Unit-5REWARD SYSTEMDEFINITION Reward Management is about the development, implementation, maintenance, communication and evaluation of reward processes. These processes deal with the assessment of relative job values, the design and management of pay structures, performance management, the provision of employee benefits and pensions.
What the organization values and want to pay for
The value they create for their organizations
The right behaviors and actions of the employees in order to reinforce appropriate behaviors and outcomes
Foster and maintain a high performance work culture
Motivate employees in order to obtain their commitment and engagement
OBJECTIVES Attract and retain talents the organisation needs Emphasize the right mix of financial and non-financial rewards Develop a positive employment relation and psychological contract Align reward practices with the business strategy of the organisation and communicate business values and direction to employees Operate in ways that are fair, equitable, consistent and transparent.
COMPONENTS Financial reward – Salary, Wages, Incentives, etc., Non-financial reward – Medical Insurance, Life insurance, subsidized canteen, subsidized transport, free uniforms, interest free loans, etc., Psychological satisfaction – Social interactions with others in the workplace, job training, career advancement opportunities, recognition,
DIMENSIONS Intrinsic Reward – Psychological reward that is experienced directly by an individual. Ex: Feelings of accomplishment, Increased self-esteem, satisfaction of developing new skills, sense of fulfillment, etc., Extrinsic Reward – A reward that is provided by outside agent, such as a supervisor or work group. Ex: Bonus, promotions, increase in salary, perks, appreciation or praise, etc.,
CONSTRAINTS Statutory compulsions Industry wise wage boards Operative long term settlements Lack of mutual trust Lack of visional and innovative approaches Lack of commitment Lack of system Fear on personal authority
LINKAGE BETWEEN THE REWARD AND PERFORMANCE Value of reward Abilities and Traits Intrinsic Reward Efforts Performance accomplishment Satisfaction Extrinsic Reward Received Effort-reward probability Task Perceptions
IMPLICATIONS FOR MANAGERS Determine the rewards valued by each subordinate. Determine the performance desired Make the performance level attainable Link rewards to performance to maintain motivation Analyze what factor might counteract the effectiveness of the reward
IMPLICATIONS FOR ORGANIZATIONS The organisation’s reward system must be designed to motivate the desired behaviour and results. The jobs should be designed to the employees to fulfill some of the higher needs such as independence or creativity The immediate supervisor has an important role in the motivation process. He has to trained in the motivation process and given enough authority to administer rewards.
MONETARY AND NON-MONETARY REWARDS MONETARY REWARDS NON-MONETARY REWARDS Salary increments Promotions with increments Paid up insurance Loans Transport(Car/Two Wheeler) Telephone Profit sharing Free Lunch Picnics Dinner with boss Birthday treats Trophies Certificate Letter of Appreciation Vacation trips Special Leave