MASTER OF BUSINESS ADMINISTRATION (MBA)

2020 - 2022

ICFAI BUSINESS SCHOOL (IBS)

Shankarapalli, Hyderabad, Telangana - 501203

A PROJECT REPORT ON
“REWARDING PERFORMANCE”

Date of Submission: 24th JAN 2020

Section: I
Submitted by: Group No. 10

Aayush Yadav 18 20BSPHH01C0019

Mididoddi Vineeth 26 20BSPHH01C0693

Yashvi Gupta 37 20BSPHH01C1465

Milind Singh 44 20BSPHH01C0698

Harsh Rai 58 20BSPHH01C1534

Mayank Yadav 64 20BSPHH01C0680

Risha Pandey 65 20BSPHH01C0988

Subject: Human Resource Management

Submitted To: PROF. Dr. Nayeem Mohd

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 ACKNOWLEDGEMENT

We would like to express our deepest appreciation to all those who provided us the possibility

to complete this report. A special gratitude we give to our faculty member of Human Resource

Management and our project guide, Associate Professor Dr. Nayeem Mohd, whose

contribution in stimulating suggestions and encouragement helped us to coordinate our project

especially in writing this report.

We are using this opportunity to express our gratitude to everyone who supported us throughout

the course of this HRM. We are thankful for their aspiring guidance, invaluable constructive

criticism and friendly advice during this project work. We would once again like to express our

warmth thanks to Associate Professor Dr. Nayeem Mohd for the opportunity given to us here

at IBS HYDERABAD.

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 INDEX

SR.NO PARTICULAR PAGE.NO

1. Abstract 04

2. Introduction 05

3. Literature review 07

4. Methodology: Data from Relevant Studies 09

• Types of Rewards 09
• Technology in Rewards and Recognition 12

5. Results and Discussion 15

• Benefits of Rewarding Performance 15
• Selection of Reward and Recognition Platform 18

6. Limitations/Challenges in Rewarding Performance 21

7. Conclusion 24

8. References 25

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 ABSTRACT

Reward systems exist so as to motivate employees to figure towards achieving strategic goals

which are set by entities. Reward management isn’t only concerned with pay and employee

benefits. It is similarly concerned about non-monetary prizes like training, development,

recognition and increased occupation responsibility. Reward management system features a

positive and significant effect on employee performance.

Rewards frameworks may contain of a few parts, including monetary and nonfinancial prizes,

in fixed and variable sums. Reinforcement, expectancy, and equity principles are talked about

to explain why reward systems have motivating properties. The influence of reward systems

on motivation isn’t straightforward, because the psychological meaning of pay has got to be

taken under consideration.

Each system may have unintended consequences due to the psychological interpretation of the

rewards. In the world context, it is sensible to accept that social contrasts influence the

interpretation and importance of remuneration frameworks, as the qualities that influence their

significance may vary between societies. The correct types of recognition and compensations

at the opportune time can have unrivaled beneficial outcomes regarding increased employee,

commitment, efficiency, confidence, and performance. Additionally, workers become more

engaged, situated, and put resources into the organization objectives and goals.

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 INTRODUCTION

Every project manager now-a-days uses a lot of tool and techniques to execute the work within

the timeframe or within the estimated cost with the desired quality. The main thing is to

complete the work on time. And it is possible only through true, motivated, successful

manpower. They are the resources who are working on the projects. Do you think it is always

possible to get the motivated personnel? No, not at all. It is the project manager’s responsibility

and accountability to keep the project team fully motivated towards project objectives. How to

do it? Introduce some reward and recognition system for each performer. Introduce some

reward and recognition system which is highly achievable. It should not be like no one can get

it. An integral part of any organization today is its rewards and recognition system.

Remember that whenever you are going to introduce any reward and recognition system in

your project, it should be like everyone will get something out of it. It should not be like the

top three performers will get some reward and recognition and rest will not. It should be like

everyone will get this reward based on their performance in the projects. One more thing need

to be remembered for the project manager is the incremental cost for the reward and recognition

system should not exceed the project cost and it should be added while estimating the cost. Be

sure that you are getting more work (more revenue) from the project team who are eligible for

reward and recognition. The incremental cost for reward and recognition should be nearly

equal to incremental revenue.

