Universiti Malaya Faculty of Business And Accountancy Master of Business Administration Semester 2, Session 2012/2013

CSGB 101 !uman Ca"ital Mana#ement Grou" Assi#nment

$itle% $&e Use of 'ntrinsic and ()trinsic *e+ards on 'm"rovin# ,o- .erformance in an /r#ani0ation

1ecturer% 2r3 /n# 1in 2ar

1ouis Go& 4o5 4it Amut&a Su-ramaniam C&on# C&ee ;oon C&on# 4&ian Foo

CGA120060 CGA1200 8 CGA12013< CGA120077

Grou" Mem-ers% 0122738922 louis#o&55:#mail3com 01 289 701 amut&asu-ramaniam6:#mail3com 01 2611761 c&ee=voon:&otmail3com 012 132231 5fc&on#96:ya&oo3com 2ate of Su-mission% 19 May 2013 >ord Count%

Introduction 'n t&e +orld of ra"id c&an#in# environment and #lo-ali0ation, for an or#ani0ation to com"ete favoura-ly and com"etitively, t&e "erformance of t&eir em"loyees #oes a lon# +ay in determinin# t&e success of an or#ani0ation ?A@ila and A-iola 2007A3 Bot& "u-lic and "rivate sectors or#ani0ations are "uttin# increasin# attention on &uman resource mana#ement to maintain and motivate its most valua-le and +ort&y assets, t&e em"loyees3 Accordin# to Catalini ?2012A, or#ani0ations are ta5in# more of a "roactive stance to+ards ensurin# em"loyees are satisfied +it& t&eir "lace of em"loyment and feel a level of commitment and connection to em"loyers3 Bac5 t&en, em"loyee satisfaction is often not a "rimary focus of an em"loyer3 /r#ani0ations routinely focus on finances, "roduction, and "leasin# customers and ne#lect t&e im"act t&eir actions or lac5 of action &as on em"loyee satisfaction3 $&e conseBuences may -e seen in "roducts or services t&at are not u" to standards and an increase in turnover and increase in cost for em"loyers3 !ence, findin# t&e ri#&t -alance -et+een em"loyee satisfaction and its en&ancement of em"loyee motivation and "erformance is im"erative as it +ill &ave "ositive effects on several as"ects of an or#ani0ation, includin# lo+erin# turnover rates and increasin# "roductivity and "rofit3 $&e use of re+ards &as -een found over t&e years to -e one of t&e mana#ement tools in t&e or#ani0ation to increase @o- "erformance3 Besides, it is common to offer em"loyees attractive, lucrative and com"etitive remuneration "ac5a#es3 For e)am"le, an attractive re+ard "ac5a#es &as -een a norm of any em"loyment contract3 $&ese &ave a direct lin5 or interCrelated to im"rovin# em"loyeesD @o- com"etency, retainin# &i#& ac&ievers and finally ac&ievin# t&e or#ani0ational "erformances and #oals ?Mansor, Bor&annudin and Mo&d Eusuf 2012A3 Besides, "erformance of em"loyees in any or#ani0ation is im"ortant not only for t&e #ro+t& of t&e or#ani0ation, -ut also for t&e "ersonal #ro+t& of t&e em"loyees ?A@ila and A-iola 2007A3 $&e re+ards systems for em"loyees are no+ closely connected to t&e "erformance measurement indicators of an or#ani0ation3 'f t&e re+ards does not commensurate +it& t&eir "erformance, t&is +ill lead to lo+ motivation and &i#& attrition, +&ic& eventually affectin# t&e service delivery ?Fa-i&a, $&um and Sardana, 2012A3 !ence, re+ards are very im"ortant to ensure t&at adeBuate and reasona-le re+ard "ac5a#es can si#nificantly increase motivation of em"loyees to increase +or5 "erformance3

