Essay Example on Rewarding Employees for Enhanced Performance: Bonuses & Other Tactics

Organizations around the world continue to focus on different avenues they can use to ensure that they enhance the work performance of their employees. Therefore, most of the firms are implementing competitive compensation and reward systems to motivate the employees such that they can work performance that results in increased productivity both at individual and organizational levels. Pay bonuses are one method that organizations are using as one of the several avenues to improve the performance of their workers. The following discussion is primarily focusing on assessing the correlation that exists between pay bonuses and work performance.

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Pay bonuses represent the amount of money given to an employee and are above the basic or fixed salary, or an hourly rate agreed between the employer and the employee (Kulikowski, & Sedlak, 2017). Work performance relates to the extent of efficiency and timely completion of tasks and simultaneously maintaining high-quality outcomes (Irshad, 2016). In this regard, most organizations believe that paying bonuses will motivate the employees, and a motivated workforce usually plays a significant role in enabling the organization to achieve its objectives, both in the short and long terms. However, the correlation between pay bonuses and work performance is complex because more money in terms of bonuses may not always replicate to better work performance. There exist numerous non-financial rewards such as training, managerial support, and timely and positive feedback, which significantly determine work performance among the employees (Irshad, 2016).

When assessing the relationship between pay bonuses and work performance, it is imperative for a person to thoroughly understand the motivational process leading to improved work performance (Kulikowski, & Sedlak, 2017), as stipulated and explained by theories and models such as expectancy theory. This theory affirms that human beings are motivated by both internal and external factors. The expectancy model indicates that the workers must make a conscious decision for them to facilitate improved or motivated work performance (De Vito, Brown, Bannister, Cianci, & Mujtaba, 2018). Additionally, the theory asserts that individuals are motivated to pursue a particular task that they believe will make them receive the highest possible value (De Vito et al., 2018). The expectancy model acknowledges that different individuals have different goals and objectives. Therefore, the model postulates three assumptions that will make the individuals to be motivated. First, individuals must establish that there exists a positive correlation between the required efforts and performance value (De Vito et al., 2018). Secondly, they must believe that improved performance will lead to a high-value reward. Thirdly, they must understand that the potential reward can assist in satisfying needs and critical wants value (De Vito et al., 2018).

Consequently, employers who want to establish and implement pay bonuses schemes for their employees must understand such critical information explained by the expectancy model before rolling out the program. This is to ensure that the pay bonuses are directly aligned with the work performance among the employees. The management has the responsibility of convincing the employees that set goals and objectives are realistic and that there is a likelihood for the workers to attain them and simultaneously earn the appropriate bonuses. These pay bonuses must be transparent to ensure that the employees will not only have the urge to pursue the set targets but also understand how they will earn these bonuses on a fair basis.

Nonetheless, it is critical to understand that pay bonuses may not directly result in improved work performance without touching on other variables like work engagement, job satisfaction, and attraction and maintenance of a highly skilled workforce, among others. These are the essentials that will be directly influenced by pay bonuses and, in the long term, facilitate effective work performance. For instance, the provision of a pay bonus may make an employee earn more money, which translates to job satisfaction in the organization. In the usual scenarios, we know that job satisfaction largely contribute to improved work performance both at the individual and corporate levels (Bun, & Huberts, 2018). Therefore, when assessing the correlation between pay bonuses and workforce, we must first identify how these bonuses will affect the afore-mentioned essentials.

Organizations that pay bonuses are well-positioned to attract top performers when compared to their rivals in the industry. Pay bonuses will have a positive relationship with work performance if they can help the organization to attract a highly skilled workforce (Bun, & Huberts, 2018). Therefore, the pay bonuses programs must not come into the minds of the management only when they are calculating the monthly, quarterly, semi-annually, or annual bonuses to be paid to the various employees. Instead, the management must acknowledge that the relationship between compensation of pay bonuses starts early during the recruitment process. Organizations must indicate their pay bonuses when they are advertising for vacancies to ensure that they attract top performers and convince them to apply for the available posts. The presence of a motivated workforce constituting high performers will facilitate an increase in work performance among the employees. Thus, pay bonuses have a positive association with work performance if they are helping the firm to attract a highly talented and skilled workforce (Bun, & Huberts, 2018).

