In order to unleash the potential of organisational rewards for enhancing employee wellbeing and performance, organisations should understand the nature of employee needs that these rewards fulfil, and hence the power of need fulfilment in eliciting desirable employee outcomes.
Need fulfilment is an integral aspect in employment relationships. The main rationale for individuals in entering an employment relationship is to satisfy their instrumental and socio-emotional needs through organisational rewards, and to exchange their contributions in return for these provisions.
Instrumental rewards are organisational resources that satisfy the utility-based and competence needs of employees, such as receiving compensation proportionate to work efforts, or being provided with career, training, and development opportunities. Relational rewards, however, satisfy the socio-emotional needs of employees. For instance, working for an authentic, fair, socially responsible, and prestigious organisation serves as a source of pride, as well as a proxy for organisational social support, which satisfy individuals’ affiliation, relatedness, and self-enhancement needs.
The provision of instrumental and relational organisational rewards satisfies a wide range of interwoven individual needs; this is why rewards hold such a power for desirable employee outcomes. The key, for the HR function, is to know which types of rewards elicit highest returns for both parties of employment and under which contingencies. Evidence from psychological contract and person-organisation fit literatures suggests that the authentic provision of especially inimitable relational rewards that precisely correspond to employee needs yields the utmost value for both parties.
Therefore, the HR function should uncover, internally and externally communicate, and importantly follow through on the unique and most desirable rewards of working for that particular organisation — a crucial HR practice that can be referred to as employer branding. If this set of inimitable relational rewards can be followed through, it will be an immense source of positive distinctiveness and a driver of desirable employee outcomes.
Dr Selin Kudret is lecturer in human resource management at Kingston Business School