Generally, a re+ard is #iven in return for #ood +or5 or in reco#nition of merit or for "erformance of a service rendered3 McCormic5 and $iffin ?1<8<A su##ested t&at re+ards can -e eit&er intrinsic or e)trinsic3 'ntrinsic re+ards classified as re+ards t&at are in&erent in t&e @oitself3 (m"loyee feels satisfied and en@oyed +&en tas5s are com"leted successfully or attain &is #oals3 /n to" of t&at, intrinsic re+ard is also referred as G"syc&olo#icalH re+ards3 ()am"les of intrinsic re+ards are o""ortunity to use oneDs stren#t&, a sense of ac&ievement from com"letin# t&e @o-, c&allen#in# roles, receivin# a""raisal, and "ositive reco#nition and a""reciation to+ards oneDs effort, and last -ut not least -ein# treated in a carin# and res"ected manner3 /n t&e ot&er &and, e)trinsic re+ards are t&ose t&at are e)ternal to t&e tas5 of t&e @o-, suc& as "ay, +or5 condition, frin#e -enefits, security, "romotion, contract of service, t&e +or5 environment and conditions of +or53 Suc& tan#i-le re+ards are often decided at t&e or#ani0ational level, and it is not +it&in t&e control of individual em"loyees3 A@ila and A-iola ?2007A su##ested t&at for an individual to -e motivated and commited in &is @o-, t&ere must -e a need t&at t&e individual +ould &ave to "erceive a "ossi-ility of satisfyin# oneself t&rou#& some re+ards3 For instance, if t&e +or5s in&erently contains elements t&at is satisfyin#, individual +ill feel intrinsicially motivated and +ill -e motivated to com"lete &is @o-3 1i5e+ise, if t&e individual "erceives t&at &e could #ain e)ternal re+ards from com"letin# t&e @o-, &e +ill -e e)trinsically motivated and committed in accom"lis&in# t&e @o-3 Problem statements As itDs a 5no+n fact t&at em"loyeesD "erformance can -e im"roved -y increasin# motivation, decidin# +&ic& ty"e of re+ards to motivate em"loyee is of im"ortant to -rin# t&e -est out of t&e em"loyee3 !avin# stressed t&e im"ortance of a #ood remuneration "olicy on t&e "erformance of em"loyees and t&e different 5inds of re+ard t&at can influence em"loyees to "erform -etter on a @o-, it is relevant t&at em"loyers are committed to "ut in "lace a""ro"riate incentive "lan t&at +ill motivate +or5ers to -e more "ur"oseful and im"rove t&eir @o"erformance3 Ma5in# sure to 5no+ +&at motivates t&e em"loyees is t&e mar5 of an enli#&tened leader, and re+ards "olicy need to &ave t&e fle)i-ility to -e tailored to fit t&e needs of individuals and t&e or#ani0ation3 As re+ards mana#ement &as -een a crucial to determine success of an

or#ani0ation, it is essential to com"re&end +&at ty"e of re+ards, eit&er intrinsic or e)trinsic, can -e used in today +or5 dynamics to motivate em"loyees to im"rove @o- "erformance3

Objective of the study $&e o-@ectives of t&is study are to determine t&e relations&i"s -et+een intrinsic re+ards and e)trinsic re+ards on @o- "erformance, as +ell as to e)amine t&e most effective ty"es of re+ards t&at may im"rove @o- "erformance3 $&e follo+in# are t&e to"ics t&at +e +ill -e discussin# in t&e study %C 13 23 33 $o discuss t&e relations&i" -et+een intrinsic re+ards and @o- "erformance3 $o discuss t&e relations&i" -et+een e)trinsic re+ards and @o- "erformance3 $o e)amine +&at are t&e most effective ty"es of re+ards to to+ards im"rovin# @o"erformance3 Literature Review Job motivation and reward system Good remuneration "ac5a#es &ave -een "roven over t&e years to -e one of t&e "olicies t&at or#ani0ations ado"t to increase t&eir +or5ers "erformance and t&ere-y increasin# t&e or#ani0ations "roductivity3 /r#ani0ations offer intrinsic and e)trinsic re+ards to mem-ers for t&e "ur"ose of im"rovin# &uman resources outcomes ?Ma&aney and 1ederer, 200 A3 $&e re+ard system s&ould -e ali#ned to motivate em"loyee "erformance t&at is consistent +it& t&e or#ani0ationDs strate#y, attract and retain "eo"le +it& t&e 5no+led#e, s5ills and a-ilities reBuired to reali0e t&e or#ani0ationDs strate#ic #oal, and create a su""ortive culture and structure ?Allen and 4illman, 2001aA3 *e+ard systems are strate#ically desi#ned +&en re+ards are lin5ed to activities, attri-utes and +or5 results t&at su""ort t&e or#ani0ationDs strate#ic direction and t&at foster t&e ac&ievement of strate#ic #oals3 Suc& lin5a#es can lead to im"roved s5ills and 5no+led#e, fle)i-ility, commitment, retention and "roductivity ?!o+ard and 2ou#&erty, 2007A3 *e+ard systems are li5ely to &ave a direct effect on t&e direction of em"loyeesD individual attention and effort ?Bam-er#er and 1evi, 200<A3

