Appropriate rewards can increase the motivation of employees to achieve the organisation's goals.

Employee rewards can be split into two main categories:

Monetary rewards

Non-monetary rewards

Monetary Rewards

Much debate has taken place as to the value of monetary rewards as a motivator. Vroom's Expectancy Theory, for example, indicates that monetary rewards can act as strong motivators if the rewards are clearly linked to the effort exerted. Following the Expectancy Theory monetary rewards should be strongly related to performance levels and the achievement of clearly defined goals.

However, when using monetary rewards as a motivating strategy Adams' Equity Theory needs to be taken into account. The Equity Theory tells us that employees need to perceive their salaries as being equitable with other individuals.

When using monetary rewards as a motivating strategy it is important to ensure that the financial reward system:

Directly relates pay to performance

Provides equity in pay rates between individuals within the organisation and similar job roles outside of the organisation

Ensures individual preferences and desires are recognised

One issue that needs to be considered is that the level to which monetary rewards can be used to motivate employees is limited by budgetary constraints. Therefore, it seems appropriate to use monetary rewards as part of a motivational strategy that also includes non-monetary rewards.

Non-monetary Rewards

Motivational theories indicate that employees can be motivated by non-monetary rewards. For example, needs theories indicate that employees can be motivated by the recognition of skills and achievements, increased