As per your organization’s Human Resource policy it can be in the form of incentives, bonuses,

separate cubicle places, separate parking places, medical facilities and other perks and

perquisites. And it can be weekly, fortnightly, monthly, bi-monthly, quarterly, and annually. It

depends really on the nature of the projects and human resources policies in your working

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organization.

The main objective of introducing rewards and recognition system is to ensure that the

employee feels appreciated and that his or her work has not gone unnoticed. It also serves as a

great way of pushing people to do better and better over project life cycle. One important point

is that each and every project team members should be aware of this reward and recognition

system so that they can religiously try for achieving the same. In this way, they can be more

motivated towards the ultimate project goal.

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 LITERATURE REVIEW

This section reviews literature related to the study. These include: Challenges and issues in

general rewards and recognition schemes, types of rewards and recognition schemes and

motivational aspects of reward and recognition schemes in work environments.

Rewards and recognition are used either to reward an employee for eliciting desired behavior

or recognize an employee for exemplary results. Subsequently, the purpose of many rewards

and recognition programs are multi- layered but motivation of employees to increase

performance is the key objective in reaching corporate goals. This is because motivated

employees perform. So, what is motivation? Motivation is a general term for factors that make

one’s intent on a particular behavior. He provides the factors as needs, drives, motives,

incentives, urges and goals. He insists that motivation satisfaction depends solely on the

demands of the situation. Staff individual performance is shaped by the nature of the rewards,

attitude of the staff and knowledge of reward schemes. Various studies have explored the

concept of staff reward programs and the effect they have on staff motivation and performance.

Attention has been given to how these schemes contribute to overall realization of

organizational goals.

Every organization needs a reward and recognition system which exhaustively addresses four

main areas. They are compensation, benefits, recognition and appreciation; the entrepreneur

(2003). The system should also aim to reward two types of employee’s activities: performance

and behavior. There are two kinds of rewards: Extrinsic and Intrinsic Rewards. Extrinsic

rewards are actually tangible rewards presented to the employees by the management. They

could be in various forms like pay rises, promotion, bonuses and respective benefits. The

rewards are termed as extrinsic because they external to the work itself, this means that other

people namely the management has the ability to control the size and whether or not they are

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granted. These kinds of rewards had played a dominant role in earlier eras whereby the job

employees were involved in was routine and bureaucratic. This involved complying with rules

and regulations. The work at this era offered employees with few intrinsic rewards and

therefore there were the only available motivational tools. The extrinsic rewards bring about

extrinsic motivation. Extrinsically motivated employees tend to focus on performance

outcomes. Intrinsic rewards come from verbal rewards such as positive feedback and praise

which lead to job satisfaction. Intrinsically motivated employees participate eagerly in their

jobs for internal reasons. This is from pure enjoyment and satisfaction. Behaviors brought about

by intrinsic motivation can be better task – relevant focus, less distraction, less stress when

mistakes are made and improved confidence.

Employee compensation includes all forms of pay or reward going to employees arising from

their employment. Nonetheless, some employee benefits are mandated by organizational laws

throughout the world. This includes such items like minimum wage, over time, leave under

medical leave act, Unemployment, workers compensation and disability. There are types of

employee benefits provided by the company but the employer is not required to offer them and

likewise the employee is not entitled to receive them. They are offered at the discretion of the

employer and covered in labor agreement.

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 METHODOLOGY: DATA FROM REFERENCE STUDIES

TYPES OF REWARDS

• Extrinsic rewards:

Extrinsic rewards are tangible in nature and are normally under the control of the

organization.

• Intrinsic rewards:

Intrinsic rewards are intangible in nature and are internal to the individual.

• Financial rewards:

Financial rewards are the rewards that employees receive in monetary terms. E.g.,

Bonus.

• Non-financial rewards:

Non- financial rewards are intangible and are paid in kind. It can be measured in terms

of their value to the employee. E.g., free gifts, paid family vacation.

MORE FORMS OF REWARDS:

Another form of rewarding employees is incentives. Incentives are the rewards to an employee, over

his wage or salary, in recognition of his performance and contribution to the organization.

