UNIVERSITI TEKNOLOGI MARA
RELATIONSHIP BETWEEN REWARDS, JOB
STRESS TOWARD EMPLOYEES
PERFORMANCE: CASE STUDY OF WESTIN
HOTEL KUALA LUMPUR AND SHERATON
IMPERIAL HOTEL KUALA LUMPUR
AMANINA BINTI MAT GHANI
NUR SARINA KHAIRRUDDIN
Applied Research Project submitted in partial fulfillment of the
requirements for the degree of
Master in Hospitality Management
Faculty of Hotel and Tourism Management
January 2012
AUTHORS’ DECLARATION
We declare that the work in this thesis/dissertation was carried out in accordance with
the regulations of Universiti Teknologi MARA. It is original and is the result of our
own work, unless otherwise indicated or acknowledged as referenced work. This
thesis has been submitted to any other academic institution or non-academic
institution for any degree or qualification.
We, hereby, acknowledge that we have been supplied with the Academic Rules and
Regulations for Post Graduate, Universiti Teknologi MARA, regulating the conduct of
our study and research.
Name of Student
: Amanina binti Mat Ghani
Nur Sarina binti Khairruddin
Student I.D No.
: 2010442656
2010470304
Programme
: Master in Hospitality Management
Faculty
: Hotel and Tourism Management
Thesis/Dissertation Title
: Relationship between Rewards, Job Stress, towards
Employees Performance: Case Study of Westin Hotel
Kuala Lumpur and Sheraton Imperial Hotel Kuala
Lumpur
Signature of Student
: ……………………………………………
……………………………………………
Date
: January 2012
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ABSTRACT
In any organization, the issues of rewards, job stress and job performance are wellknown issue to be highlighted. In this study, the researchers desired to examine the
relationship of rewards, job stress toward job performance among employees in five
stars hotel. The total of front liner staff that participates is 120 employees. Out of 120
front liner employees of Westin Hotel Kuala Lumpur and Sheraton Imperial Kuala
Lumpur, only 100 employees returned the questionnaire. 100 employees participated
in this research in order to explore if there is any relationship pertaining to the issue of
rewards, job stress and job performance. There are two types of rewards applied in
this five star hotel, which are extrinsic and intrinsic rewards. Intrinsic value determine
the existence of job stress among the employees, Job Stress Index was used and there
are seven items in job performance that the researchers investigated. In the data
analysis, researchers choose to use correlation and multiple regressions to interpret the
data collected. Questionnaires were adapted from the previous researcher. Clifford
(1985) questionnaire item were used to measure the type of reward. Job Stress Index
develop by Kahn, R.L, Wolfe, D.M., Quinn, R.P., Snoek, J.D & Rosenthal, R. A.
(1964) were used to measure the level of stress perceived on the task given and for the
job performance, the items adapted by Kaye, B. & Jordan-Evans, S. (2008) were used.
The researchers found that all the variables are related and associated. From the result,
there are positive relationships among variables with the different strength of
association. The details of the finding will be discussed at Chapter Four and Chapter
Five.
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ACKNOWLEDGEMENT
Bismillahirrahmanirrahim
First and foremost we would like to express our gratitude to Allah S.W.T for His
blessing and allowing us to complete this dissertation.. In addition, this work cannot
be successfully completed without the assistance and cooperation of many individuals.
Then, we would like to thank our supervisors En. Mohd Razif Bin Jamaluddin,
for his patience and guidance throughout the entire process of completing our
dissertation. We also would like to appreciate to En. Mohd Razif his supports and
encourages until the completion of our dissertation.
Next, we also wish to thank our university and faculty, Faculty of Hotel
Management, Universiti Teknologi Mara for giving us the chance to pursue our
studies at master level. Our appreciation also goes to Westin Hotel Kuala Lumpur and
Sheraton Imperial Hotel Kuala Lumpur for their support of our dissertation. With the
valuable information provided from Westin for us has helped us to complete our thesis
on the time.
We would also like to acknowledge the contributions of the following
individuals who have help us in this study. These persons include our classmates
(Master in Hospitality Management) and lectures especially Associate Professor Dr
Salleh Mohd Radzi from Universiti Teknologi Mara Malaysia.
Last but not least, special thanks dedicated to our beloved families especially
to our parents and family members for their support. Thanks to our parents who
always prayed for my success. Thank you very much.
