The Reward Management Practices: Kazakhstan’s Hospitality Industry

Introduction

In this part of the paper, attention will be paid to the review of recent studies about employee job performance, reward management, and hospitality industry in the Republic of Kazakhstan. A literature review is an integral part of any research project, the goal of which is to create a solid foundation of advancing knowledge and theory development (Fisch & Block 2018). To conduct the research on the chosen topic, the literature review should help to find the knowledge gap between available evidence and clarify what kind of work can be done to enhance a better understanding of the hospitality industry in Kazakhstan.

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Taking into consideration the importance of a theoretical framework for a project, the evaluation of theories will be developed to prove the relevance of Vroom’s expectancy theory and Porter and Lawler model of motivation. In this section, the review of recent studies on reward management with its intrinsic and extrinsic types, job performance, employee motivation, and job satisfaction will be performed in the context of Kazakhstan’s hospitality industry.

Reward Management

There are many ways for business organisations to motivate their employees and promote successful performance. A reward system is one of the most effective methods to achieve the desired purpose, including the improvement of quality and career management (Hoole & Hotz 2016; Myrzaliyev et al. 2018). Despite the field of work, any firm could gain a number of benefits from cooperating with loyal workers, and a reward is an influential factor in worker loyalty (Linz, Good & Busch 2015). A reward system is characterised by the presence of specific financial and non-financial benefits, and the correct choice of rewards may become a challenging task in human resource management (Bustamam, Teng & Abdullah 2014). The concept of reward management is complex, and researchers develop their approaches to the most applicable evaluation.

There are no definite rules to be followed in creating a reward system, and a company is free to focus on its priorities. According to Anku, Amewugah and Glover (2018), reward management is a process of examination and control employee compensation and remuneration with a specific intention to motivate employees, accomplish strategic goals, and promote commitment. However, companies may give rewards for a variety of reasons, thus creating different types of rewards that are commonly divided into intrinsic and extrinsic ones.

Intrinsic Rewards

When employees are engaged in a working process, they are able to demonstrate productive results and stay competitive. Linz, Good and Busch (2015) and Putra, Cho and Liu (2016) prove the possibility to examine the worth of intrinsic and extrinsic rewards. Intrinsic rewards, as a non-physical type, are usually associated with the job itself and positively linked to loyalty (Linz, Good & Busch 2015). It is expected that intrinsic rewards contribute to motivation that “comes from within an individual” (Putra, Cho & Liu 2016, p. 232).

These rewards are of a psychological type, and employees enjoy them because it is a chance to improve organisational behaviours, self-management, and emotional reactions (Yoon, Sung & Choi 2015). Common examples of such rewards are a possibility to learn new things, find friendly co-workers, obtain freedom at work, accomplish goals, or make observations (Linz, Good & Busch 2015). Recognition of an employee and his or her achievements in a team, professional growth, respect, and acknowledgement help to motivate people with different backgrounds (Ajmal et al. 2015). Still, companies and their leaders are free to establish different frames and choose the necessary type.

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Extrinsic Rewards

Extrinsic rewards comprise tangible, financial rewards that are associated with the quality of job performance. An outcome of this benefit is detachable, including bonuses, promotion, supervisor’s praise, and other monetary benefits (Linz, Good & Busch 2015). Extrinsic motivation is frequently observed in the world of business because employees want to believe that their work is appreciated, and financial rewards turn out to be the best result (Putra, Cho & Liu 2016). Although intrinsic motivation contributes to work performance, extrinsic motivators cannot be ignored because they set the tone of work (Turner & Cheng 2017).

Additional pay, verbal appreciation, and promotion are appropriate examples of this type of reward (Linz, Good & Busch 2015). In their analysis, Anku, Amewugah and Glover (2018) underlined that such rewards have a great impact on people and their desire to demonstrate their best qualities, but the shortage is that they cannot last long. For example, improved working conditions may be compelling to an old worker, but, with time, it is expected to find new benefits, and the same reward will hardly be valuable. Extrinsic rewards depend on the policies of companies, their costs, and effectiveness.

