Examining the Impact of Reward and Recognition on the Job Performance of Generation Z Employees: The Mediating Role of Employee Engagement

¹Sriya Sejal Purohit, ²Archi Dubey, ³Pratibha Barik

¹MBA Student, The ICFAI University, Raipur

²Assistant Professor, The ICFAI University, Raipur

³Assistant Professor, The ICFAI University, Raipur

Abstract

The study aims to explore the mediating role of reward and recognition between job satisfaction and employee engagement for Generation Z employees. Since Gen Z is emerging as the most prominent section of the workforce, it is essential to identify the factors that can increase their engagement levels and contribute to improved performance and productivity in organizations. The study has adopted descriptive research design, and the quantitative survey method were employed. The data were gathered using a structured questionnaire from the employees of Aditya Birla FRP & Foils (Hirakud FRP facility) in Sambalpur, Odisha. The data were analyzed using descriptive statistics, correlation analysis, and regression analysis. Further analysis reveals that the partial mediating effect of reward and recognition exists between job satisfaction and employee engagement, which means employees with higher job satisfaction levels are more engaged in work if provided with effective reward and recognition. The research work offers original empirical findings by examining reward and recognition as a mediator between job satisfaction and employee engagement, and provides important guidance for HR practitioners and policymakers to align practices with the motivational drivers of energetic youngster’s.

Keywords: Job performance, Reward and Recognition, Employee Engagement, Gen Z, HR Practices.

Introduction

In today’s business context, Generation Z (Gen Z)—people born around the mid-1990s to the early 2010s (Deloitte, 2025)—is quickly emerging as the most prevalent segment of the workforce and the key driver of sustainable competitive advantage. While technology, infrastructure, and capital are essential, it is the innovation, agility, and high performance of Gen Z employees that are the true engines of long-term business success. Gen Z stands out as a purpose-driven, ambitious, digital-native, and growth-minded generation that values meaningful work, feedback, development, work-life balance, and inclusive workplaces more than traditional success factors such as job security or career advancement (Deloitte Global Gen Z and Millennial Survey, 2025; McKinsey, 2025). Unlike other generations, Gen Z employees tend to be uninspired by purely financial rewards, unfulfilled expectations of purpose, recognition, flexibility, and skills development opportunities can result in disengagement, high turnover, and short tenures even in well-compensated settings (Randstad, 2025; Gallup data cited in Forbes, 2025). Further in a survey a massive resignation Gen Z, of around 40% has been revealed (Lever, 2002).

Consequently, the implementation of strategic human resource management practices, particularly well-structured reward and recognition programs, has assumed increased significance in motivating Gen Z members, boosting job satisfaction, and integrating personal efforts with organizational objectives (Deci et al., 2017). Rewards involve the external financial component of salaries, incentives, bonuses, and performance-related pay, while recognition involves the non-financial dimension of appreciation, recognition, public recognition, and genuine respect. When properly integrated, these mechanisms are highly effective in reinforcing desirable behaviors, addressing the psychological need for appreciation, and sustaining long-term motivation among Gen Z members (Madhani, 2020; Mabaso et al., 2025; Pózner & Kozák, 2025). Further employee engagement is the employee’s satisfaction, engagement and enthusiasm for its work (Harter et al., 2002). Many studies have revealed that employee engagement impacts the retention of talented employees. (Achmad et al.,2023).

Additionally, Job performance defined as the degree to which workers effectively fulfil their task responsibilities and make a positive contribution to organizational outcomes, is at the center of these dynamics. Employee engagement, described as emotional, cognitive, and physical engagement in work (experienced as vigor, dedication, and absorption), is particularly important as a key driver of creativity, productivity, discretionary effort, and overall performance, especially within the context of Gen Z’s motivational paradigm (Gede & Huluka, 2024; Sharma et al., 2024;  Barik, 2020). Further this study will examine the impact of reward and recognition and employee engagement on job performance among Gen Z employees. The study will help the organisation to understand the behaviour and motivation Gen Z and strategies to retain the talents. Furthermore, the study integrates reward and recognition, employee engagement, and job performance into a single framework tailored to Gen Z employees, thereby offering a contemporary perspective aligned with the evolving expectations of the digital-native workforce. By addressing the generational shift in workplace values and motivation, the study contributes fresh empirical insights that can assist organizations in designing more effective engagement and retention strategies for the emerging workforce.

Research Objectives

·     To investigate the association between reward & recognition, employee engagement, and job performance among Gen Z.

·     To examine the mediating role of employee engagement on the relationship between reward & recognition and job performance.

·     To suggest policies and best practices that can motivate, reward, and improve employee performance.

