Motivation is one of the key factors that affect the productivity of an employee. An employee's motivation plays a key role in producing greater outputs from the employee. It has been seen that uninspired employees are usually less productive as they become apt to complacency. The lack of motivation also leads to a decline in morale and discouragement which ultimately results in lower performance of the employee (Motivation).
It has been seen that employees usually need something extra apart from their basic salary in order to get motivated. This extra is usually in the form of bonuses given to the employees which helps the in making the employee realize that his hard work is being recognized by the organization. These feelings usually increase the urge within the employee to perform better as better performance may lead him better incentives and bonuses.
Although it is important for a manager to give bonuses but allocation of resources is not always an easy task for the manager. It is one of the most complex decisions as identifying the best out of many good performers is quite difficult as employees have to be given different bonuses which are usually on the basis of their performance. It is also important for the manager to keep in mind the budget of the company while allocating bonuses as allocation of bonuses should be done within the budget as excessive money allotted to bonuses may lead to decline in the total value of the organization. Value Driven and Performance Driven Organizations:
In the book "Authenticated Leadership" author Bill George has said that the biggest challenge for businesses today is to create a culture that is performance driven and value centered as performance and values form a very important part of business today. It can also be said that businesses today run on these two basic terms. Value driven generally means dealing with the current scenario and it deals with the values of employees and clients. As the clients and employees are the people responsible for success or failure of the company it is important not to hurt their values as it may lead to loss of client or a skilled employee for an organization.
Performance driven means that performance is the most important criteria to judge any entity related to an organization or organization as a whole. A performance driven company usually has fixed and clear goals. The activities of a performance usually are well planned to achieve the goals of the organization. In a performance driven organization bonuses and incentives are based on the performance of employees.Bonuses as Motivating Factors:
Bonus given to an employee may make him feel that his worth is understood by the organization and gives him a feeling of belongingness to the organization. Bonuses are also a method to make the employee feel that the profits that the organization is making due to his contributions are shared with him. Such feelings in the minds of the employees motivate them to work harder for the organization as they feel that the organization belongs to them and higher profits to the organization will lead to higher benefits for the employee.Issues for managers in allocation of bonuses:
While allocating bonuses the managers of the organization have to deal with various issues. The issues can create problems for the organization if they are not handled with care. The allocation of bonuses is mainly done on the basis of performance so the first issue that affects the manager has to take care is to distinguish between the performances of different employees. Another issue s that the staff of the organization may feel that the decision taken by the manager was bias towards an employee so it is important for the manager to explain his views on the allocation of bonuses to different employees and why different amounts were given to different employees in other words the manager has to take the whole staff into confidence. Sometimes it is also possible that people with better communication skills and lower performance may present themselves as high performers in such cases also the manager has to work out the situation and ensure that the best performer is awarded as otherwise a wrong message will be passed to the employees of the organization. The manager also needs to make sure that the allocation of bonuses is not affected by the Wasta Connections of an employee.Wasta Connections:
Wasta is Arabic for connections, pull. Wasta connections usually play a key role in decisions taken in the Arabic organizations. Wasta was initially used by patrons to help their followers but now it has been exploited to seek money rewards and is commonly used in the Middle East. Wasta initially served the purpose of defusing tribal conflict in the past to acquiring economic benefits today (Wasta connections)
According to a poll done by Arab Archives Institute it was found that more than 87% of the respondent believed that Wasta should be eradicated from the society and considered it as a form of corruption. Another problem that was clear from the polls was that more than 90% agreed that they would be using it if it was not eradicated which shows the affect of Wasta on the Arabic society. (Research on Wasta By Arab Archives Institute). This high percentage is bound to impact all the organizations working in the organization as organizations usually adopt to the culture of the place where they operate and the acceptance of Wasta highly reduce their probability for becoming performance oriented because due to the existence of Wasta a non-deserving employee may get higher bonuses than a deserving employee.
Wasta has affected both private and public sector enterprises of the region and has been the cause of losses to many organizations in the region.
Wasta generally refers to mediation by a third party which leads to benefitting an individual. Some of the Wasta practices are considered legal in the Middle East whereas others are illegal under law in the region. Wasta practices are considered legal and include the services of real estate broker, attorney generals and accountants in the west (Description on Wasta).
Wasta usually leads to acceptance of a less skilled person on a job where a more skilled person could be employed does leading to loss for the organization as a less skilled person requires more training and is usually less efficient in terms of output hence the organization has to put in extra costs and gets lesser output. Moreover if Wasta is dominant while allocation of bonuses and incentives it gives a feeling to the other employees that they will not get awarded in the organization no matter whatever their performance be and as a result demoralize them and also affects the productivity of the employee in the long run.
From the study it is clear that bonuses form an important part of businesses today as highly serves the purpose of motivating employees and getting higher profits from them and also affects the net output given by the organization in the year. If the bonuses are distributed ethically they tend to act as promoters for the business but if they are distributed unethically and in a manner that questions the transparency of the distribution process then its impacts on the organization are usually negative as it leads to loss of confidence of the employee on the organization.
In today's highly competitive world the organizations have largely become performance oriented as high performers usually leaded to higher outputs for the organization and which in turn leads to a high growth rate for the organization but in the Arabic countries the practices such as the Wasta affect the organizations badly and usually lead to lower profits.
It is important for the companies working in the region to find ways to cope with all these practices in order to ensure a steady growth rate.
It is also important for the manager to allocate the bonuses properly after the complete analysis on the subject as any errors or misconceptions with lead to a feeling of misunderstanding in the minds of the employees and the values of the manager will be questioned even though the manager is not at fault with his values and is clear when it comes to his personal values.
It can be concluded that awarding bonuses are measures taken by organizations in order to revolutionize the growth of the company but they may have negative impacts if they are not properly distributed which creates importance to the role of the manager and it is the ability of the manager that finally results in the success or failure of the policies.
- Description on Wasta. (n.d.). Retrieved 5 9, 2010, from http://www.praeger.com/catalog/C4402.aspx
- Motivation. (n.d.). Retrieved 5 9, 2010, from http://www.oppapers.com/essays/Motivation/77983
- Research on Wasta By Arab Archives Institute. (n.d.). Retrieved 5 9, 2010, from http://www.alarcheef.com/campaigns/wasta_campaign.asp
- Wasta connections. (n.d.). Retrieved 5 9, 2010, from http://www.danielpipes.org/642/wasta-the-hidden-force-in-middle-eastern-society