empowerment.

405
Perso n a l g r owth :

People at all level of hierarchy in organisation recognise

the importance of upgrading their skill and knowledge especially

in this days where there are economical and financial problem and

other constraints in public sectors organisations. This is the

philosophy of continuous development many employees considered

access to a training as a key element in the overall reward

package. The availability of learning opportunities, the

selection of individual of individuals for high-prestige training

programnes and the emphasis place by organisation on learning new

skills as well as improving existing ones, can all act as strong

motivating forces.

SKILL REQUIRED TO RUN REWARD SYSTEM :

To run or manage your reward system one will need skills as

well as knowledge. They are ;

(a) Job analysis-understanding the demands made by Jobs on Job

holders;

(b) Job design-constructing Job which provides Job holders with

the maximum amount of intrinsic motivation throiigh
achievement, responsibility and growth.

(c) Use of motivation theory to tinderstand the needs and motives

of individuals and, therefore,how best to motivate them.

(d) Rating-ability to make consistent, fair and defensible

performance ratings.

(e) Interpersonal skills in dealing with people, especially when

reviewing performance and agreeing to objectives.

406
Does performance reward motivate people to perform better ?

Experience over the last fifty years with various forms of

pay systems has shown that money doesn't on its own motivate

higher levels of performance. It appears that it satisfies the

Maslow's hierarchy of needs and that is likely to engender to

improve performance.

According to Bentley (1996) if the human "TOUCT" is missing

no amount of coercion or financial persuasion will work. Roger

Harrison (1995) put it this way in his book. He said :

(a) Give credit for people's ideas and build on their

contributions.

(b) Listen to people's concerns hopes, fears, pain: be there for

them n^en they need an empathetlc ear.

(c) Treat people's feeling as Important

(d) Be generous with your trust. Give others the benefit of the
doubt.

(e) See others as an valuable and unique in themselves and not

simply for their contribution to the task.

(f) Respond actively to other's need and concern ; give help and
assistance when it is not your Job.

(g) Look for the good and positive in others, and acknowledge it
\^en you find it.

(h) Nurture other's growth ; teach, support, encourage, smooth

the path.

(1) Take care of the organisation. Be responsive and responsible

to its needs as a living system.

407
 In this way, Harrison argues that the degree of personal

satisfaction,growth and commitment for managers and those they

manage will increase considerably and performance with it,

Rao (1992) mentioned that there are many points you have to

keep in mind for the effectiveness of the reward system as the

following :

(i) The employees should know the aspects of his performance

that have been Judged or assessed as deserving of reward.

(ii) The employee as well as his co-employees in the organisation

should perceive the rewards as a form of recognition and
should attach some value to them.

(iii)The employee should know clearly the nature of reward being

given to him.

When these conditions are met, the rewards are likely to be

effective.

Deeprose (1995), Provided a guide lines for recognition and

reward system to be effective in motivating employees to improve

their performance.

DeepTOse stated that “A good recognition and reward system

provides employees with three things :

(a) A fair return to their efforts

(b) Motivation to maintain and Improve their perfonaance ; and

(c) Clarification of what behaviors and outcomes the

organisation values.
Deeprose and others provide for recognising and rewarding

employees to be effective the following :

408
1. Involve enqsloyees in designing your reward and recognition
program : It is not necessary to spend a lot of money to
implement a meaningful program, employees satisfy with token
awards when it acknowledges they did a good job that
impressed their boss and peers.

One way to give a recognition program that credibility ia to

involve employees in designing and administering it. If they
participate in designing they know ^ a t to do to receive the
award. They also know v^at their peers have to do and they
will respect the other winner. They can ensure that
everybody in the department have the opportunity to earn an
award.

2. Specify reward criteria : Defining the criteria or what to

do or what is needed to be done to win is a very important
information for employees, because some employee will be
stymied before they begin. Also if one picks or announces a
winner, some employees will attribute a success to
favoritism or luck.

3. Reward everyone who meets the criteria : For a longer-impact

determined specific criteria, individual goals and rewards
to everyone «dio meet the criteria- It is necessary to
publicize each accomplishment and acknowledge each achiever.
As long the criteria are meaningful the more winners the
better-

4. Recognise behavior as well as outcome t In some

organisations result or outcomes get rewarded, that is
appropriate but it will lessen the use of recognition as a
way to encourage poor performance to improve. By recognizing
small behavior shifts-arriving on time, correcting mistakes,
helping another person one can reinforce incremental
improvements, a sincere ” thank you*' or some specific
positive feedback is an appropriate response.

409
5. Individualise rewards. Give people what they want i George
Bernard Shaw said "Do not do unto others as you wish that
they should do unto you**. Taste or preference or needs is
different from person to person. If an employee is going to
be rewarded, one has to make sure that if the recipient will
be thrilled or feel burdened.

6. Say "thank you" frequently : Thank you is a very cheap and

simple word of appreciation and acknowledgment especially
for small successes. It is an effect as to recognise a big
achievement. It validates the importance of work people do.
And it starts a chain reaction- Pretty soon more people
start saying it to more people, boosting morale and
lioprovlng relationships as well as motivating people to work
well.

7. Nurture self-esteem : Feedback especially if it positive,

specific, reasonable and realistic about the employer's
potential efforts and accomplishments will flourish or
natural self-esteem on employees. This will develop more
confidence in employees to set and meet challenging
objectives, overcome setbacks and self manage their work.

8. Foster intrinsic rewards : For fostering intrinsic rewards,

the eiQployer or management should create an environment that
encourages the intrinsic rewards such as the good feelings
people get from doing their work, enjoyment of the task,
excitement about the opportunities, pride in doing a good
Job. Make sure that employees feels or knows their Job is
worthwhile, treat problems as opportunities for innovation,
encourage people to try new ways of doing things and let
them know when they have done a good Job.
9. Reward the whole team : For team accomplishments, it is
important to reward the whole team. Otherwise competition
not cooperation is fostered among team members. There are
some team members who give more effort and some members who
coast along on the efforts of others. When the coaster get
the same as the doers, resentment occurs.

410
10. Be careful, you get what you reward : It is seen In some
organisations after publishing its values, people are
rewarded for behaving quite differently. Rewards clarify for
employees what the organisation really wants, they quickly
determine that the stated goal or values in meaning less.

If one is looking for teamwork, be sure one is not rewarding

competition. If one wants their people for initiative, one may

even need to reward people for doing things in ways that make one

uncomfortable.