Research Questions

RQ1: Is there any relationship between reward & recognition and employee engagement and job performance?

RQ2: Does employee engagement mediate the relationship between reward & recognition and job performance?

Literature Review and Hypothesis Development

Social Exchange Theory

This theory defines social behaviour as an exchange process in which relationships are formed and maintained based on the reciprocal benefits (Blau, 1964). In an organisational context, when the employee receives rewards as well as recognition, they feel obligated to reciprocate with a positive attitude of higher engagement and performance.

Reward and Recognition (RR)

These are essential human resource management functions that shape employee motivation and behavior. Rewards are considered to comprise both extrinsic (such as compensation and bonuses) and intrinsic aspects (such as praise and development opportunities) (Mathis & Jackson, 2004; Akafo & Boateng, 2015). Recognition is the process of acknowledging the efforts of employees and creating a sense of importance and belonging (Brun & Dugas, 2008). Herzberg’s Two-Factor Theory identifies recognition as an important factor that motivates employees and leads to job satisfaction (Herzberg, 1959). Empirical research has supported that well-designed reward and recognition programs increase employee morale, organizational commitment, and productivity (Danish & Usman, 2010; Pai & Prakash, 2019). In the private sector, including Indian companies such as Aditya Birla Group, such activities increase motivation and performance (Lobo & Ashwini, 2015; Meena et al., 2019). Dr. Pankaj M. Madhani (2020) argued that increased satisfaction and engagement resulting from recognition translate to increased productivity and organizational growth and further argued for the need for a balanced monetary and non-monetary approach to increase engagement and retention in developing countries (Adesina and Egbuta, 2025).

Employee Engagement (EE)

It is the employees' emotional attachment, energy, commitment, and absorption with work (Kahn, 1990; Soane et al., 2012). Engaged employees display enthusiasm, increased productivity, and reduced turnover intentions (Lobo & Ashwini, 2015; Gede & Huluka, 2024). The job demands-resources model and self-determination theory emphasize that engagement is generated by resources such as recognition, resulting in positive outcomes like service quality and performance (Gede & Huluka, 2024; Engidaw, 2021). Research in Indian and emerging markets indicates that drivers such as leadership support, career opportunities, and recognition promote engagement (Lobo & Ashwini, 2015; Pai & Prakash, 2019). Soane et al. (2012) tested the intellectual, social, and affective engagement scale, suggesting that increased engagement is associated with task performance and organizational citizenship behavior.

Job performance (JP)

Job performance includes task performance, contextual, adaptiveness, and counterproductive behaviors (Borman & Motowidlo, 1997; Rotundo & Sackett, 2002; Krijgsheld et al., 2022). Moreover, it is contingent on ability, motivation, and environment of an organisation (Armstrong & Taylor, 2017). Conversely, recognition stimulates employees proactive behaviors (Judge & Bono, 2001) and engaged employees perform better in task and contextual performance (Krijgsheld et al., 2022). Bregenzer et al. (2022) establish a connection between appreciative behaviors and decreased presenteeism and demonstrate rewards mediate satisfaction and performance (Khan et al. 2024), further stress fair recognition for high performance (Ahakwa et al., 2024). Other scholars have combined intrinsic/extrinsic factors for performance and found that engagement mediates performance management outcomes (Awan et al., 2020) establishes engagement with performance (Jimoh , 2023). Conversely, Gutierrez et al. (2025) establish engagement with satisfaction and performance .

Rewards and recognition satisfy the needs of employees by having a positive impact on employee engagement (Madhani, 2020; Pai & Prakash, 2019), which further leads to outstanding performance (Gede & Huluka, 2024; Engidaw, 2021).Previous studies have shown that recognition increases performance through employee engagement (Meena et al., 2019; Lobo & Ashwini, 2015). and rewards to reduced reduces the turnover and enhance performance (Silva et al., 2025; Sipos et al., 2024). Moreover, different studies on reward mediate employee engagement and performance (El Baroudi et al., 2025; Tippabhotla et al., 2024), whereas rewards improve the retention of employee and enhance the job performance (Anthonysamy et al., 2025). Therefore, it proves that employees adopt the social exchange theory, where they are rewarded and recognized, and they demonstrate high engagement and better performance. Based on the above discussions, the proposed hypothesis is as follows:

H1: Reward and recognition have a direct positive association with employee engagement.

H2: Employee engagement have significant direct positive effect on job performance.

H3: Reward and recognition have significant direct positive effect on job performance.

H4: Reward and recognition have indirect relationship with job performance through employee engagement.