*e+ards t&at an individual receives are very muc& a "art of t&e understandin# of motivation3 *esearc& &as su##ested t&at re+ards no+ cause satisfaction to t&e em"loyees and it directly influences t&e "erformance of t&e em"loyee3 1a+ler ?1<96A concluded t&at factors influence t&e "erformance +it& re#ards to +or53 Firstly, it de"ends on t&e amount received and t&e amount t&e individual feels &e or s&e s&ould receive3 Secondly, com"arison to +&at ot&ers collect influences "eo"les "erformance, and t&irdly, and em"loyeeDs satisfaction +it& -ot& intrinsic and e)trinsic re+ards received affects overall @o- "erformance3 Fourt&ly, "eo"le differ +idely in t&e re+ards t&ey desire and in t&e value t&ey attac& to eac&3 And t&e firt&, t&at many e)trinsic re+ards satisfy only -ecause t&ey lead to ot&er re+ards3 $&e o-servations a-ove su##est t&e need for a diverse re+ard system3 Fumerous re+ards systems o"erate +it&in or#ani0ations3 't is seen in t&e literature t&at re+ard "ractices of -usinesses are mostly analy0ed under t&e classification of intrinsic and e)trinsic re+ards ?Ma&aney and 1ederer, 200 A3 Extrinsic Rewards *emuneration factors t&at are e)ternal to t&e @o- suc& as "ay, +or5 condition, security, -enefits, "romotion contract of services and +or5 environment are e)am"les of e)trinsic re+ards ?Mansor et3al 2012A t&at em"loyees can find very motivatin#, and to -e most effective s&ould -e "rovided fairly, strate#ically, and lin5ed to "erformance3 Bonuses, raises, "aid vacations and "romotions are also included in &ere3 .rofit s&arin#, tuition reim-ursement and "aid or un"aid leave to "ursue furt&er education are "racticed -y some -usinesses as additional strate#ies in determinin# @o- satisfaction3 ()trinsic re+ards drive em"loyeeDs morale and t&e re+ards distri-ution &as al+ays loomed lar#e in cor"orations "articularly in tune +it& "erformance a""raisals in "resent eras of #lo-ali0ation ?2atta 2012, A""el-aum et al3, 2011A3 A researc& article -y ,en5ins, Gu"ta, Mitra, and S&a+ ?1<<9A s&o+ed t&at "rovidin# e)trinsic re+ards motivate in en&ancin# +or5 "erformance3 $&e study +as conducted usin# a metaCanalytic revie+ of em"irical researc&, and t&e #oal -e&ind t&e study +as to determine +&et&er monetary re+ards or #ifts and material items +ere more a"t to increase motivation and "roductivity amon#st em"loyees3 From t&e results of t&is metaCanalysis study it is 5no+n t&at e)trinsic re+ards do correlate +it& a &i#&er level of "erformance and outcomes from em"loyees see5in# to o-tain t&e re+ards3 2ata concluded t&at an increase in activity ran#ed from 27I to

