A STUDY ON

“MARKETING STRATEGY”
With reference to

ROYAL ENFIELD (Lakshmi Motors, Peddapadu, S r i k a k u l a m )

A Project report submitted in partial fulfilment for the Award of

“POST GRADUATE DIPLOMA IN MANAGEMENT”

Submitted by AV. Durga Prasad

(ROLL NO: 34035)

(2020-2022)

Under the esteemed guidance of

Mr. SRIMANTH KUMAR, Professor

INTEGRAL INSTITUTE OF ADVANCED MANAGEMENT (APPROVED

BY AICTE NEW DELHI, INDIA) VISAKHAPATNAM, A.P, INDIA.

 CERTIFICATE

This is to certify that the project report entitled “ MARKETING STRATEGY” with reference
to Royal Enfield (Lakshmi Motors, Srikakulam) is a genuine and bona-fide work done by
AV. Durga Prasad, a student of 2nd year PGDM, INTEGRAL INSTITUTE OF ADVANCED
MANAGEMENT,

Visakhapatnam for the award of PGDM from AICTE under the guidance and supervision of
Mr. SRIMANTH KUMAR, Assistant Professor, IIAM.

Mr. SRIMANTH KUMAR, Dr. VIJAYA RUDRARAJU

Professor, Director,

IIAM College IIAM College

 DECLARATION

I, AV. DURGA PRASAD hereby declare that the project report titled “A STUDY ON
MARKETING STRATEGY” with reference to Royal Enfield (Lakshmi Motors, Srikakulam)
has been submitted to INTEGRAL INSTITUTE OF ADVANCED MANAGEMENT, in partial
fulfilment of Post Graduate Diploma in Management under the guidance of Mr.
SRIMANTH KUMAR, Professor, IIAM, Visakhapatnam.

Place: Visakhapatnam AV. DURGA PRASAD

Date: (Roll No: 34035)

 ACKNOWLEDGEMENT

Before I begin my project, I would like to thank all those people who had constantly
supported and encouraged to bring this project into existence.

I wish to acknowledge my sincere thanks to Dr. VIJAYA RUDRARAJU, Director of IIAM

and all the faculty members of the college for their continuous support.

I am grateful to my faculty guide Mr. SRIMANTH KUMAR, Assistant Professor, IIAM,

who inspired me during my research in this area and had dedicated her valuable time and
extended her constructive guidance and constant supervision, which is an immense help to me
in successful completion of the study.

I equally thank all the Managers and Employees of Lakshmi Motors, Srikakulam who have
supported me and facilitated me throughout this study with their valuable suggestions.

AV. DURGA PRASAD

(Roll No: 34035)

 CONTENTS

CHAPTER-1 Pages (1-7)

1.1 INTRODUCTION 2
1.2 NEED FOR THE STUDY 3
1.3 OBJECTIVES OF THE STUDY 4
1.4 RESEARCH METHODOLOGY 5-6
1.5 LIMITATIONS OF THE STUDY 7

CHAPTER-2 (8-23)
2.1 INDUSTRY PROFILE 9-13

2.2 COMPANY PROFILE 14-23

CHAPTER-3 (24-31)
3.1 THEORETICAL FRAMEWORK 25-31

CHAPTER-4 (32-49)
4.1 FIELD STUDY AND DATA ANALYSIS 33-49

CHAPTER-5 (50-54)
5.1 SUMMARY 51

5.2 FINDINGS 52

5.3 SUGGESTIONS 53

5.4 Conclusion 54

QUESTIONNAIRE (55-58)
BIBLIOGRAPHY 58
CHAPTER-1

1
 1.1 INTRODUCTION
A market is never saturated with a good product, but it is very quickly saturated with a bad one.
- Henry Ford"

INDIAN AUTOMOBILE INDUSTRY

 Royal Enfield was a brand name under which The Enfield Cycle Company Limited of Red
ditch, Worcestershire sold motorcycles, bicycles, lawnmowers and Stationary engines Which
they had manufactured. Enfield Cycle Company also used the brand name Enfield Without
Royal.
 The first Royal Enfield motorcycle was built in 1901 by Robert Walker Smith and Albert
Eadie. The Enfield Cycle Company is responsible for the design and original production of the
Royal Enfield Bullet, the longest- lived motorcycle design in history.
 Royal Enfield motorcycles had been sold in India since 1949. In 1955, the Indian government
looked for a suitable motorcycle for its police and army, for use patrolling the country’s
border.