Furthermore, the pay bonuses will have a positive relationship with the work performance if the program facilitates an increase in retention rates of the employees in the respective organization (De Vito et al., 2018). One may be skeptical about how retention rates will have an impact on performance as many of the people concentrate mainly on the costs attached to high labor turnover or churning of employees. However, regular replacement of employees can lead to demotivation of other colleagues (De Vito et al., 2018). Also, high turnover may result in inefficiency in work performance because it takes time before a newly hired individual goes through the learning curve and attains his or her full productivity level in the new environment. Firms may opt to offer retention bonuses to ensure that the most experienced and top performers are tied down to remain in the organization for the long term, thus minimizing the aspect of frequently replacing the employees even during organizational changes. Therefore, pay bonuses will have a positive association with work performance if they assist the organization in retaining its workforce and simultaneously minimize instances of labor turnover.

Moreover, pay bonuses will have a positive correlation with work performance if these bonus schemes increase management's trust among the employees (Ogbonnaya, Daniels, & Nielsen, 2017). The management will earn the trust from the employees if they roll out transparent pay bonuses such that the workers understand how their bonuses are calculated and that they believe they are compensated fairly according to the put efforts. Employees are likely to improve their work performance whenever they trust organizational management and leadership because they feel that the administration not only recognizes their efforts but also highly value the interests and well-being of the workforce.

A positive correlation between pay bonuses and work performance can occur if the bonus schemes are adequate to motivate the employees (Irshad, 2016). Workers have a higher chance of improving on their work performance whenever they are sure that they will receive financial rewards to accompany the invested efforts. Additionally, the work performance at all organizational levels will rise because the pay bonuses make the employees feel that their efforts are recognized and rewarded accordingly by their employers (De Vito et al., 2018). The primary goal of organizations in employing pay bonuses is to motivate the workers and consequently enhance work performance which leads to organizational success (Kulikowski, & Sedlak, 2017).

According to Ogbonnaya, Daniels, & Nielsen (2017), performance-related incentives such as pay bonuses are positively related to job satisfaction. Satisfaction is essential in any workplace and directly contributes to increased work performance. The pay bonuses are vital to satisfaction among the workers because they avail financial rewards, which facilitates human beings to meet most of their needs. Bakotic (2016) asserts that firms with highly satisfied employees usually perform more effectively when compared to those organizations with dissatisfied workers. Also, employees who are satisfied with their jobs can go the extra mile, such as devoting private time, to ensure that they are highly contributing to the realization of the set goals starting from the individual level to higher ranks across the organizations (Bakotic, 2016). Therefore, pay bonuses have a positive relationship with work performance if these bonuses assist in promoting job satisfaction among the employees.

On the contrary, pay bonuses with vast amounts of money can result in a negative relationship on work performance. Pay bonuses usually come with increased pressure to the individuals due to amplification related to work procedures and processes. In return, such pressure weaken the capabilities of the employees to perform their work effectively and efficiently (Ogbonnaya, Daniels, & Nielsen, 2017). Therefore, pay bonuses can result in worse performance if not managed appropriately. For instance, individuals may toll dedicating private time for them to earn higher rewards, and such actions may adversely affect their health and reduce their available time to interacting socially. Eventually, compromise on health and social life may result in the long term to spend more time away from the job, probably due to sicknesses, among other problems. Likewise, such a negative relationship of pay bonuses on work performance raises a question on whether or not financial incentives like pay bonuses can serve as a method of motivating and addressing the employees' needs sustainably or in the long-term.

The above discussion shows that pay bonuses may have both positive and negative correlations with the employees. Thus, managers should first understand the psychology of human beings as far as motivation is concerned. This is to ensure that financial reward programs to be rolled are aligned with individual needs and will contribute positively to improved work performance in the organization. Also, the managers should understand that pay bonuses may not have a direct impact on work performance if it fails to address critical variables such as attracting and maintaining a workforce of top performers, improving employees' trust towards the management, motivating the employees adequately, enhancing work engagement, and job satisfaction among other aspects. Addressing these variables will enable pay bonuses to have a positive relationship with the work performance of the employees. Thus, it is imperative to assess both the positive and negative effects that pay bonuses can have on work performance before implementing bonus schemes in the organizations.

References

Bakotic, D. (2016). Relationship between job satisfaction and organizational performance. Economic research-Ekonomska istrazivanja, 29(1), 118-130.

Bun, M. J., & Huberts, L. C. (2018). The Impact of Higher Fixed Pay and Lower Bonuses on Productivity. Journal of Labor Research, 39(1), 1-21.

De Vito, L., B...