Intro Draft

In any organization, the Employees(workers(?)) motivation to perform well

Basis

1. Introduction 1.1 Background to the Study Reward management is one of the strategies used by
Human Resource Managers for attracting and retaining suitable employees as well as facilitating
them to improve their performance through motivation and to comply with employment legislation
and regulation. As a result of these pressures, HR managers seek to design reward structures that
facilitate the organizations strategic goals and the goals of individual employees. Reward systems
are very crucial for an organization (Maund, 2001). Rewards include systems, programs and
practices that influence the actions of people. The purpose of reward systems is to provide a
systematic way to deliver positive consequences. Fundamental purpose is to provide positive
consequences for contributions to desired performance (Wilson, 2003). The only way employees will
fulfil the employers dream is to share in their dream (Kotelnikov, 2010). Reward systems are the
mechanisms that make this happen. They can include awards and other forms of recognition,
promotions, reassignments, non monetary bonuses like vacations or a simple thankyou. When
employees are rewarded, they get work done. Employers get more of the behaviour they reward,
not what they assume they will automatically get from employees. Thus when employees surpass
their target or exceed their standard they should be rewarded immediately as a way of motivating
them. By doing this, employees directly connect the reward with behaviour and higher performance
they have attained. Effective reward systems should always focus on the positive reinforcement.
Positive reinforcement encourages the desired behaviour in www.ccsenet.org/ijbm International
Journal of Business and Management Vol. 8, No. 21; 2013 42 organizations. This encourages
employees to take positive actions leading to rewards. Reward programs should be properly
designed in the organization so as to reinforce positive behaviour which leads to performance
(Torrington & Hall, 2006). An organization for global manufacturer of brand-name products for
consumers needed to improve levels of employee motivation fast in order to improve performance.
Managers focused on recognition as the key to raising employee morale. Every employee could
nominate anyone they considered worthy of recognition. Successful employees got certificates and
they really felt appreciated. In the experience of a recognised employee to be recognised formally
gave me extra motivation and made me wonder what i could do to keep the momentum going
(Gyurcik & Brawley, 2000). Scottrade Inc.; a firm that deals with financial services delivered superior
performance and took care of its employees even in the turbulent environment that had gripped the
entire financial services industry. The firm had given good performance and industry observers felt
that its performance management and reward system was responsible for this (Purkayastha &
Chaudhari, 2011). Kenya Power and Lighting Company Ltd Company transmit, distribute and retail
electricity throughout Kenya. The Government of Kenya is the major shareholder, while the rest is
owned by private shareholders. KPLC Ltd. is divided into four administrative regions which are
Nairobi, Coast, Mount Kenya and Western and it has many branches country wide. The research will
be carried out at KPLC Nakuru main office, which is the Central Rift Sub Region headquarters. 1.2
Statement of the Problem Reward management is one of the strategies used in organizations to
improve organizational performance. Researchers, practitioners and scholars have established that
 there is a positive link between reward management and desired performance. KPLC is an
organization that offers essential energy services that support other sectors of the economy. The
management has established rewards in their organization; these include cash bonuses in pursuit of
increasing employee performance so as to ensure prompt and quality service. However, the extent
to which cash bonuses influence employee performance is not established. This study therefore
aimed at determining the effect of cash bonuses on employee performance at KPLC.

2. Many retail organisations in South Africa are adopting a

strategic approach to motivation management in order to
improve their competitiveness, profit and sales. Common
strategies employed include ensuring employee loyalty,
organizational citizenship behavior, and appropriate
rewards (Bateman and Snell, 2007). The design and
management of motivational reward systems present
managers with one of the most difficult human resource
tasks. Bagraim et al. (2007) noted that, there is need to
find out the needs and goals of employees in order to
address them and achieve the required motivation.
Thompson et al. (2005) indicate that a properly designed
powerful tool for mobilizing organizational commitment to
successful strategy execution and productivity.
Arnolds and Venter (2007) stated that there is a huge
crisis of motivation in most large corporations. Their
findings show that, business firms spend billions of
money each year on courses and incentives, to increase
employee motivation, but these interventions do not
always translate into higher levels of employee motiva-
tion. This is as a result of the different perceptions
between management and subordinates on the way
organizational goals should be achieved. Employees and
managers give different levels of importance to various
motivational rewards depending on the situation. Delany
and Turvey (2007) noted that, managers want a
workforce with speed, high productivity and adaptability
to change.
Employees on the other hand want an entrepreneurial
environment, strong skill development and opportunities
for growth and competitive compensation to be motivated.
A body of experience, research and theory has been
developed to study motivational rewards. Some of the

