Reward_Management

1. Reward Management

2. Reward Management
 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.

3. Aims of Reward Management
 reward people according to the value they create;
 align reward practices with business goals and with
employee values and needs;
 reward the right things to convey the right message
about what is important in
 terms of behaviours and outcomes;
 help to attract and retain the high-quality people the
organization needs;
 motivate people and obtain their engagement and
commitment;
 develop a high-performance culture.

4. The Philosophy
 Reward management is based on a well-expressed philosophy
– a set of beliefs and guiding principles that are consistent with
the values of the organization and help to enact them.
 The philosophy recognizes that, if human resource
management (HRM) is about investing in human capital from
which a reasonable return is required, then it is proper to
reward people differentially according to their contribution.

5. Guiding principles
 Operating the reward system
fairly, equitably
 Developing reward policies and
principles that support the
achievement of business goals;
 Rewarding people according to
their contribution;

6. Guiding principles
 Providing rewards which attract and
retain people;
 Maintaining competitive rates of pay;
 Developing more responsibility for
reward decisions to line managers

7. Financial rewards
base pay
pay contingent on performance
pay related to service
financial recognition schemes
benefits: pension, sick pay and
health insurance

8. Arguments against financial
rewards
 will not result in sustained
motivation;
 it cannot be assumed that money will
motivate all people equally;
 can demotivate those that do not get
financial rewards;
 may be against quality and team
work

9. Financial rewards and
financial incentives
Financial incentives aim to
motivate people to achieve
their objectives, improve their
performance or enhance their
competence or skills by
focusing on specific targets and
objectives.

10. Financial rewards and
financial incentives
Financial rewards provide
financial recognition to people
for their achievements, they
can serve as indirect
motivators

11. Contingent pay schemes
Contingent pay is any form of
financial reward that is added
to the base pay or paid as a
cash bonus and is related to
performance, competence,
contribution, skill or service.

12. Performance related pay
 Increases to basic pay or bonuses are
related to assessment to
performance.
 Links rewards to objectives
 Focuses on output not quality.
 Appropriate for people who are likely
to be motivated by money

13. Competence related pay
 Pay increases are related to the level
of competence
 Encourages competence
development.
 Danger of paying for competences
that will not be used.
 Appropriate where it may be
inappropriate and hard to measure
outputs

14. Contribution-related pay
 Increases in pay or bonuses are
related to inputs and outputs
 Rewards people not only for what
they do but how they do it.
 It may be hard to measure
contribution

15. Skilled- based pay
 Increases related to acquisition of
skills
 Encourages and rewards the
acquisition of skills.
 Can be expensive when people are
paid for skills they do not use.

16. Service-related pay
Pay is linked to time in the job
rather than performance or
competence
It does not need to manage at
all
Fails to reward those who
contribute more

17. Non financial rewards
Job enrichment - giving workers
more interesting, challenging and
complex tasks
 It gives workers the chance to test
themselves and use their full range of
ability
 It is more motivating than job
enlargement or job rotation

18. Non financial rewards
Job enlargement - giving workers more
tasks to do of a similar nature or
complexity
 It reduces the monotony or repetition
 It does not increase a person’s satisfaction
or sense of achievement.
Job rotation - having a wider variety of
tasks to do
 It does not increase the challenge of the
job.

19. Non financial rewards
Team working
 meets a worker’s social needs
 leads to greater flexibility of production
Empowerment - delegation
! Even if managers pass down authority to
their subordinates, they are still responsible
for the work that is done by them.

20. Further Reading
 Armstrong, M. Handbook of Human
Resource Management Practice.
Reward Management. pp. 266-293
 Dessler G. Human Resource
Management. Pay for Performance
and Financial Incentives. pp. 333-362