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  2. 2. Reward system in private organizationTABLE OF CONTENTS:Management of rewards and incentives Reward superior performance Improved working conditions at the field levelPerformance appraisal Potential appraisal Performance review and counseling Use compensation as a tool to motivate your people Types of rewards Equitable compensation Determining rates of pay Salary increases Size of merit increases Pay increases on promotion General salary adjustments Automatic salary progression Anomalous salary Salary reviewsDigit #09{ROLL#AH531929} Page 2
  3. 3. Reward system in private organization Compensation and strategic HR Management Corporate transformation and compensation strategy Necessity of rethink approach to compensation Forces affecting compensation Compensation legislation and compliance Role of legislation in private sector compensation Compensation strategy and HRM Effective reward system Performance management The Do’s and Don’ts of effective reward programsASKARI COMMERCIAL BANK REWARD SYSTEM &ORGANIZATIOM BEHAVIORLeadership stylePerformance approachAppraisal methods & instrumentsMethods &techniques of performance evaluationEmployee motivationAbilityDigit #09{ROLL#AH531929} Page 3
  4. 4. Reward system in private organizationSWOT analysisConclusionRecommendationsReferencesDigit #09{ROLL#AH531929} Page 4
  5. 5. Reward system in private organization Management of rewards and incentivesAn important aspect of human resource managementwhich needs special attention in extension organizationsis the development of a reward system which will attract,retain, and motivate extension personnel, as well asprovide training and promotional opportunities.Extension organizations in Asian and African countrieshave a poor reward system. The extension agents are notonly poorly paid but are paid late and after reminders or visits to head-quarters. Most of theextension services are run by government agencies and operate under rules and regulations ofpublic administration. These rules do not have provisions for rewarding superior performance orfor a wage system based on merit. Promotion criteria are based on seniority and length ofservice. Thus the bureaucratic structure of extension services is a basic hindrance to designing abetter reward system. Among many of the government departments, the agricultural departmentand extension service have a low public esteem and poor pay structure.The rewards and incentive system can be improved in several ways.Rewarding Superior Performance:Extension organizations have to develop a reward system which encourages superiorperformance so that pay and wage administration will be an effective tool to promoteperformance, motivation, and satisfaction. A clear job description, performance standards, andperformance appraisal will help in evaluating extension work and rewarding people formeritorious service. Ways and means have to be found within the existing framework of publicadministration for basing pay on performance. For example, extension workers on the basis oftheir performance can be sent for higher education. Nonmonetary rewards such as recognizingthe good ideas of field workers or awarding honorable titles will also help in improvingperformance. Extension personnel may also be encouraged to form professional societies todevelop and communicate high standards, as well as to recognize superior performance. Aprofessional monthly journal or newsletter can help extension agents to communicate innovativeideas and reinforce superior performance.Improved Working Conditions at the Field Level:The reward system must also be internally equitable. The relative importance of field-levelextension functionaries has to be realized in terms of pay compensation and other amenities.Lower level extension workers often have to work under unpleasant and isolated conditions. Acarefully planned system of field allowance will compensate this (Baxter, 1990). The livingDigit #09{ROLL#AH531929} Page 5
  6. 6. Reward system in private organizationconditions of field extension workers must be improved by providing adequate facilities forhousing, transport and medical and educational allowances for children.. A career refers to all of the jobs that people hold during their working lives. Career planning isthe process by which employees plan their career goals and paths. Career development refers toall of the technical and managerial skills employees acquire to achieve their career plans. Careeradvancement, which gives a picture of future opportunities in terms of promotion, is a motivatingfactor for performance and development of skills. Unfortunately, no career structure exists forextension personnel in many organizations. In developing countries like India, there are manycases where one joins as a village extension worker and retires in the same position after servingthirty to thirty-five years. As part of improving the rewards and incentives system, extensionorganizations have to develop suitable career paths and advancement for different categories ofextension personnel on a systematic basis.As part of career development, extension personnel should be provided with opportunities todevelop their technical and managerial skills to enable them to occupy higher positions.Extension personnel should have a salary structure as well as promotion opportunitiescomparable to other professions like health or engineering. In Kenya, the pay and careeropportunities of extension workers are comparable to other government employees.Recommendations have already been made to equate the status of agricultural extension withthat of agricultural research by offering an equal salary structure, professional advancement, andincentives and rewards.Performance appraisalIn the previous sections, we discussed how extension personnel are recruited and trained andbecome part of a work group. These are all vital activities. However, the ultimate measure ofeffective human resources within an extension organization is the performance of extensionpersonnel. Thus performance appraisal is important for effective human resource management.Performance appraisal is a process of evaluating employee performance in order to guide anddevelop the employees potential. In many extension organizations which are governmentdepartments, the performance appraisal is nothing more than a confidential judgments of workdone and a character report used to facilitate disciplinary action or promotion. The employees donot get feedback about their performance. Extension organizations need to have an openappraisal system to provide feedback and opportunities for open discussion with employees ontheir performance, because they have immense potential to grow and develop. This system cancreate a healthy working climate and employee motivation.The performance appraisal which aims at facilitating employee development has the followingmajor purposes:(1) To provide feedback and guidance,(2) To set performance goals,Digit #09{ROLL#AH531929} Page 6
