Reward Systems

Theoretical and Practical Implications

The outcomes of this research have theoretical and practical significance, suggesting critical theoretical implications for incentive management systems. Firstly, this study advances our knowledge of the mechanism by which incentive and reward systems affect employee performance by examining the mediating role of employee job satisfaction as a link between incentive and reward systems and employee performance. By doing so, the current study avoids the traditional linkage in the relationship of these variables by highlighting the critical mediation effect of job satisfaction in causal explanation. According to the findings of this study, firms can increase employee job satisfaction through the use of incentives and rewards, which subsequently enhances employee performance. Analyzing employee job satisfaction as a mediator allows for a better understanding of how and why different forms of incentives and rewards enhance employee behavior at work.

Secondly, this study was conducted in a country with a thriving economy, the Kingdom of Saudi Arabia, that has scarcity of research in this context. Thus far, little research has been conducted on incentive and reward management systems and their impact on employee performance in the Saudi industrial sector. Nevertheless, the study was able to find applicable relationships between different reward forms and employee performance through a mediating variable. This finding encourages more research to find the appropriate employee retention and acquisition tools that suit the Saudi market.

The practical implications of our study include: First, the verification that incentive and reward systems are positively viewed as beneficial in improving employee performance. Second, the research affirms that incentives and rewards are critical in motivating employees. Additionally, because this study demonstrates that incentives and awards have a considerable, indirect influence on employee performance, it is proposing that firms lay the foundations for conditions conducive to improving employee performance and strive to improve employee job satisfaction. Moreover, because incentives and rewards have a favorable effect on job satisfaction, employers are encouraged to implement a rewards management system (financial and non-financial) that incentivizes employees to achieve their goals and fosters maximum job satisfaction. Another technique to motivate employees is to establish challenging yet achievable goals which gives an intrinsic incentive (intangible award, i.e., appreciation, promotion, and authority). Firms should require all employees to set personal growth goals for work, education, and project completion and provide training to employees on how to develop quantifiable goals and encourage them to do so on a short- and long-term basis. Allowing employees to contribute to corporate goals helps them feel connected to a broader purpose. Employees earning incentives and rewards for meeting goals, and setting new ones, aids in boosting their job satisfaction.