We cam conclude from the previous discussion and litrature

that:

- Pay is important : its consistently raiiked among the top

five rewards,

- The importance of pay and other rewards is affected by many

factors for example it is viewed differently in early,
middle and later career because of the need of money and
also the national culture. High inflation

- Satisfaction with rewards is in a part, a function of what

is expected and how much is received

- Employees satisfaction also effected by comparisons this pay

with other people in similar ^obs and organisations. Also by
the misperception of the rewards of others (becaiise tend to
overestimate the pay of fellow workers doing similar Jobs
while underestimating their performance). And also effected
by if the reward is a mix of intrinsic and extrinsic reward
or not and it is better of a single reward.
Organisations that give the most desirable rewards will be
best able to attract and keep people, particularly the
better employees. (To do this, organisation must pay it
better performers more than it pays poorer performers; and
the difference must be significant).

411
 For employees to get motivated or pay can also be used to
motivate job performance, provided certain conditions are
met:

1. Employees must belive that effective performance (or certain

specified behavior) will lead to certain rewards will
follows achivement of those performance levels.

2. Employees must feel that the rewards offered are attractive

(because of the differences between individual in needs and
perceptions)»

3. Employees must belive that certain level of individual

effort will lead to achieving the organisation's standard of
performance-

Hotivation to exert t;ffort is triggered by the prospect of

desired rewards : money, recognition, promotion and the
like. If effort leads to performance and performance leads
to deaired rewards, the employee is satisfied and motivated
to perform again.

Motivational and satisfactional value of a reward system is

a function of the perceived equity of the reward system.
Without percaption of equity and trust in the reward system
will be low and the contingent linkage between performance
and pay will not be accepted.
Experience and research suggest employees involvement or
participation in pay system design is desired by employees
and that such participation lead to higher satisfaction and
acceptence. This desired is h i ^ when rewards are percived
to be inequitable.

412
 PART - TWO

ANALYSIS OF SURVEY REPORT

PERFORMANCE REWARD PRACTICE IN PUBLIC

SECTOR ORGANIZATIONS IN YEMEN

1 : MANAGER'S RESPONSES
 Table C6. 1)
Formal reward system

Whether Number of responses Percentage

N = (80) %

Yes 30 (37.5)
No 29 (36.3)
No responses 21 (26.3)

Total : 80 100.0

It is obvious that (37.5%) of the sample stated that they

have a formal reward system and the system regulated by decree

No. (01-87) from law No. (19) for 1991. Every organization should

design its system in accordance to its goals, tasks, environment

and ita available reaourcea. Reward ayatem ahould be approved by

Ministry of Civil Service. (36.3X) of the sample responses that

they do not have a formal reward system. Law No, (19) is an

obligated policy as a minimum requirements for every government

orgainizations, departments. Joint organizations and non-profit

organizations. Existant of formal policy is more helpful for

managers and employees to deal with their individual in an

objective and a fair way. Decision to reward the creative, hard

worker, the good performer and the innovative employees in most

of the public organizations depend on the factors of favouritism

and loyalty to certain individuals, and not on the results

achieved and performance.

All organizations and departments administered by government

should have a formal reward system implicity or explicity stated

in manual written or in the memories in the head of employees,

because it is a part of the governmental system. (26.3%) did not

response to this question-

413
 Table (6.2)

Response of managers reflecting their opinion about the

objectives of reward systeiD
Sr. Objectives Number of percentage of responses
No.
Production Service
(N = 32) (N = 47)
1- Motivate members to 16 18
achieve high quality (50.0) (38.3)
performance

2. Encourage value-added 14 10
performance - achieve (43.7) (21.2)
cont inues Improvement
in performance

3. Achieve fairness a 14
and equity (25.0) (29.8)

5. Increase commitiDent 3 9
( 9-3) (19.1)

6. Support cultural 0 5
change (0.0) (10.6)

7. Achieve Integration 2 6
(6.2) (12.8)

8. Support managers 8 10
(25.0) (21.2)

9. Empowerment of 5 9
individuals and teams (15.6) (19.1)

10. Support new develop­ 2 4

ment ( 6.2) (8.5)

11. Enhance quality 3 7

( 9.3) (14.9)
12. Promot teamworking 3 12
( 9.3) (25.5)

13. Great competation 11 13

(34.4) (27.6)

Total 75 117

N o te : 1- R e apo n de nts p ro v id e s m u ltip le a jis w e r fo r th is g u e a tio n -

2. F ig u re s in b ra ck e ts in d ic a te s p e rce n ta g e s of re s p o n d e n ts

414
 Table (6.2) shows the opinion of managers about the

ob;Jective of their organizations regarding rewarding their

employees. The main objective in both production and service

organizations in ranking order is as follows :

The main objective in Prcxixiction Organization is :

1. (50.OX) of the sample is to notivate enployees to achieve

high level performance.

2. (43.OX) of sample used the reward to encoiirage value-added

performance to achieve continuous improvement in performance
by focusing attention of employees to areas vrfiere he/she can
achieve more or %dhere the maximum added value can be
obtained from improved performance and by getting people to
agree to demanding goals in those areas which match their
capability.

3. (25.OX) of the sample said that they use reward to achieve

fairness and equity. Employees who work hard, and their
performance is perfect and they are Innovative, creative and
more loyal to the mission of their organizations should be
rewarded and be treated In a different way from the average
employees. Fairness and equity get promoted by rewarding
people fairly and consistently according to their
contribution and value to the organization.

4. The last objective used In the production organizations Is

that (25.OX) of the sample stated that to support managers.
Some organizations using rewards and Incentives to control
employees' behaviours, actions, and rewards provide managers
with the authority and skills needed to help them achieve
their goals. It is necessary, however, to ensure that
managers have a strong frajnework of guiding principles and
procedures within which they can play their part in managing
rewards for their staff with whatever guidance they may
need.

415
In service organizations» the main obj&c tive of rewards is as

follows :

1. (38.3%) of the sample uses rewaj^d to notivate members to

achieve high quality performance.

2. (29.8X) of the sample uses reward to achieveand prcniote

fairness and equity.

3. (27.6%) of the sample said that they use rewai^ to cz^eate

competetIon.

4. (21.2%) of the sample uses reward to encouraice value-added

performance.

5. (25.5%) of the sample said that iialng reward to promote

teasBforklng, assist in Improving cooperation and effective
teamworking at all levels.

As noticed from the analysis above the approach, the

objective and the priorities of objective in service sector are

different from that of the production sector. None of the

production organization uses reward system for supporting change

(0.0%). Only (10.6%) in service sector uses z'eward for supporting

cultural change.

