Number Contents

1 Introduction
2 Explanation dependent variable and independent
variable
3 Understanding Reward Power
4 Types of Rewards and Their Impact on Performance
5 Impact of Reward Power on Employee Performance
6 Potential Downsides of Reward Power
7 Balancing Reward Power with Other Management
Approaches
8 Conclusion
9 References
Relationship between manager reward power and employee performance

Introduction:
In today's competitive business environment, understanding the dynamics between managers
and employees is crucial for organizational success. One significant aspect of this dynamic is the
relationship between a manager's reward power and employee performance. Reward power
refers to the ability of a manager to influence employees by offering them rewards, which can
be tangible (such as bonuses or promotions) or intangible (such as praise or recognition). This
assignment explores how this form of power affects employee performance, motivation, and
overall job satisfaction.

Explanation dependent variable and independent variable

this scenario, reward power is considered the independent variable because it represents a
factor or cause that the manager can control and manipulate. Reward power is the manager's
ability to influence employee behavior by providing rewards (e.g., bonuses, promotions, praise).
It's seen as a potential motivator for employees to improve their performance.

Employee performance is the dependent variable because it reflects the outcome that may
change in response to variations in the independent variable. In other words, employee
performance may increase, decrease, or remain stable depending on how the manager uses
reward power.

By setting up the variables this way, you can explore whether and to what extent the use of
reward power impacts employee performance, establishing a cause-and-effect relationship in
your analysis.

Understanding Reward Power:

Reward power is one of the five bases of power identified by French and Raven in 1959. It
operates on the principle that employees are motivated to perform well if they anticipate
positive rewards. This form of power gives the manager the ability to influence behavior by
promising desirable outcomes for good performance. There are several types of rewards a
manager may offer, including:

✓ Extrinsic Rewards: extrinsic rewards or in other words monetary rewards are the best
source of employee motivation which would cater the expectations of individual
 employees in order keep them motivated. Therefore, this way of motivation tends to be
short term and should be repeated constantly to retain motivation and performance of
the employees.
By extrinsic rewards an organization can boost the productivity and moral of workforce,
therefore maximizing and improving employees’ performance as well as the whole
organizational performance. By reward system an organization ensures that the
employees have perception that they are valuable for the company and the
management acknowledges the role they play in the progress of the company. In short,
monetary rewards can play an effective role to maximize productivity of employees and
has a critical role in maintaining high level of motivation among employees. Extrinsic
motivation is generated by some actions being done for people to motivate them. This
motivation occurs from the external sources such as money, grades, criticism or
punishments. Extrinsically motivated employees can work on a task even without being
interested in it, knowing that the reward will provide them with satisfaction and
pleasure after the task being completed. Unfortunately, extrinsic motivation has a short
effect on the employees and with the new task to be done new rewards should be
offered
The study conducted by Andrew and Kent (2007), proved that cash rewards are highly
appreciated by all level of employees and give them a sense of recognition and job
satisfaction. Monetary rewards, also, have the power of promoting different job
positions making them more attractive for the employees, therefore, pushing workforce
for constant skills improvement and development. According to the above information
the following hypothesis may be concluded: extrinsic rewards used in Normet ltd. have
positive impact on the performance of the employees.

✓ Intrinsic Rewards: In contrast, intrinsic motivation refers to the motivation that comes
from inside an individual. This type of motivation usually comes with the satisfaction
employee gets after the work being done or in some cases during the working process.
Intrinsic motivation can be influenced by several factors which are responsibility,
freedom to act, scope to use and develop skills and abilities, interesting work and
opportunities for advancement. These motivators are used to have a long- term effect
as they come from the individual and not from the surrounding environment used a
different term for non-cash rewards i.e. non-material rewards and concluded non-cash
rewards tend to increase the job satisfaction in employees particularly employees that
show high productivity as compared to other employees. The study, conducted by the
researchers, explains that when an employee is satisfied with monetary rewards, he/she
starts searching for something different as cash benefits cannot satisfy the needs and
 cannot motivate in the same way. The study also emphasized the fact that intrinsic and
extrinsic rewards should coexist in a reward system as only a balanced system may

adequately meet motivation needs of employees and ultimately lead to optimization of

commitment, motivation, and job satisfaction of employees. As a result, the researcher can
conclude the third hypothesis which states that intrinsic rewards used in Normet Ltd. have
positive impact on the performance of the employees.

✓ Career-related Rewards: Opportunities for professional development, additional

responsibilities, or leadership roles.

Managers with significant reward power can boost morale, encourage hard work, and foster
loyalty within their teams.

Types of Rewards and Their Impact on Performance:

Managers can use various types of rewards to enhance performance, including financial
rewards, promotions, and social recognition. Each type has different effects on employee
motivation and performance.