  7. 7. Reward system in private organization(3) To identify training needs, and(4) To provide inputs for management of pay administration, rewards, and promotion.The steps involved in effective performance appraisal are:(1) Identification of key performance areas and setting yearly objectives under each KPA,(2) Identification of critical attributes for effective performance,(3) Periodic review of performance,(4) Discussion of performance with employees, and(5) Identification of training and developmental needsPotential Appraisal:The potential appraisal is a future-oriented appraisal by which the potential of an employee tooccupy higher positions and to assume higher responsibilities is evaluated. The potentialappraisal can help the extension staff to know their strengths and weaknesses and can motivatethem to further develop their skills. Thus the potential appraisal helps in planning overall careerdevelopment of employees. Some of the techniques used for the appraisal are self-appraisals,peer rating, the management by objectives (MBO) approach, psychological test and simulatedwork exercises, case analyses, and leadership exercises.Performance Review and CounselingAn important purpose of the performance appraisal is to counsel and guide employees towardsgreater job effectiveness. Thus a system of performance counseling is needed in extensionorganizations. Performance counseling is provided by the manager to the subordinates to helpthem in the analysis of job performance, identification of training needs, and finding solutions tothe problems which hinder job effectiveness. Counseling is an art of communication involvingtwo people - manager and employee. Counseling differs from training in that the former involvesa dyadic relationship and establishes more mutuality and confidentiality. The success ofperformance counseling depends upon the employees interest, a climate of openness andmutuality, and the counseling process. Extension managers can use directive, nondirective, andcooperative counselingDigit #09{ROLL#AH531929} Page 7
  8. 8. Reward system in private organization Use Compensation Strategy as a Tool to Motivate Your PeopleThe main objective of compensation strategy is to give the right rewards for the right employeebehaviors.Compensation is an important motivator when you reward achievement of the desiredorganizational results.It is said "that money is a powerful source of motivation."But it is also said that salary increase can only motivate until the next pay increase is due.Imagine what the impact is if an employee is at the maximum point of his or her salary range.Achievement of the desired behaviors is important in order to enhance your organizationseffectiveness. In turn, this increases the possibility of success.Compensation strategy can reinforce the organizational culture that you desire. This is anenabling organizational culture under which pay is linked to performance.Your compensation policy must reflect your strategic business objectives.This becomes all the more important when determining CEO compensation.You must clearly define the objectives of your organization so that you can achieve them byusing compensation strategy.These are communicated to everyone soon after a decision is taken. It can happen that gooddecisions fail to achieve results due to poor communication.By providing the right combination of benefits which are non-cash compensation yourorganization can motivate employees and make them stay to help in its progress.What is the strategy that we are talking about and how do HR strategies fit in? Click here to seethe hierarchical levels of strategy by Jack Welch.Types of RewardsThere are two types of rewards, monetary and non-monetary.Digit #09{ROLL#AH531929} Page 8
  9. 9. Reward system in private organizationMonetary rewards include salary, bonus, commissions, medical and health benefits, holidays,and retirement benefits.Among the non-monetary rewards are meaningful and challenging works, recognition and careeradvancement, safe and healthy working environment, and fair treatment.How You Can Make Good Use of Compensation StrategyYou can use compensation to attract and retain competent people. This objective requires you tooffer a salary that is not lower than the market rates.When you want better customer service, reward employee behaviors that produce superiorservice.Do not harp on the amount of salary you are paying yet at the same expect good performance.Your people may conclude that there is insincerity on the part of management.Match the written policy with the right and appropriate actions that demonstrate to youremployees that you are a fair and just employer.Equitable CompensationLike employees working elsewhere in other organizations, your people are concerned withcompensation equity. Take this into consideration in drawing up your compensation strategy.When people notice inequities, their morale and motivation will suffer.Do not make it worse by maintaining pay secrecy. This indicates that you may not have anobjective and defensible compensation system.Researches had shown that pay secrecy generates mistrust, and reduces motivation andorganizational effectiveness.Of course, you are concerned about competitors inducing your people to leave. Thesecompetitors may have the financial capability to pay better salaries and benefits.But by adopting a compensation strategy, you dont have to worry about your good peopleresigning. If they believe in your managements fair-handedness, it is very probable that they willnot go away.Decision to leave an organization requires considerations other than or in addition todissatisfaction with compensation.Digit #09{ROLL#AH531929} Page 9