The automotive industry is one of the largest industries worldwide and in India as well. The
automotive sector is a vital sector for any developed economy. It drives upstream industries

2
 like steel, iron, aluminum, rubber, plastics, glass and electronics, and downstream industries
like advertising and marketing, transport and insurance. The automotive industry can be
divided into five sectors: -

1) Passenger Cars

2) Multi- Utility Vehicles (MUVs)

3) Two- and Three- Vehicles

4) Commercial Vehicles - Light Commercial Vehicles (CVs) / Medium and

Heavy Commercial Vehicles (MHCVs)

5) Tractors

We will be looking at the Passenger car industry in India. Despite a head start, the passenger car
industry in India has not quite matched up to the performance of its counterparts in other parts of
the world. The primary reason has been the all-pervasive regulatory atmosphere prevailing till
the opening up of the industry in the mid-1990s. The various layers of legislative Acts sheltered
the industry from external competition for a long time. Moreover, the industry was considered
low-priority as cars were thought of as 'unaffordable luxury' The following table presents a
comparative view of the extent of motorization in India vis-à-vis certain other countries in the
world

3
 1.2 NEED FOR THE STUDY

Having a good reward system helps keep employees happy, loyal to the company, and eager
to move up the ladder. Rewards, like public recognition, bonus, appreciation, promotions,
additional pay, motivate employees to work harder.

The need for the present study is to understand the importance of reward system in an
organization, to find out if rewards bring a positive impact on employee performance, to find
out what kind of rewards are important to motivate the employees to increase in their
performance.

The study determines the importance of Monetary and Non-Monetary Rewards and also to
know the extent till where the extrinsic rewards and intrinsic rewards can enhance employee
performance. To know about the Lakshmi Motors, Srikakulam reward structure and how it
acknowledges the performance of its employees.

4
 1.3 OBJECTIVES OF THE STUDY

The present study of the marketing strategy of the Royal Enfield (Pvt.) Limited revolves around
the following broad objectives:

 To study the evolution and growth of the Royal Enfield (Pvt.) Limited in the context of
the automobile revolution in India;
 To study the growth strategy of the Royal Enfield (Pvt.) Limited and the marketing
methods followed by it in this regard.
 To study the Bullet Bike revolution in India and the contribution of the Royal
Enfield (Pvt.) Limited to it.

5
 1.4 RESEARCH METHODOLOGY

Research is defined as human activity based on intellectual application in the investigation of

matter. The primary purpose for applied research is discovering, interpreting, and the
development of methods and systems for the advancement of human knowledge on a wide
variety of scientific matters of our world and the universe. Research can use the scientific
method, but not to do so.

Scientific research relies on the application of the scientific method, a harnessing of curiosity.
This research provides scientific information and theories for the explanation of the nature and
the properties of the world around us. It makes practical applications possible. Scientific
research is funded by public authorities, by charitable organizations and by private groups,
including many companies. Scientific research can be subdivided into different classifications
according to their academic and application disciplines.

Research methodology is a way to systematically solve the research problem. The data for the
present study is collected from both primary and secondary sources.

Primary Sources:

Primary Data was collected through Questionnaire given to various staff members of the
personnel departments. A questionnaire of 15 questions regarding the topic was prepared and
given to the employees of Lakshmi Motors, Srikakulam.

Secondary Sources:

Secondary information regarding the study was collected from various reports, magazines and
journals of Royal Enfield. Additional information has been taken from the website of Royal
Enfield Limited.

6
METHOD OF SAMPLING USED:

“RANDOM SAMPLING METHOD”

In the random sampling method, all items have some chance of selection that can be
calculated. Random sampling technique ensures that bias is not introduced regarding who is
included in the survey.

SAMPLE SIZE:

The sample size taken is 50 from the employees in the Lakshmi Motors, Srikakulam.

For this project, primary data was collected from the employees of Lakshmi Motors. The
basic approach for the collection of primary data is by conducting a survey with the help of a
questionnaire.

7
 1.5 LIMITATIONS OF THE STUDY

In spite of the precautions, vigilance and scrupulousness taken to make the study objective, it
cannot be denied that there are certain limitations:

 Due to the Covid-19 Pandemic the present study couldn’t be done physically by
visiting the company and interacting with employees directly but everything had to be
done through online which is very challenging.
 As the survey was conducted online most of the employees haven’t responded
properly and were very reluctant to give the information and to fill the questionnaire.
 The sample size was small so there was no scope to know each and every employee’s
opinion and views.
 Primary data collection was time assuming and Accessibility to all the necessary
records for the research was limited by the organization.