One of the main ideas to use reward is to improve the

performance of the employees by motivating them for acquiring new

skills, attending training etc, and imparting them to the work.

Just only (6.2%) in production and (8.5%) in service sector use

reward to help employees and managers in the introduction and the

effective \ise of sophisticated management techniques such as

computer or information technology or new management methods

which help in facilitating and making work easy and productive.

416
Some organizations using empowez*ment of their Individuals /teaois

as a reward to raise performance and quality through enpowered

people who have the scope and skills needed to succeed and az^

rewarded accordingly. Reward processes should help to upgrade

comptence, and encourage personal development.

Table C6. 3>

Financial Rewards

Sr. Reward Mechanian Number and Percentage

Mo. of responses

Production Service
(N = 32) (N = 47)
^ ^ ^ _ -------- ,, ,,

1. Salary increase 10 7
(31.1) (14.9)

2. Risk pay 10 4
(31.1) ( 8.5)

3. Performance pay 27 24
(84.4) (51.1)

4. Perquisities or 3 9
previleges (9,4) (19.1)

Total : 50 44

Note : 1. Respondents provide multiple answer for this question.

2. Figures in brackets indicate percentages of respondents

Table (6.3) shows the mechanisms used by public

organizations to reward their good employees. Some organizations

concentrate on the direct motivation which they hope will be

provided by incentives and bonuses.

Ranking the financial reward accordance to their priorities are

used as follows :

417
 In production organizations (84.4X) and (51.1%) in service

of sample responses that they reward their employees according to

their performance. Pay is related directly to performamce aa

assessed in an appraisal reports. No performance, no reward.

Relating reward to perfomance directly is an attractive idea in

terms of motivation. It la also powerful Instrument to reinforce

the direction of cultural change In that those who exhibit the

desired behaviour and achieve in the right direction can be seen

to benefit throu^ their z^wards. For these reasons more and more

organizations are adop'ting this formate and applying it cross a

wider and wider spectrum of employees.

(31.1%) in production and (14.9) in service organizations

stated that their organizations using salary Increase excluded

yearly Increase as reward. Some organizations rewarding their

good performer or certain individual for doing special things

which was required by their bosses or loyal to the top management

etc., by giving him double increment in his salary than those

whose performance are average. Annual salary increment is

regulated by law No. (19) and it Is obligated by law for every

employee eventhough their performance is good or not. The

previous techniques Is the most and widely used by public

organizations.
(9.4%) In production and (19.1%) In service they use
prerequisite or previlliages as a reward. In few organizations,

exceptional performers especially in higher positions of the

organizations give them a company car for personnel use and free

gas everyday as a privilege. In some organizations they give

418
people at the lower level plus basic pay 5 litres of oil ever day

if he was a car» or the organization bus brings him every day

from his house to the work place.

Most organizations or all public organizations reward their

employee with special payment, including those modes for working

like overtime shifts, a social hours, or for unpleasant or

dangerous conditions. Also, all government organizations give

full salary or half salary during the fasting OKsnth, and during

the Big Aid or on the Independent Day to help their eoiployees

with the increase cost of living.

Table CG. 43

Non-Financlakl Rewards

Sr. Reward Mechanism Number and Percentage

No. of responses

Production Service
(N = 32) (N = 47)

1. Promotion to higher 9 11
position (28.1) (23.4)
2. Letter of appreciation 11 3
for achievement (34.4) (6.4)
3. Higher more 9 5
responslbl11ties (28.1) ( 10. 6 )
4. Written conmendation or 4 2
thanks letter publl^ed (12.5) (4.2)
on honour board or
local newspaper

5. Tour outside the country 3 1

paid by organization (9.4) (2 .1 )
6. Sponsorship for h i ^ e r 7 4
or advanced training (21.9) (8.5)
7. Opportunity for 6 7
develoFinent of skills (18.7) (14.9)
and knowledge In high
reputation institutes

Total 49 33
(135) (70.2)

Note : Some respondents provide multiple answers for this question

419
Non-financlal rewards are z^lated to the needs people have for

achievement, recognition, responsibility, influence and personal

growth.

In ranking order from the table that : (34.4%) in production

organizationa using letter of appreciation or comDendation for

achieveTOnt, only (6.4%) in service organizationa use this

method. In loost organizations the good performer and ideal

employee is given a letter of appreciation assigned by the head

of the organization or by the minister andsubmitted to employee

at a special or at cermony in public some other time, ^ i s is

considered as one of the formal z^cognition techniques for

achievement.

In service organizationsthe highest techniques \ised is

promotion as stated by (23.4%) of the sample. Promotion is based

on seniority and sometimes on merit. Thesecond mechanism is

(28.9%) of sample in production by giving the good performer a

more responsibility to their current position or by delegating

some of the imDediate boss's responsibilities to him. While in

service it is only (iO.6%) that use this methods The third is

(21.9%) of sample stated that the potential and the good

performaner is given an opportunity for developing their

potential and equiring new skills and knowledge by sponsoring

them for higher or advance training programntes especially in

higher reputation institutes. In service only (8.5%) responses

that their organizations uses the same method.

420
 Table C6. 5^
Employee Benefits

Sr. Reward Mechanism Number and Pex*centage

No. of responses

Production Service
(N = 32) (N = 47)

1. Pension 5 2
(15.6) (4.2)
2. Medical Insurance 5 6
(15-6) (12.8)
3. Life Insurance 9 1
(28.1) (2.1)
4. Sick pay 10 13
(50.0) (27.6)
5. Company car 6 2
(18.8) (4.2)
6. Extra holidays 2 6
(6.3) (12.8)
Total 43 30
(106-2) (63.8)

Note : 1. Number in bracket Indicate the percentage of responses.

2. Some respondents provide multiple answer for this
question.

Employee benefits are elements of the total package which

provides extra value for the employees beyond their pay. Benefits

includes items to which a financial value can be attached.

Sometimes employee benefits are referred to derogatively as

"frying benefit", but they are infact, essential element of the

reward package, which eventhoti^ they will not provide direct

motivation, but they can increase commitment and a general

feeling of satisfaction with the organization. Table (0.5) showed

that (15.6%) of the sample in production organization and (4.2%)

in service organizations said that they have no plan for after

retirement or a plan for pension.