Theoretical Framework

The creation of a theoretical framework is a significant step in the development of a research project in the field of business in general and the hospitality industry in particular. This framework aims at evaluating existing theories and their contributions to the discussion of the chosen topic with a number of theoretical arguments being properly identified (Rider 2017). Reward management is based on such concepts as employee motivation, job satisfaction, and high-level performance (Al-Shaibah & Habtoor 2015).

In a working process, the role of motivation cannot be ignored because this factor combines the abilities of people to complete their tasks, their willingness to work, and the quality of desired results. In the Soviet block to which the country for analysis, Kazakhstan, belongs, the human side of organisations was weak for a long period (Luthans et al. 2000). Therefore, it is recommended to recognise frequently used theories of motivation and define their relevance to the project. The analysis will include such models as Maslow’s hierarchy of needs, McGregor theory X and Y, Herzberg motivational theory, Vroom’s expectancy theory, and Porter and Lawler motivational theory.

Irrelevant Approaches

Motivation theories were created during the centuries, and each theorist made significant contributions to understanding motivation as a condition to achieve goals. Maslow’s hierarchy of needs is one of the well-known models to be applied by researchers in their intention to investigate sources that motivate people (Velmurugan & Sankar 2017). Being visualised in the form of a pyramid, this theory indicates physiological, safety, and belonging needs lower that esteem and self-actualisation (Güss, Burger & Dörner 2017). It was developed in the middle of the 20th century and remains a critical element in business research and strategic management (Abulof 2017).

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However, one should admit that today’s needs could considerably vary from those defined about a century ago. Amabile and Kramer (2011) proved that, compared to the people of the previous century, many modern employees are interested in the progress they can show but not financial awards they can gain. In his model, Maslow supported extrinsic rewards as a core of employee motivation and neglected the potential of intrinsic factors, which makes this theory irrelevant to the modern corporate context.

Another motivational theory X and Y with two main hypotheses was introduced by Douglas McGregor. A negative perspective is that employees are lazy and need a strong leadership style, and a positive perspective is that employees are motivated and expect the use of an effective management style to be rewarded (Bojadziev et al. 2016). The irrelevance of this model is explained by its focus that is the perceptions of managers about their employees in order to define the level of control and the style of leadership (Hattangadi 2015). In this project, the goal is to identify the types of rewards for employees in Kazakhstan’s hospitality context.

Herzberg motivational theory is based on two major categories of job satisfaction, which are hygiene and motivating factors. Hygiene factors imply the necessity to avoid unpleasantness at the workplace, and motivation factors contribute to self-growth and actualisation (Alshmemri, Shahwan-Akl & Maude 2017). This theory is frequently applied in job satisfaction research, and this project considers satisfaction as one of the potential factors in job performance. Thus, Herzberg’s approach is not relevant due to the impossibility to cover all the aspects of reward management.

Vroom’s Expectancy Theory

Vroom’s expectancy theory is one of the recommended frameworks to be used in this research project. Victor Vroom explained employee performance through the prism of individual factors that motivate people to complete their tasks and demonstrate the best results (Lloyd & Mertens 2018). This theory is based on determining reward expectancy and desirability influence to motivate employees and succeed in high-level performance (Linz, Good & Busch 2015). Two conditions should be met, which are employees’ beliefs that successful results may be achieved and employee’s beliefs that rewards can be offered. Effective motivation includes the evaluation of three elements, efforts, performance, and rewards (Figure 1). First, an employee must believe that he or she posses enough efforts to do the necessary work. Second, an individual evaluates possible rewards in regard to the level of performance. Finally, the analysis of achieved outcomes is developed in relation to personal needs.

Vroom’s expectancy theory diagram.
Figure 1: Vroom’s expectancy theory diagram.

Porter and Lawler Motivational Theory

Another recommendation is to apply another theory to strengthen the results and make the necessary clarifications. Vroom’s theory was expanded by Porter and Lawler several years later (Sahito & Vaisanen 2017). The authors suggested paying attention to the role of personal abilities that contribute to the success of a working process, connecting employee satisfaction and performance and focusing on past relationships (Lloyd & Mertens 2018).