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TABLE OF CONTENTS
TITLE PAGE
CANDIDATE’S DECLARATION
ABSTRACT
ACKNOWLEDGEMENTS
TABLE OF CONTENTS
i
ii
iii
iv
v
CHAPTER ONE: INTRODUCTION
1.1
1.2
1.3
1.4
1.5
1.6
1.7
Background of the study
Problem Statement
Purpose of the study
Research Objectives
Research Questions
Theoretical Framework
Significance of the study
1
5
7
8
9
9
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CHAPTER TWO: LITERATURE REVIEW
2.1
Introduction
2.1.1 Front Line Employee
2.1.2 Extrinsic Rewards
2.1.3 Intrinsic Rewards
2.1.4 Job Stress
2.1.5 Job Performance
2.1.6 Rewards and Job Stress
2.1.7 Job Stress and Job Performance
2.1.8 Rewards and Job Performance
2.1.9 Rewards, Job Stress and Job Performance
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14
15
17
19
20
21
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24
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CHAPTER THREE:METHODOLOGY
3.1
3.2
3.3
3.4
Research Design
Data Collection Method
3.2.1 Study Population
3.2.2 Data Gathering Process
Data Analysis
Instruments Refinement
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30
31
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CHAPTER FOUR: RESULTS AND ANALYSIS
4.1
4.2
4.3
4.4
4.5
4.6
4.7
Introduction
Response Rate
Demographic Profile
Reliability Analysis
Descriptive Analysis
4.5.1
Intrinsic Rewards
4.5.2
Extrinsic Rewards
4.5.3
Job Stress
4.5.4
Job Performance
Correlation
Multiple Regression
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38
39
40
42
43
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CHAPTER FIVE: FINDINGS AND DISSCUSSION
5.1
5.2
5.3
5.4
Introduction
Findings and Discussion
Implementation
Future Research and Limitation
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50
52
53
5.5
Conclusion
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LIST OF TABLES
Table 1:Demographic Profile
Table 2:Reliability Analysis
Table 3:Descriptive Analysis for Intrinsic Rewards
Table 4:Descriptive Analysis for Extrinsic Rewards
Table 5:Descriptive Analysis for Job Stress
Table 6:Descriptive Analysis for Job Performance
Table 7:Correlation
Table 8:Multiple Regression
REFERENCES
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40
41
42
44
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APPENDICES
Set Of Questionnaire
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LIST OF TABLES
Table 1: Demographic Profile
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Table 2: Reliability Analysis
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Table 3: Descriptive Analysis for Intrinsic Rewards
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Table 4: Descriptive Analysis for Extrinsic Rewards
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Table 5: Descriptive Analysis for Job Stress
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Table 6: Descriptive Analysis for Job Performance
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Table 7: Correlation
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Table 8: Multiple Regression
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CHAPTER 1
INTRODUCTION
1.1
BACKGROUND OF THE STUDY
The issue of reward, job stress and job performance become a never-ending
discussion in every job. Reward, job stress and job performance have become the
central of debate among Human Resource practitioners as well as academician. On top
of that, it is very important to ensure an effective reward and recognition process
being designed in a comprehensible and visible statement to all employees of the
organizational values and the commitment to employee involvement. A reward is the
payment or benefit received by the employees that stated in the service contract after
the hiring process and there are two type of reward, which are intrinsic and extrinsic
rewards (Kerrin and Oliver, 2002).
Based on the report from Department of Statistics (2011), supported by strong
domestic consumption and investment activities in Malaysia, the services sector grew
6.4% in the first half of this year. Recently, the announcement made by the
government during the budget 2011, saying that the accommodation and restaurant
sub-sector increased 4.9%, supported by the entrance of international hotel groups and
aggressive growth and escalation of restaurants, predominantly fast food outlets.
Looking back on year 2010, the service sector has risen to become the major
contributor to the nation’s economy, contributing 56.9 % in the second quarter of
2010 to the country’s Gross Domestic Product (GDP).
