© 2020 IJRAR March 2020, Volume 7, Issue 1 www.ijrar.

org (E-ISSN 2348-1269, P- ISSN 2349-5138)

A STUDY ON EFFECTIVENESS OF REWARD

SYSTEM ON EMPLOYEE MOTIVATION IN BPO
SECTOR
Sophy Alexander
Department of Masters of Business Administration
Assistant Professor, Marian International Institute of Management, Kuttikkanam, Kerala
Steema tomy
Management Trainee, Marian International Institute of Management, Kuttikkanam, Kerala

ABSTRACT:

In the age of global competition, obtaining the right work force and retaining it turns into the
most essential assignment of all organization. To get the most from those resources , employees should be motivated.
Managers must think of new ways to hold an employee’s attention and interest in BPO sector. The primary data is
collected from 100 participants. The questionnaire survey method is used to collect the primary data. From the
analysis, it is found that the majority of the respondents are satisfied with effectiveness of reward system on
employee motivation. The reason on why the study is vital is it helps to understand why reward system is
important within the organization so the organization can adopt better ways to encourage workers through a
good reward system to increase worker productivity.

Keywords : Reward system , Employee motivation, Attitude, Employee productivity.

INTRODUCTION

Reward system is a very important management tool which is used to motivate workers. In different words, reward
system attract people to join the organization and also helps to reduce turnover intention of employees. It will
encourage them to work, and motivate them to perform good. The factors that motivates and affect employee
performance are rewards which can be monetary, job security, working conditions, employer-employee relationship,
autonomy, relationship with colleagues, training and development opportunities, employee recognition and
company’s rules and policies for rewarding employees. Among all these factors, motivation that comes with rewards
becomes important factor which increases the exceptional contribution by employees.

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An organization should satisfy its obligations to stakeholders, its top management must build a bond between the
organization and its employees that will fulfill the needs of both the parties. The organization expects employees to
perform the duties which is assigned to them and at the standards set for them, and to follow the policies that have been
established to govern the workplace.

Employee motivation is outlined as the willingness or effort exerted by the employee so as to realize the goals of the
organization and this development of motivation is universal and results as a result of bound unhappy wishes of the
employee. An individual has preferences and likes and dislikes that he or she desires to
fulfill. Once these desires and wishes aren't glad , a drive or motivation is formed in this person to realize that goal.

Today an organizations growth is completely reliant on employee’s work motivation. It is very important for a
company to find out plethora of ways to motivate its employees so that it can plan a suitable reward system and gain
better results. The right combination of monetary and no monetary rewards can boost up the employee’s work
motivation and enhance their fidelity to the company. Past literature has brought the area of rewards systems to
attention, significantly in the area of monetary and non monetary rewards and how it can motivate employee
performance at work.

The aim of the study is to investigate and analyze how the reward system is effective in BPO to generate employee
motivation. It should aim what reward system functions well and could be further developed and improved in order to
boost employee satisfaction. The driving force behind this study is to enable the employees to give feedback on their
work motivation and their attitude towards the reward system.

LITERATURE REVIEWS

Nirma Sadamali Jayawardena and Darshana Jayawardena(2020) Studied on the extrinsic and intrinsic rewarding
system on employee motivation. The study contributed to identify the employee motivational factors in the selected
company and to reduce current labour turnover ratio by identifying the factors which motivate the current workforce.

Walters T. Ngwa(2019) conducted a study on the effect of reward system on employee performance. The study
assesses the degree to which profit sharing affects employee commitment. Firstly, because reward systems are not a
one size fit for every firm, it will be interesting to investigate the effect of reward system on employee performance in
service firms. Employee task are more routine with a relatively lower level of creativity and innovation. There is a
lower probability for group work and a higher level of specialization and task distinction. It is very important for
research to be done in this direction with the focus of identifying the most appropriate reward system for service
firms. Secondly, wages and salaries constitute a significant part of expenses made by firms. Considering that reward

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is an important tool that can be used to attract the right employee, keep them and constantly motivate them to perform
at optimum level, reward systems are expected to deliver attractive packages.

