People of the organization are integral part of business as they perform significant role in success of corporate entity. Employee engagement refers to the commitment level of employees and their involvement towards organization and its values (Perkins and White 2008). An engaged employee is one who is aware about the importance of organizational objectives and improves his performance in order to benefit the organization. The report aims to understand the role of reward strategies and policies in shaping corporate performance. This study also evaluates the effectiveness of reward practices and processes in influencing organizational performance.


Employee engagement and commitment gives competitive advantages to the company and it can also enables higher productivity and lower employee turnover. In today's competitive scenario every firm whether it is big or small has policies and practices to engage the workforce in business context as well as to foster commitment level of employees. Every company includes diversified people in its workforce. Individual employee has different expectation and needs different types of motivation. The motivation of staff is crucial for the company's success. By having knowledge about the need and wants of people employer can motivate them toward higher performance and organization goals. Management needs to understand the factors which are essential for staff motivation at work (Armstrong, 2010). Reward system is an HR tool that is used widely to involve and make employee committed towards strategic goals. At the individual level firms needs to focus on factors such as values, attitudes, beliefs, skills, and motivation. If an employee is making an effort to give higher performance and has concern about quality then it can be said the he / she is committed towards business goals. To improve the engagement and commitment level of workers, management needs to offer them good promotions, training, pay- scales, respect, flexibility and feedback. Workforce is conversant of reward system and considers it as total value preposition in case they are sufficient enough to keep the employee satisfied in the organization. This concept is known as total reward system.

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Total reward concept includes all types of rewards:

  • Non-financial as well as financial,
  • Indirect as well as direct,
  • Extrinsic as well as intrinsic.

However employee retention has direct and positive relationship with higher productivity and organizational performances. Employees always look for best return for their services they provide and their services can be awarded with tangible and non tangible rewards. Employee retention and profitability are two important objectives of organization and these can be achieved by offering competitive compensation for employees (Dundon and Rollinson, 2011). However, it is always argued that financial rewards are not a single thing to motivate people but mostly companies fail to hire a good talent pool at the time of recruitment process or after they have been hired. This is because of providing insufficient financial rewards against their performance or industry norms. In this way employee reward system is associated with organizational performance therefore the business needs to fairly compensate to its workforce. Using total reward concept, company focuses on offering attractive salaries and benefits to the workforce.

With addition to this, the management can satisfy staff members by including element such as work - life balance, performance and recognition and development and career opportunities. Vision of company can limit the benefits of total reward system. In case of strong sense of company's situations and the needs of future human resources, total reward system cannot be harnessed effectively (Bratton and Gold, 2007). Companies require focusing on creating such a reward system that can help in attracting and retaining the people who are needed to accomplish future goals. This model cannot be used to reduce benefit element that are to be offered to the workforce. It is only concerned with supplement pay benefits, rather than offering a mix-up of all the reward systems. There is a huge cost involved in implementation of total reward model. On the other hand commitment level of supervisors is another limitation of the total reward model (Brown, 2001).

Strategic approach of reward system is basically based on designing and implementing long term reward policies that can support achievement of organizational objectives and employee aspirations. This system benefits firm and employees at the same time. While introducing strategic approach of reward system business can focus on cutting the cost for business while making employees committed. In this approach corporation selects the option of traditional aspects of pay and benefits. This is the best way to recruit, retain and motivate high quality staff in the organization.

It has already been stated that there is a positive relation between employee engagement and organization performance. Employee engagement and commitment can be assessed by providing rewards. There are two types of rewards that an enterprise can provide its workforce like and intrinsic and non-intrinsic. Intrinsic rewards are related to higher needs whereas non - intrinsic rewards are linked with satisfying lower needs of employees (Armstrong and Murlis, 2007). To make good relationship with people in the workplace, the management focuses on offering both these rewards. Tesco Plc is the largest company in retail sector of United Kingdom and it employs more than 15000 people. In order to enhance organizational performance which is directly linked with employee performance, the retailer uses both financial and non financial rewards. Having a bureaucratic organizational structure it follows similar rewards system which has a significant role in improving workforce motivation. Management has a standardized pay scale for individual employee such as director, senior managers or middle level employee. New workers are placed at a lower salary and are ensured to get their salaries over the period of time and as per performance. On the basis of performance of individual, company offers various kinds of monetary and non monetary rewards. For this the management regularly evaluates the performance of individuals. In order to get good benefits all the employees work at their best potential for giving higher performance. This directly impacts on organization performance and success (Easterby-Smith, Thorpe and Lowe, 2002). Tesco has created a performance management cycle that helps the management in offering a quality environment to the employees so they can perform in a better way by using their skills and competencies.