  10. 10. Reward system in private organizationDetermining Rates of PayCompensation strategy involves considering to adopt any of several ways in setting rates of pay. Pay increase based on employees length of time spent on the job. This is seniority-based pay that is a good motivator in employee retention. But here, you are not rewarding performance. Performance-based pay is intended to motivate employees to perform better. Such a plan is becoming more common whereby the manager and employee agree on the job goals and performance criteria at the beginning of a specified period, usually at the beginning of the year. The effect of this as a motivator can vary from time to time and from situation to situation. You can give pay increases based on job-related skills and knowledge. This is intended to motivate your people to gain additional skills, acquire new competencies and knowledge. Under this method, you do not pay employees for the job they are-doing, their job title or seniority. This is competency-based pay.The second method appears the most reasonable. But you can include the elements of seniorityand competence.An effective executive compensation is an important area of your organizations pay program.Executives are among your key employees.Salary IncreasesYour compensation strategy needs to align your compensation objectives to your organizationalbusiness objectives.Salary increases are part of this plan. By this, you are recognizing employees contribution to theaccomplishment of your organizations objectives.Salaries are normally reviewed annually and an increase is given if the employee merits it.There are times when you feel your organization cannot afford to give any pay increase.So what do you do in order not to de-motivate your people?Consider implementing a policy whereby employees are given salary increases when yourorganization can afford to give them, in arrears. This ensures that good performers will continueto perform. They know that they will get what is due to them.In order to ensure that this is done properly, ensure that the annual performance appraisal is doneas usual. You need the employees performance data.Digit #09{ROLL#AH531929} Page 10
  11. 11. Reward system in private organizationGiving salary increase to an under-performer is not justified. There are organizations who haveimplemented a policy that employees who are in the last five percent of the performance bracketwill have to go.Size of Merit IncreaseThis usually consists of payment in respect of performance level. A merit increase that isperceived as significant by employees can motivate them to perform better.Make sure that your best employees are duly rewarded, the amount being sufficient enough tomotivate.Ensure that your performance review is effective to reduce any possibility of wrong or biaseddecisions made.Pay Increase on PromotionWhen an employee is promoted, you may or may not give a significant pay increase.It is not justified to pay an overpaid employee a significant promotional increase. Consider allrelevant matters before you make a decision.One important thing to consider is the pay parity with people in the same category andperforming similar tasks.General Salary AdjustmentIn performance-based pay, do not give across-the-board increases.Differentiate between outstanding, average and non-performers. If not, your employees will losetrust in the system, resulting in little or no motivational impact. Paying the right salary hasimpact on employee performance and organizational effectiveness.Automatic Salary ProgressionThis has no relationship to performance. Avoid it as it does not encourage your employees toimprove their performance.This is fairly common in the public sector. But there are now significant changes made inaccordance with sound human resource management principles.The only occasion where you can consider giving some salary increase that is unrelated toperformance is in respect of increase in the cost of living.Anomalous SalaryIf you have any employee whose salary is below the minimum for the job or too low in relationto the employees performance and experience, make the necessary adjustment.Digit #09{ROLL#AH531929} Page 11
  12. 12. Reward system in private organizationThis is in addition to an increase based on performance merit.On the other hand, you may have an employee who is paid above the maximum point in thesalary range for the job.You may freeze further salary increases until the relevant pay level is reached. Then give meritincrease based on performance. Dont give increase if performance is unsatisfactory.Be careful in handling the situation where you do not see the reason for increasing an employeessalary.Conduct a salary survey whether your range maximum is lower than the markets rates. If so, youmay want to adjust the maximum range.Communicate the results to the affected employees. It is also good if other employees know whythis is being done.Do all of these as part of your compensation strategy.Salary ReviewsCompensation strategy requires that the appropriate salary review method is adopted. Fixed-date Reviews Such reviews are usually on 1st January each year. A modified version is to fix the reviews every quarter for different groups of employees whose appointment fall within the respective quarter. For example, 1st January review for those who joined the organization between 1st January and 31st March. Under this method, there is widespread comparison of salary among employees. In many cases, this creates dissatisfaction. And it can affect employee morale. Anniversary Reviews Here, you review employees salary at 12-month intervals from the date of their appointment. This is a good method to reward good performance. But it is time-consuming and needs a lot of effort. Flexible-date Reviews the interval can range from nine months to eighteen months.Digit #09{ROLL#AH531929} Page 12