421
 (15.6%) in production and (12.3%) in service organizations

give medical insurance. Medical insurance given only to the

employees of Yemeni Airlines and the other public organizations

did not have any medical insurance. Some organizations give their
employees and managers half of the medical expenses, or

prescription bills. (28.IX) of the sample in production and

(2.1%) in service organizations said that their organizations

give all employees and managers life insurance. Some public

organizations before the unification insured their employees in

local insurance companies. If the employees died during the work

time or i^en he was on assignment, the organization paid him a

full insurance which may be five thousand dollars* if he died

outside the work time they deduct 30 percent from the amount

above. Very few public enterprises, but none of the government

ministries have life insurance except the Ministry of Foreign

Affairs.

(50.0%) of the sample in production and (27.6%) in service

organizations give a sick pay to their employees. Employees have

a right to statutory sick pay. In some organizations ei^loyees

could claim at least 80 percent of their sick pay beside basic

salary from their organizations and in some organizations

employees could claim 50 percent of sick pay. Claiming sick pay

in government organizations depends on the employee's close

friendship with the top management. The sick pay act includes

also wife and children, mother and father of the employee. It is

important to appreciate that benefits such as sick pay can act as

a control mechanism, and that specific entitlements to sick pay

422
reflect the character of the employment relationship. In some

organizations, sick pay entitlment is dependent on the l e n ^ h of

service, while in others staff are treated on the same basis

irrespective of their eoaployement, but none the less there are

strict disciplinary procedures.

Table C6. 6>
Reward in Kind

Sr. Mechanism Number and Percentage

No. of responses

Production Service
(N = 32) CM = 47)

1. Gifts and Mementoies 10 10

(31.2) (21.3)

2. Lunch in big restaurant 1 1

(3.1) (2.1)

3. Insignia or badge and 3 0

token (9.4) (0,0)

4. Weekend celebration in 0 0
the coast or in good (0.0) (0.0)
hotel paid by
organization

Total : 14 11
(43.6) (23.4)

Rewards in kind are often handed out to sales

representatives for success for achieving exceptional results.

Increasingly* now organizations in public sector are offering

rewards in kind to other staff as well.

(31.2%) of sample in production and (21.3%) in service
organizations said that their organizations reward their good

performer especially the non-managerial level with gift such as

Recorder, Washing Machine, T.V. Watches, etc., especially on the

423
labour day, besides certificate or letters of appreciation. This

kind of reward is considered as a form of recognition for

achievement of the employees, and it is \isually given in public.

The second form of reward in kind used by government

organizations and only used by production organization is

represented by (9.4%) of the sample which they claim that in

their organizations they reward the outstanding performers with

Insignia, badge or token, especially in the production line for

their sales persons, or line managers. This kind of reward is

used in public organizations for rewarding teams for their

exceptional performance and their achievements.

The rest of forms and techniques, none of the public sector

organizations used them, because it does not fit in the Yemeni

culture, and seems inappropriate for the local situation.

Apparently, one of the most difficult areas of recognition is

that involving some physical token-a gift or memento. The golden

rule is to use whatever seems appropriate and works in the local

situation. There is no point in presenting recipients with gift

if they are going to be ridiculed by their peers. It must fit the

local culture and have credibility in the workplace .

424
 Table C6. T>
Opinion of employees about characteristic of the present reward
system in their organizations
Sr. Number and Percentage of responses
No. Characteristics
Strongly Agree Donot Donot Not Total
a^ree a^ree agree stated
at all

1. Recognise and 18 21 14 10 17 80
reward employees (22.5) (26.3) (17.5) (12.5) (21-3)
when they acquire
new qualifications
and imparting them
to their work.

2. Enployees parti­ 7 24 18 13 18 80
cipate in design­ (8.8) (30.0) (22.5) (16.3) (22.5)
ing and implemen­
ting reward system

3. Supervisor/ 19 34 6 4 17 80
immediate (23.8) (42.5) (7.5) (5.0) (21.3)
have the authority
to determien the
reward and its
application.

4. Employees have 4 12 20 24 20 80
a choice to choose (5.0) (15.0) (25.0) (30.0) (25.0)
their reward,
which they perceive
its valuable and
satisfy their needn

Organization prote­ 22 11 8 22 19 80
cting their employ­ (27.5) (13.8) (7.5) (27-5) (23.8)
ees from inflation
by raising salary

425
 Table C6. T> (contd. )

Sr. Number and Percentage of responses

No. Characteristics ---------------------------------------------
Strongly Agree DonotDonot Not Total
agree agreeagree stated
at all

6. Organization 25 11 8 20 16 80
maintaining a (31.3) (13.8) (10.0) (25.0) (20.0)
competative pay
to protect their
employees against
increases in the
cost of living

7. Organization rewar- IB 21 9 17 15 80
ding not only the (22.3) (26.3) (11-3) (21-3) (18.8)
final results/
outcomes, but also
any change in behav­
iours or improvement
in Qualities required
to finish work

(38.8%) of the sample said that they strongly agree and

agree that there should a participation of employees in designing

and implementing reward policies, make reward policies and

practices are more likely to be accepted and understood and be

more effective if employees are Involved in their design and

management. Some organizations allow their managers to

participate in the design and management of Job evaluation, and

methods of measuring and assessing performance and relating

rewards to the performance (performance management and paying

rewards to the performeuice processes). Also the same percentage

(38.8%) of the sample said that their organizations did not allow

them to participate in designing and managing reward policies and

practices. In some organizations, the high or top management ask

their mid and low level managers to nominate the good performers

426
from their departments for a reward cuid they ask them to suggest

the suitable reward. The final decision is taken by senior

executives whether to give rewards or not and in what form or

not. (22.5%) did not answer the question.

(56.3%) of the sample strongly agree and agree that the

immediate supervisors and line managers have the authority to

determine the reward. Some managers believe that organizations

should be run on the basis of empowerment and trust» and it is

essential to give at least a minimum authority to line or

immediate managers to manage their own reward system within their

department and budget if it is available and broadly in line with

policy guidlines. After all, managers are fully accountable for

the results and they should be trusted to deal responsibly with

reward matters. If they cannot be trusted they should not be

managers. (12.5%) of the sample replied that the management have

a full control over the reward system. If they leave it to

individual managers you will get inconsistencies and inequities

throughout the organization. Favouritism will prevail and policy

guidelines will be ignored. (21.3%) of sample did not respond to

this question.
(20.0%) of the san^le agree and strongly agree that in their

organizations employees have a choice to choose their reward,

which they perceived is valuable and satisfies their needs. More

than (55.0%) of the sample answered that the recipient of the
reward have no choice of the valueable reward and the one that

satisfies his need. The decision of what kind of reward in the

hand of the higher management, and it depends on budget and the

427
resources available to the organizations. (25.0%) of sample don't

respond to this question.