The incentives are broadly classified into individual, group/team and organizational.

• Individual incentives:

Individual incentives are those incentives which is paid to an individual. For e.g., bonus,

sales compensation etc. There are different types, which is discussed below;

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 a) Piece-rate system- The piece rate system is based on the output produced by the

employee.

b) Spot bonus- It’s been awarded to the employees who is showcasing

extraordinary contribution to the organization. The spot bonus could be

monetary or a non-monetary.

c) Special program- This program is used to reward an employee for achieving

performance standards over a period of time. E.g., Best performer of the year.

• Group incentives:

Group incentives are those incentives which is paid to a group/team. It could be either

in the form monetary or non-monetary benefits.

a) Group/team result- In this, group/team members are equally rewarded based on

group output.

b) Annual bonus- Annual bonus is provided on the annual performance of the

company and the performance of the group. It is generally a one-time payment

and usually paid at the time of major festival in India.

c) Gain-sharing- This incentive is provided to the group on the basis of team-work,

coordination, and other characteristics that have determined its success.

d) Task bonus system- In this system, the pre-determined task assigned to each

group member has to be achieved in order to claim a bonus above his pay.

e) Progressive bonus- The type of incentive payment is done once the output

crosses the minimum or standard output.

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 • Organizational incentive:

The organizational incentive plan is based on overall performance of the organization

during a year. The organizational results are based on the efforts and corporation of all

the employees working in that organization.

a) Profit sharing: In this; employees earn a share of the company’s profit.

I. Distribution plan: Annual or quarterly cash bonus is paid

according to pre-determined formula.

II. Deferred plan: Employees earn profit-sharing credits instead of

cash payment, which is paid when the employee parts the

organization.

b) Employee stock plans: In this; employees are given a part of ownership. This

type of incentive measure really benefits and motivates the employee to work

more harder for the organization.

I. Employee stock option scheme (ESOS)- The company grants an

option to its employees to acquire shares at a future date with

pre-determined prices.

II. Employee stock purchase plan (ESPP)- This is generally used in

listed companies. The employees are given the right to acquire

shares normally at a price lower than the market price.

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 TECHNOLOGY IN REWARDS AND RECOGNITION

Employees of today want fast and immediate recognition when it comes to getting recognition

in the workplace.

For organizations with a broad employee base, this poses an issue where it is less feasible for

the leader to go up to each employee and compliment them on their everyday accomplishments.

Constructive use of technology has made it easier to reward and appreciate their workers in a

simpler, quicker and more timely way, making it smoother to run the whole process.

That's where it comes into the picture to have a rewards and recognition program embedded

within your company.

Here's how the act of remembering the employees is made simpler by providing a dedicated

R&R platform:

Instant Recognition:

Recognition deferred is refused recognition. The modern atmosphere in the workplace is fast,

frantic, and constantly changing.

The introduction of a digital compensation solution creates an atmosphere in which workers

can actually be appreciated for the high quality of their work within moments of completing it,

instead of getting a note left on their desk a month after completing a project saying, "good

job."

Data-Driven Insights:

An R&R platform helps you to get insights into how recognition invariably affects the output

of employees as data becomes more and more important.

The correct information allows you to recognize the most important contributors in your teams,

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making it easy for you to remember them.

It will also help you to consider the areas in which it works in particular and the areas in which

little seems to be done to increase overall participation.

Furthermore, data-driven insights can help you find gaps in the recognition pattern of your

company.

Integrations:

The ability to seamlessly combine modern rewards and recognition schemes, such as Vantage

Rewards, with team sharing platforms such as Slack, Microsoft Teams, etc., has made it

extremely easy for peers to enjoy each other on the go.

It can be as easy to admire a team member when collaborating on a remote project as doing it

in a collaborative app. It guarantees that not only is peer recognition promoted but also followed

by the workforce.

Similarly, make sure that the rewards and acknowledgement platform selected is easily

compatible with your HRMS system and facilitates quick on-boarding.

Recognition on The Go:

Today's employees don't just rely on their computers to stay connected. The humble laptops

and desktops have been slowly taken over by mobiles, tablets and Kindles.