The essence of this theory is that sometimes performance produces rewards, both intrinsic and extrinsic, and rewards result in satisfaction (Figure 2). Perceived equitable rewards are indirectly linked to satisfaction and performance because this variable indicates the number of expected rewards compared to the number of offered rewards. Satisfaction depends on this difference and defines the desire to work again in the same routine.

Porter and Lawler motivational theory
Figure 2: Porter and Lawler motivational theory (Kiehne et al. 2017, p. 542).

Theories’ Critique

The critiques of Vroom’s theory underlined its simplicity and the possibility to develop a number of accompanying factors. Therefore, Porter and Lawler decided to improve the offered model and investigate additional sources of motivation in the workplace. The chosen theories alone can be criticised due to the absence of significant details (Vroom) or the lack of originality (Porter and Lawler). Together, these authors introduced a strong theoretical framework, an expectancy theory, with three main components, namely valence (performance), instrumentality (outcomes), and expectancy (efforts) supported by intrinsic and extrinsic rewards (Jeske& Axtell 2017). There is a significant challenge in this model that is the necessity of managers (leaders) to define the value of reward as motivational force individually. Therefore, biased results can be achieved, depending on the specific policies of companies.

Job Performance

Job performance turns out to be an integral issue of the discussion. The authors of studies about organisational and strategic management are free to develop their own definitions and interpretations of necessary terms. In this research project, job performance is identified as “the amount of effort that individuals expert in their job” (Yunus et al. 2018, p. 1963). There are many factors that may contribute to the level and quality of job performance.

Some of them include organisational demands, missions, visions, goals, and beliefs that shape employee behaviours (Yunus et al. 2018). In the hospitality industry, job performance plays a crucial role because it involves not only employees but their managers, customers, leaders, suppliers, and many potential stakeholders (Loveland et al. 2016). In Kazakhstan, this industry is not new, but a number of improvements and new trends are observed, making it a specific area for analysis.

Employee Motivation

The way of how employees are motivated influences a number of working processes, outcomes, and rewards. According to Kurmanov et al. (2013), motivation depends on socio-economic factors that are related to the labour code of Kazakhstan organisations. They include the possibility to develop labour relationships, social partnerships, and the level of social protection (Kurmanov et al. 2013). In the study by Amabile and Kramer (2011), the motivation of employees is closely related to human emotions, perceptions, and intrinsic interests. The more positive attitudes towards organisational missions and management are observed, the better intentions and performance are demonstrated.

The example of Kazakhstan restaurant business shows that motivational methods may vary, including participation in profit and ownership, bonuses, payment, training, and cooperation with permanent clients (Yerdavletova & Mukhambetov 2014). Unfortunately, the results of Uteubayev (2015) showed that Kazakhstan is not able to develop enough motivational methods and improve the desire of employees to maximise their efficiency. Therefore, it is expected to observe different examples of how to motivate and reward in order to clarify what contributes to successful employee motivation.

The motivation of employees can be either a personal initiative or promoted by higher managers. If a leader is a source of motivation, reward management system is a tool that helps to attract talented employees and demonstrate their skills and possibility (Ahmad, Maochun & Rehman 2019; Danish et al. 2015). Mikkelsen, Jacobsen, and Andersen (2017) add command systems as external interventions to control employee behaviour and improve their performance. Commands may be perceived as another method to restrict employees’ thoughts and actions, but it still remains an effective intrinsic means to motivate and avoid punishment.

However, in post-socialist regions, extrinsic employee motivation is a preferred approach to guide managers and their colleagues (Ristic, Selakovic & Qureshi 2017). To motivate means to find out the ways of how to cooperate and help people define their potential in the chosen field.

Job Satisfaction

Job satisfaction is another critical element of the reward system that determines the quality of the hospitality industry. According to Skibba (as cited in Alromaihi, Alshomaly & George 2017), the relationship between job satisfaction and performance remains one of the most frequently investigated topics in business and psychology sectors. Many conditions result in increased satisfaction, including participation in decision-making, control of business conduct, and education opportunities (Ceschi et al. 2017; Nahipbekova & Kuralbayev 2018). When a happy employee is involved in a working process, the level of productivity is increased, and the number of organisational problems is decreased.

