Reward management ( part 1 )


Published on

Published in: Business, Technology
  • Be the first to comment

No Downloads
Total views
On SlideShare
From Embeds
Number of Embeds
Embeds 0
No embeds

No notes for slide

Reward management ( part 1 )

  1. 1. Min Khaung ( EMPA – 8 )
  2. 2.  Reward management is concerned with the strategies, policies and processes required to ensure that the value of people and the contribution they make to achieving organizational, departmental and team goals is recognized and rewarded 2
  3. 3.  Reward people according to what the organization values, wants to pay for and for the value they create.  Support the achievement of business goals  Promote high performance & Develop a performance culture.  Support and develop the organization’s culture 3
  4. 4.  Define the right behaviors and outcomes  Align reward practices with employee needs  Help to attract and retain high quality people  Reward the right things to convey the right message about what is important in terms of behaviors and outcomes.  Motivate people and obtain their commitment and engagement. 4
  5. 5.  Help to attract and retain the high quality people the organization needs.  Develop a positive employment relationship and psychological contract.  Align reward practices with both business goals and employee values.  Operate fairly – people feel that they are treated justly in accordance with what is due to them because of their value to the organization 5
  6. 6.  Apply equitably – people are rewarded appropriately in relation to others within the organization, relativities between jobs are measured as objectively as possible and equal pay is provided for work of equal value.  Function consistently – decisions on pay do not vary arbitrarily and without due cause between different people or at different times.  Operate transparently – people understand how reward processes operate and how they are affected by them. 6
  7. 7.  A reward system consists of the interrelated processes and practices that combine to ensure that reward management is carried out effectively to the benefit of the organization and the people who work there 7
  8. 8. REWARD SYSTEM PROCESSES Business strategy Reward strategy Total rewards Financial rewards Pay determination Non-financial rewards Performance management Recognition Base pay management Job design Contingent pay Opportunity to develop Employee benefits Work environment Performance
  9. 9.  sets out what the organization intends to do in the longer term to develop and implement reward policies, practices and processes which will further the achievement of its business goals. 9
  10. 10.  Reward policies address the following broad issues:  the approach to total reward;  the scope for the use of contingent rewards related to performance, competence, contribution or skill;  the role of line managers;  transparency – the publication of information on reward structures and processes to  employees. 10
  11. 11.  Total reward is the combination of financial and nonfinancial rewards available to employees. 11
  12. 12.  Total remuneration is the value of all cash payments (total earnings) and benefits received by employees. 12
  13. 13.  The base rate is the amount of pay (the fixed salary or wage) that constitutes the rate for the job.  It may be varied according to the grade of the job or, for manual workers, the level of skill required.  Influenced by internal and external relativities. 13
  14. 14. The management of base pay uses the information from market pricing and job evaluation to design and operate grade and pay structures that cater for job-based pay and allow scope for pay to progress within the structure through person-based pay 14
  15. 15. Pay determination is the process of deciding on the level of pay for jobs or people. Its aims, which frequently conflict, are: 1. To be externally competitive in order to attract, engage and retain the people required by the organization ( External Equity ) 2. To be internally equitable in the sense that rates of pay correctly reflect the relativities between jobs ( Internal Equity )
  16. 16.  Employees’ perception of external equity—which concerns the fairness of what the company is paying them compared with what they could earn elsewhere—are critical in such employment relationships.  Organizations with an external labor orientation must assess how their compensation compares with the compensation offered by other organizations.
  17. 17.  Employees’ perceptions of internal equity—their beliefs concerning the fairness of what the organization is paying them compared with what it pays other employees.  Organizations with an internal orientation spend time and effort comparing and analyzing pay differences among their own employees.  Pay practices, such as how much each person makes, are usually less secretive in these organizations than in organizations with an external orientation.
  18. 18.  Job evaluation is a systematic and formal process for defining the relative worth or size of jobs within an organization to establish internal relativities. It is carried out through either an analytical or a non-analytical scheme.
  19. 19. Market rate analysis The process of identifying the rates of pay in the labor market for com-parable jobs to inform decisions on levels of pay within the organization. Market pricing The process of making decisions on pay structures and individual rates of pay and obtaining information on market rates (market rate analysis).
  20. 20. Jobs may be placed in a graded structure according to their relative size. Pay levels in the structure are influenced by market rates. The pay structure may consist of pay ranges attached to grades which provide scope for pay progression based on performance, competence, contribution or service.
  21. 21. Contingent pay - Additional financial rewards may be provided that are related to performance, competence, contribution, skill or service in the grade. Employee benefits - pensions, sick pay, insurance cover, company cars. Performance management Non-financial rewards - achievement, autonomy, recognition, scope to use and develop skills, training, career development opportunities and high quality leadership.
  22. 22. THE COMPONENTS OF TOTAL REWARD Base pay Transactional rewards Contingent pay Total remuneration Employee benefits Total reward The work itself (job design) Relational rewards The work experience Recognition, achievement, growth Non-financial rewards
  23. 23. TOTAL REWARD MODEL (TOWERS PERRIN) TRANSACTIONAL (TANGIBLE) BENEFITS PAY/REWARD • Base pay • Pensions • Contribution pay • Health care • Shares/profit sharing • Perks • Recognition • Flexible benefits LEARNING AND DEVELOPMENT WORK ENVIRONMENT • Workplace learning • Core values • Training • Leadership • Performance management • Employee voice • Career development • Job/work design RELATIONAL (INTANGIBLE)
  24. 24. Financial rewards comprise all rewards which have a monetary value and add up to total remuneration:   base pay pay contingent on performance, contribution, competency or skill  pay related to service  financial recognition schemes  benefits such as pensions, sick pay and health insurance
  25. 25. Non-financial rewards are those that focus on the needs people have to varying degrees for recognition, achievement, responsibility, autonomy, influence and personal growth
  26. 26. Grade and pay structures provide the framework for base pay management so that an organization’s pay policies can be implemented
  27. 27.  Narrow-graded  Broad-graded  Broad-banded  Career family  Job family  Pay spine
  28. 28. MODEL OF A NARROW-GRADED STRUCTURE ( MULTI GRADED STRUCTURE ) £ consists of a sequence of job grades into which jobs of broadly equivalent value are placed.
  29. 29. MODEL OF A BROAD-GRADED STRUCTURE £ Have six to nine grades rather than the 10 or more grades contained in multi-graded structures
  30. 30. MODEL OF A BROAD-BANDED STRUCTURE £ multi-graded structures into four or five ‘bands
  31. 31. MODEL OF A CAREER FAMILY STRUCTURE Operation Finance IT Level 1 Level 1 Level 1 Level 2 Level 2 Level 2 JE points £ Level 3 Level 3 Level 3 Level 4 Level 4 Level 4 Level 5 Level 5 Level 5 jobs in the corresponding levels across each of the career families are within the same size range Career families
  32. 32. MODEL OF A JOB FAMILY STRUCTURE Different job families are identified £ Finance Operation Job families IT
  33. 33. A PAY SPINE Pay spine
  34. 34. 34