The firm has developed unit strategies and goals for workforce so that all the workers can understand their role and responsibilities towards the organization. Business has set performance standards for every employee at different management level. Line manger conducts general meeting to make the workforce aware about their responsibilities and performance expectations. They also guide their subordinates to work as per their maximum potential. This helps in understating their importance for the firm and they can also perform at their level best. It also increases the individual as well as organizational performance (Ramsay and Finney, 2006).

Assessment: Tesco provides regular assessment to its workers related to their task and performance. In case an employees is having problem with working style then he / she is guided by experts. They make him learn the skills for performing the task effectively. Manager provides regular feedbacks to the employees regarding their work. This helps in encouraging employees for giving better performance. Talent discussions are always there in the company, so people can acquire new skills and understandings. This will help in improving their work which is good for enhancing company’s effectiveness (Torrington, Hall and Taylor, 2008).

Recognition: Management of Tesco plc is focused on individual performance in order to provide recognition to them. For this task, managers analyze the work done by employees and observe their performance level. The best performer is awarded and recognized among all the employees. This helps in boosting moral of workforce and they can work against achieving performance standards (Ali and Ahmed, 2009).

Career development opportunities: Company provides career development opportunities to the employees and offers training to the workforce in the areas where they need it. The organization has a standard procedure of training the workers. It also provides opportunities to get overseas exposure by transferring its employees to foreign branches. The retailer also offers opportunity to receive higher education in retail sector. For this it has collaborations with big universities. Such opportunities are to be given to part timer workers. Having such reward system employees can acquire new skills and can perform better. The people who develop their competencies are promoted by the management to managerial level or leadership positions. In this way reward system improves overall performance of Tesco.

Following points represent some of the existing reward systems and strategies in the company and its role in Tesco's business performance:

Share our Success-This strategy helps the firm in achieving employee engagement and commitment. This is divided into three major parts that are explained below:

Offering Share- After completing one year of employment the company rewards its employee with shares. It provides shares of company to the eligible employees and gives them chance to become a shareholder. This reward system supports in gaining commitment level of employees (Coffman and Gonzalez-Molina, 2002).


Save as you earn- After finishing one year at Tesco the employee can become eligible for the scheme in which workers are given option to save £50 in a month for regular 3-5 years or a fix period. These things enable employees to save their money with a reliable source. The amount can be redeemed after completion of time period. The scheme is free from tax and employees can redeem it any time. Such financial rewards make the workers committed towards the organization and increase employee retention (Densten, 2005).

Buy as you earn- This rewarding strategy comes under the financial rewards and enables workers for gaining monetary benefits. Employees are given the option to buy shares of company at the market prices and can also have some tax benefits. In this way workforce can save their money and become loyal to the organization.

Staff Privilege card- This reward is provided to all the employees working at any management level in Tesco. By having this card workers can gain 10% discount on the purchase of Tesco products from any store from any location. They can also earn club card points for their shopping. This scheme offers both intrinsic and non-intrinsic rewards to the workers (Khan, Farooq and Ullah, 2010).

Pension- Tesco offers pension schemes in order to provide financial protection in future to the staff members and their family. This scheme insures the workers to be financially secure and business can retain qualified workers. This is good for performance of the organization.

Leisure Time- The retailer offers fun activities in the leisure time that enable workers to have good bonding to each other. It also reduced the employee conflicts and they can perform better. In this way management can increase the performance of company.

Other benefits- In addition to this, Tesco provides discounts and the special offers are only available to the staff of the company. Discounts can be used at theme parks, holidays, gym, etc (Prasetya and Kato, 2008).


Motivation in the organization refers to encouraging the employees for better performance and achieving organizational goals. To achieve motivation in the company, managers need to identify the needs and wants of individual employees. There are various theories that are used to achieve motivation in the firm and all are based on intrinsic and extrinsic rewards. Some workers can be motivated with financial rewards while some are motivated by receiving non-financial rewards. For many employees money is an important thing. If employees are motivated and satisfied, they will actively fulfill the duties assigned to them. Every organization seeks for an employee who follows the rules and policies of the company on the other hand workers expect for a better working environment, attractive financial rewards and fair pay system. Financial rewards include salaries, incentives and bonuses. This thing has always been argued if a monetary reward is better than non- monetary reward to motivate the employees. The employees who receive good financial rewards are likely to be more motivated in performing day to day tasks. Such employees work from core of their heart. There is a positive relation between financial rewards and employee motivation. According to Herzberg's motivational theory there are two types of motivational factors that are important for achieving employ motivation. In this theory it has been suggested by providing better salaries and benefits individual can be motivated at workplace. Hilton worldwide is a famous hotel chain based in United Kingdom. The organization operates in hotel industry where employee retention is a problem. In order to motivate and retain the workforce, company uses various rewards which include financial and non - financial rewards (Prasetya and Kato, 2008).

