Improving and sustaining performance through rewards

rewards In a highly competitive business world, a motivated workforce has become the key to the survival and success of any business organization. In a free market system, the customer has become the king, and the entire business revolves around him. The customer of today is spoilt for choices, he is demanding, and he is hard to please. Therefore, to achieve the customer’s loyalty, the employees of the organization can make the real difference.

However, the basic human psychology is that a person will not work unless there is sufficient motivation for him to do so. To ensure that the employees operate at the maximum efficiency levels, and perform up to the best of their ability and potential, an organization needs to have an effective rewards system in place along with other programs and activities. The system must be competitive, in tune with the times, and more importantly, it must be just and fair. Furthermore, the reward system must be wholly positive, as far as possible. A negative rewards system can end up de-motivating the employees, and fail in its goal of improving their performance. (1)

Rewards have to be a combination of monetary as well as non-monetary rewards. The monetary rewards are crucial to any employee reward system, because money is a strong motivator. People render their services to a corporate organization in return for monetary payment. Therefore, the importance of financial rewards cannot be undermined. However, it is equally crucial to devise a fair system that is performance-linked. The performance-linked system encourages the employees who are performing well, and at the same time, it gives a new aspiration to others who may not be performing up to the mark. (2)

In the Indian context, the rise of services sector after the opening up of the Indian economy in the 1990s has brought about a sea change in the outlook of the corporate managements towards their employees. The human resource-intensive Information Technology sector in India led from the front in this regard, and showed how a liberal rewards system can power the growth of an organization. Infosys Technologies is a classic case in point. It treated its employees as associates and partners, and created a new revolution by giving away stock options to its employees as a reward for their performance. The result was that Infosys got the finest talent to work for the company, and the employee dedication and loyalty index was very high. The company grew rapidly and ranked among the leading offshore IT service providers in the world because of its world-class service quality delivered to its global clients.

The Tata Group of Companies, Unilever India, Wipro Technologies, ICICI Bank, and P&G are some other examples of leading Indian companies that have created innovative systems of rewarding their employees with liberal bonuses and other forms of incentives. However, despite the top layer of corporate India realizing the importance of rewards, there is a large section of Indian industry that still lags behind in employee motivation. According to one Gallup study, 60 to 80% of Indian workers are still not highly motivated about their work. They feel little or no loyalty, passion or motivation on the job. They are putting in the hours, but they are not doing a great job and they are certainly not happy at work. (3)

This is a serious flaw of the Indian corporate management at a broad level. There is a strong need to create more awareness and introduce more innovative and popular employee reward systems to ensure an improved work performance on a sustainable basis. This is the key of survival for corporate India in a globally competitive business environment dominated by multi-national corporations.


- Vikas Vij (views expressed in the article are that of the author)


(1) Harpaz, I. (1990) The importance of work goals: an international perspective. Journal of International Business Studies.

(2) Entrepreneurship: Motivation, Performance, Rewards, by Anand Saxena, Deep and Deep Publications



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