More than (49. OX) of the sample agree -that their

organizations rewarding any change in behaviours beside outcomes
or results. In most organizations, results earn rewards. That's

appropriate, but it lessens the opportunity to use recognition as

a way to encourage poor performers to improve. Since they do not

produce many worthwhile results, they seldom get rewarded. By

recognizing small behaviour shifts - arriving on time* correcting

mistakes* helping other person- one can reinforce incremental

improvements. More than (40.OX) of the sample answered that

their organizations protecting their employees from inflation by

conducting general pay review every other year and they increase

the salary of their employees. (46.8X) of the sample response was

that their organizations award employees every three to four

years a cost of living increase in line with inflation. More than

(35.OX) of the saiople donot agree at all with the statement, that

if the government raises the salary of employees, it will not

protect the ea^loyee from inflation, and the increment is not

worth 10 per cent of the increase in the cost of living. More

than (25.OX) did not ans«rer this question.

Table (6.8) shows that more than (66.3X) of san^le of

manager strongly agree and agree that people work hard if you
offer them more money. Just only (16.3X) of sample don't agree

and not agree at all to this statements. People who agi*ee with

the statement belief that people only work for and therefor©,

money is the only way to get them work.

428
 Table C6.83
Opinion of employees reflecting the effectiveness
of factors of rewards such as pay, connitiiient,
selection and training, on performance

Sr Number and Percentage of responses

Ho Statement
Strongly Agree DonotDonot Not Total
agree agreeagree stated
at all

People work hard if 26 27 9 4 14 80

you offer them more (32-5) (33.8) (11,3) (5„0) (17.5)
money

Pay will only work 54 12 0 1 13 80

well as a motivator (67.5) (15.0) (00=0) (1.3) (16.3)
if it is felt to be
fair =

Non-financial 20 28 9 7 16 80
rewards ^ c h as (25.0) (35.0) (11.3) (8.8) (20.0)
praise, recog­
nition, and the
opportunity to
achieve and
develop can have
deeper and longer
lasting positive
effect on motiva­
tion than financial
reward.

4. Pay is a key factor 50 10 3 3 14 80

in attracting and (62.5.) (12.5) (3.8) (3.8) (17.5)
retaining h i ^
quality people.

5. The motivational 24 29 10 1 16 80
impact of a pay (30.0) (36.3) (12.5) ( 1.3) (20.0)
increases quickly
disappears.

6. People work best, 34 24 4 2 16 80

if they are (42.5) (30.0) (5.0) (2.5) (20.0)
coiUDitted to agreed
ob;)ective.
7. Improving perfor­ 57 9 0 0 14 80
mance is a largely (71.3) (11.3) (0.0) (0.0) (17.5)
a matter of better
selection and
training

429
 More than (80.0%) of the sample agreed and strongly agreed

with the statement that pay will motivate more if is felt to be

fair. Only (1.3%) did not agree at all. Justice is the constant
and unceasing will to give everyone his right or due. That

gunuine and sustained intention is expected from any leader who

has discretion over the distribution of rewards. Argiament of

managers who supported this statement that individuals will only

motivated by their pay if they believe it is fair in relation to

their contribution and effort and importantly, in relation to

what other people are paid within the organization or outside.

More than (60.0%) of the sample strongly agree and agree

that non-financial reward have deeper and longer lasting positive

effect on motivation than financial rewards, Non-financial reward

focuses on the need most people have although to different

degrees, for achievement, recognition, responsibility, influence

and personnel growth. These needs are related to the content of

the Job or what is sometimes called "the quality of working

life”. Their satisfaction can be described as a process of

intrinsic motivation, or motivation by the work itself.

(62.5%) of the sample strongly agree, and (12.5%) agree that

pay is a key factor in attracting and retaining high quality

people. By asking employees what attract them to move to a new

Job ? Some individuals answered that the opportunity to take a

career step-to gain wider and higher - level experience and to

have greater responsibilities. Others to seek security. But roost

people the pay was an important consideration.

430
 (72.5%) of the sample strongly agree and agree that people

work best, if they are committed to agree to the objective.

People will be motivated w^en they are clear about what they are

63!5>©cted to achieve and know that they will be rewarded

appropriately if they do achieve their agreed objectives. Theory

(Y) states that "ConiDitiQent to objective is a function of the

rewards associated with their achievement.

(82.3%) of the sample stz^ngly agree and agree that,

improving performance is largely a matter of better selection and

training. Selecting the r l ^ t people and providing them with

relevant and performance-related training is clearly an important

factor in improving performance.

Table C6. 93

Opinion of Manager about the most effective

reward which has impact on employees

Sr. Techniques Number and Percentage

No. of responses

Number Percentage
N = 80 %

1. Financial rewards 29 36.3

2. Non-Flnancial rewards 1 1.3

3. Employees benefits 1 1.3

4. Mixed of the above 39 48.8

5. Not stated 10 12.5

Total : 80 100.0

Table (6.9) shows the response of managers about which

techniques you think from your experience are the most effective

(and preferable by employees) to improve the perfonnance.

431
 (36.3%) of sample responses that the financial rewards are

the most effective and proffered by employees and managers. The

argument of managers and employees that every enqployees have a

set of a hierarchy of needs which they want to be satisfied.

Psychological and safty needs are innate or natural needs. To

satisfy the psychological and all lower needs such as foods,

shelter and clothing as well as safty and security needs (sick

pay, pension^ etc.) all the previous needs are largely satisfied

or achieved by money or financial rewards, especially for those

on low wages and operating at the lower end of the hierarchy,

money may loom more Important than for those earning considerably

more. But now because of economic problem in the country,

inflation increase in the cost of living, the financial rewards

in the eye of higher management is more important than non-

finaneial rewards, because extrinsic rewards can be transferred

directly to get basic needs, and that does not mean that non-

financial rewards is not important, but the climate is not

suitable now. Only, (1.3%) of sample prefer non-financial

rewards, also (1.3%) of sample answered that they prefer employee

benefits. Non-financial rewards are powerful and they will be

more effective and more powerful if they are mixed with financial

rewards in an integrated total rewards .