Belachew Kassahun(2019),identified that employee motivation is a very important issue that affects every business
organizations. To provide an excellent service for their customers and to foster development of tourism in the region
one and two star rated hotels as vital place should consider the issue of motivation to satisfy its employees and grasp
success. The rewards that one and two star rated hotels provides for its employees payment, promotion, recognition,
benefit, work content, and work condition. But the reward system of the one and two star rated hotels is poor and
employees were not treated well by the hotels. This means, the one and two star rated hotels did provide adequate
rewards which incorporates intrinsic and extrinsic for their staff that motivates them for higher performance. The
perception of the hotel employees towards the reward system of the one and two star rated hotels is negative. They
believe that the reward system of the one and two star rated hotels is not properly communicated, transparent and
fairness. They also felt that the reward system is not externally competitive and appropriate for hotel employees

Zhen Zhang, Lianying Zhang, Aibin Li(2019) found that reward system as an effective tool to manage NPD(new
product development) collaboration. Yet, our understanding about what types of rewards should be used for NPD
collaboration is still unclear. This research examines the effects of reward interdependence and nonfinancial
incentives on NPD collaboration, as well as the moderating roles of team size and deep-level heterogeneity

Yoko Kitakaji, Susumu Ohnuma(2018), examined whether rewards and mutual punishment increased non-
cooperation or motivation and regarded illegal industrial waste dumping as a social dilemma in which everyone bears
the burden of the cost of illegal dumping, legal treatment is cooperative behavior, and illegal dumping is non-
cooperative behavior.

Said Juma Al Darmak(2017), observed the role of rewards in promoting innovation has received considerable
attention in both theory and practice. The fact that rewards have a positive impact on promoting innovation is well
established. However, this relationship is complex since different types of rewards are suited for various kinds and
stages of innovation. Further, an alternate view undermines the role of rewards in promoting innovation. Research
explains that reward plays a significant role in the motivation of employees since it creates a certain degree of
excitement among employees, thus leading to the development of innovation culture within the organization.
However, this relationship between rewards and innovation is not a straightforward one. Considering that innovation
varies in degree and types, this study highlights that various types of rewards impact on different types of innovation.
Further, considering the existence of a profusion of rewards systems, this study through an exhaustive literature
review, shows that different types of rewards are linked to various stages of innovation.

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Felista Ngozi Abasili, Abdu Ja’afaru Bambale(2017), investigate the direct relationship between reward and
employee performance using the variables including salary, bonus, incentive, promotion, recognition, pension and
gratuity as independent variables and performance as dependent variable. Employee performance and the level of job
satisfaction and commitment to their job is a direct function of the compensation packages and reward system of the
organization. Without appropriate compensative package, incentive system and motivational techniques put in place
in the organization, it is most likely that workers will not be committed and their performance level will be
underhand. Reward is central to the functioning of any employee-employer relationship and it is a matter that is
closest to the heart of both the employee and the employer

Ofelia Robescu and Alina-Georgiana Iancu(2016) says that the most important finding of the study is that a large part
of employees agree that recognition motivates and influence the performance. In summary, recognition can be a
powerful tool used to motivate employees. It is desired by employees and significantly increase their performance.
Some suggests that social rewards, such as recognition may affect employee performance to the same level as
payment.

Abdifatah Abdilahi Ali(2015), opined that there is a positive relationship between extrinsic rewards and employee
satisfaction. Giving of rewards to the best performing employees motivates them to increase their job satisfaction as
well as encouraging the other employees to enter into a competitive performance for them to be rewarded too.
Appreciation of the work done and provision of performance benefits affects employee satisfaction level thereby
promoting their morale in their work. From the findings the level of satisfaction an employee perceives by receiving a
extrinsic reward is expected to influence the reward attractiveness in the same manner as a fixed pay salary does. This
implies that an employee who prefers a fixed pay over a performance based pay, will also be more attracted to a
tangible reward than to a non-tangible reward. yet, granting non tangible rewards to employees has also proven to be
an important factor that influences employee satisfaction

Ayesha Binte Safiullah(2014), From this study it can be inferred that it is not just one factor, for example it is not just
monetary rewards which motivate an employee, though monetary compensation is the physiological factor to the
employees. This essentially says that the employees need to be motivated with the content of their job. That is the
employees in any organization need to be constantly provided with opportunities for learning new skills so that they
do not feel monotonous. They should be motivated to use the acquired skills on their job. The organizations need to
provide challenging opportunities to the employees. The organizations also should emphasize on work life balance,
and should provide options to employees, like- flextime, day care centre for their children etc. They must be
encouraged to participate in decision making and they need to get challenging tasks. The employees would appreciate
these initiatives. It is important to link pay to performance as it is an effective motivator when people know what they

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are going to get in return for certain efforts or achievements, and when they feel that what they may get is worth
having.