According to the report from Department of Statistics (2010) there was an
increment in the service industry by 8.2 % in 2010 as compared in 2009 driven by the
favorable job performance. Specifically it indicate that economic job performance of
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Wilayah Persekutuan Kuala Lumpur continued the upward trend with services sector
became a major contributor to the economy of Wilayah Persekutuan Kuala Lumpur
with 89.3% while manufacturing, construction and import duties contribute 10.7%
only. In terms of sectoral point of view, Wilayah Persekutuan Kuala Lumpur
continues to be as the main contributors in the services sector with a share of 24.4 %
to the national level. Regardless of the slowdown in the economic and social
situation, Malaysia is still capable to attract 24.6 million tourists visit Malaysia and
generated revenue of RM 56.5 billion in the year 2010 (Tourism Malaysia , 2010).
The revenue comes from the profit of selling hotel rooms, food and beverage and
tourism activities.
In year 2011, the tourist expenditure expected to be increased with average per
capital expenditure amounting from RM2, 411 to RM2, 299 this year. According to
the Department of Statistic (2009), there were 2,362 businesses operating in the
accommodation services in 2009 with total number of rooms available for occupancy
in 2009 was 165,245 units as compared to 2,184 establishments in 2008. This
demonstrates an increase of 8.2% in the number of business that involve in
accommodation services.
The biggest percentage of a business in accommodation services were
registered under budget hotels with a percentage of 67.6 %, followed by hotels
(including resorts) and service apartments with 17.9%, chalets 9.7% and for the rest
houses/ guest houses/ hostels/ bed and breakfast is about 4.8%. According to the
Department of Statistic, in year 2009, Kuala Lumpur was in first ranked with 32, 925
number of rooms available followed by Pahang and Johor respectively with 20, 408
rooms and 13, 853 rooms. Meanwhile, based on the accommodation segmentation,
hotels/ resort and service apartments contributed the highest gross output, RM7.8
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billion with the percentage of 85.8%. This was followed by budget hotels RM1.1
billion (11.6%), chalets RM200.5 million (2.2%) and rest houses/ guest houses/
hostels/ bed and breakfast RM32.1 million (0.4%).
According to the Department of Statistic (2009), Wilayah Persekutuan Kuala
Lumpur was in a first ranked that contributed to the gross output, which is RM2.5
billion (27.8%) of the total gross output of RM9 billion with 231 numbers of
accommodation services. There was an increase of 2% of gross output for year 2009
compared to 2008.Even though Sarawak had the largest number of accommodation
services which is 285, its contribution to gross output was only 4.9%. Factors that may
lead to the highest contribution of Kuala Lumpur are because of famous shopping
destinations and tourist attractions. The second and third ranked contributors in terms
of gross output were Selangor and Pahang with percentage of 12.4% and 11.3%
respectively.
In term of contribution of by accommodation services, hotels (including
resorts) and service apartments had contributed RM7.8 billion of gross output out of
RM9 billion. While budget hotel contributed RM1.1 billion, chalet RM200 million
and rest houses/ guest houses/ hostels/ bed and breakfast RM32.1 million only. While
based on state, Kuala Lumpur recorded as the highest contributor to the gross output
of hotel (including resorts) and service apartments which is RM2.3 billion or 30.2%
and followed by Selangor, 13.6 % and Pahang, 11.5 %.
In the hotel industry, to deliver the service or product offered it involves an
exchange process. In the exchange and transaction process, it requires a high degree of
interactions especially between front line staff and guest. Good interaction,
communication and attention provides by the employee will encourage guest to
stimulate their intention to revisit. To develop well-performed employee, organization
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should understand and meet the need and requirement of the employee. When
organization meets the requirement as expected by the employee, it will help to
motivate their employee. Previous studies have been conducted by (Ali and Ahmed,
2008) mentioned that one of the factors to motivate employee through fair and
excellent rewards system besides safe working conditions, and fair treatment.
However, due to job stress on workloads somehow or rather it effect on the job
performance even though the effective rewards system had been carried out by the
organization. Thus, this study had been carried out to examine the relationship
between rewards programs, and job stress towards job performance among front
office’s employees.
In Malaysia, there are about 104,645 persons were involved in accommodation
services until the end of 2009. 96,483 persons or 92.2% were full-time employees and
part-time employees were 6,667 persons or 6.4%. While another 1.4% or 1,495
persons were constituted working proprietors and unpaid family employees. The
largest number of employees employed was general employees 22,937 employees or
21.9%, followed by housekeeping with 20,012 employees or 19.1%. Meanwhile for
clerical and related occupations were 18,091 employees or 17.3% and for technical
and supervisory group were about 12,328 employees or 11.8%, managerial. For
professional and executives group have 12,431 employees or 11.9% and the last group
is cooks and staff cooks which have 10,684 employees or 10.2%.