  13. 13. Reward system in private organization You can use this method to adjust the salaries of high-performing employees whose salary is low, say after nine months. You can give an under-performer less frequent salary increases, say after eighteen months. A non-performer gets no pay increase. Issue a letter cautioning the employee to improve his or her performance. This is required under the law. If this continues, issue a show cause letter for poor performance.Compensation and Strategic HR Managementnone of the compensation systems is perfect. Human judgment remains an important element.Try to reduce the subjectivity as much as possible. Provide the necessary skills training forassessors.Use compensation strategy to: monitor cost-effectiveness Are you getting good returns from the compensation methods that you have adopted? verify legal compliance Are there legislation that may prohibit the way your organization is managing its compensation scheme? determine pay equity Are you using strategy to minimize or eliminate pay disparity in order to achieve maximum employee motivation? and link pay to performance Is a performance-based pay implemented in your organization?Corporate Transformation and Compensation StrategyIt is stated in a Report "Strategic Compensation: How to align performance, pay and rewards tosupport corporate transformation" that it involves four strategic elements in a closed loop, orcontinuous process. These are: translating business issues into compensation or HR interventions designing and delivering them with key objectives leading the resultant change process, and reviewing or evaluating the outcomes." (www.business-intelligence.co.uk)The Report finds that strategic compensation is a significant contributor to different forms ofcompetitive advantage, includingDigit #09{ROLL#AH531929} Page 13
  14. 14. Reward system in private organization better business results more effective performance stronger capability higher staff attraction and retention levels heightened motivation, and employee satisfaction.But it cautions on the repercussions if it is poorly managed.If so, it can "de-motivate, is divisive,create upheavals among employees or force good performers to leave."In addition, you may find help from Martocchios book ""Strategic Compensation: A HumanResource Management Approach".He mentions criteria in determining employee compensation, design of compensation system,among other things.Necessity to Rethink Approach to CompensationStrategic compensation is the type of compensation that can achieve its intended purpose.Compensation strategy is the course of action taken to ensure that this purpose is attained.There is no excuse in paying salaries that make no difference in the performance of youremployees.Brent Long Necker, a leading authority on compensation trends, planning and strategy in hisbook "Rethinking Strategic Compensation" believes we need to rethink our approach tocompensation.He provides "all facets of attracting, retaining, and motivating employees through a robustcompensation plan."Forces Affecting CompensationEffects of Market Forces on Compensation StrategyOrganizations operate in a dynamic market environment. There are times of plenty andthere are lean years.This matter does not fail to catch our attention especially the effects of economic downturns.Many people particularly corporate heads and leaders ask important questions how theirorganizations can continue to exist.One question that they cannot evade is on compensation.Digit #09{ROLL#AH531929} Page 14
  15. 15. Reward system in private organizationYou want your organization to continue in existence. And reducing the headcount will quicklyreduce your overheads.You need people in order to survive. However, maintaining the same number of employees canlead to bankruptcy.So what do you do? This is a difficult question to answer.Further, you need to ensure that your organization does not lose talent and needs to engage talentthat you need to help during the hard times.You also need to pay attention to the retained employees so that they remain committed andfocused. Thus, the importance of preparing a compensation strategy.You can consider the following: Differentiate between top performers and non-performers and even average performers. And reward them accordingly. Reward top performers only. This may motivate mediocre performers to contribute more. Check the market whether your compensation system is competitive. Clearly communicate to employees what their compensation package is worth. Then negotiate on possible reduction for certain heads such as non- cash compensation. Dont say demotivating words like "You are lucky you still have jobs." Make plan to achieve continued employee motivation at least in the short- term. Terminate non-performers, not good performers in sectors that are no longer profitable due to the downturn.We read from publications or hear from broadcasts that some people are not too happy thatorganizations continue to pay incentives to executives during downturns.Some suggest that cost-cutting is not the answer but implementation of compensation strategy.We need to remember that whatever the economic situation or your organizational financialperformance is, formulating and implementing a compensation strategy will ensure the ever-readiness of your organization.Once in place, it is necessary to review the strategy at least yearly and whenever there is a needto do so as dictated by events.Digit #09{ROLL#AH531929} Page 15