The key driver for the shift alluded to above is the need for accessibility. Likewise, the success

of a rewards and recognition program depends largely on whether it is usable for different

channels (i.e. smartphone apps) and multiple devices (Android, iOS, etc.).

Service Yearbook:

An unbelievable motivator for everyone, including the staff, is peer recognition. In order to

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promote and encourage peer-to-peer recognition in your company, a tiny but handy feature

called the Service Yearbook can prove to be the perfect recognition concept.

So, what is the Yearbook for Operation exactly? Think of job anniversaries, yet a version that

is intensified and secret.

The Service Yearbook is a feature of Vantage Incentives that allows peers to gather and

exchange memories in a customized online yearbook format before someone's job anniversary.

This "secret gift" is revealed only during the anniversary of the work itself, where the

participant can see the importance of the role they have performed over the years of service.

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 RESULTS AND DISCUSSIONS

BENEFITS OF REWARDING PERFORMANCE

Company Culture:

Frequent and timely recognition profoundly impacts the culture of the company. A company’s

culture is the combination of a company’s vision, goals, and ideologies for achieving the

greater good. An appreciation-based work culture builds trust and respect among the members

of the workforce. Employees get a means to learn and praise their peers’ strengths and unique

qualities.

Competitive Edge:

Rewards and recognition promote healthy competition among employees. Implementing a

culture of recognition in a structured and meaningful manner assures the employees that their

hard work and efforts will not go unnoticed. Employees try to bring their A-Game to work, and

it is always beneficial for the company. It helps the company achieve its goals faster and aids

in employees’ personal and professional development.

Improves Manager-Employee Relationships:

People don’t leave jobs; they leave managers. A big part of employee experience is dependent

on the relationship that employees share with the managers. Rewards programs give managers

a way to connect with the employees and convey their regards. It helps both parties to bridge

the gap between them.

Boosts Team Spirit:

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Team recognition and rewards can play a vital role in increasing morale and promoting team

building. When recognition (mostly peer-to-peer recognition) becomes a norm in the company,

it builds camaraderie and heightens team spirit. Rewards that incorporate peer-to-peer

recommendations are great for team spirit, as they encourage staff to see the positive attributes

in one another. Teams are well-placed to do this, as they work alongside each other every day.

Plus, allowing colleagues to nominate one another for rewards is empowering, as it

demonstrates that they value each other’s opinion.

Empowers Employees:

An exciting benefit of recognition is that recognition sparks empowerment among employees.

Recognizing employees inspires them to take autonomy and ownership in their work. They

take pride in their job and their contribution to the success of the company. By praising and

recognizing efforts, you encourage their efforts and enable them to develop.

Employee Retention:

Managing high employee turnover is the biggest challenge of human resource departments

worldwide. Although many factors lead to an employee’s decision to leave a company,

employee satisfaction is a crucial one. Employee satisfaction is mainly dependent on how the

workforce’s treatment inside of the organization. When you make it a point to recognize your

employees duly, they get emotionally invested in the job and the company as a whole. They

naturally tend to stay longer.

Productivity:

It’s well-known that engaged staff are significantly more productive, working efficiently and

proactively in order to do a good job. If efforts are likely to be praised and rewarded, then it

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makes sense that a member of staff will work harder to receive such employee recognition.

Job satisfaction:

Recognizing an employee’s efforts demonstrates that the job they’re doing is valuable to the

business. It sends the message that their hard work is worth rewarding and therefore must be

important. This, in turn, makes the individual feel that they are making a difference.

Loyalty:

If employees are engaged with the business, they will be able to promote and sell the brand far

better than someone who does not believe in or care about it. Rewarding hard work generates

loyalty and helps your team to feel an emotional bond with your organization.

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 SELECTION OF REWARDS AND RECOGNITION PLATFORM

1.) Make Sure the Program Suits your Organization:

Digitization and innovation have become a quintessential piece of overseeing individuals. The

odds are that your association is now utilizing a HRMS for different HR capacities. It is

fundamental to guarantee that the worker acknowledgment program can be flawlessly

incorporated into the current HRMS. You may likewise need to watch out in the event that you

can white mark the program to give it an organization personality.

An organization's acknowledgment program should suit the organization socially.