432
 PART - THREE

ANALYSIS OF SURVEY REPORT

REWARD PRACTICE IN PUBLIC

SECTOR ORGANIZATIONS IN YEMEN

2 : EMPLOYEE'S RESPONSES
 T a b l e C6. 10:>

Opinion of the employees reflecting

the objective of Reward system

Sr. Objectives Number and Percentage

No. of responses

Production Service
(N = 65) (N-61)

1, To show employee his 31 44

important and his (50,8) (67.7)
performance is
recognized and reward

2. To motivate individual 18 37
group to maintain (29.5) (56,9)
regular attendance and
high performance.

3. To reinforce good 8 24
desirable behaviour (13.1) (36.9)

4. Creating healthy 25 31
competation climate (40.9) (47.7)
among employee's for
the developiDent

5. To attract competence 8 27
persons from outside (13.1) (41.5)
and retaining skilled
people

6. Increase production 22 27
improve performance (36.0) (41.5)
and quality of services

7. Retain values, produ­ 14 27

ctive employees (22.9) (41.5)

Total : 128 217

Note : 1. Figures in brackets indicates the percentages of responses

2. Multiple answers are provided by respondents for this
question.

433
 Table above shown the objective of reward in the eye of

employee. (50.8%) of sample in production organizations and

(67.7%) in service respond that the aim of reward is to show

empoyee that his performance is recognized, and he is an

important for the organization. Every employee desires that his

efforts should be recognized and that he should be treated as an

important being in the organization. Performance rewarding is a

way of communicating to employees that every individual employee

is considered Important and his performance is recognized.

The second important objective as (40.9%) of sample stated

in ranking order - in production organizations is to attract

competence people from outside and retain the skilled people

inside. While in service organization cis (56.9%) of sample said

that is to motivate individual, groups, to maintain regular

attendance and hi^ quality performance. Another purpose of

reward is to reinforce desirable behaviours shown by employee so,

that they continue to contribute to the organization by

exhibiting such behaviours. (13.1%) of sample in production and

(36.9%) of sample in service organizations replied that the

objective is to reinforce desirable behaviour.

(40.9%) in production and (47.7%) in service organizations

that they use the reward to creat healthy competation climate

among employee by encouraging less hard working employee to

compete with more hard working ones. Thus, is one way of keeping

organization a live and dynamic.

In the modern world, with high levels of competation and

technological advances, it is clear that if the organizations are

434
to survive, they zmist ensure a high level of organizational

performance. Performance in public sector organizations cannot be

measure in tei^s of financial retxirns, but instead can be

measured in term of service and quality. For these reasons one of

the reward objectives in production and service organizations is

to increase the productivity, improve performance by improving

the quality of service delivers to customer, (36.0%) of sample in

production and (41.5X) of sample in service organizations said

that their organizations used reward to improve performance. In

same organizations they related reward to performance, or to the

final results / outcomes. In other organization by rewarding all

employees, and give extra reward for employees whose performance

Is assessed to be of a high standard.

435
 Table C6. H D

Mechanism for rewarding performance

Sr. Mechaninmn Number and Percentage

No. of responses
Production Service
(N = 65) (N=61)
a. Salary Increases 12 16
(19.7) (24.6)

b. Providing financial 34 49
and nan-financial (55.7) (75.4)
(mix).
c. Annual performance 7 16
rewaz^outstanding (11-5) (24.6)
performance rewards

d. Promotion for higher 11 16

positions (18=0) (24.6)

e. Increasing employees 2 7
respectively (3.2) (10.8)

f. Appreciation letters 10 18
and certificates (16.4) (27.7)

g. Transfer 3 3
(4.9) (4.6)
h. Thanks letter and 4 3
announcement In local (4.9) (4.6)
news, or burnal honor
board, etc.

i. Sponsorship to conference 4 9
and tour out side coxintry (6.6) (13.8)

J- Attending high or 7 6
advance training programne (11.5) (9.2)

Total : 94 145

Note 1. Multiple answers provided by respondents for this questi(

2. Number in brackets respondents the percentage of responds

Table (6.11) gives detailed of major reward techniques used

by Yemeni organization for rewarding performance. Most of

436
respondents (55.7% in production organizations) and (75.4% in

service organization) use both financial and non—financial

rewards for good work. Recognizing the variety of individual

needs, it is best to offer (financial and non-finanoial) of a mix

of motivotrs. Financial rewords usually satisfied most of the

employee needs and most of individual perfer it, put it needs to

be reinforced by other non-financial motivators such as a praise

and recognition. For many people, the strongest and

longest-lasting type of motivation will be the intrinsic

motivators, opportunities to achieve, exercise responsibility and

advance their carrer, in some stage of their career especially in

the late stages.

(19-7X) of sample in production and (24.6X) in service

organization said that they use salary increase for rewarding

good performance. In general, annually the salary of every

employee increases by a fixed amount associated with the grade.

In some organization or a few the salary Incz^ases are not given

until the performance appraisal reports of that employees is

received from his supervisor. In these organizations, employees

whose performance are rated higher than most others are also

given additional increments in salaz^ or increment under

different names, and that depend on the head of organization

mode, and obssession. Certain criterion needed for this policy

such as loyalty, political acceptance party performances or an
over- understanding performance reports. In some organizations

have the practice of stopping or holding the annually salary

increment of an employee whose performance is not satisfactory.

437
This is a rare phenomenon but it is mentioned or regulated by law

No. (19) for 1991 which organized the reward system in government

organization and is resorted to only in extremely poor

perfordnance cases as measure of warning for improvement.

Increasing employees responsibility as a reward (3.2% in

production) and (10.8% in service) had been used occasionally or

rarely = The effectiveness of this technique as reward depend on

the scope of the Job in terms of its Impact on results, the size

of resources controlled, the amount of the authority employees

posess, the degree of freedom they have to make decisions and to

act and the extent to which they receive guidance or instruction

on what they should do. Increasing employee responsibility is a

part of or related to the concept of intrinsic motivation which

related to the control of the job or the "work itself" and it

related to the fundamental concept that individuals are motivated

when they are provided with the meems to achieve their goals.

The philosophy behind rewarding employees through Increasing

responsibility was expressed in Theory Y : The average human

being learns, under proper conditions, not only to accept but

also to seek responsibility.

(11.5%) of sample in production and (24.6%) in service

organizations uses annual performance Awared and outst€mding

performacne award. Some organizations selected every year a

percentage or number of its good performance and give them a

certain amount of money and that has no relation with their

salaries. Or the employee may presented with some prizes, or

extra privileges and benefits may be given to the good

438
performaer. In some organizations, they choose the outstanding

performance employees and give them an amount of looney,

certificate and a momento and given to employees in public

ceremony held by organization or during the labour day festival

and presented by the head of the state to the employees.