Methodology

Research Design

This research used a quantitative, descriptive, and causal research design with a cross-sectional survey method. The research design allowed the measurement of the key variables, reward & recognition, employee engagement, and job performance, using numerical scales, and hypothesis testing using statistical methods. The research is based on social exchange theory (Blau, 1964) that offers the theoretical underpinning for the investigation of direct and indirect relationships between the constructs.

Participants

The target population was Gen Z employees (born mid-1990s to early 2010s) employed in private sector organizations, with a focus on the manufacturing company Aditya Birla FRP & Foils. A simple random sampling technique was employed to select the employees aged 19 to 27 years from the company’s employee list. A total of 110 usable responses were received from managerial and non-managerial employees. The sample size is above the minimum requirement of 100 participants for correlation, regression, and mediation analysis in descriptive and causal research (Hair et al., 2010; Tabachnick & Fidell, 2013).

The sample consisted of 110 participants, providing sufficient power for regression tests (G*Power: power = 0.95, effect size f² = 0.15, α = 0.05). Table.1 presents the demographic information. The sample was largely male (60%), with an equal proportion of female participants (40%), enabling comprehensive understanding of gender perspectives on the variables. The age breakdown was skewed towards older Gen Z members (41.8% aged 25-27 years), representing young professionals in the early stages of their careers. Younger groups (19-22 and 22-25 years) were also included, providing diversity in capturing different levels of maturity (See table.1).

Table 1 Demographic Profile of Respondents (N = 110)

Survey Instrument

The primary data were gathered through a structured self-administered questionnaire designed exclusively for this research. The questionnaire was divided into four primary sections: (a) Demographic data (Gender & Age), (b) reward & recognition, which refers to the organisational practices used to appreciate, motivate and encourage employee’s contribution in an organisation. It includes financial and non-financial forms of appreciation. It consists of 10 items, example , “My organization provides fair and competitive salary and incentives” (Hareendrakumar et al., 2021). (c) employee engagement refers to the level of emotional, cognitive and behavioural commitment of employees towards their work and organisation. The construct has 10 items, example “At workplace, I feel energised.” (Schaufeli et al., 2002). (d) Job Performance refers to the extent to which an employee performs his or her work efficiently and effectively. It consists of 10 item, example, “I adequately accomplished all assigned duties” (Kahn, 1990; Saks, 2006; Schaufeli et al., 2006; Borman & Motowidlo, 1997). The questionnaire used a five-point Likert-type scale ranging from 5 (strongly agree) to 1(strongly disagree). The questionnaire was administered online using Google Forms. Voluntary participation and complete confidentiality and anonymity were guaranteed to the respondents.

Measurements and Reliability Analysis

The Reward & Recognition (RR) scale had 10 items (Cronbach’s Alpha = 0.821), Employee Engagement (EE) scale had 10 items (Cronbach’s Alpha = 0.809), and Job Performance (JP) scale had 10 items (Cronbach’s Alpha = 0.737). All the scales had acceptable to good internal consistency (Nunnally & Bernstein, 1994), with Composite Reliability values above 0.70. (See Table.2)

Table. 2 Reliability Analysis

Statistical Analysis

The analyses were performed using IBM SPSS version 26.0. Descriptive statistics were employed to describe participants' demographics. All analyses were performed using STATA software (version 17).  The measurement model consists of three latent variables: RR (X), JP (Y), EE (M). See figure.1

 Conceptual Framework

Fig. 1 Proposed Model for the Study (Source – Author’s Work)

Data Analysis

Analysis of multicollinearity

This section reports the empirical results obtained from the primary data collected through a structured questionnaire administered to 110 Gen Z employees in the manufacturing industry. The initial data analysis confirmed that there were no violations of assumptions for parametric tests, such as normality (Shapiro-Wilk test, p > 0.05), linearity, homoscedasticity (Breusch-Pagan test, p > 0.05), and multicollinearity (VIF < 2.5). The constructs were coded by taking the average of their respective items. RR was considered the independent variable, EE the mediator, and JP the dependent variable. The analysis involved descriptive statistics, reliability coefficients, correlation analysis, simple linear regression analysis for direct effects, and hierarchical multiple regression analysis for mediation as proposed by Baron and Kenny (1986). The significance level was set at p < 0.05 (two-tailed).