3930 Afr. J. Bus. Manage.

researches focused on non financial motivational

techniques. An example is the research by Arnolds and
Venter, (2007) on the strategic importance of non-
financial motivational rewards. However other research
for example Ramms (2007) focused on money as a
motivator on all levels of employment. This presented
challenges and misconceptions regarding money as a
motivator since different levels of employees are
motivated by different factors. For example, it is possible
that lower level employees whose needs fall under lower
order needs according to Maslows hierarchy of needs
can be highly motivated by monetary rewards depending
on how these financial rewards are administered.
According to Robbins et al. (2003) one of the most
challenging motivational problems in industries such as
retailing and fast foods is how to motivate individuals who
work for very low wages and have little opportunity to
increase their pay in either their current jobs or through
promotions. These jobs are filled with people who have
limited education and skills and whose pay levels are little
above minimum wage, thereby dominated by lower
order needs. The only choice left to motivate these lower
level employees is the significant increase of pay and
benefits to reduce turnover and boredom.
As far back as 1911, Frederick Taylor described money
as the most important reward to motivate lower level
employees to achieve high productivity. However, there is
lack of conclusive evidence on the motivational impact of
monetary rewards on job performance of employees.
Research by Arnolds and Venter (2007) indicated that
frontline employees and blue collar workers rate
recognition as their best rewards hence relying only on
money can cause problems because people are motiva-
ted by different rewards. According to Bagraim et al.
(2007), some employees have financial goals, others
have professional goals, and others have personal goals.
The same incentives cannot work for all.
As a result of the above, there are debates, miscon-
ceptions and empirically unsupported opinions on
whether managers should consider money to be the best
choice to motivate lower level employees and neglect
non-monetary rewards. Thus, it is not surprising that
money alone is less an effective motivator for lower level
employees than when it is used in conjunction with non-
financial reinforcements. Bates (2006) noted that, lower
level group of workforce is difficult to motivate because,
they neither enjoy their jobs nor feel good about
themselves they lack motivation and organizations do not
want to invest much in them. Hellriegel (2004) stated,
traditionally motivating these people have focused on
providing more flexible work schedules and filling these
jobs with teenagers and retirees with less financial needs
but all the same statistics indicated dissatisfaction among
the lower level employees. It is therefore important to
investigate whether lower level employees are motivated
by rewards both monetary and non-monetary and if so
which are the best rewards for them. In this regard, the study addresses the concern raised by
Iglans and
Roussel (1999) that, assumptions that underpin the com-
pensation policies of managers have not yet been
adequately and conclusively tested by field research
especially among the lower-level employees.