Improved satisfaction leads to constant engagement, which results in a better understanding of job functions, human relationships, and employers’ expectations (Bakotić 2016; Platis, Reklitis & Zimeras 2015; Shmailan 2015). Jenkins, Chenneville and Salnaitis (2018), Huang and Su (2016), Memon, Salleh, and Baharom (2016) underline the importance and effectiveness of training activities in promoting satisfaction when employees share their abilities and gain new skills. Feeling pleasure and evident achievements serve as strong evidence of successful performance in companies, and employees want to discover new aspects of their jobs.

Kazakhstan’s Hospitality Industry

The hospitality industry in Kazakhstan is closely related to recent achievements in the tourism business and the development of public relationships. The current economic situation is not stable, and business owners aim at finding new sources of investments and identifying service standards (Erkin 2013; Shayekina & Tashenova 2013; Tleuberdinova & Ussenov 2013). Another direction of the hospitality business is customer and competitor orientation as an opportunity to understand what people need and expect from the industry and gather enough credible information (Seilov 2015). Marketing analysis shows that a low level of training does not allow establishing high-quality facilities in the country (Raimbekov et al. 2015). Therefore, improvements in job performance through motivation, rewards, and satisfaction are integral for organisational management.

Reward Management Trends

In the country, reward management trends are determined by the interests of people and living conditions that are available to the population. Khoreva and Kostanek (2019) and Zharkeshova et al. (2017) identify that the majority of Kazakhstan employees are concerned about their social and financial statuses and expect to obtain monetary rewards instead of intrinsic benefits. Material rewards have critical importance in motivation, and employees try to identify their best areas of services to neglect weaknesses and underline strengths (Nurgali 2017). Knowledge governance is one of the approaches to improve organisational practices, but not many employees have enough time for additional training (Nazri 2017).

Therefore, leaders base their material rewards on the results of regular evaluations (feedback system), career advancement, competitions, and the intentions to self develop and grow (Junusbekova 2016). Innovation is a significant part of reward systems because people change their interpersonal relationships and competencies in regard to available sources and desired outcomes (Sagiyeva et al. 2015). In other words, three main trends exist in reward management of Kazakhstan’s organisations, including the evaluation of social status, financial needs of employees, and innovations that influence job performance.

Rewards in the Hospitality Context

During the last several years, Kazakhstan’s hospitality industry has undergone a variety of changes, facing certain challenges and demonstrating achievements. Rewards in the chosen context depend on the quality of services and access to resources. However, tourism business still lacks definite policies, specialists, and skills (Kenebayeva 2017; Nametova & Tolymbek 2018; Raimbekov et al. 2015; Trusheva & Syzdykbaeva 2018). Leaders and managers focus on the improvement of employees’ skills, knowledge, and abilities to differentiate between what can improve their level of hospitality and attract new clients (Thapa 2019; Williams & Horodnic 2017; Yessengabylova et al. 2015).

As soon as the quality of services is improved, and employees demonstrate high-level performance, new reward systems are introduced. The establishment of rewards is usually based on reciprocal relationships, and some monetary benefits remain non-informal (Oka 2015). The goal of managers is to increase the desire of people to work in the chosen business. Therefore, attention is paid to monetary rewards, salary control, and other benefits that can stabilise the economic situation in the country.

Conclusion

In general, the influence of reward systems in Kazakhstan’s hospitality industry cannot be ignored. It is not only a chance to improve the quality of job performance but also an excellent opportunity to invite new specialists who are ready to share their knowledge and experiences. The country is challenged by post-Soviet transformation and the changes in economic and social affairs. Some organisations are ready to face additional tasks and improve employee motivation practices. In many cases, Kazakhstan’s companies need more time and additional help to manage rewards and demonstrate high-level performance.

Regarding the outcomes of intrinsic and extrinsic benefits, Kazakhstan’s employees prefer to receive monetary rewards to stabilise their work and personal relationships and contribute to the development of the hospitality industry. The expectancy theory by Vroom, Porter, and Lawler focuses on the evaluation of three variables, job performance, employee motivation, and job satisfaction, in managing reward systems.

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