The informal reward system is part of a broader informal organization that parallels the formal organization in every company. Informal organizations come about as a result of interpersonal inter actions among people who come to establish personal relationships that are often independent of their organizational roles. Individuals tend to be more strongly motivated by the potential to earn rewards than by the fear of punishment, which suggests that management control systems be reward-oriented. Link to organizational goals. To be effective, informal rewards need to support behavior that leads to the attainment of organizational goals.
Good management is that which leads to the desired behavior by organizational members.
Management must see to it that the consequences of behavior are such as to increase the frequency of desired behavior and decrease the frequency of undesired behaviors. Individuals respond to many kinds of rewards, tangible and intangible, on the job and off the job. Tying these rewards to controls is not simple. Consequently, a careful review of the reward system should be made along with any major redesign of the control system. Insofar as flexibility permits, the granting of rewards should be clearly and explicitly related to desired performance as reflected by the con trols.