3. Employee Performance is fundamental component that facilitates organizational growth and

sustainability, specifically being affected by the reward system employed in an organization
(Ngulube, 2003). Over the last few decades the world business environment has undergone a
radical transformation. The world has become smaller, not physically, but in terms of
communications, competition and economics. This has radically changed the way successful
organizations do business and how they look at their employees. This transformation has impacted
the private sector significantly and is impacting the public sector as well, both in direct and indirect
ways. Global organizations are becoming more responsive to their customers, reducing costs, and
improving quality (Erbasi, 2012). Todays customer demands value in both products as well as
services. Even more significantly, customers do not have to tolerate sub-par performance because
they can readily turn to alternative sources that offer faster, cheaper, better and more innovative
products and services. The organizations that are succeeding in this global environment are those
that have recognized that their people are the greatest factor in their success. New organizations
that are evolving place a greater value on employees than organizations had in the past, and they
achieve more by creating a process for employees to share in the results that they help achieve.
Thus, todays successful organizations match their employee reward systems to their strategies,
goals and values (Ballentine, 2007). An organizations reward system shapes its culture, and defines
for the employee what type of behaviors the organization wants to pay for and reinforce. Every
organization attempts to control the competencies and capabilities of its people in order to
accomplish its 2 goals, the difference is in the methodology. Lawler (2000) argues that control can
best be obtained through incentive pay, close supervision, hierarchy, and the careful delineation of
responsibilities. The new logic management approach involves employees in the business of the
organization, looks to them for innovation and solutions, and rewards them when the business
succeeds. Some of what is driving this change is an increased competition to obtain and retain
human capital. According to Wyatt (2001) 83% of surveyed companies reported difficulty in
recruiting 10 employees that have the skills that are critical to the success of their organizations.
Organizations must develop a rewards strategy that attracts, motivates and retains the human
capital they need to succeed. Wiscombe (2002) explains on a study that was conducted by Lawler,
has the rationale of reinforcing the conception that non-financial offers have a noteworthy outcome
on the performance of an organization. In his study, carried out in 2000, Lawler questioned
administrators and workers from 34 corporations in Australia and concluded that the
acknowledgement of employees via the provision of non-monetary gifts augmented enthusiasm,
amplified employee performance, was providing a realistic feedback means, assisted in receiving
work completed, enhanced organizational productivity, and was also facilitating the attainment of
the administrators personal as well as professional goals OHara (2011) insinuates that
organizations with employees that feel affection for work for recognition are more likely to feel
contented with non-monetary rewards as opposed to monetary ones. Non-monetary awards lower
occupational stress, absenteeism from work, turnover rates, and in turn elevate work morale,
organizational productivity, employee competitiveness, in addition to organizational revenue as well
as profits (Ngulube, 2003). Reddy (2000) underscores the need for non-monetary incentives in the
workplace in Australia. Reddys findings insisted that recognition is a powerful motivator that
establishes a 3 positive work culture. Recognition also serves to encourage employees to believe in
themselves, to deliver quality products and services, and to generate loyalty to the organization. The
GMP Institute (2002) suggests that the use of non-monetary rewards is often overlooked by
organizations. Non-monetary rewards can be used more frequently and tend to have a longer-
lasting effect than monetary rewards. The GMP Institute (2002) also points out that many of these
type rewards can be given on-the-spot when an employee is doing an especially good job, which,
reinforces good performance, provides recognition of the employee when peers are present, and
encourages everyone to strive for the best. These types of rewards are internal, according to the
GMP Institute, due to the fact that they address the internal needs of employees such as self-
esteem, recognition and fulfillment. Accordingly, whether or not an employees internal needs are
being met significantly impacts his/her job satisfaction and motivation (Burns and McKinnon, 1993).
Gubman Consulting in 2001 summed up employee enthusiasm concept with their thought of Total
Rewards. The total rewards idea emerges from numerous studies which showed that workers view
everything that their organization offers in a bid to make decisions on about whether to continue
working in that organization or leave, as well as how hard they should work. Organizations that
have the history of taking considering both compensation and a non-monetary incentive, and to
integrate all into an arrangement that rewards behavior and effort, which make the organizations
goals more meaningful tends to be taken as the largest part of success. For a reward system to
show effectiveness, it must provide meaning to the worker (Ballentine, 2007). Wilson (1999) also
states that a reward creates a machinery for in which the benefits of a successful organization are
shared, and forms a connection between the expectation from people and achieved results. In
successful organizations, people are no longer valued merely in conjunction with the job they
perform; rather they are valued by the skills and abilities they bring to bear on 4 the business
strategies of the organization. Companies today invest in human capital and employees barter their
personal capital in terms of the competencies and capabilities they bring to the table that are useful
to the organization. In order to obtain and retain the human capital necessary to be successful,
organizations must create an environment where people are valued for achieving desired results
(Wilson, 1999). Rewards must be linked to those activities and behaviors that promote the success
of the organization. The reward system sends messages to managers and employees about what is
important and valued by the organization (Wilson, 1999). This linkage of organizational goals with
employee rewards creates an environment where both the organization and the employee can
succeed, and where critical talent is developed, maintained and retained. The increasing popularity
of the utilization of non-financial gifts in organizations, with the increasing economic decline, more
organizations are rising up to consider the use of rewards that are not valued in terms of money as
a way of ensuring that their employees work for better yields (Kepner, 2010). Sometimes, monetary
incentives have been considered as a compensation for unfortunate management in an organization.
For instance, an employer who offers a monetary encouragement as a way of increasing sales in
his/her department may be to a cover up for poor management. The workers are assigned duties
for picking up the slack in order to ensure that the minimum quotas for sales have been met. This