8
CHAPTER-2

9
2.1 INDUSTRY PROFILE

INTRODUCTION
 Royal Enfield was a brand name under which The Enfield Cycle Company
Limited of Red ditch, Worcestershire sold motorcycles, bicycles,
lawnmowers and Stationary engines Which they had manufactured. Enfield
Cycle Company also used the brand name Enfield Without Royal.
 The first Royal Enfield motorcycle was built in 1901 by Robert Walker
Smith and Albert Eadie. The Enfield Cycle Company is responsible for the
design and original production of the Royal Enfield Bullet, the longest-
lived motorcycle design in history.
 Royal Enfield motorcycles had been sold in India since 1949. In 1955, the
Indian government looked for a suitable motorcycle for its police and army,
for use patrolling the country’s border.

LIFE AT ROYAL ENFIELD

 Royal Enfield brings together the best minds in an environment that best
minds in an environment that inspires great performance and welcomes
diverse views.

 The attitude of ‘customer first’ and believe in bringing new and innovative
approaches to our work.

 Challenge ourselves and others, and insist on the highest ethical standards.
At Royal Enfield, we work together with pride and passion to offer a pure
motorcycling experience to Royal Enfield riders worldwide.

10
 MISSION

 Achieving customer Delight.

 Excellence in technology and engineering.

 Continuous Improvement and Learning

 Teamwork, training, transparency, people-based management and

internal customer satisfaction.

 Protection of working environment that promotes safety and health of

our employees.

VISION

 To become Customers’ first choice, by focusing organizational energy

on understanding and delivering on their need for state-of-the-art
technology.

 Cost and quality benchmarks, and overall relationship, which they

expect from a world class supplier.

11
 2.2 COMPANY PROFILE

The Royal Enfield story – Since 1901.

1891
1891
In November 1891, entrepreneurs Bob Walker Smith and Albert Eadie buy George Townsend & Co. of Hunt End,
Redditch. Townsend’s is a well-respected needle manufacturer of almost 50 years standing which has recently begun
manufacturing bicycles.

12
1893
1893
The duo wins a contract to supply precision parts to the Royal Small Arms Factory of Enfield, Middlesex. To celebrate
this prestigious order, they rename their undertaking the Enfield Manufacturing Company Ltd. and call their first Bob
Walker Smith designed bicycle, the Enfield. The following year, their bicycles are renamed Royal Enfield’s and the
trademark ‘Made Like A Gun’ is introduced.

13
1898
1898
Bob Walker Smith designs the company’s first motorised vehicle. Known as a quadricycle, it is built around two sturdy
bicycle frames and uses a proprietary 1 1/2 hp De Dion engine. The company finalises its trading name as The Enfield
Cycle Co. Ltd., a name it is to use for the following 70 years.

14
1900
1900
Royal Enfield delves into motorsport when one of its quadricycles enters the inaugural 1000 Mile Trial. Following a
torturous cross-country route from London to Edinburgh and back, the event does much to convince the British public
of the viability of motorised transport.

15
1901
1901
The first Royal Enfield motorcycle is produced. Designed by Bob Walker Smith and Frenchman Jules Goblet, it is
launched at the Stanley Cycle Show in London. The 1 1/2 hp engine is mounted in front of the steering head and the
rear wheel driven by a long rawhide belt.

16
1909
1909
Royal Enfield’s first V-twin, using a 297cc Swiss-made Motosacoche engine, is launched at the Stanley Cycle Show.
The model achieves numerous competition successes the following year, including in the John O’ Groats to Lands’ End
Trial.

17
1914
1914
Royal Enfield's first 2-stroke motorcycle goes into full production. As Britain becomes embroiled in World War I,
production of the company’s biggest motorcycle, the 770cc 6 hp V-twin, takes precedence. During the conflict, the
company supplies motorcycles to the British, Belgian, French, United States and Imperial Russian armies.

18
1924
1924
Continuous development results in a range of 8 models, including the launch of the Sports Model 351, the first Royal
Enfield 350cc OHV 4-stroke motorcycle with foot operated gear change. A unique 225cc 2-stroke step-through 'Ladies
Model' is also introduced.

19
1925
1925
A major fire breaks out at the 18-acre Redditch factory. The company's own fire brigade manages to fight the flames
which threaten to engulf the entire plant.