Following points explains the process of motivation in Hilton worldwide

Unsatisfied needs and motives: This stage is the first step of motivation. In this stage, managers indentify the needs and wants of diverse workforce. To analyze the needs of individual employees, management needs to develop good relations with them. Every manager at different level in Hilton hotel is committed to understanding the needs of employees.

Tension: The next stage of motivation involves the tension in the organization. This occurs when the needs of employees are not satisfied. The tension can be in the form of physical, psychological, and sociological. This directly affects the performance of individual as well organizational performance. The organization has a culture that enables employees to discuss their tension and stress with the managers so that can try to resolve them. Having problem of employees, management makes objectives to satisfy their needs and resolve their tension (Densten, 2005)

Actions to satisfy needs and motives: In this stage people take actions to satisfy the needs and desires of individuals. As per expectations of their employees, management plans the rewarding strategies from which they can be motivated. Hilton always gives importance to its employees in a way to attain their commitment and loyalty. This is because it knows that a motivated employee can create worth for company and can help in achieving success. HR policies of the organization always focus on creating effective tactics to motivate workforce (Bauer, 2008).

Goal accomplishment: This is an important step which involves implementation of actions in order to achieve the goals of organizations. The aim of Hilton is to motivate its workforce and retain them for a long time. The strategies of business focus on improving the performance of individuals at the workplace. This task is achieved by rewarding and punishing the employees. For the best performance an employee is awarded on the other hand for bad performance one can be punished. The organization does this to motivate the workers for giving their best by enhancing their skills.

Feedback: This is the last stage of motivation in which organization seeks for the feedback provided by the employees. It can involve in the process of motivation by taking their views in respects of the actions taken to motivate them. The workers provide information for revision and improvement that are needed in the strategies. This information is helpful in applying modification in the actions. In order to achieve high level of motivation in the organization effective revision and modifications are needed (Densten, 2005).
Reward practices in Hilton worldwide

Effective compensation: Organization provides effective compensation to the workers. This is the best wants to motivate them towards success. The company provides salaries as per industrial norms. With the help go this effective strategies, Hilton retains skilled workforce in the organization. It enables organization to improve performance of individual organization. However the new workers are hired at minimum salaries but the company ensures them to achieve good packagers in future which will match their performance standards. This thing motivates them for higher performance (Yoon and Uysal, 2005).

Performance appraisal: Hilton has performance appraisal systems in which they provides rewards to employees based on their performance. This creates a better working environment in the organization and people do their best to achieve higher rewards. As per the performance workers get incentives.The organization has a program called Best Employee of the year in which it awards the best performer in front of all the employees (Kim, Mattila and Baloglu, 2011).

Training and development: Company offers training and development programmers to the workers. Supervisors provide the report of individual employee and present the need of training. Management conducts training that are essential for the development of skills of the workforce. It also provides development opportunities to the workers by taking their views and suggestions on various business problems (Bauer, 2008).

Better career opportunities: To reward the workforce, organization provides them better career opportunities in the way by giving them chance to gain foreign espousers. It sends employees to the various branches located at different countries. They can acquire new skills and competencies which can help them in developing career opportunities.
Gain sharing: This is the force that enables employees to gain a mutual share of any increases in total organizational productivity. The company offers a part of profits to the employees in the form of bonus (Lundberg, 2009).

Ways to improve reward system in Hilton world wide

  • Company needs to focus on reward teamwork and cooperation
  • Actively sell the plan to supervisors and middle managers who may view employee participation as a threat to their traditional notion of authority
  • If annual cash bonuses are granted, pay them in a lump sum to maximize their motivational impact
  • Encourage two-way communication so problems with the pay-for-performance plan will be detected early


The above report presents the role and functions of reward strategies and their influence on business strategies. The concept of total reward has been explained in the study while analyzing its limitations. The rewards strategies and practices of Tesco Plc and Hilton worldwide have been explained. The role of motivation in achieving individual and organization performance has also been analyzed.


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