sometimes causes workers to turn out to be disobedient, because of doing the jobs for upper
administration (Ballentine, 2007). Though every employee requires money everyday life expenses,
most established workers hardly ever view finances as good reward for their work. When an
employer pays employees in a fair manner, the workforce desires to be appreciated as well as other
non monetary gifts as a swap over for work done that is done well. This trend has increasingly
become more acceptable as majority of large businesses continue exploring ways of motivating
workers without having to break the budget. The advantages are far much 5 better when
businesses offer employees desire: growth opportunities, flexible hours, recognition, opportunity to
contribute, and autonomy, than to compensate employees with cash (Warren, 2007). In Kenya,
non-monetary rewards have been offered in various ways in organizations in order to cause
motivation of employees, especially in the public sector. Some of them include performance
appraisals, security assurance via signing of contracts etc. Rewarding good employee performance
in Kenya seems to be a challenging task, yet it is one which is necessary to support improvements in
performance sought through the strategic management initiative (Wright, 2004). The use of rewards
is normally aimed at aligning workers with the strategy of an organization via the provision
employees incentives, which are meant for acting in the interest of a firm so that it can execute its
mission and vision suitably over time. To achieve desired goals, reward systems should be closely
aligned to organizational strategies. Majority of the systems of research find their basis in Maslow
(2004) work, which came up with the needs-hierarchy theory. The study of Maslows (2004)
shows rewards impacts vary from one person to another, and that there are some persons who
may respond at a higher note to any type of reward offered in an organization. This has the
implication that both monetary and non-monetary rewards have great importance in organizations,
though non-monetary rewards are gaining strong feelings from the employers in the whole world.
However, though most organizations in Kenya have offered rewards to employees, most of them
believe in monetary rewards like pay increase, bonuses and money valued vultures as opposed to
rewards like recognition and opportunities to contribute in decision making (Aktar, Sachu & Ali,
2012). Most employees have been trained to operate on a hierarchical platform where managers
make decisions and impose them to the middle and lower level employees due to lack of
understanding by managements that teamwork and 6 other types of non-financial rewards can
boost employee performance. More so, most organizations do not embrace flexible working hours
for employees and every employee is usually required at the workplace as early in the morning,
meaning that family issues and other external duties outside workplace are never put into
consideration. It is evident that most organizations still apply the traditional rewards systems that
were mainly monetary because they is lack of enough knowledge regarding how non-monetary
rewards relate with employee performance, how these rewards can impact on the performance as
well as organizational competitive advantage, and most importantly, how effective they can be if
used in boosting employee performance in the workplace (Dzuaranin, 2012). Though, according to
Messah (2006), almost all parties that are involved in an organization including the management,
supervisors, workers, as well as HR managers usually have a typical dissatisfaction with the kind of
reward systems that are utilized in their organization's performance, and most of them end up
viewing the reward system as either an unsuccessful officious implementation or even worse, some
view it as a unhelpful manipulation on the supervisor-employee relationship. This somehow true for
the majority of the Kenyan organizations, where research surveys have typically revealed extensive
dissatisfaction of employees with the reward processes that are put in place. This has in turn
resulted in high rates of employee turnover. From Huber (2003) study findings, despite this
intensive indictment, the management in most organizations is unenthusiastic to dispose of
monetary systems in preference for non-monetary systems. Recently, numerous organisations have
implemented or planned to put into practice non-monetary systems of reward for instance
recognition in a belief that they may end up causing the considered necessary cultural
transformation in organizations. Some organisation have been investing large amounts of money in
these kinds of actions, and a number of managers are needed to particularly have certain amounts
 from the organizational budgets for the accomplishment of 7 this purpose (Denning, 2001). This
proposition has its basis assumptions that those kinds of incentives are likely to promote workers
faithfulness; they are capable of fostering teamwork and can also ultimately end up facilitating the
innovation of the appropriate culture, which the ability of encouraging and supporting information
sharing. Others argue that as a way of encouraging knowledge-sharing organisations are needed to
design reward systems that encourage the sharing of all forms in terms of the set goals, assigned
tasks to employees, vision in addition to knowledge (Wright, 2004).
People are different not only because they have different capabilities, skills and motivations, butalso
because they exhibit different work ethics and workplace behaviour. Employee workplacebehaviour
is directly related to their values and beliefs as well as character and upbringing. The
overallworkplace behaviour has been recognised as an important element in organisational
performance.Positive attitude towards work will result in better work performance, lower level of
absenteeism,higher motivation, and overall commitment to the organisation. On the other hand,
negative attitudehas the opposite effect, resulting in lower motivation, lower performance, and
increased staff attrition(Rutherford et al., 2009; Tsai & Huang, 2008; Yousef, 2002; Bowling, 2010;
Tharenou, 1993;Deconinck & Stilwell, 2004; Rutherford et al., 2009; Judge et al., 2001, Ng et al.,
2009; Schleicher etal., 2004; Spector, 1997). Studies have also shown that job satisfaction creates
positive influencebeyond the workplace, increasing the overall satisfaction with life in general (Ilies
et al., 2009; Tait etal., 1989; Qu & Zhao, 2012).While job satisfaction is a widely used term, there is
no agreed definition of what it really coverswhen it comes to work and life in general. Hoppock
(1935) defined job satisfaction as a combination ofvarious psychological, physiological, and
environmental conditions that would prompt a person tohonestly believe they are satisfied with their
job. These factors were considered as personal,subjective reactions toward working environment
and directly dependent on the inner feeling of eachperson (Hoppock, 1935, in Tsai, Yen, Huang &
Huang, 2007, p.160). Seal and Knight observed jobsatisfaction from a psychological viewpoint: they
related it to the overall emotional or evaluationresponses from the employees to the job itself (Seal
&Knight, 1998, in Tsai, Yen, Huang & Huang,2007, p.160). Cranny, Smith, and Stone defined job
satisfaction as an emotional reaction of anindividual to their job, based on their comparison of the
outcomes at the workplace and their desires(Cranny, Smith & Stone, 1992, p. 1).
This goes in line with Lockes definition from 1976 that defines
job satisfaction as

