Practical Challenges To Reward And Recognition

Published by MBA Skool Team, Published on January 04, 2013

In today's fast paced world with ever increasing competition a motivated workforce is one of the biggest assets an organisation can have. Having had a prior experience of I.T industry in Birla soft and from current experience of pursuing my summer internship in a FMCG company like Kimberly Clark, I believe that ensuring employee motivation is the single most important challenge being faced by majority of companies across industries . The problem has been further compounded by the presence of high attrition nourished by presence of competitors with fat purses and hence resulting in a recurring expenditure of selection, training and development.

However employee motivation also becomes conspicuously quintessential in case of principal-agent conflicts where the agent(managers) is entrusted to work harder to generate profit for the principal( shareholders) in return for a monetary compensation which clearly and obviously is lesser than the net income/revenue the work generates. With increasing literacy and sense of self betterment among workers , Reward and Recognition for those who work hard to generate value for the company( indirectly shareholders) finds greater relevance today than ever before .

Image Courtesy:, Simon Howden

Among the motivation theories that were suggested so far Maslow’s Need Hierarchy, Herzberg’s two factor theory and Reinforcement theory point towards the composition of Reward and Recognition Framework .

However , the practical challenges while implementing the framework goes way beyond the propounded theories. A brief overview of the recommendations are as follows :

Practical Challenges

The three major practical challenges that come up while implementing the above theories are as follows :

1. The premise behind allocating a reward/recognition is that it should motivate the workers who are not performing at their best to perform better .Which means, the target segment for the reward and recognition framework is the segment just below the best performers ( average performers) and extends all the way to the under performers. But then we also know that the best performers are the ones who believe in bettering themselves and compete to be the best. So by excluding them from the reward system would demotivate them and hence can easily counter balance the value created by introduction of the reward and recognition framework.

2. In case of rewarding and recognising all segments of workforce that is selected individuals from each performance ratings there is always a chance of a good performer not getting recognised while a not so good performer getting recognised by just being selected in that few. This becomes compounded when we consider that once a reward and recognition framework gets established , the employees/workers specially the high performers keep waiting for the reward or recognition to come to them and work exceptionally hard keeping that in their mind as it provides visibility and a sense of fulfilment and recognition ,which indirectly excites them. Now what is intriguingly true is that it is this “visibility” and the sense of “extreme excitement /strong desire of winning it” ,is what the entire reward and recognition framework seeks to espouse! So no matter how baffling it may feel it is true that an absolute implementation and fulfilment of the reward and recognition framework could again lead to demotivation among sections of the workers who would find themselves losers and which can again spur enmity and lack of team playing behaviour.A live example of the same can be drawn from actor Aamir khan’s absenting himself from majority of award ceremonies which media often attribute to a prior experience of himself not winning an award while expecting it.

Lastly , comes the issue of organisational politics and favouritism which in practice is often involved in final selection of winners .Now most organisations usually have a cross functional team for selecting the final winner of various awards. This is done to normalise the performances across functions. Since the output of an hr department is different from that of the finance department and the operations department. Yet for a award like “ Best Employee of the Year” which is one of the most coveted ones it becomes pertinent to compare and normalise performances across functions to decide the winner thus opening up scope of subjectivity and favouritism . Now on this point too , there is a conflict. The source of which that individuals tend to put more prize on objects which are difficult to achieve. For rewards which are intra departmental the competition is less and hence relative value becomes less thus indirectly as per expectancy theory, reducing its motivational power. But with inter deparment and across organisation rewards which are valued more comes scope of politics and scope of favouritism which can again lead to a deserving individual not getting his deserved prize thus leading to demotivation

This article has been authored by Uddalak Banerjee from XLRI

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