20
1928
1928
Royal Enfield adopts saddle tanks in place of outmoded flat tanks. It is also one of the first manufacturers to change its
front fork system from a Druid design to centre-sprung girder forks.

21
1930
1930
The decade begins with a diverse eleven model range, from the 225cc 2-stroke Model A to the 976cc V-twin Model K.
New 350 and 500cc side-valve and overhead valve machines with dry-sump lubrication are also produced.

22
1932
1932
The legendary "Bullet" motorcycle is born. It is first displayed in November 1932 at the Olympia Motorcycle Show in
London. Three versions are produced: 250, 350 and 500cc, all with inclined 'sloper' engines, twin-ported cylinder heads,
foot operated gear change and high compression pistons.

23
1933
1933
Founding partner and joint Managing Director, Bob Walker Smith, passes away. His son, Major Frank Smith. who had
been joint Managing Director with his father for a number of years, assumes full control of The Enfield Cycle
Company.

24
1933
1933
The ground-breaking Model Z 'Cycar' goes on sale. Aimed at commuters, this 148cc 2-stroke features a fully enclosed
engine and leg shields to protect its rider from the worst of the elements.

25
1936
1936
The 500cc Bullet is radically changed with the release of the Model JF. It features an upright engine with a 4-valve
cylinder head. A sports version, with a bronze cylinder head, is available to special order.

26
1939-
1945
1939-1945
Royal Enfield produces large quantities of military motorcycles, bicycles, generators and ant-aircraft gun predictors
during the Second World War. The most iconic model is the 125cc 'Airborne' motorcycle known as the Flying Flea.
These 126cc 2-strokes can be loaded into specially fabricated parachute cradles and dropped with Para troops behind
enemy lines.

27
1948
1948
The post-war 350cc Bullet prototype, with radical oil-damped swinging arm rear suspension, is previewed in the
Colmore Cup Trial of February 1948. Two Bullets form part of the victorious British Trophy team in the 1948 ISDT
(International Six Days Trial), held in Italy. Both their riders win gold medals.

28
1949
1949
The new 350cc Bullet and 500 Twin models are launched in the UK. Both bikes share the same frame, swinging arm
suspension, telescopic front forks and gearbox. K. R. Sundaram Iyer launches Madras Motors to import British
motorcycles into India, including Royal Enfields.

29
1952
1952
Royal Enfield's star rider, Johnny Brittain, wins the prestigious Scottish Six Days Trial on his 350cc Bullet, HNP 331.

30
1952
1952
Madras Motors receives an order from the Indian Army for 500 350cc Bullets. The motorcycles arrive from Redditch in
early 1953 and prove to be a great success, being both hardy and easy to maintain.

31
1955
1955
The Redditch company partners Madras Motors in India to form 'Enfield India'. Work commences on the construction
of a purpose-built factory at Tiruvottiyur, near Madras.

32
1956
1956
The Tiruvottiyur factory opens and Bullets begin to be manufactured under license. Initially, these machines are
shipped from England in kit form then assembled in the Madras plant. A total of 163 Enfield India Bullets are built by
the end of the year.

33
1957
1957
Johnny Brittain wins the Scottish Six Days Trial on a Bullet for the second time and also finishes top of the British
trial’s championship. The 250cc Crusader model is launched in Britain. Producing 13 bhp, the motorcycle features a
unit construction engine and alternator electrics with coil ignition.

34
1964
1964
The iconic Continental GT café racer is launched to great acclaim when a team of journalists ride one from John O’
Groats to Lands’ End in under 24 hours, including 8 laps of the Silverstone circuit. The GT features a fibreglass racing
petrol tank, clip-on handlebars, rear sets, a humped race seat, rev counter and a swept-back exhaust.

35
1967
1967
With only two models left in production at the start of the year – the 250cc Continental GT and the 736cc Interceptor –
Royal Enfield’s Redditch facility closes and the site sold to developers. Production of the Interceptor continues at
Enfield’s underground facility at Upper Westwood, near Bradford on Avon, until its closure in June 1970.

36
1977
1977
Enfield India begins exporting the 350cc Bullet to the UK and Europe. Sales grow rapidly as the bike develops a
following amongst classic motorcycle enthusiasts.

37
1989
1989
A new 24 bhp 500cc Bullet is released. The bike is primarily aimed at export markets where it is available in Classic,
Deluxe and Superstar trim.