67I, s&o+in# a "ositive correlation -et+een e)trinsic re+ards and increased Buantity3 Material re+ards +ere more effective in increasin# "erformance, -ut monetary offerin#s also &ad a "ositive effect and increase in "erformance3 $&e metaCanalysis study com"leted -y ,en5ins et al3 ?1<<9A does indicate t&at e)trinsic re+ards -ased on material items and monetary com"ensation can increase em"loyee "erformance, -ut it is im"ortant to "oint out t&at t&e study does not "rove t&at em"loyee satisfaction and motivation are maintained for t&e lon# term and +ill sustain at a &i#& level if t&e material and monetary enticements are not continuously offered3 $&e researc& studies s&o+ t&at e)trinsic motivators can im"rove "erformance and satisfaction of em"loyees in a variety of @o-s and roles3 't is im"ortant to also e)"lain t&at t&ere may -e a direct relations&i" -et+een &o+ e)trinsic re+ards are structured and "resented to em"loyees, since t&e a""roac& can &ave eit&er a "ositive lon#Cterm effect on motivation and "erformance or t&e o""osite effect and cause feelin#s of unfairness amon# em"loyees, +&ic& +ill lead to @o- dissatisfaction and decreased motivation3 An article titled GGettin# JMore Ban# for t&e Buc5D% Sym-olic ;alue of Monetary *e+ards in /r#ani0ationsH ?Mic5el K Barron, 2009A discussed t&at to increase motivation and satisfaction it is im"ortant to set u" an e)trinsic re+ard system3 Sym-olic value can -e e)"lained as t&e meanin# associated +it& t&e monetary or material re+ard3 $&e effects of t&e re+ard system may &ave ne#ative results if t&e system set u" to decide +&o receives re+ards and &o+ t&ey are dis"ersed is seen as fla+ed -y em"loyees3 $&e article su##ests t&at +&en desi#nin# a system t&ere are several factors need to -e considered to ensure its intentions of motivatin# em"loyees t&rou#& e)trinsic satisfaction3 Fairness issues must -e considered3 Accordin# to eBuity t&eory and distri-utive @ustice, em"loyees must feel t&at t&e re+ard is fair and eBuita-le3 /-servin# a fair and &onest "ractice to determine +&o receives t&e re+ard is very im"ortant3 Several as"ects of em"loyee roles and "erformance are considered rat&er t&an @ust -e -ased on a sole cate#ory suc& as attitude or "erformance3 ,ust -y &avin# &i#& out"ut of "erformance alt&ou#& not a team "layer or dis"lays a ne#ative attitude in t&e +or5"lace, t&at "ersonDs recei"t of t&e re+ard may cause ot&er em"loyees to vie+ t&e re+ard "ractice as not fair3 $&erefore +&ere t&e re+ard mi#&t &ave &ad a direct motivational effect on one em"loyee, it indirectly mi#&t cause a decrease in satisfaction and motivation for a #rou" of em"loyees3 !ence, factors suc& as +&o is "resentin# t&e re+ard, +&y t&e re+ards are distri-uted, &o+ t&ey are distri-uted,

and +&o receives t&em and +&y are im"ortant distri-ution "ractices in t&e success of e)trinsic re+ard "ro#rams3 $&e article discussed t&e im"ortance em"loyees feel +&en re+ards are #iven -y &i#&Cu" e)ecutives and in a settin# +&ere t&ey feel reco#ni0ed -y many at t&e +or5"lace3 Ber#um and 1e&rDs ?1< 7A study, +&ic& investi#ated t&e influence of monetary incentives and its removal on "erformance, s&o+ed t&at t&e su-@ects in t&e e)"erimental #rou" +&o received individual incentives "erformed -etter t&an t&ose in t&e control #rou"3 2aniel and Caryl ?1<91A study +as desi#ned to e)"lore t&e a-ility of t&e investment model to "redict @osatisfaction and @o- commitment3 $&e result s&o+ed t&at @o- satisfaction +as -est "redicted -y t&e re+ard and cost value of t&e @o-3 And @o- commitment on t&e ot&er &and +as -est "redicted -y a com-ination of re+ards, cost values and investment si0e3 ()trinsic are concrete re+ards t&at em"loyees can find &i#&ly motivatin#, and to -e most effective, re+ards s&ould -e "rovided fairly, strate#ically, and tied to "erformance3 't remains si#nificant for +or5ers as "ay is an im"ortant consideration for most +or5ers in acce"tin# a @o-, and unreasona-le "ay can -e a stron# deCmotivator3 $&e creativity of movie and s&ortCstory titles develo"ed -y t+o #rou"s of "readolescent students +ere com"ared -y (isen-er#er and *&oades ?2001A% one #rou" +as re+arded durin# a "rior trainin# tas5 ?#eneratin# creative uses for common o-@ectsA and anot&er #rou" +as trained -ut received no monetary re+ards3 *esults indicated t&at students +&o received money durin# t&e initial trainin# tas5 com"ared to individuals +&o received no money develo"ed more creative titles3 'n anot&er study, (isen-er#er and *&oades e)amined +&et&er colle#e students +it& t&e "romise of a financial re+ard could #enerate more creative s&ortCstory titles3 *esults s&o+ed t&at t&e students +&o +ere "romised money "roduced more creative t&an t&e titles of students +&o +ere not "romised re+ards3 'ndividualsD feelin#s of "ersonal control may -e en&anced, t&ere-y -oostin# levels of intrinsic motivation and creativity +it& t&e "resence of e)trinsic re+ards3