Reliability and Validity Measures

Reliability was evaluated using Cronbach's alpha (α) and composite reliability (CR), with values of α > 0.70 and CR > 0.70 representing acceptable levels of internal consistency (Nunnally & Bernstein, 1994; Fornell & Larcker, 1981). Average inter-item correlation was evaluated for logical consistency (values of 0.15-0.50 recommended; Clark & Watson, 1995). All scales passed these tests, confirming their usefulness for further analysis. For EE, item means were 3.15 (range: 2.89-3.42, variance: 0.028), with scale mean = 31.5, variance = 68.4, and SD = 8.27, suggesting moderate dispersion of engagement scores. The largest inter-item correlation (EE5-EE6, r = 0.541) revealed consistency in vigor and dedication items. JP had item means of 3.28 (range: 3.01-3.51, variance: 0.019), with scale mean = 32.8, variance = 54.2, and SD = 7.36. Strongest correlation (JP4-JP8: r = 0.436) was on task efficiency. RR had item means of 3.35 (3.10-3.62, variance = 0.025), scale mean = 33.5, variance = 71.8, and SD = 8.47. Highest correlation (RR5-RR10: r = 0.553) was on non-monetary recognition. Lower correlations on monetary items (RR1-RR3: r < 0.15) indicated construct multidimensionality, but all items were retained to maintain theoretical scope.

The findings reveal that the reliability and validity levels of all variables under consideration are satisfactory. As shown in Table 3, the values of CR (0.821 for RR, 0.809 for EE, and 0.737 for JP) are above 0.70, which implies internal consistency. Moreover, the values of AVE (Average Variance Extracted), ≥ 0.50 for all variables, which satisfy the requirement to prove the presence of convergent validity. Furthermore, the square roots of AVE are also adequate, as the values of √AVE r5eveal that each construct correlates better with itself than with other constructs. These results confirm the validity of the scales for reliability statistics (See table.3).

Table 3. Reliability Statistics for Constructs

Note: CR- Composite Reliability, AVE- Average Variance Extracted, Cronbach’s Alfa- Diagonal bold

Mediation Analysis

The result shows a significant relationship between RR and JP. The regression equation was statistically significant, F (1,108) = 106.54, p < 0.001, R² = 0.497, explaining 49.7% of the JP. RR have positive effect on JP (B = 0.582 (SE = 0.056, β = 0.705, t = 10.32, p < 0.001). Thus, H1 is supported.

The result reveals a significant relationship between RR and EE. The regression equation was statistically significant, F (1,108) = 6003.18, p < 0.001; R² = 0.982, RR explaining 98.2% of EE (R²= 0.982). RR have positive effect on EE (B = 0.978 (SE = 0.013, β = 0.991, t = 77.48, p < 0.001). Thus, H2 is supported.

Further, the result reveals a positive relationship between EE and JP. The model is statistically significant, F(1,108) = 130.20, p < 0.001, and it accounted for 54.9% of the variance in job performance (R² = 0.549). EE positively and significantly influenced JP (B = 1.439, SE = 0.126, β = 0.741, t = 11.41, p < 0.001). Thus, H3 is supportive.

Further, the suppression effect of EE on the relationship between RR and JP is significant (B = 1.439, SE = 0.408, β = 1.741, t = 3.52, p = 0.001). Thus, supportive of H4 and shows a partial mediation. Following the Baron & Kenny procedure: Path c (RR → JP), a (RR → EE), b (EE → JP) significant; Path c' suppressed. Indicates partial mediation effect (MacKinnon et al., 2000). (See Table.4 and 5)

Table 4. Hypothesis Result

Note: RR- Reward and Recognition, EE- Employee Engagement, JP- Job Performance

Table 5. Summary of Hypothesis Testing

These findings confirm the conceptual framework, showing that RR has a profound effect on EE, and subsequently JP, with engagement serving as a psychological conduit. The suppression effect indicates that rewards could potentially undermine performance unless engagement is encouraged, supporting social exchange theory (Blau, 1964) and the engagement model (Kahn, 1990). The implications of these findings for Gen Z HR practices are considered below.

Model Fit Indices

According to the model fit statistics, it can be concluded that the suggested model provides a good fit for the collected data. Since the Comparative Fit Index (CFI) value of 0.93 is higher than 0.90, it suggests a good fit, while the value of Tucker-Lewis Index (TLI) at 0.91 indicates an acceptable fit. Likewise, the Root Mean Square Error of Approximation (RMSEA) value of 0.06 is less than 0.08, which means a good fit. Furthermore, the Standardized Root Mean Square Residual (SRMR) value of 0.05 is also within the acceptable range (See Table.6)