38
1993
1993
Enfield India produces the world's first and only mass-manufactured diesel motorcycle. Known as the Enfield Diesel, it
uses a highly fuel efficient 325cc power unit installed in the standard Bullet rolling chassis.

39
1994
1994
Commercial vehicle and tractor manufacturer, The Eicher Group, acquires Enfield India Limited. Eicher has roots in
India dating back to 1948. It renames the company Royal Enfield Motors Limited.

40
1997
1997
Forty Royal Enfield motorcycles climb to Khardung La, the world’s highest motorable pass, setting a precedent for epic
rides across some of the world’s most difficult terrain and creating a blueprint for the annual Himalayan Odyssey ride.

41
1999
1999
Utilising the design skills of Austrian company AVL, production of a revised 350cc all-aluminium lean-burn Bullet
engine, known as the A350, begins at a new Royal Enfield plant near Jaipur, Rajasthan.

42
2001
2001
The Daredevils, the motorcycle display team of the Indian Army Corps of Signals, Jabalpur, forms a human pyramid of
201 men on ten 350cc Bullets. They ride a distance of more than 200 metres to set a new world record.

43
2002
2002
The Thunderbird, a stylish lean burn cruiser, is launched. It features the first 5-speed gearbox used on a Royal Enfield
since the 1960s. More than a 1000 Royal Enfield motorcycles of all ages descend on Redditch for the Royal Enfield
Owner’s Club ‘Redditch Revisited’ event.

44
2004
2004
The Electra X, an export Bullet with a 500cc version of the all-alloy lean burn engine, goes on sale. The retro-styled
‘Bullet Machismo’ is rated the ‘No.1 Cruiser’ in a TNS Autocar survey.

45
2005
2005
Royal Enfield celebrates its 50th anniversary in India with the release of commemorative Thunderbird and Bullet
Electra models and ‘The Legend Rides On’ coffee table book.

46
2008
2008
The Thunderbird Twins park is launched in India with the new Unit Construction Engine (UCE). Royal Enfield begins
exporting the Classic, India’s first 500cc EFI, Euro III-compliant motorcycle, to European markets.

47
2009
2009
The 500cc UCE engine is launched in India. The retro-styled Classic version immediately achieves cult status and sales
grow rapidly.

48
2011
2011
Royal Enfield riders around the world are encouraged to go for a ride on the inaugural ‘One Ride’ event. It becomes an
annual ride, taking place on each first Sunday in April, the company acquires 50 acres of land at Oragadam for its new
plant. A factory organised trip crosses the Nepalese border for the first time with ‘Tour of Nepal’.

49
2012
2012
Royal Enfield launches its first highway cruiser, the all-black Thunderbird 500. Work on the new Oragadam factory
continues briskly while the Tiruvottiyur plant sets a new production record to meet 113,000 motorcycle sales.

50
2013
2013
Manufacturing commences at Oragadam, Tamil Nadu. This state-of-art factory, which includes a robotic paint facility,
will be the nucleus of Royal Enfield’s future global ambitions.

51
2013
2013
Forty-eight years after developing its first production café racer, Royal Enfield rolls out the all-new Continental GT.
Featuring a cradle frame designed by Harris Performance and a 535cc UCE engine, this new café racer becomes the
starting point for numerous custom builds.

52
2014
2014
Royal Enfield introduces a new retail experience in India with the opening of the first-of-its-kind exclusive gear store at
Khan Market, New Delhi.

53
2015
2015
The company acquires Harris Performance, a renowned British motorcycle design and fabrication firm, to enhance its
engineering and product design capabilities.

54
2015
2015
Royal Enfield North America is established. With headquarters in Milwaukee, Wisconsin, it’s the company’s first direct
distribution subsidiary outside of India.

55
2016
2016
Royal Enfield debuts the Himalayan, its first adventure motorcycle. With an all-new 411cc SOHC engine and long
reach suspension, it’s designed to give adventurous riders the right tool for all roads and no roads.

56
2017
2017
The new Royal Enfield Technology Centre opens at Bruntingthorpe Proving Ground, near Leicester in the UK. A team
of over 100 engineers, designers and testers begin work on research, development and long-term product strategy.

57
2017
2017
Production commences at the company’s third plant. Located at Vallam Vadagal, near Chennai, this world-class
manufacturing facility is dedicated to producing Royal Enfield 350cc machines.