(ffective re+ards mana#ement influence em"loyeesD affective commitment, motivation and su-seBuent &i#& or#ani0ational "erformance and t&is are clearly reflected in "ractice

e)am"les3 Goo#le, for e)am"le, +as ran5ed 7t& in FortuneDs $o" 10 Best Com"anies to +or5 for, -randin# it as one of t&e most desira-le em"loyers +orld+ide ?CFF Money, 2011A3 Com"any re"orts indicate a &i#& rate of em"loyee satisfaction, lo+ em"loyee turnover and &i#& or#ani0ational "rofita-ility3 Bot& monetary and nonCmonetary re+ards are incor"orated in Goo#leDs em"loyee mana#ement and retention strate#ies3 Goo#le em"loyees receive an avera#e salary of L9 900 a year, as com"ared to an avera#e of L21 600 in t&e U4 "rivate sector ?*u"ert, 2011A3 Besides, Goo#leDs re+ard mana#ement strate#y includes fle)iCtime and a +or5 environment in line +it& c&an#in# +or5 "atterns t&at "romotes em"loyeesD +or5Clife -alance3 Goo#le &as created s"eciali0ed +or5 environments +&ere its em"loyees are encoura#ed to s"end 80I of t&eir time on core -usiness tas5s, 20I on "ro@ects related to t&e core -usiness and 10I on any "et "ro@ects unrelated to t&e core -usiness ?$&e Goo#le Culture, 2011A3 $&is serves to -oost em"loyeesD com"etitive intrinsic motivation, as +ell as re+ards and @o- satisfaction +&ile &el" Goo#le to im"rove -usiness o"erations and ma)imi0e financial o""ortunities3 .er5insD ?1<99A su##ested t&at individuals +&o are intrinsically motivated see5 o""ortunities to solve -oundaryC"us&in# c&allen#es, demonstrate &i#& levels of commitment to t&eir or#ani0ation and are t&us less li5ely to leave t&e em"loyment relations&i" and t&is -ein# one of t&e Goo#leDs strate#y3 !ence, +e can conclude t&at +&en a""lied t&e re+ards in t&e ri#&t +ay t&ey can #enerate si#nificant results3 Intrinsic Rewards 'ntrinsic re+ard is intan#i-le re+ard or reco#nition t&at an individual received from "erformin# meanin#ful +or5 and did it +ell3 McCormic5 and $ifflin ?1<8<A "ointed out t&at intrinsic re+ard is defined as stems from re+ards in&erent in t&e @o- itself and +&ic& t&e individual en@oys as a result of successfully com"letin# t&e tas5 or attainin# #oals3

'n anot&er article -y A@ila and A-iola ?2007A, intrinsic re+ard are defined as J"syc&olo#ical re+ardsD and t&e e)am"les of intrinsic re+ards are o""ortunity to use oneDs