According to Department of Statistic (2009) for hotel industry, there are about
78,891 employees that worked with hotel establishment in year 2009. The highest
number of employee was general employees with 23.1%, followed by housekeeping
with 17.1%, clerical and related occupation were 26.4 %, technical and supervisory
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with 12.9. Managerial, professional and executive were 12.5% and cooks and staff
cooks have a small percentage which is 11.7 %.
Intrinsic and extrinsic rewards program is one of the motivation factors that
lead to employees’ job performance. According to Robert (2005) there is a
relationship and linking agent in programs that direct rewards to true job performance.
Freed (1978) stated that when an effective reward implemented within an
organization, favorable working environment will produced motivated employees to
excel in their job performance. In order to motivate the employees in doing their job,
organization or employers should determine and implement intrinsic and extrinsic
rewards program accordingly. Motivated employees can help make an organization
competitively more value added and profitable.
La Motta (1995) mentioned that job performance at job is the outcome of
employee ability and motivation. As a matter of fact, in hotel industry, employee job
performance is very crucial in overall job performance of an organization. Hence,
organization will produce best performers or committed employee through motivation
technique. The job performance evaluation and rewards are the factors that proved to
be the bonding agents of the job performance evaluation programs. Wilson (1994)
stated that job performance is one of the key elements in determining fair and equal
rewards system. Moreover, according to Meyer and Kirsten (2005) in dealing with the
human capital, rewards systems are an essential part that can be used as an approaches
and strategy for the organization in managing the job performance of employees.
1.2
PROBLEM STATEMENT
In hospitality industry, most of the firms realized that effective intrinsic and
extrinsic rewards program will result in increasing employee job performance,
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reducing rate of employee turnover, and, in most cases, attracting many qualified
applicants to work with them. However, it seems that most of these firms are giving
ambiguous description about intrinsic and extrinsic rewards program (Ali and Ahmed,
2008), which is later, will make the employees feel unsecured, unenthusiastic and
decline in their work performance (Mudor and Tooksoon, 2011). To avoid any bad
circumstances owners and managers in every firm should plan a well-built intrinsic
and extrinsic rewards program mutually.
Front line employees portray and represent the image of the hotel, thus they
are considered as one of the important asset of an organization. Hotel guests will be
impressed through superior service experiences and welcoming atmosphere at the
check-in counter and interact with front office staffs. Hence, the roles of front office
employees are important in giving good first impression to the guest. They play vital
roles in order to give good perception and reputation to the potential guests.
Therefore, they need to be motivated, rewarded and recognized by the employers and
organization. While organization takes care on their employees, employees will take
care on their guests. This is a win-win situation that should be adopted by the
organization, which their profits are depending so much on guests and employees.
Sustaining and keep up at the accurate level of services from frontline employees has
become a decisive concern for the hotel industry player because a service firm’s
success depends on the frontline employees’ performance (Chebat, Babin and
Kollias, 2002).
Thus, it is vital for an organization to ensure that they are able to delight the
guest need and wants which later will result in higher guest satisfaction in service and
product delivery. Guest satisfaction leads to increased revenues because it enables the
firm to gain a market advantage (Kaynak, 2003).
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It should be taken into consideration whereby guest will feel dissatisfied when
the job performance of the employee is below their expectation especially, when the
employee works under pressure or job stress. For that reasons, guest will refuse to
revisit the hotel, which directly will effects the profit of the hotel. Therefore,
organization must create a positive culture on working environment that can help to
boost and support the front office employee to increase their work job performance
(Miao et al., 2007).
Previously, it had been generally viewed that intrinsic and extrinsic rewards
program enhanced positive environment at the work places. Moreover, in order to
boost the job performance and encourage employee to work harder, the right intrinsic
and extrinsic rewards program need to be determined, structured, and implemented
well. Exclusively, this study will also focus on gathering the information and figures
pertaining to the most preferable intrinsic and extrinsic rewards program by the
employees.