• Financial Rewards: Salary increases, bonuses, and profit-sharing plans are popular
methods of motivating employees. Studies show that financial rewards can lead to
short-term boosts in performance, especially for task-oriented jobs. However, if
employees begin to expect financial rewards as a norm, they may require increasingly
higher incentives to maintain their performance. Managers should balance financial
rewards with other forms of recognition to avoid creating a culture of entitlement.
• Promotions and Career Development: For many employees, the opportunity for career
advancement is a powerful motivator. Promotions not only increase an employee's
status but also typically bring more responsibilities, which can lead to increased
engagement and productivity. By clearly defining career paths and linking promotions to
performance, managers can motivate employees to achieve higher goals.
• Social Recognition and Praise: Recognition, whether through public acknowledgment,
employee-of-the-month awards, or thank-you notes, is an often underestimated
reward. Praise and social recognition can be particularly powerful because they satisfy
employees' psychological need for appreciation and validation. This type of reward can
foster a positive work culture, boosting morale and encouraging teamwork
Impact of Reward Power on Employee Performance
a. Motivation and Engagement When employees perceive that their hard work will be
rewarded, they are often more motivated to exceed expectations. Studies have shown that
performance-based incentives can lead to increased productivity, as employees strive to meet
or surpass targets.

In particular, expectancy theory suggests that employees will be motivated if they believe that:

• Effort leads to good performance.

• Good performance will result in rewards.
• These rewards will satisfy personal goals.

Thus, the link between effort, performance, and rewards becomes a crucial driver of employee
engagement and productivity.

b. Job Satisfaction Reward power also affects employees’ overall job satisfaction. Employees
who feel appreciated and rewarded for their efforts are more likely to experience higher levels
of job satisfaction. This satisfaction leads to lower turnover rates, a stronger sense of loyalty,
and a more positive workplace atmosphere.

c. Performance Consistency A manager’s ability to consistently reward good performance helps

set clear expectations. Employees understand what is expected of them and what they will
receive in return for meeting those expectations. This clarity can lead to consistent, reliable
performance across the workforce.

d. Employee Loyalty and Retention When employees are rewarded for their hard work, they
tend to develop stronger loyalty to their manager and the organization as a whole. This loyalty
can reduce turnover, save recruitment costs, and enhance organizational culture. Employees
who feel valued are less likely to seek opportunities elsewhere.

Potential Downsides of Reward Power

Reward power, while a powerful tool for motivation, can have significant
downsides if not used judiciously. Here are some potential drawbacks:

▪ Diminishing Returns: Overreliance on rewards can lead to diminishing

returns. As individuals become accustomed to rewards, their motivating
effect wanes. This can lead to a cycle where increasingly larger rewards are
needed to achieve the same level of motivation.
 ▪ Extrinsic vs. Intrinsic Motivation: Excessive focus on external rewards can
undermine intrinsic motivation. When individuals are primarily driven by
rewards, they may lose interest in the task itself. This can lead to decreased
creativity, innovation, and overall job satisfaction.
▪ Unintended Consequences: Reward systems can sometimes have
unintended consequences. For example, if rewards are tied to individual
performance, it can foster competition and hinder teamwork. Additionally,
if rewards are not perceived as fair or equitable, they can lead to
resentment and decreased morale.
▪ Short-Term Focus: Reward systems that emphasize short-term goals can
discourage long-term planning and strategic thinking. Individuals may
prioritize quick wins that lead to immediate rewards, neglecting important
but less tangible tasks that contribute to long-term success.
▪ Dependency: Overreliance on reward power can create a dependency
culture. Individuals may become reliant on external rewards for motivation,
rather than developing a strong internal drive. This can make them less
resilient and less adaptable to change.
▪ Ethical Concerns: Reward systems can sometimes be used in unethical
ways. For example, they may be used to manipulate or coerce individuals
into behaving in a certain way. Additionally, if rewards are not distributed
fairly, it can lead to feelings of injustice and resentment.

To mitigate these downsides, it is important to use reward power in conjunction

with other forms of power, such as expert power and referent power.
Additionally, it is crucial to design reward systems that are fair, equitable, and
aligned with the organization's long-term goals. By using reward power wisely,
organizations can harness its motivational potential while avoiding its potential
pitfalls.

Balancing Reward Power with Other Management Approaches

To avoid potential downsides, it is essential for managers to balance reward power with other
forms of power, such as:
 ▪ Referent Power: Based on the personal appeal or relationship between the manager
and employee.
▪ Expert Power: Gained through knowledge, skills, or expertise.
▪ Legitimate Power: Stemming from the position of authority held by the manager.

By integrating reward power with these other forms of influence, managers can create a more
holistic and effective leadership approach. This balanced approach encourages both extrinsic
and intrinsic motivation, resulting in long-term employee performance improvements.

Conclusion
The relationship between a manager’s reward power and employee performance is complex
but crucial for organizational success. When used effectively, reward power can motivate
employees, boost productivity, and enhance job satisfaction. However, managers must be
cautious to balance this form of power with intrinsic motivation, fair reward distribution, and
long-term engagement strategies.

By creating a reward system that recognizes both performance and individual contributions,
managers can foster a positive and productive workplace environment, leading to sustained
improvements in employee performance and organizational success.

References
French, J.R.P., & Raven, B. (1959). The Bases of Social Power. In D. Cartwright (Ed.), Studies in
Social Power. Ann Arbor, MI: Institute for Social Research.

Lawler, E.E. (2003). Reward Systems and Performance. California Management Review.

Deci, E. L., & Ryan, R. M. (2010). Intrinsic Motivation and Self-Determination in Human
Behavior. New York: Springer.