stren#t&, a sense of c&allen#e as +ell as ac&ievement, receivin# a""raisal, "ositive reco#nition, and -ein# treated in a carin# and considerate manner3 *efer to earlier researc& article -y A@ila ?1<<8A, an e)trinsically motivated "erson is committed for e)ternal re+ards3 !o+ever, an intrinsically motivated individual +ill -e committed for in&erent @o- contains tas5s t&at are re+ardin#3 !er article furt&er su##ested t&at to maintain motivation in a +or5 situationM t&ere must &ave -ot& GneedH and GdriveH to "erceive t&e "ossi-ility of re+ard satisfaction3 $&ere is anot&er study -y 4ennet& $&omas ?200<A on t&e im"ortant -enefits of t&e intrinsic re+ard to an or#ani0ation3 $&e results s&o+ed t&at retention -y 5ee"in# t&e "eo"le +&o are ener#i0ed and selfCmana#in#, intrinsic re+ards are stron# "redictors3 $&e em"loyees +it& &i#& levels of intrinsic re+ards +ill eventually -ecome informal recruiters and mar5eters for t&eir or#ani0ation -ecause t&ey +ill recommend t&e or#ani0ation to friends as a "lace to +or5 and its "roducts and services to "otential customers3 Besides, intrinsic re+ards are identified as sustaina-le and &ealt&y source of motivation for "eo"le3 $&is is -ecause of intrinsic motivation is very muc& selfCsustained and &ard to +ear off3 Bes+ic5 ?2008A o-served t&at some "eo"le "artici"ate more out of interest in a tas5 t&an ot&ers3 >&ile some #ain satisfaction mainly from +&ic& "erformance on t&e tas5 leads to "&ysical re+ards3 !e "ointed t&at intrinsic motivation is defined as a "rocess of satisfaction in +&ic& t&e re+ards come from carryin# out an activity rat&er t&an t&e outcome of t&e activity3 !e commented t&at re+ards -ein# intrinsic to a tas5 rat&er t&an -ein# a means to an end t&at is re+arded or satisfyin#3 >&en "eo"le are intrinsically motivated, t&ey tend -e more alert of a +ide ran#e of events, +&ile #ivin# careful attention to com"lications, inconsistencies, novel events and unforeseen "ossi-ilities3 $&ey reBuire more fle)i-ility to ma5e decisions, to acBuire ne+ information, and &ave an a""reciation of +ell finis&ed and inte#rated "roducts, all of +&ic& may lead to more inCde"t& learnin# and more creative outcomes3 'n &is vie+, intrinsic motivation is re#ards to -e a""etitive, and ne+ information +ill furt&er add on to t&e a""etite3 For instance, underta5in# a scientific researc& "ro@ect can satisfy "ersonal develo"ment #oals +&ile at t&e

same time intrinsically re+ardin# in oneself3 Satisfaction ac&ieved from suc& incentives is seen to -e intrinsic to t&e "erson rat&er t&an to t&e tas53 'n overall, t&e intrinsic re+ards +ill create selfCsustained and a stron# form of motivation for -ot& em"loyees and or#ani0ation3 $&is 5ind of motivation is stren#t&enin# on t&e em"loyeesD s&ared desire on t&eir +or5 +&ic& +ill ma5e an e)cellent contri-ution to meanin#ful reasonin#, so t&at t&ey +ill -e very muc& "erformanceCdriven3 't re"resents selfCmana#ement and "rofessional develo"ment demanded -y youn#er +or5ers3 Furt&ermore, intrinsic re+ards +ill ma5e a "erson more inde"endent3 Discussion (m"loyees are t&e most im"ortant assets of an or#ani0ation3 /r#ani0ations t&at &ave t&e a-ility to identify t&e -est re+ard system for its em"loyee +ill not only a-le to attract and retain em"loyees -ut also motivate t&em to ac&ieve or#ani0ationDs #oal3 'ntrinsic and e)trinsic re+ard system is to encoura#e desired em"loyee -e&aviors to ensure t&e success of &uman resource strate#ies3 $&erefore, it is crucial t&at or#ani0ations desi#n and de"loy a suita-le re+ard system t&at com"lement &uman resource strate#ies and fits t&e -usiness com"etitive strate#y3 Usin# t&e -usiness com"etitive strate#ies as descri-ed -y .orter, +e identify t&e attri-utes of t&e com"etitive strate#y selected and t&en deduce a suita-le &uman resource strate#y ?innovationCoriented, contri-utionCoriented and commitmentCorientedA3 $o su""ort t&e &uman resource strate#ies and facilitate t&e im"lementation of t&e -usiness com"etitive strate#y, an a""ro"riate re+ard system ?intrinsic re+ard, e)trinsic re+ard, com-ination of -ot&A is finally determined3