1.3
PURPOSE OF THE STUDY
The purpose of this study is to investigate the relationship between rewards
programs and job stress towards job performance among front office employees. In
this study, researchers had chosen a 5-star hotel which is Westin Hotel and Sheraton
Imperial Hotel Kuala Lumpur. The reason being for choosing this hotel is because
they were managed under the same management which is Starwood Hotel and Resort
worldwide. Rationally, most of the hotel will offer with a variety of reward to keep
their employee satisfy and perform well. In addition this is one of the strategic
management of human resources applied in organization as it considered crucial for
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the achievement of the various organizational and individual outcomes including job
performance (Ooi et al., 2007).
This study explored the human capital need in performing good and quality
services. This study were provide recent information pertaining to the current
intrinsic and extrinsic rewards program that been developed and exercise by the 5 star
hotel in Malaysia. In addition, with this study, the researchers hope that the study were
able to promote a better understanding on the importance of practicing the effective
intrinsic and extrinsic rewards program in order to enhance the overall job
performance in the organization.
With this study the researchers anticipate that the result from this study were give
benefits to the hotel owner in making any decision pertaining to the rewards program.
This study also had been conducted to fill up the gap in view of the fact that lack of
research pertaining to this topic has been done in Malaysian setting. Hence the
researcher feels that it is vital for the research to be conducted. Moreover, this study
will also be used to supports any future study that relate with this topic matter.
1.4
RESEARCH OBJECTIVES
Based on the purpose of the study, there are four main objectives that the study
aims to identify and it comprises the followings:
1.
To examine the relationship between rewards programs and job stress
2.
To investigate the relationship between job stress and job performance
3.
To explore the relationship between rewards and job performance
4.
To identify how job stress moderates the relationship between rewards towards
job performance.
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1.5
RESEARCH QUESTIONS
Specifically, based from objectives above, the following research questions
will be addressed in the study:
1.
Is there a relationship between rewards programs and job stress?
2.
Is there a relationship between job stress and job performance?
3.
Is there a relationship between rewards and job performance?
4.
Does job stress moderates the relationship between rewards towards job
performance?
1.6
STUDY FRAMEWORK
Independent variable
Dependent
H3
Rewards
variable
Job performance
Clifford JM (1985)
Kaye, B. and JordanEvans, S. (2008)
H4
Job stress
H1
Kahn, R.L, Wolfe, D.M.,
Quinn, R.P., Snoek, J.D
and Rosenthal, R. A.
(1964)
H2
HYPOTHESIS
H1- There is a relationship between rewards and job stress
H2- There is a relationship between job stress and job performance
H3- There is a relationship between rewards and job performance
H4- Job stress moderates the relationship between rewards towards job performance.
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1.7
SIGNIFICANCE OF THE STUDY
This study is as an attempt to give information to the organization especially in
service and hospitality industry on how to enhance job performance of the employees
through effective intrinsic and extrinsic rewards program. Besides that, this study can
give better understanding about the relationship between intrinsic and extrinsic
rewards program with the intention to perform well.
In addition, this study explored on how intrinsic and extrinsic rewards program
changed rapidly since that every firm nowadays especially hospitality industry are
reacting and very sensitive with the impacts of globalization. For every firm that
hoping to stay in the market, they need to cope with the current situation and
understand the trends of working environment these days.
Since turnover is quite high in hospitality industry, it is crucial for every firm
to seek and search the most effective intrinsic and extrinsic rewards program, so that
they are able to keep their valuable asset, which is qualified and talented employee.
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CHAPTER 2
LITERATURE REVIEW
2.1
INTRODUCTION
Previous research found that reward systems and job performance appraisal are
based on the assumption that employees’ job performance and motivation can be
improved by establishing a clear link between efforts and reward through formalized
and specified individual targets (Fay and Thompson, 2001; Beer and Cannon, 2004;
Latham et al., 2005). Thus, it is very significant to understand whether such rewards
systems are effective to stimulate employee intention to perform or not and do they
feel the rewards that had been promising worth and beneficial to them.
According to Osman, Ho and Galang (2011) they stated that recently, most of
the company trends in Malaysia are moving into job performance-based rewards
system. This argument had been supported by a survey done by Malaysian Employers
Federation in 2007 on 233 companies in Malaysia, in which 86.3 % of respondent
companies linked the salaries of their executives to their job performance or
productivity, while 81.1 % did so for their non-executives.