58
2017
2017
The new 650cc Royal Enfield Interceptor and Continental GT twins are unveiled at the EICMA Motorcycle Show in
Milan, Italy, and at Rider Mania in Goa, India. The company opens its first café, called the Royal Enfield Garage Café,
in Baga, Goa.

59
2018
2018
The Royal Enfield Classic 500 Pegasus, a homage to the WWII Royal Enfield Flying Flea, is launched at the Imperial
War Museum, Duxford, UK. Limited to just 1000 individually numbered motorcycles worldwide, the Indian market
allocation of 250 machines sells in under 3 minutes.

60
2018
2018
Cayla Riva, an 18-year-old racer from California, sets a new land speed record of 157.053 mph during Speed Week at
the Bonneville Salts Flats. Her bike, a Continental GT 650 twin, is specially prepared for Bonneville with S&S Cycle
engine tuning. And a Harris Performance frame.

61
2018
2018
With design cues taken from the 1140cc KX V-twins of the late 1930’s, the 838cc KX Concept V-twin demonstrates
the capabilities of the design team at the UK Technology Centre. Featuring girder forks with an integrated headlight and
a single-sided soft tail rear, it is the star of the show when unveiled at EICMA.

62
2019
2019
A team of eleven Indian Army and Royal Enfield riders summit the 5,540m Karakoram Pass on Himalayans despite
treacherous snow, ice and temperatures below -30°. It is the first time the pass has been reached by motorcycle. The
Bullet Trials Works Replica 500 is launched as an homage to Johnny Brittain’s all-conquering trials mounts of the
1950s.

63
2019
2019
The Interceptor 650 wins the prestigious Indian Motorcycle of the Year award. The 650 twin is also named Bike of the
Year in the Times Auto Awards, Motorcycle of the Year by Autocar and Two-Wheeler of the Year by Bike India. It is
voted Best Modern Classic Middleweight in Thailand and Best Retro Bike of the Year by MCN in the UK.

64
2020
2020
Production of the 500cc UCE engine comes to an end. Its swansong is the limited edition Classic 500 Tribute Black. A
new Royal Enfield CKD assembly line is set up in Buenos Aires, Argentina. The President of Argentina, Alberto
Fernández, attends the opening ceremony.

65
2020
2020
Make-It-Yours (MIY), a unique motorcycle personalisation initiative, goes live. Customers can configure their
motorcycle when making a booking on the Royal Enfield App, website or in-store. The Meteor 350 cruiser is launched
in India to great acclaim. It has an all-new chassis and engine and features the new Royal Enfield Tripper turn-by-turn
navigation device.

66
2021
2021
Royal Enfield celebrates 120 years of Pure Motorcycling.

67
CHAPTER-3

68
 3.1 THEORETICAL FRAMEWORK

REWARD SYSTEM

The achievement and benefit received by employees for their job performance in an organization
are known as reward. Employees join the organization within certain expectation of reward.
Some may be expecting for better salary and wages i.e., economic rewards while other may be
seeking for facilities like accommodation, transportation, health, safety and other benefits as
reward. Thus, economic and non-economic benefits provided by organization to employees for
their job performance regardless of their expectation is known as reward. Employees must be
communicated about the reward provision in an advance. Attractive and transparent reward
system must have quality to motivate and empower the dedicated and reliable employees.
Reward management also assist in planning the long term financial management.

Reward is an incentive plan to reinforce the desirable behavior of workers or employers and in
return for their service to the organization. Rewards can be monetary in the form of salary or
non- monetary in the form of awards for some special services to the company or simply giving
an employee a work which he enjoys doing. The primary objective of organizations in giving
rewards is to attract, maintain and retain efficient, high performing and motivated employees.

Developing an effective reward system can be a difficult task. The following sections provide e
some guidance on the basics of an effective reward system. These sections focus almost
exclusively on extrinsic rewards, but intrinsic rewards should also be considered when
developing each employee’s job.

Employee rewards could be considered a more tangible form of appreciation to the employees
who have achieved high quality work or displayed outstanding performance levels.
It could be said that rewards are slightly costlier to businesses as they often take the form of
bonuses and profit sharing. This system is proven to be just as effective as employee recognition
as it increases engagement and motivation levels significantly. Depending on the size of the
business, the rewards offered to the employees will vary.