Com"etitive strate#y

/verall leaders&i"

cost 2ifferentiation

Focus

!uman resource strate#y *e+ard systems

Contri-utionCoriented e)trinsic re+ard

'nnovationCoriented intrinsic re+ard

CommitmentCoriented Com-ination of

intrinsic and e)trinsic $a-le 1% $&e strate#ic fit -et+een &uman resource strate#ies, re+ard systems and com"etitive strate#ies An or#ani0ation t&at im"lements differentiation as com"etitive strate#y em"&asi0e on delivery of &i#&ly customi0ed and uniBue "roduct or service3 Suc& "roduct or services are &i#&ly valued -y customers t&us or#ani0ation en@oys a stron# loyalty sentiment from customer3 Customers do not mind "ayin# a "remium "rice for suc& uniBue and &i#& Buality "roduct or services3 $&e success factor of differentiation strate#y de"ends on t&e or#ani0ationDs a-ility to cultivate creativity and innovation amon# its em"loyees to "rovide &i#& Buality "roduct or services3 $&erefore, an or#ani0ation t&at im"lements differentiation strate#y s&ould use innovationCoriented as its &uman resource strate#y3 /r#ani0ation t&at im"lements differentiation strate#y "roduces &i#& Buality "roduct or service via e)tensive researc& and develo"ment activities3 $&is includes t&e use of so"&isticated mac&inery or latest tec&nolo#ies to -e a-le to "roduce "roduct or services t&at satisfies customerDs e)"ectation3 $&erefore, or#ani0ation must re+ard em"loyees t&at &ave suc& s5ill set and innovation3 'ntrinsic re+ard system is t&e -est fit to re+ard em"loyees in an or#ani0ation t&at "ractices innovationCoriented &uman resource strate#y3 By offerin# intrinsic re+ards, em"loyees +ill -e more motivated to develo" t&eir creativity and innovation3 'ntrinsic re+ards suc& as fle)i-le +or5 sc&edule as em"loyees -ecomes more Bualified in t&eir +or53 .rovidin# reco#nition and &uman ca"italC-ased "ay to outstandin# em"loyees +ill also motivate t&em to "roduce &i#& Buality "roduct and services t&at eventually increases or#ani0ationDs re"utation3 /r#ani0ations t&at im"lement com"etitive strate#y of cost leaders&i" strate#y +ill al+ays try to lo+er "roduction cost and aim to -e t&e lo+est cost "roducers in t&e industry3 Customer

+ill sta-le demand of "roducts and services +it& relia-le Bualities3 $&ere +ill -e less mana#ement discretion to monitor t&e "roduction of "roduct and services3 resource strate#y3 /r#ani0ations t&at im"lements com"etitive strate#y of cost leaders&i" strate#y need to continuously reduce costs and ac&ieve more economies of scale3 Suc& strate#y reBuires a &uman resource strate#y of contri-utionCoriented -ecause more +ei#&t needed to -e a""lied to firstCline "roducers and sales "ersonnel3 /nly t&rou#& t&is +ay, t&ey +ill -oost t&eir "erformance or "roductivity to -rin# in more sales or reduce +asta#e in "roduction/o"erational "rocesses3 An e)trinsic re+ards system com"lemented -y contri-utionCoriented +ill ensure success of or#ani0ation im"lementin# cost leaders&i" strate#y3 /r#ani0ations t&at im"lements focus com"etitive strate#y +ill concentrate its resources to a nic&e or s"ecific se#ment mar5et3 Alt&ou#& focus com"etitive strate#y concentrate on a nic&e mar5et, t&e or#ani0ation +ill strive to ac&ieve differentiation or cost advanta#e in t&at nic&e mar5et3 /r#ani0ations t&at successfully im"lement focus com"etitive strate#y +ill en@oy &i#& customer loyalty and "revents com"etitor from com"etitor from enterin# t&e nic&e mar5et3 /r#ani0ation needs &i#&ly e)"erienced em"loyee to "roduce "roducts and services +it&in t&at "articular nic&e mar5et3 $&erefore, an or#ani0ation t&at im"lements com"etitive strate#y of focus +ill &ave commitmentCoriented &uman resource strate#y3 Focus strate#y can -e costCfocused or differentiationCfocused3 /r#ani0ations t&at ado"t com"etitive strate#y of focus need to offer a "ositive re+ard system t&at include com-ination of e)trinsic and intrinsic re+ards in order to retain e)"erienced em"loyees and cultivate t&eir commitment to t&e or#ani0ation3 $&is includes e)tra annual leaves, s"onsored com"any tri"s, em"loyee stoc5 o"tions sc&eme, @o- security, letter of a""reciation and fle)i-le +or5in# &ours3 $&erefore, or#ani0ation t&at ado"t overall cost leaders&i" strate#y s&ould use contri-utionCoriented &uman

