Burke and Litwin (1992) define ‘organisational climate’ as being the ‘collective impressions, expectations, and feelings’ that employees currently have towards their employer. They go on to argue that policy and practice in the field of reward management plays a major role in influencing ‘organisational climate’. To what extent do you agree, and why? Justify your answer with reference to your reading and personal experience.

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Employees’ attitudes toward their employers’ policies and procedures can be measured with the help of organizational climate which acts as a barometer for determining the employee’s collective impressions, expectations, and feelings. Using measurements read from this barometer, employers can align the organizational policies and practices to the organisational goals and strategy (Ahmad et al., 2018). The concept of organisational climate offers more clearly defined tangible categories that have a direct relationship to the measurable outcomes compared to organizational culture which is a vague concept. Since organizational climate is flexible it serves as a critical variable for people in management who might desire to measure the anticipated response to a new policy or modification, or even employee responses to the measures of an existing policy (Ahmad et al., 2018). Furthermore, organisational climate captures slice of response to a specific policy, change, metric or even a manager compared to its counterpart organisational culture which is a comprehensive response and understanding of “how things work around here (Mohapatra, 2018).” For this reason when determining the organisational climate, researchers often place a lot of consideration on different organisational climate. Since organisational climate is related to employee motivation, creating a motivating atmosphere in company settings is dependent on managers’ capacity to build a supportive organizational climate (Elmadag & Ellinger, 2018). This section shall discuss the impact a reward system on establishing a positive and favourable organizational climate.

Reward management is defined as the implementation of policies and practices that reward each organisation employee and consistently and fairly. When employees are rewarded for their exceptional performance, they feel valued and it acts as a great motivator that enhances productivity (Elmadag & Ellinger, 2018). A successful reward management system offers the employees with the opportunity to advance and allows the organisation to recognise good employees ( Paais & Pattiruhu, 2020). Furthermore, they system supports the company’s personnel requirements, culture and performance, and overall strategy and purpose. A compelling reward management system is that which encourages a healthy work-life balance that leaves the employees feeling and performing at their best (Ngwa et al., 2019).  Furthermore it helps to create a caring and compassionate workplace community that contributes to a positive organisational climate.

The most common and natural option of any reward system is the offering of monetary incentives. Monetary rewards often include, allowances, bonuses and hikes all which are key in motivating the employees. However, while salaries and perks are significant in employee motivation, studies have shown that non-monetary rewards are also just as motivating to the employees ( Paais & Pattiruhu, 2020). Therefore, for a reward system to be considered effective, it must combine the employees’ intrinsic demands with external benefits to become the perfect compensation system that would incentivize them to achieve to their full capacity. For the reward to be more effective, many businesses have implemented reward systems and policies that identify the fit between distinct needs and the alignment of an employee’s talents with the position at work (Ngwa et al., 2019). Of course while the fundamental components of the reward system must adhere to organizational regulations, variable compensation and components particular to individual bands of employees are at the discretion of the division or group to which the employees belong.

While developing a reward system, there are a few factors which determine the bonus and pay raises including the industry standards, the organisation’s performance in the preceding year and finally the organisational policies. Furthermore, it is important to place the current market conditions into consideration in addition to the industry’s demand and supply dynamics in terms of skill need and staff availability (Ahmad et al., 2018). This is key to ensure that the reward system is effective in ensuring that the reward management system is effective in retaining top employee talent especially in the service industry where there exists a fierce competition for highly trained personnel (Ngwa et al., 2019). Hence, it is important for the compensation systems must reflect market trends rather than what the firm believes to be a fair reward system. When it comes to non-financial reward systems, the rewards are unique to each organisation for each company has its own policies and way of combining non-monetary reward and recognition systems (Ngwa et al., 2019).  For instance, many multinational corporations offer non-financial reward schemes in terms of special events and days set aside to honour the employees.

In addition to organizational productivity, employee performance is also heavily influenced by the reward policy. Therefore, they are crucial to the company’s achievement of its objectives as well. Furthermore, reward management is also significant to the evaluation of organizational performance (Ngwa et al., 2019).. This is due to the fact that rewards in any system affect the rate and direction of organisational performance. Rewards have long been acknowledged as an important tool for increasing employee productivity and accomplishing the goals of an organisation (Mohapatra, 2018).  A successful reward system leaves the employees feeling valued by their employer which encourages them to not only work hard but better thus increasing their productivity. Employees are encouraged to stay at an organisation where they are aware that their managers are concerned about their well-being (Mohapatra, 2018). Furthermore, if employees recognize that their employers are honed and taking care of their needs, they prioritize the organizational goals more and take interest in attaining the organization’s specified goals.

One cannot emphasize enough on the significance of rewarding the employees in the organisation. It goes undisputed that employees who are constantly and fairly rewarded are more efficient, productive and motivated to work towards the set objectives compared to employees who are not rewarded. Highly compensated personnel provide a competitive edge to any firm since their performance contributes to the achievement of its objectives. Therefore, it is correct to say that there is a direct correlation between reward management to the level of motivation and organisational output (Ngwa et al., 2019).. As a result, the majority of employees attempt to equate their output in terms of performance with the amount of motivation generated by the incentives they receive at work. It is because rewards give the desired stamina that drives organizational performance. When employees are motivated, determined to work towards the organisational goals, then the organisational climate is positive. It is because employees feel that the organisation is concerned about their well-being and hence they will want to remain in the organisation longer. Therefore, policy and practice in the field of reward management plays a major role in influencing ‘organisational climate’. 


Ahmad, K.Z.B., Jasimuddin, S.M. and Kee, W.L., 2018. Organizational climate and job satisfaction: do employees’ personalities matter?. Management Decision.

Elmadağ, A.B. and Ellinger, A.E., 2018. Alleviating job stress to improve service employee work affect: the influence of rewarding. Service Business12(1), pp.121-141.

Mohapatra, I. and Sundaray, B.K., 2018. Impact of employee empowerment on employee performance. International Journal of Advanced Technology & Engineering Research (IJATER)1, pp.98-102.

Ngwa, W.T., Adeleke, B.S., Agbaeze, E.K., Ghasi, N.C. and Imhanrenialena, B.O., 2019. Effect of reward system on employee performance among selected manufacturing firms in the Litoral region of Cameroon. Academy of Strategic Management Journal18(3), pp.1-16.

Paais, M. and Pattiruhu, J.R., 2020. Effect of motivation, leadership, and organizational culture on satisfaction and employee performance. The Journal of Asian Finance, Economics, and Business7(8), pp.577-588.

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Burke and Litwin (1992) define ‘organisational climate’ as being the ‘collective impressions, expectations, and feelings’ that employees currently have towards their employer. They go on to argue that policy and practice in the field of reward management plays a major role in influencing ‘organisational climate’. To what extent do you agree, and why? Justify your answer with reference to your reading and personal experience.

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