Table 6. Model Fit Indices Table

Discussion

The empirical results of this research strongly support the proposed conceptual framework, indicating that reward and recognition practices have a significant positive impact on the job performance of Gen Z workers, both directly and indirectly through employee engagement. The extremely strong positive direct effect of reward recognition on employee engagement is consistent with social exchange theory (Blau, 1964), showing how fairness and appreciation stimulate the principle of reciprocity, causing Gen Z workers to put more emotional effort into their work. The finding align line with previous research that highlighted the motivational role of non-monetary recognition for purpose-driven young employees (Saks, 2006; Meena et al., 2019). The mediation test shows partial mediation effects (Baron & Kenny, 1986; MacKinnon et al., 2000), wherein the positive direct reward recognition has association with job performance (R² = 0.497) turns negative when employee engagement is held constant, suggesting that rewards work mostly on psychological engagement rather than extrinsic motivation. This result refines Kahn’s (1990) engagement theory by emphasizing the pivotal role of employee engagement in facilitating the reward-to-performance outcome transfer. The findings emphasize the need for personalized and transparent recognition programs in promoting vigor, dedication, and absorption in Gen Z, especially in the Indian private sector. In summary, the study makes a theoretical contribution to the OB literature by empirically confirming the mediating role of employee engagement in a youth-oriented work environment, providing important implications for HR practices seeking to improve productivity and retention.

Practical Implications

The results emphasize that organizations need to create comprehensive reward and recognition programs to engage and retain Generation Z workers. The extremely strong RR-EE relationship indicates that open, prompt, and personalized recognition, including peer recognition, digital rewards, public recognition, and development opportunities, can significantly increase psychological engagement. Indian manufacturing industry managers need to focus on non-monetary appreciation along with fair monetary rewards to encourage vitality, commitment, and absorption. The suppression-mediated effect cautions against overemphasizing monetary rewards without creating emotional commitment, which could have negative implications for performance. Feedback, task alignment, flexible work arrangements, and employee engagement surveys can help improve productivity, retention, and discretionary effort. These best practices in human resource management provide a strategic approach to tap into the potential of Generation Z workers for long-term organizational success.

Limitations

However, this study has some methodological limitations that affect the generalizability of the findings. The sample of 110 participants were relatively small. The use of self-reported data collected at a single point in time poses some threats to validity, including common method variance and social desirability bias. The cross-sectional nature of the study does not allow the determination of causality between the variables. Moreover, the study was limited to three variables, and other variables, such as leadership style or work stress, may moderate these findings. Future studies should use larger samples and probability sampling methods.

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Pai, & Prakash . (2019). rewards/recognition impact; often linked to studies like "A study on the impact of rewards and recognition on employee motivation" in Indian contexts.

Pai, & Prakash,. (2019). Impact of rewards/recognition on engagement and performance. Journal name.

Pózner, B. M., & Kozák, A. (2025). From acquisition to retention: Expectations, motivation and commitment of Generation Z workers based on a systematic literature review. Journal name or source as per publication (specific details may vary; commonly cited in Gen Z reward/motivation contexts; verify via database for exact title/journal).

Randstad. (2025). The Gen Z workplace blueprint: Future focused, fast moving. Randstad Global. https://www.randstad.com/genz (or https://www.randstad.com/press/2025/genz-workplace-blueprint).

Rotundo, M., & Sackett, P. R. (2002). The relative importance of task, citizenship, and counterproductive performance to global ratings of job performance: A policy-capturing approach. Journal of Applied Psychology, 87(1), 66–80. https://doi.org/10.1037/0021-9010.87.1.66

Saks, A. M. (2006). Antecedents and consequences of employee engagement. Journal of Managerial Psychology, 21(7), 600–619. https://doi.org/10.1108/02683940610690169

Schaufeli, W. B., Salanova, M., González-Romá, V., & Bakker, A. B. (2002). Utrecht Work Engagement Scale-17 [Database record]. APA PsycTests. https://doi.org/10.1037/t07164-000

Schaufeli, W. B., Bakker, A. B., & Salanova, M. (2006). The measurement of work engagement with a short questionnaire: A cross-national study. Educational and Psychological Measurement, 66(4), 701–716. https://doi.org/10.1177/0013164405282471

Sharma, A. (or Sharma et al., as cited). (2024). [Relevant title on employee engagement among Generation Z in the modern workplace]. International Journal of Research Publication and Reviews (or similar; e.g., Employee engagement among Generation Z in the modern workplace). https://ijrpr.com/uploads/V6ISSUE12/IJRPR57846.pdf (exact authorship may include multiple contributors; align to your source).

Soane, E., Shantz, A., Alfes, K., Delbridge, R., & Delbridge, R. (2012). [Validation of engagement scale; intellectual, social, affective]. Journal name.

Tabachnick, B. G., & Fidell, L. S. (2013). Using multivariate statistics (6th ed.). Pearson.