Interviews

After intervie+in# fe+ em"loyees at Astro, +e concluded t&at Astro is im"lementin# Focus strate#y +&ere-y Astro "osition itself to serve tar#et mar5et se#ment -y offerin# differentiated $; c&annels to meet customersD s needs3 At t&e same time, Astro strate#i0e to -e t&e lo+ cost "rovider +it&in its -roadcastin# industry due to economies of scale3 >e found out t&at t&e com"any is im"lementin# commitmentCoriented &uman resource strate#y +&ere-y it focuses on -ot& ()trinsic and 'ntrinsic re+ards to motivate and retain its em"loyees3 Most of t&e Astro em"loyees t&at +ere intervie+ed from various de"artments in Astro suc& as "roduction, mar5etin#, censors&i", "ro#rammin#, and customer service a#reed t&at t&eir "ay is at least on "ar +it& mar5et rate, if not -etter3 Besides, +e also found t&at most of t&e customer service officers are fres& entrants and t&ey feel satisfied and ent&usiastic +it& t&e startin# salary of *M 2,6003 /n to" of t&at, fres& entrants are also a-le to #et /$ allo+ance +&en usually not t&e case in ot&er com"anies3 Accordin# to t&em, Astro "rovides a -etter "er5s t&an ot&er MFCs +&ere-y under t&e e)trinsic re+ards, a"art from t&e -asic "ay, Astro e)tend t&e em"loyee -enefits -y "rovidin# medical care, #rou" insurance, (S/S etc3 Furt&ermore, some em"loyees from "roduction de"artment claims t&at t&e fle)i +or5in# &ours allo+ed in Astro "rovide t&em a +or5Clife -alance3 $&e censors&i" de"artment staffs also added t&at t&ey en@oy +or5in# on s&ift and t&ey only +or5 for 7 days in a +ee5 +it& 3 days off3 Astro offers its em"loyees o""ortunities to learn ne+ s5ills set in t&eir +or5s3 Accordin# to t&e "roduction team, t&eyNre very "roud to -e in t&e team as t&ey are t&e first "erson to learn ne+ tec&nolo#y in t&e movie ma5in# or television "ro#ram "roducin# industry3 $&is &el"s Astro em"loyees to 5ee" "ace +it& t&e latest tec&nolo#y and 5no+led#e in t&e ra"id c&an#in# -roadcastin# environment3 'n turn, t&e em"loyees are more +illin# to ta5eCu" t&e c&allen#es in +or5, for e)am"le settin# ne+ "ro#ram +it& ne+ tec&nolo#y, i3e3 !2 "ro#rams3 Some "ro#rammin# staffs commented t&at t&ey are &a""ily attac&ed to Astro as t&ey #et to acBuire ne+ 5no+led#e and s5ills from various trainin#, namely First Aid, Fire (sca"e, CS* etc3 t&at are "rovided free to Astro em"loyees3 $&ey claim t&at itNs an annual routine for all t&e staff to com"ly t&e trainin# reBuirements and t&e trainin#s are -eneficial and informative to t&em3 Recommendation/ onclusion

$&is study s&o+ed t&at intrinsic and e)trinsic re+ards are effective to+ards im"rovin# @o- "erformance3 'n todayDs &i#&ly com"etitive +orld, or#ani0ations t&at a-le to de"loy t&e ri#&t re+ards system +ill drive +or5erDs "erformance and motivate +or5ers in ac&ievin# ac&ieve or#ani0ational #oals3 $&is study serves as a frame+or5 for or#ani0ations to select a""ro"riate re+ard systems tailored to t&e s"ecific circumstances of t&e or#ani0ation, +it& reference to t&e com"etitive strate#y and &uman resource strate#y selected3 /r#ani0ations t&at de"loy differentiation as com"etitive strate#y s&ould use innovationCoriented as &uman resource strate#y and intrinsic re+ard system +ould -e suita-le3 /r#ani0ation t&at de"loy overall cost leaders&i" as com"etitive strate#y s&ould use contri-utionCoriented &uman resource strate#y and e)trinsic re+ard system3 1astly, or#ani0ations t&at de"loy focus com"etitive strate#y s&ould use commitmentCoriented &uman resource strate#y and a com-ination of -ot& e)trinsic and intrinsic re+ard system to #et t&e -est from its +or5ers3

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