(18.0%) in production and (24.6%) in service organizations

using promotion as technig;ues for rewarding good performer

promotion usually in public sector organization depends more on

seniority in related to promotion to the next h i ^ e r grade. But

promotion to the next higher position is considered as a rewsird,

and that depends on beside seniority to the final results of

appraisal reports, political performance, loyalty, etc. In some

organizations promotion to higher next position depend on

vacancy, and in some organizations may try to create special jobs

or in some cases create new organization or ministry or agency

etc. For such Individuals. However, this result of unnecessary

expansion of the organization and that create managerial

problems, because of the conflict between roles or lack of

coordiantion may arise.

(3.2%) of sample in production and (10.6%) in service

organizations use the change of responsibilities and status. In

some organization the good performer employees rewarded by

assigning or giving them more responsibilities or h i ^er level

responsibilities, some times by delegating more power and

authority to him help to increase his status and give him more

prestiage from his colleagues.

439
 (11.5%) of sample in production and (9.2%) in service

organizations reward H i ^ - Performing Employee by aponsoring

them to attend training programmes as preparation for their

promotion, or in some organizations, they nominated some

employees for attending training programmes outside the country

not becaxise they need the training, but as a way of improving

their financial situation, and for relaxation from the work

pressure, or for shopping outside the country. The criteria for

nomination Is known for every body in Third World Countries.

(16 >4%) of sample in production and (27-7X) in service

organizations use appreciation letters and certificates as a

reward for high performing employees. Some organization used

certificates and letter of appreciation usually distributed to

the lower level of employees and signed by the head of the

organization and submitted in most of time in the annual

functions Some employees value this certificates h i ^ l y and fell

proud to receive them.

There are other mechanisms used by some organization in

little or rare cases as reward for good performance such as :

sponsorship to conference and tour outside the country, transfer

and thanks letter, and announcement in local news, o\irnal, honour

board etc.

440
 Table C6. 12)

Opinion of employees reflecting their perception about some

statements made by an experts in reward

Sr. Niimber and Percentage of responses

No - Statements ------------------------------------------------ - -
Strongly Agree Donot Donot Not Total
agree a ^ e e agree stated
at all
1. To motivate people 88 22 2 4 16 132
is necessary to (66.7) (16.7) (1.5) (3.9) (12,1)(100)
use both intrisic
and extrinsic
factors

2. Money is a key 45 40 23 6 18 132

motivating factors (34.1) (30.3) (17.4) (4.5) (13=6)(100)

3. To motivate people 41 38 17 12 24 132

is necessary to (31.1) (28„8) (12.9) (9.1) (18.2) (100)
spell out to them
what they have to
do and will happen
if they don't do it.

4. Prais (recognition 33 54 16 4 25 132

of achievement) is (25.0) (40.9) (12-1) (3.0) (18.9) (100)
one of the most
powerful motivators

5. Irrespective of the 83 15 4 3 27 132

size and cost of (62.9) (11.4) (3.0) (2.3) (20.5)
the reward people
will be demotivated
and unsatisfied if
they feel that the
evaluation of the
reward is unfair

The above Table (6.12) revals the opinion of employees and

their perception about some statements made or written by some

experts in reward system. (66.7%) + 16.7%) of sample strongly

agree and agree that. Mix of financial and non-financial is

necessary to motivate employees. People have a vareity of needs

441
and the individuals in the organization differ from each other in

their needs, preference and expectation. It is best to offer a

mix of motivators. Pay and money are important and satisfy most
of the basic needs especially the low by other non-financial

motivators such as praise and recognition. For many people, the

non-financial reward will last for long time and strong

motivators. Intrinsic motivators gives opportunities to achieve,

to exercise responsibility and to advance thier career. Less than

(5.0%) of sample did not agree with this statement, because some

Individuals prefere single motivator, especially the financial

motivators. (12.1%) of sample did not response to this statement

(60.0%) of sample strongly agree and agree that it is

necessarily and clearly for people to know what they are expected

to do, if they have contributed to the agreement of their goal,

will be motivated more rather than have them "spelt out*'.

Depending on threat as a mean of motivation will not get you very

far.

(65.9%) of sample strongly agree and agree that praise or

recognition of achievement is powerful motivators, if it must be

deserve and given sincerely. (15.1%) of sample do not agree or

not agree at all for the statement. (18.9%) of sample did not

responses to this statement. Praise should be given, you should

recognize that something has been doneto warant praise, respond

Immediately, use simple words and be praise, and neither

understate or overstate your appreciation.

(74.3%) of sample strongly agree and agree that irrespective

of the size of their rewards, E»eople will be demotivated if they

442
feel that the system is unfair. Basic concepts of motivation are

concerned with needs goals, reinforcement, expectation and

equity. To be equitable and therefore to motivate, pay must be

felt to match the level of work and the capacity of the

individual. To be effective, a reward system must be felt to be

fair. This is often called the "felt-fair” principle by many

writers.

Table C6. 133

Responses 6f employees about which in their opinion

is the most important type of reward

Sr = Number and Percentage

No. of responses

Number of Percentage
responses %
a. Financial reward 76 (57.6)
(salary increments,
Bounas, PA pay)

b- Non-finane 1a 1 32 (24.2)
(recognition
achievement reward
more responsibility,
promotion and
personal growth)

c. Reward in kind (gifts 4 (3 =0)

holidays and etc.)

d. Not stated 20 (15.2)

Total : 132 100.0

The Table (6.13) reveals the opinion of employees about

which is the most important rewards they prefer and satisfy their

need, expectation, goals and equity. (57.6%) of sample answered

that they prefer the financial reward such as (salary increases.

443
pay, Bonuces, PRR, etc.). Financial reward oncans in the eye of

employees more money. Money is an important to individuals

because it is instrumnntal in satisfying a number of their most

pressing needs. It is significant not only because of what they
can buy with it but also as a hi^ly tangible method of

recognizing their worth, thus improving their self-eateem and

gaining the esteem of others. The most dominant financial

mechanisms is a pay for extra work, and its paid monthly for

employees and its depend the extra hours and the amoutn of money

depend on the person grade. There can be no doubt that financial

rewards can motivate and no therefore, a mador means of achieving

the organization objectives. Indeed, it can be claimed that

"money is obviousely the primary incentive, since without it few

if any employees would come to work*'. But they want on to say

that money alone is not always enough to motivate high

performance,
(24.2%) of sample responses that they prefer non-financial

rewards which focuse on the need of achievement, recognition,

responsibility, influence and personal growth. Non—financial

motivators are powerful in themselves but can work even more

effectively if integrated with financial rewards in a total

reward system. However, it is important to remember that the

needs of individuals vary almost infinitly, depending upon their

psychological makeup, background, experience, occupation and

position in organization.It is therefore, dangerous to

generalize about which mix of motivators is likely to be most

effective in individual cases.