While based on the study that conducted by Abdullah, Uli and Tari ( 2008 )
there are five out of six soft factors have a positive relationship with quality
improvement practices and one of the factors is rewards and recognition. According to
London and Higgot (1997), many companies in Australia are using rewards and
recognition as a tool and measure to improve the job performance and quality of work.
Abdullah, Uli and Tari (2008) also mentioned that it is very important for the
managers to understand that employee are more motivated and prefer to share their
thoughts for work improvement once the managers give them praise and appreciation
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for their contributions to the organizations. Based on the past research that had been
conducted it has demonstrated the positive motivational effects reward programs have
on employee job performance (Stajkovic and Luthans, 2001).
With these rewards program also it will not only improve the job performance
of the employee but also built a good rapport between all employees in organization
because they believed that organization cares about their thought and they are wiling
to reward the employee for their initiatives and effort (Abdullah, Uli and Tari, 2008).
This result is supported by the study that conducted by Cacioppe (1999) who claimed
that rewards and recognition are not only motivated the development and learning by
stimulating risk taking and trying new initiatives but can also be used to enhance
relationships by encouraging cooperation and working toward common goals.
Meanwhile, Sweatman (1996) mentioned results from a US Council of
Communication investigation founded that recognition for a job that successfully done
is the top motivator of employee job performance. The same result also found from
Cacioppe (1999) that believed that organizations and managers must consistently
recognize reward and recognition as a significant component in motivating
employees. He added that rewards are one of the loudest and clearest tools that leaders
of an organization used to communicate with employees regarding what they think
and believed as an important.
Cacioppe (1999) found that rewards and recognition had influence to shape the
behavior of an employee. This statement had supported the result from the previous
researchers London and Higgot (1997) highlighted that reward and recognition
practice had encourage employee participation in the culture change towards
continuous improvement and intend to distinguish those individuals by provide an
example of pleasing behavior that align with company value and objectives. To
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strength the argument, recent study by Yap,Bove and Beverland, (2009) found that the
significance of informal reward programs and its indirect effects on in-role and extrarole behavior.
Besides that, one of the important elements that contributed to the success of
rewards program is the involvement many of the major stakeholders such as top
management, team members, and union representatives, other teams, human resource
professionals and guests (Cacioppe, 1999).
Based on the study conducted by Yap, Bove and Beverland (2009) they found
that some reward programs, either individual or group financial incentives are more
likely ease to increase in-role job performance without sacrificing extra-role job
performance. According to Estrada, Young, and Isen, (1994), they stated that by
receiving a small gift, it can enhance the cognitive job performance of an individual
cognitive job performance, such as creative problem solving. Ashby et al., (1999) and
Revelle and Loftus, (1992); had supported this argument and declared such a reward,
given prior to the task, could change job performance in a number of ways, including
by increasing the motivation, concentration, learning and mood of employees.
In addition, reward system should be associated to induce employee job
performance that is constant and aligned with the firm's strategy, catch the attention,
and retain people with the information and knowledge, skills and abilities, which is
very necessary to achieve the firm's strategic goals, and create a supportive culture and
structure. At the same time as according to the previous researcher Brown, (2005)
rewards are the most common human resource management practice used to recognize
and compensate for good job performance.
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2.1.1 FRONT LINE EMPLOYEE
According to Asif and Sargeant (2000), service organizations have begun to
consider the roles their employees should play in achieving a sustainable competitive
advantage. The main reason for service firm to achieve sustainable competitive
advantage is that, they want to stay longer in the market after their successes in
reaching business goal and objectives. Therefore, it is very important for them to
ensure continues development of employee whom can deliver and provide a best-class
service to the guest and organization.
Zeithaml et al. (1996) mentioned that front line employees are the crucial
aspect to the concept of guest-focused organizations as their behaviors influence
guest’s perceptions of the quality in the service provided. In return, this had
influenced the level of guest satisfaction, patronage, loyalty and retention as we as the
cost of attracting new guests (Bitner et al 1994: Bolton, 1998); hence contributing to
the organization’s overall job performance.
Kotler (2000) stated that when an organization preserves positive relationships
with both the employee and the guest, several desirable outcomes expected to arise. In
addition, De Man, Gemmel, Vlerick, Rijk, and Dierckx, (2002) also mentioned that
with maintaining positive relationship employees will experience increased levels of
motivation, satisfaction, and commitment and decreased levels of intention to leave
from the organization . Positive relationship can be created when the organization
strives for the best for their employee. To strive for the best for their employee,
organization should ensure that compensation and benefits programs designed must be
competitive to recognize and reward for employee achievement.