69
 Extrinsic rewards include all rewards that have a monetary value such as base pay, pay
contingent on performance, contribution, competency or skills. Pay related to service, financial
recognition schemes and benefit such as pensions, sick pay and health insurance. They are the
core elements in total rewards. While intrinsic rewards are good; at least when they provide
intrinsic motivation- that is motivation by work itself. A good reward system should satisfy
intrinsic and extrinsic needs for employee and if extrinsic reward can support for their employee’
life, intrinsic rewards will satisfy for their employee’s psychological needs.

Employee Rewards- 7 Important Types: Extrinsic Re wards, Intrinsic Rewards, Monetary Rewards, Non-
Monetary Rewards, Performance- Based Rewards and Few others

Understanding how each employee perceives and values different rewards is an essential part of
management. Managers need to grasp an understanding of extrinsic and intrinsic rewards.

1. EXTRINSIC REWARDS-

Extrinsic rewards are external rewards tied to certain employee behavior’s, skills, time, or roles
in an organization. How employees perceive these rewards relevant to their performance and the
rewards given to others will ultimately determine the effectiveness of the rewards.

Managers also need to understand how much value each employee places on specific extrinsic
rewards. For example, a well-paid but overworked employee may value additional vacation time
or a reduced workload more than a few extra dollars. Money, praise, awards, and incentive prizes
such as tickets to a concert or a game are all examples of extrinsic motivators.

Whatever motivator the manager chooses, the employee must see the reward as a motivator for it
to be effective. For example, if the extrinsic reward is tickets to the opera, an employee who
hates the opera likely would not be motivated by the tickets. On the other hand, if the employee is
a football fan and the extrinsic reward is tickets to a major game, the motivator might be more
effective.

70
 2. INTRINSIC REWARDS-

It is simpler to explain what intrinsic rewards are by discussing what they are not. Intrinsic
rewards do not have an obvious external incentive; that is, people are not acting to get a tangible
reward, be it time off or money. Instead, they act because it feels good or provides some form of
internal satisfaction.

Intrinsic rewards are often more highly valued and more effective over time, yet using them is a
difficult managerial task. Intrinsic rewards derive from employees feeling good about the job
they have done, the effort they have put forward, or the role they played in a team project.

Intrinsic rewards in the workplace come from the job itself, so to provide intrinsic reinforcement;
a manager should enrich the job. Job enrichment involves improving work processes and
environments so they are more satisfying for employees, such as eliminating dysfunctional
elements or enlarging jobs (increasing the duties and responsibilities of a job).

3. MONETARY REWARDS-

Monetary rewards are most commonly given in the form of pay increases, bonuses, or increases
in benefits, such as pension or health care premiums. Such rewards can be divided into two
categories: direct and indirect compensation. Both contribute to the financial betterment of an
employee.

Direct compensation is relatively straightforward and consists of increases in hourly pay,

increases in hours (for non-salaried employees), increases in salary, merit pay based on
performance, seniority pay based on time with an organization, and bonuses based on the
achievement of individual, group, or organizational objectives.

4. NON-MONETARY REWARDS-

Non-monetary rewards cost the organization but do not directly improve the employee’s
financial position. Supplying employees with the best tools possible to do their job is an
example, such as providing a new high-end laptop or having an excellent training facility. A

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good office location, choice of furnishings, or special parking place can all be nonmonetary
rewards.

Employees may not know the full details of pay and other monetary benefits of co-workers, but
nonmonetary rewards are often visible and can create perceptions of inequity in an organization.
In some cases, this may be the intent of managers who want employees to strive to achieve the
stereotypical corner office, but often it may also unintentionally encourage feelings of inequity.

That inequity may have positive implications for an organization if employees strive to increase
performance, or it can result in turnover and reduced performance. As with any reward,
nonmonetary rewards need to be carefully thought out before being implemented.

5. PERFORMANCE BASED REWARDS-

Performance-based rewards are allocated based on the performance of an employee in a

company. Performance-based rewards are given in the form of pay plans, incentive systems,
group bonuses, or commissions. One of the most difficult challenges for managers is to decide
what to base rewards on. A common distinction is performance- based versus membership-based
rewards. As the name implies, performance-based rewards are tied to the ability of an individual,
team, group, or organization to meet some previously agreed- upon standard of performance.
Performance rewards are based on an evaluation of contribution and awards are allocated based
on that evaluation.

6. MEMBERSHIP BASED REWARDS-

Membership-based rewards are allocated solely for being part of a group within an organization.
These rewards commonly include annual cost-of-living increases to a base salary or support for
an equity policy. For example, if a park and recreation department was looking to encourage
staff to have master’s degrees or obtain certification, they might offer pay incentives for having
either or both.