a pleasurable or positive emotional state resulting from an appraisal o
f ones jobor job experiences
(Locke, 1976, p. 1300).Based on these definitions it can be concluded that job satisfaction is in fact
an individual attitudetowards work that involves cognitive (certain assumptions and beliefs about the
job), emotional(feelings towards the job), and evaluative (job assessment) reactions to their job.
The review of therecent literature identified some new elements of the job satisfaction phenomenon.
For example, in thepaper called

Deconstructing Job Satisfaction Separating Evaluations, Beliefs, and AffectiveExperiences

, the author argues that standard treatments of job satisfaction have inappropriatelydefined satisfaction
as an affect and in so doing have obscured the differences among three separateconstructs that
contribute to the overall job satisfaction. These key constructs are: overall
evaluative judgments about the job, affective experience at work, and fundamental beliefs associated wi
th the job. The paper showed that clearly separating these constructs is more consistent with the curren
t,basic research and theory on attitudes as well as the theory of

subjective well-being (SWB)
 . Theauthor also asserts that separation of the constructs can produce better job satisfaction
predictionsthan a single criterion, suggesting the new areas of research and development of new
measurementsystems that do not treat satisfaction and affect as equivalent constructs (Weiss, 2002,
p. 173).With the increase in recognition of the direct relationship between employee satisfaction and
thebusiness success, so did increase the overall interest in the job satisfaction phenomenon, in
bothacademic research and practice. This growing interest in the employee attitude towards work
can belinked with the modern business practices that created a new trend where people and their
knowledgeare treated as organisational assets and a critical factor in achieving and maintaining
competitiveadvantage. The human resources are being more and more recognised as the valuable
source ofknowledge, new ideas, and productivity that are hard to acquire, copy or imitate across
differentorganisations.The relevance of job satisfaction among bank employees to the overall bank
performance becomeseven more important under the challenging conditions associated with the
global recession, especiallydue to the accompanying increase in non-performing loans (NPLs) and
the cost of provisions for

potential losses associated with credit as well as the consequential fall in profitability. Thedeveloping
countries face even more challenges in their banking sector, where banks and otherfinancial
organisations are fighting for survival on local, regional, and global markets. Therefore,
theidentification and analysis of elements that can help developing banking sector in countries such
asBosnia and Herzegovina (BiH) build their business and stay afloat becomes even more
critical,highlighting the importance of the quality human resources and the factors that may
influenceemployee job satisfaction, ultimately influencing the degree of business success