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2.1.2. EXTRINSIC REWARDS
Rewards play a vital role in determining the significant job performance in job
and it is positively associated with the process of motivation. There are two factors,
which determine how much a reward is attractive, first is the amount of reward, which
is given, and the second is the weight age an individual gives to a certain reward
(Lawler, 2003).The reward includes the financial rewards, pay and benefits,
promotions and intensives that satisfy employees to some extent.
Porter and Lawler, (1968) declared that there are several practices that can be
used in order to plan an extrinsic rewards program which are profit sharing, gain
sharing, employment security , comp time, individual based job performance system
and quantity based job performance appraisal.
Rewards enhance the level of productivity and job performance at job whether
it’s a first time job performance or repeated activity at the job in a progressive way.
According to Spitzer (1996), rewards are as different as the people who receive them
and it does not make sense to give the rewards when the receiver feel that they are not
rewarded well.
Janice et al. (1999) categorized various rewards based upon cost. Their
categories are No-cost rewards (handwritten notes of appreciation; time off; reserved
parking space), Low- cost rewards (tickets for a restaurant or movie; flowers; coffee
mug; desk clock; birthday card signed by supervisor and high level administrators)
and High- cost reward (plane ticket to go overseas; laptop computer; banquet; paid
vacation).
According to Yap, Bove and Beverland (2009) extrinsic rewards is refer to the
financial incentive that organizations propose and give to the employees in exchange
for an effort that they put to increase the sales figures, quality and guest service. They
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also mentioned that it is important to note that extrinsic rewards are distinct from pay
and remuneration practices (i.e. salary or wages).
Clifford, (1085) argue that extrinsic rewards are financial benefits and
organizational rewards. Financial benefit referred to the monetary benefit given by the
management. While for the organizational rewards is refer to the rewards that agreed
or given by the management to their employee. Social rewards are the rewards that
perceived by the employee through the supportive working environment. Supportive
working environment comes from helpful colleague, encouraging superior and good
teamwork.
2.1.3 INTRINSIC REWARDS
Intrinsic rewards or recognition is one of the methods that have been used in
the organization to enhance the employee motivation. Committed employee felt that
recognition must be kept them motivated, appreciated and committed. When the
organizations recognize and acknowledge the employees in term of their identification
and their working capacity, job performance is very high (Baron, 1983).
The level of motivation of employees increases when employees get an
unexpected increase in recognition, praise and pay (La Motta, 1995). Further,
Branham (2001) recommends managers must be able to recognize the ways that
employee prefer themselves to be recognized. This is to ensure there will be no gap
between rewards expectation with the rewards perceived by the employees.
Based on the study that had been conducted by Yap, Bove and Beverland
(2009), they classified recognition to the identification of a “job well done”; thus
representing a non-financial means of appreciating and acknowledging a sales
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associate’s involvement in increasing sales figures, improving quality and enhance the
value in guest service
There are various types of reward and recognition programs which
organizations can offers and practiced in their system and procedure. The reward and
recognition can be formal or informal, intrinsic or extrinsic, monetary and nonmonetary, individual or group, large or small, and so on. McAdams (2000) suggests
aligning the rewards with the business objectives, which are: profit, revenue growth,
cycle time, financial return, guest’s satisfaction, quality, new product development
and reducing operating expenses.
According to Nelson (1994) , he argued that by writing a letter to the
employee’s family telling them about the excellent job that the employee doing,
arrange for a senior level manager to have lunch with the employee, have the CEO of
the organization call the employee personally (or stop by in person) to say, ‘Thanks
for a job well done’, find out what the employee’s hobby is and publicly award him or
her gift relating to that hobby, designate the best parking space in the lot and create a
‘wall of Fame’ to honor outstanding job performance as employees rewards are the
ways which organization can implements.
In the organizations, the reward and recognition programs are implemented in
different way based on their preferences and there are many factors that lead to the
specific implementations. Umiker (1998) job stresses on personal thank you. He
recommends that hold thank you meetings at which everyone thanks someone, post
citations, thank-you letters or notes, get chief executive officer to make thank you call
and send the recipient a thank you letter signed by everyone in the unit are the way to
reward employees.
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