444
 Just only (3.0%) of sample prefer reward in kind such as

gifts, holiday, etc. (15.2%) of Scimple did not response this

question.
Table C6. 143

Opinion of employees about the characteristic of their

present reward system

Sr- Number and Percentage of responses

No.
Strongly Agree Donot Donot Not Total
agree agree agree stated
at all
1. Define a clear 19 36 34 23 20 132
criterian of what (14.4) (27.3) (25.8) (16„4) (15.1)(100)
results or out­
comes expected
to win reward

2. They recognize 12 30 30 29 31 132

change in behav­ (9.1) (22.7) (22.7) (22.0) (23.5)(100)
iors as well as
outcomes

3= They ask employees 10 13 43 40 26 132

what kind of reward (7.6) (9.8) (32.6) (30.3) (19.7) (100)
he would most
appreciate or
satisfy his needs.

4. The organization 27 18 30 30 27 132

reward everyone (20.b) (13.6) (22.7) (22.7) (20.5) (100)
who meet criteria

5. The organization 18 15 36 32 31 132

create environment (13.6) (11.4) (27.3) (24-2) (23.5) (100)
to encourage
Intrinsic rewards

6. Organization treat 19 22 29 32 30 132

problems as oppor­ (14.4) (16.7) (22.0) (24-2) (22.7) (100)
tunities for
innovation encourage
to try new idea of
doing things and let
them know whom they
done a good 6oh

445
 Table (6.14) showed the employees about soine features of

their present reward system as follows :

(14.4X) of the sample strongly cigreed and (27.3%) of the

sample agree that their organizations define a clear criterian of
what results or outcomes expected from them to win a reward. Some

organizations in public sector define a clear criteria for things

like innovation, showing initiatie and quality improvement, and

what kind of reward will the employee win if he do so.

(43.2%) of sample do not agree or do not agree at all, and

their organizations do not specify and reward criteria, and there

is no clear objectives or standai^ds for rewarding performance,

and the nomination for reward depend on other factor than good

performance, innovation, outstanding inititive. Without this

information or criterian about winning rewards, some employees

will be stymied before they begin.

When a winner is announced, employee may be attribute a

co-worker"s success to favouritism or uck. Or, if you offer an

award on an ongoing basis, such as "employee of the month" they

may begin to think everyone's turn comes up eventually,

(15.2%) of the sample did not response this question.

By recognizing small behaviour shift-arriving on time,

correcting mistakes, helping other person - you can reinforce

incremental improvement. This does not mean you should arrange a

parade in someone's honor dust because the person finally did

what expected. A sincer thank you or some specific positive

feedback is an appropriate responses.

446
 (21.8%) of sample strongly agree and agree that, their

organizations, or the present system reward changes in behaviour

as well aa outcomes or good performance.

(44.7X) of the sample do not agree and do not agree at all

that their organizations did not reward the good performance or

the achievement or innovation, and how come they will rewaz^i

changes in behaviour. In most organizations, results earn

rewards. That's appropriate, but it lessons the opportunity to

use recognition as a way to encourage poor performance to

improve. Since they do not produce many worthi^ile results, they

seldom get reward. (23.5%) of the sample did not response.

When we ask the manager in Table (6.7) and employees in

Table (6.14) abot that the present system of reward in their

organizations give the employee a choice to choose reward or give

people irtiat they want. The responses of both managers and

employees was relatively close ii^ich is (20.0%) of managers and

(16.4%) of employees strongly agree and agree with the statement.

(55.0%) of managers and (62.9%) of employees did agree or do not

agree at all to this statement and they never consult the

recipient or their immediate supervisors about what kind of

reward employees prefer and satisfied their need, and the final

decision in the hand of high management and in rare cases they

consult inmediate bosses. (25.0%) of managers and (19.7%) of

employees did not responses to this question.

(32.1%) of the sample strongly agree and agree that their

organization reward everyone who wkeet the criteria (45.4%) of the

sample do not agree or not agree at all that their organizations

447
did not reward everyone who meet the criteria regularly, but the

reward usually depends on other factors than meeting the criteria

some organizations draw attention to their desire to improve work

processes by announcing a contest, urging people to participate,

providing a lot of reminders during the context period, and

announcing period, and announcing the winner with flourish. Then

what ? You have got one winner and a lot of losers who discover
that their hard work did not pay off.

It is recommended that for long-term impact, determining

specifice criteria - individual goals ^ and reward everyone who

meet them. Publicize each accomplishment and acknowledge each

achieve. As long as the criteria are meaningful, the more winners

the better.

(25.0%) of the sample strongly agree and agree that their

organizations create environment to encourage intrinsic rewards,

Instrinsic rewards are the good feelings people get fromdoing

their work, enjoyment of the task exictement about the

opportunities, pride in doing a good Job. You cannot hand someone

an interinsic reward but you can create an environment that

encourages these feelings.

(51.7%) of the sample did not agree or not agree at all with

the statement, and (23.5%) of sample did not response for this

question.
In general make sure people known their work is worthwhile,

treat problems as apportunity for innovation, encourage people to

try new ways of doing things and let them know when they have

done a good job.

448
 Table C6. 15)

Responses of employees reflecting the opinion

in rewarding employees for attending training programmes

Sr. Number and Percentage

No. of responses
Whether
Nximber of Percentage
responses %

Yes 27 (20.5)

No 89 (67.4)

Not stated 16 (12.1)

Total : 132 100.0

Table above shows that (20.5%) of sample responses that

their organizations reward employees to motivate them to attend

training programme, or to acquire new skills or knowledge, and

transfer it to their work. In some organizations or in most of

them they consider nomination for training programme especially

outside the country as a big reward and the nominated person has

preference or his bosses like him. They reward attendants of

programme by giving him one additional increase in their salary

beside the annual increase, if he spent more than two months

period and in some cases if he acquire skill which organization

need, they promote him to higher position. Some employees comment

that reward not depend on what you learn from training, but also
on the political acceptance and party preference, and in this
case favouritism play an important factor in deciding to reward

employees or ot.

449
 (64o4%) of sample responses that their organizations did not

reward their employees for attending trainign programmes, because

of the financial problems faced by most of public organizations,

also, the shortage of training funded by brother countries and

friendly countries, also the donor organizations especially after

the Gulf War, 1990.

450