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Chapter 1:  Introduction

The management of reward system can be considered as one of the most crucial yet problematic part of human resources management (HRM) within any organisation (Storey, 2014). Though reward management process is a highly demanding facet of HRM, it is also a controversial and complex aspect in terms of the debates and assumptions that have surrounded the drivers of work behaviour and human motivation (Storey, 2014). Due to the rapid increase in competition and scarcity of sufficient skills, the attraction as well as retention of adequately skilled employees has been emerged as a major challenge for business organisations. Terera and Ngirande (2014) have explained that the process of attracting, retaining and motivating employees for the desired profit generation of any organisation required novel reward system that can efficiently satisfy employees. On the other hand, the current financial crisis has increased debates against the process of rewarding employees within organisation. Strong criticism, financial downfall as well as new regulations have enforced the management of various organisations to restructure or freeze the reward and bonus structure. Focusing on these arguments, the further research process is based on analysing the effect and importance of reward management in the turnover intention and retention of employees in any organisation. The research is also targeted to evaluate the effect of reward management in terms of influence the performance of workforce. In order to test the impact of reward management on the performance and turnover of the workforce, the case of Suning Commerce Group would be evaluated. Suning Commerce Group is a renowned Chinese retail brand that has started becoming a popular retail brand worldwide. The brand employs approximately 8364 employees, which promotes significant employees strength. It would be interesting to evaluate the current reward management strategies of Suning Commerce Group and if the reward strategies help improving the employee turnover situation.

 

1.1 Background of the Research

Reward is one of the most important elements to increase the motivational level of employees in terms of providing their best efforts to generate efficient and innovative solutions for organisational challenges (Cerasoli et al., 2014). This process is also targeted to improvise the performances of organisations in a non-financial as well as financial manner. Aguinis et al., (2013) have described that the process of rewarding employees is one of the major component for efficiently manage human resources of any organisation. A number of motivational theories, such as Vroom’s Expectancy Theory, Lawler’s Discrepancy Theory etc., have demonstrated that rewards and the satisfaction generated through it possess high potential to simulate desired employee performance and commitment while discouraging unfavourable behaviours such as absenteeism, turnover etc. As per Dewhurst et al., (2012), employees tend to provide their maximum potential when organisations initiate a trustworthy relationship with the employees through reward management.

There are various other factors that also affect the loyalty and performances of employees such as training and development processes, employment relationship, job security along with the overall reward management policies. Dewhurst et al., (2012) have also elaborated that apart from financial compensations there are various other means to provide reward to the employees such as opportunities to perform on important and challenging tasks and projects, leadership attention, appraisal from management etc. Various researches in leadership power have stated that reward power by supervisor can be positively associated with the productivity, task performance, job satisfaction, turnover and loyalty of employees (Murayama and Kitagami, 2014). By supporting this statement Gohari et al. (2013) have detailed that rewards can be intrinsic or extrinsic. Extrinsic rewards are tangible in nature such as promotion, bonus, salary, incentives etc. On the contrary, intrinsic rewards involve a number of intangible rewards such as challenging responsibilities, job rotation, appreciation etc (Gohari et al., 2013).

Apart from performance and loyalty management, handling turnover rate is also a major concern for the management of any organisation.  Increased turnover rate generally incur vary high cost to companies. It also highly impacts the overall outcome and performances of different business processes. According to Hong et al. (2012), retaining the valuable employees is a crucial job of any organisation as failure to it restricts organisations to capitalize on the organisational human resources. Literatures have detailed that the treatment of employers to employees as a valued contributor assists organisations to remain important human assets. Therefore, maintaining the job satisfaction plays an important role in terms of retaining valuable employees to the organisation. Mahal (2012) has revealed in his study that the turnover rate in organisations in increasing rapidly due to the dissatisfaction and lack of commitment of the employees. Hence, it increases the responsibilities of management to assure employee satisfaction through right amount and kinds of rewards and recognition.

 

1.2 Research Problem and Gap

Understanding employee’s perspectives as well as measuring their performance motivation and retention factors are very crucial for organisations to ensure long-term business success (Meyer, 2014). However, assumptions related to organisational activities and policies and understanding towards any phenomena different from employee to employee. The individual understanding of any situation generally provokes the actions of any employee. Meyer (2014); Aguenza and Som (2012) have detailed a number of factors that assist organisations to enhance the motivational level of employees in terms of improving their performance as well as commitment to the company. Various studies and literature have dispelled a misconception that good salary structure or wages play the most important role in increase the motivational level of employees regardless their industry and activities (Halpern, 2011; Haer et al., 2013).

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