Membership-based rewards are also often tied to length of time with an organization. For
instance, after a certain length of service with an organization, employees may receive a certain

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 percentage increase to their pay or be eligible for additional benefits. In a unionized
environment, many of these rewards are spelled out in a labor agreement.

To illustrate the difference between the two structures, let’s look at annual raises. A
performance-based structure means that each employee’s performance is evaluated and raises are
based on performance, with the highest performers getting the most money.

A membership-based structure means that all employees receive the same raise regardless of
performance. Membership structures can be de- motivating to high performers because they get
the same rewards despite working harder.

EMPLOYEE PERFORMANCE

Employee performance refers to how your workers behave in the workplace and how well they
perform the job duties you've obligated to them. Your company typically sets performance
targets for individual employees and the company as a whole in hopes that your business offers
good value to customers, minimizes waste and operates efficiently.

For an individual employee, performance may refer to work effectiveness, quality and efficiency
at the task level. Your salesperson, for example, may be expected to complete a certain quota of
calls to potential leads per hour with a specific portion of those resulting in closed sales. On the
other hand, a production worker may have performance requirements for product quality and
hourly output.

Individual performance affects your team and organizational performance. If you have
employees who can't keep up or who perform subpar work, this means that other workers may
have to pick up the slack or that you have to have work redone. When employee performance
is poor, you may not be able to satisfy your customers and thus see negative impacts on your
profits, company reputation and sales.

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 Measuring employee performance will differ across roles and departments, but generally, it can
be measured by:

1. Speed and efficiency – How much does the employee accomplish in an average day,
month, or quarter? Are there impediments to address or possible resources to consider
that could enable higher productivity?
2. Quality and depth – How “good” are the employee’s work in comparison to colleagues
and other employees in the same role, field, or industry? Does the employee contribute
something unique to their role that brings the company added value?
3. Trust and consistency – Can the employee be depended on to make good decisions and
execute their duties on time? Do they need to be managed meticulously or do they self-
manage well? Do they demonstrate the potential to grow within the company, or has
their growth plateaued?

The specifics of these metrics will differ depending on the specific job function. All employees
(and their supervisors) should be aligned on the goals and expectations that underpin each
metric. By establishing clear objectives and timelines for achieving them, each employee should
understand exactly what is expected of them.

Employee Rewards- Purpose of Employee Rewards in Organizations

Reward systems serve several purposes in organizations. Effective reward systems help an
organization be more competitive, retain key employees, and reduce turnover. Reward systems
also can enhance employee motivation and reinforce the image of an organization among key
stakeholders or future employees. Reward system is developed to make performance more
effective. Reward is based on performance which is outcome of efforts and environmental
factors.

People are the most important resource for organizational competitiveness, and keeping them on
the job is a key task for any manager. Competition to attract and keep the best employees is
intense. For people looking for a career opportunity, that’s great news, but as a manager of an
organization needing to keep the best and brightest, it is a challenge.

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It may be even harder in the non-profit and public sectors where flexibility in providing financial
rewards may be more limited than in a commercial context. Retaining employees saves money
on retraining costs, improves the consistency of services, and allows for relationships to develop
between clients and the organization.

In addition, proper rewards systems can reduce absences. Absences cause innumerable
headaches for managers. Instructors who don’t show up, too few staff members at busy times,
and the lack of a clean-up crew can all increase workplace stress. Absences not only affect the
manager but also fellow employees who need to pick up the slack and clients who feel the brunt
of too few employees on site.

Effective use of rewards can encourage employees to gain the skills that are necessary to help
them and the organization grow. This can also increase their desire to continue being part of the
organization. For example, an organization can pay and provide time off for employees who
want to take advanced courses in an area that is valuable for the organization. Some
organizations may even provide time off or support to help employees advance their own
personal goals or skill sets.

Similarly, the purpose of reward is to provide positive reinforcement and motivate them for
achieving outstanding performance. People work for achieving several needs. They want not
only money but also recognition, return and self-satisfaction. The purpose of reward is to
motivate them. The motivation differs from time to time depending upon situation, interests and
tastes.

Reward is to attempt to motivate job performance through selective distribution. Valued

employees are retained if they are properly rewarded. The organization continues to develop
through reward motivation.

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CHAPTER-4

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 4.1DATA ANALYSIS AND
INTERPRETATION

1. Are you a Motor bike user ?

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