Dr. Baskar , Prakash Rajkumar. K. R,(2014) studied that a variety of factors influence employee motivation and
satisfaction. It was also significant to discover that there is a direct and positive relationship between rewards and
recognition and job satisfaction and motivation. Hence, if rewards and recognition offered to employees were to be
altered, then there would be a corresponding change in work motivation and satisfaction. The direct translation of this
could be that the better the rewards and recognition, the higher the levels of motivation and satisfaction,. In the event
of major inconsistencies, especially for emotional conflicts between performers and non performers, the organization
should make an effort to re-assess and rectify this situation. In the event that the organization does not re-assess this
situation, it could have a resultant negative impact on job performance and productivity as well as on the retention of
minorities. In accordance with Maslow’s hierarchy of needs, the lower level needs such as salary and benefits must
first be met before the higher level needs, which impacts motivation can be satisfied.

RESEARCH METHODOLOGY

To cater the need of the research I have used primary (self-constructed structured Questionnaire). Primary
data is collected directly from the employees by means of holding discussions with them and through direct
observations. Direct enquires to seniors officers were a reliable source of information. Secondary data were collected
from brouchers, magazines, manuals, and articles, annual reports of the company, website and other document of the
company.

OBJECTIVES OF THE STUDY

 To identify the existing reward system of the organization.

 To analyze the effect of reward system on motivational level of employees .
 To identify the relationship between reward and employee motivation.
 To know about the motivational techniques used by the organization.
 To suggest new techniques to motivate the employees

RESEARCH DESIGN

The research design is the conceptual structure with in which research will be conducted. Research design is a frame
work or blue print for the conducting the research. It is a logical and a systematic planning and directing a piece of
research. Descriptive research has been applied, which is also known as statistical research, describes data and

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characteristics about the population or phenomenon being studied

TOOLS AND TECHNIQUES OF ANALYSIS

Structured questionnaire was prepared to interview the employees of the organization. For analyzing the collected
data different statistical techniques are used with the statistical tool SPSS.

SAMPLING METHOD

The sampling method used in the survey was Convenience Sampling method.

SAMPLE SIZE:

The sample size used in this survey was 100. A total of 150 questionnaires were distributed among labors out of
which 100 responses came back.

DATA ANALYSIS AND INTERPRETATIONS

Table 1
Correlations between Reward System and Employee Motivation
Reward System Employee
Motivation
Pearson Correlation 1 .627**
Reward
Sig. (2-tailed) .000
System
N 100 100
Pearson Correlation .627** 1
Employee
Sig. (2-tailed) .000
Motivation
N 100 100
**. Correlation is significant at the 0.01 level (2-tailed).
From the correlation analysis, it can be inferred that the correlation between reward system and employee motivation
is significant (r = .627).Thus the hypothesis, there is positive correlation, when there is increase in effectiveness in
reward system there will be corresponding increase in the employee motivation. It is evident that along with increase
in effectiveness of reward systems there is corresponding increase in the perception of employees

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Table 2

ANOVA
Employee Motivation
Sum of Squares df Mean Square F Sig.

Between Groups 949.401 23 41.278 3.726 .000

Within Groups 842.039 76 11.079

Total 1791.440 99

From the ANOVA test it can be interpreted that there is statistically Significant relationship between employee
motivation and Reward system(F= 3.726).The value show positive relationship between the variable, which says that
employee motivation is a factor which depend on rewards system. It is evident that variations in Reward system can
lead to employee motivation

FINDINGS

Most of the employees are satisfied with the reward system given in BPO sector. Many of the companies were
able to reduce turnover due to effective reward system. The study will also help the organization to increase the
motivation level of employees and thus increase the performance. In this way the organization will be able to
achieve its objectives in a better cost effective way by making a confident and strong workforce. The best way to
motivate its employees is to give good rewards so that they will remain back in the organization.

CONCLUSION

To recapitulate, the study states that salaries, bonus, commission and working conditions have a positive relationship
with performance of employees in business process outsourcing. Thus there is a positive relationship between
rewards and employee motivation. The purpose of rewards is to motivate employees thereby increasing the result of
the organization.

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