Acknowledgment projects can be an extraordinary method to communicate your organization's

basic beliefs. Thus, prior to picking a worker acknowledgment program, you should guarantee

that you can modify your program to accommodate your organization necessities.

2.) Cost:

One of the primer things you should deal with prior to going for a R&R program is arranging

the spending plan. The financial plan for an enormous endeavor will be in excess of a medium-

sized venture, which will be higher than a little measured undertaking. It is prudent to arrange

your costs inside prior to choosing the correct program. SHRM suggests that HR offices spend

at any rate 1% of finance on remunerations and acknowledgment.

You should pick a program that gives you opportunity towards spending designation and

allotting how you wish to utilize the financial plan. While picking an answer supplier, search

for concealed costs engaged with the program, for example, exchange charges, yearly, month

to month, or one-time cost. Furthermore, consider the expense of running an in-house R&R

program and measure on the off chance that it will be more doable to pick an outer supplier for

your remunerating activities.

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3.) Outcomes:

It is essential to establish the outcomes that you expect from the R&R program, as mentioned

earlier, one of the biggest challenges of building a culture of employee recognition is a lack of

means to determine the ROI.

To tackle this, you must have quantifiable outcomes and expectations. And you should be able

to capture the desired results with sound analytics. Ensure that the program you choose offers

the data in a systematic and hassle-free manner.

4.) Choosing the Right Vendor:

The program interface ought to be straightforward, smooth, and easy to understand. Since

everybody in the organization will utilize the program, there shouldn't be convoluted advances

included.

The program ought to be fun and simple to utilize. Gamification in the R&R module, where

workers can trade prizes or appreciation, have an inside leader board, focuses assignment, and

so forth can support cooperation.

5.) Choosing Right Way of Rewarding and Recognizing:

Companies often opt for giving some form of merchandise or the other to show their

appreciation to a high performing employee. However, it seems that it might not be the best

way to do so. Every employee is different, and their taste and needs vary. Thus, the reward that

you give is likely not the one that they are looking for.

Employees want the freedom and flexibility to choose their own rewards. Thus, it might make

more sense to reward your workforce by gifting gift cards or reward points. In this scenario,

employees are free to choose and redeem the rewards they want to receive.

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7.) Ease of Integration:

Organizations regularly settle on giving some type of product or the other to show their

appreciation to a high performing representative. In any case, it appears to be that it probably

won't be the most ideal approach to do as such. Each representative is unique, and their taste

and needs change. Consequently, the prize that you give is likely not the one that they are

searching for.

Representatives need the opportunity and adaptability to pick their own prizes. Accordingly, it

may bode well to compensate your labour force by gifting gift vouchers or prize focuses. In

this situation, workers are allowed to pick and recover the prizes they need to get.

8.) Smooth Point-based rewarding Process:

Gone are the days when you could apply a one-size-fits-all approach in compensating your

representatives. Point-based remunerating in the worker acknowledgment space is acquiring

fame for quite a few reasons. Here businesses can purchase reward focuses and disseminate

these focuses to representatives as remunerations. Representatives would then be able to

reclaim the focuses procured by them and use them to buy things or encounters or membership

of their decision. This gives workers adaptability and a feeling of opportunity. Furthermore,

for administrators, it lessens their cerebral pain in choosing what endowments to give on what

event.

In this way, you should ensure that the program you pick follows a point-based remunerating

framework. Additionally, examine the focuses to cash change heretofore.

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 LIMITATIONS/CHALLENGES IN REWARDING

PERFORMANCES

1.) Combating inconsistent engagement levels of different managers:

Getting all managers on board is critical. Managers need to be fully trained on the

process and HR needs to monitor managers to ensure that the program is being used

consistently and objectively. When the system is applied inconsistently, some

employees benefit and others flounder, leading to employee mistrust and

disengagement.

2.) Establishing the right matrices:

The metrics should be measurable, and they need to tie into the strategic business plan

of the organization. “Using a strategic plan – if you have a corporate plan – many times

helps you get kind of a focus of where you want to go and gives you some ideas of what

you might want to use as far as metrics.” Rizzuti and Neelman advised. There should

also be a balance between short-term and long-term metrics – especially when it comes

to skill development.

3.) Effectively using limited budgets:

The budget levels obviously impact how much the employer can differentiate pay based

on performance ratings. Nevertheless, distinctions should be made even if they are

small. This is more easily accomplished when fewer performance levels are used.

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 4.) Rewards not understood by people:

The employees in general are not aware of the process that goes behind the plan, design

and delivery of the Reward Programs. The same are also not communicated

adequately/effectively to the people, and the engagement/involvement of the line

managers are also not sought in the process either. As a result, HR is not able to either

articulate or maximize the value of such Rewards to its internal customers.

5.) Rewards not linked to employee performance:

More often than not, it is the ‘perception’ around the intent and efforts of employees,

rather than the actual results or outcome delivered that drive performance measures and

the rewards associated with the same. Developing clear expectations, creating a clear

line of sight, setting achievable goals and establishing a credible measurement system

are some of the areas that such companies should focus on. Leading industry research

reveals that more than 80% of highly successful companies consistently display certain

common attributes like clear/common employee goals and performance-based rewards.

6.) Rewards not linked to the job to be performed:

The absence of a proper Job Evaluation System or well-designed Job Descriptions often

fail to differentiate between the real job at hand and its worth, as against loosely crafted

designations/positions. The pitfall of the same is an incorrect/inappropriate job

mapping exercise with the equivalent market jobs, resulting in ‘orange to apple’ and

not ‘orange to orange’ kind of job matches, and hence incorrect/inappropriate

worth/price linked to such jobs during the hiring of employees and their annual salary

reviews.

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 7.) Rewards not linked to the labor market:

Those companies which do not track their competition or compare their salary levels

with the industry are always at a disadvantage of not paying their employees Market

level salaries, and hence losing out in talent attraction/talent retention. It is always wise

to get Market Salary Data periodically, and fresh custom surveys providing real time

data are the best options, as database study reports have their own limitations.

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 CONCLUSION

Reward systems exist in order to motivate employees to work towards achieving strategic goals

which are set by entities. Reward management is not only concerned with pay and

employee benefits. It is equally concerned with non-financial rewards such as recognition,

training, development and increased job responsibility, for an incentive plan to be effective as

an employee retaining and motivating tool, it has to have characteristics such as, the incentive

plan should be linked to the thing that is hoped to be increased i.e. employee performance.

This would improve the organizational performance and contribute to the employee morale

too. The incentive plan should be communicated to the employees clearly. The reward should

be visible and understandable. There should be transparency and the employees should view

the system as being fair and rewarding performers. It should be given immediately after the

behavior whose frequency the company wants to encourage

Employee suggestions and inputs should be valued and rewarded. The incentive should be

proportional to the contribution of each employee, it should be minimally affected by external

factors like the stock market performance and the industry’s performance. The incentive plan

should be flexible enough to accommodate changes in external factors. Companies should

upgrade their incentive plans as the environment changes. The incentive plan of an organization

should provide a challenge to the employees to gear up their performance levels and work

efficiently.

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 REFERENCES
• http://thezeroboss.com/the-importance-of-rewarding-
performance/#:~:text=People%20respond%20positively%20to%20appreciation,benef
its%20for%20your%20overall%20business.
• https://sielearning.tafensw.edu.au/toolboxes/toolbox316/cs/cs_c15.html
• https://www.strategicpay.co.nz/Reward/Rewarding+Performance.html
• https://www.entrepreneur.com/article/75340
• https://hiring.monster.com/employer-resources/workforce-management/employee-
performance/reward-employee-performance/
• https://managementhelp.org/employeeperformance/rewarding.htm
• https://www.slideshare.net/preeti52/enhancing-and-rewarding-performance
• http://www.businessperform.com/articles/performance-
management/money_in_reward.html
• http://ceo.usc.edu/working_paper/performance_management_and_rew.html

OTHER SOURCES: (BOOKS AND NOTES)

• A. M. Sarma- “Performance Management & Rewards System”

published by Himalaya Publishing House Pvt. Ltd.
• Prof. Mr. Pravin Late- “Organization Behavior” published by Himalaya
Publishing House Pvt. Ltd.

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