  16. 16. Reward system in private organizationCompensation Legislation and ComplianceIt is necessary for people in HR and those in managerial positions to know and understand thatthe law affects your compensation and benefits system.In the public sector, practically every aspect of employee compensation is governed bylegislation. In most cases, there is not much room for innovative ideas in formulatingcompensation strategy.The one good things about this is that the results are predictable at most times. But it can lead toa lot of dissatisfaction.Legislation specify job grades, salary band or range, salary increases, promotion, allowances,benefits and so on.When there are needs for changes, the legislation concerned is amended. Before any incentive ora new allowance is given or paid the law must allow it. If not, nobody will or dares to take therisk to go against the stipulated rules.Some government agencies are usually given some authority under a subsidiary legislationallowing their respective Board of Directors to make decisions. Such decisions must not goagainst the provisions of the incorporation instrument.Role of Legislation in Private Sector CompensationOrganization in the private sector are "free" to determine the levels and components of theircompensation package. They are "free" to determine their own compensation strategy subject tolegislation.Private entities are not free to follow their whims and fancies in compensation matters.National governments may enact laws forcing private organizations to change theircompensation system and practices. This can happen during times of economic recession whensensitive matters such as compensation come under close public scrutiny. This will also happenin response to sensible public opinion.If this happens private organizations may not have much choice but to follow.This can bring both positive and negative results.Some argue that self-regulation is better and preferable. But some sort of basic framework isnecessary.Digit #09{ROLL#AH531929} Page 16
  17. 17. Reward system in private organizationAn example in which legislation may determine private entities compensation policy is when aminimum wage is imposed. Here, organizations are "forced to agree". This affects youcompensation strategy.This is a controversial issue. Employees at the lowest level and their unions look forward to it.Employers Associations or Federation dread it.Government officers may not know what further action they need to take. They are responsiblefor implementation in which case they cannot go against against government policies.Another real possibility where governments may intervene is when employees, unions,community leaders, commentators and others believe that the cost of living (COLA) is gettingexceptionally high and they appeal for government intervention.Your organization may want to offer salary increase to help people cope during hard times. Inthis way, COLA become one of the factors in deciding the quantum of compensation.Further, anti-discrimination laws have impacts on compensation.We know that market forces impose "unwritten rules" on the compensation systems and thuscompensation strategy. Accepted norms such as in salary systems affect decisions oforganizations.Apart from the enacted laws, the "common law" can shape compensation decisions. When casescome before the law courts, judges interpret the law and refer to decided cases in decidingwhether compensation is payable or not. And if payable, the courts will also rule on the quantumpayable by the employer.A lot of these cases are on unfair dismissal or constructive dismissal. In many of these cases"compensation" specifically refers to the amount of back pay that the employer must pay to theformer employee.The law courts will seldom award economic loss as compensation.The courts may also rule that the employer take back the former employee to resume duties inthe same position and drawing the same salary. This may pose problems to the employer andother employees.Compensation Strategy and HRMAn HR executive like you, will understand "how compensation plans must align withorganizational design and corporate strategy."Digit #09{ROLL#AH531929} Page 17
  18. 18. Reward system in private organizationWhatever you decide to do, it is good to remember that compensation and compensation strategyare essential parts of a strategic human resources management plan.Innovative Reward Systems for the Changing Workplace.Thomas B. Wilson has written a book that is chockfull of guidelines and principles for designingperformance management programs. In his book, Innovative Reward Systems for the ChangingWorkplace, Federal managers, program design teams, and human resource specialists will findboth theory and practical applications that will be extremely helpful when dealing with thechallenge of redesigning their current programs.Wilson views rewards programs as including base pay, appraisals, and various kinds of awards.That is why his book, which would appear to be solely about reward systems, includes an in-depth chapter on managing performance. While the chapters on base pay and stock options dontapply to Federal employees, the rest of the book is rich in practical, useful wisdom andguidelines for designing new programs in any work situation. Effective Reward Systems Performance Management The Dos and Donts of Effective Reward ProgramsEffective Reward Systems. Reward systems should focus on positive reinforcement. Positivereinforcement is the most effective tool for encouraging desired behavior because it stimulatespeople to take actions because they want to because they get something of value (internally orexternally) for doing it. An effectively designed and managed reward program can drive anorganizations change process by positively reinforcing desired behaviors.The author presents criteria for building effective reward systems that he calls the SMARTcriteria. These criteria should be used when designing and evaluating programs. Programs shouldbe: Specific. A line of sight should be maintained between rewards and actions. Meaningful. The achievements rewarded should provide an important return on investment to both the performer and the organization. Achievable. The employees or groups goals should be within the reach of the performers. Reliable. The program should operate according to its principles and purpose. Timely. The recognition/rewards should be provided frequently enough to make performers feel valued for their efforts.Digit #09{ROLL#AH531929} Page 18
  19. 19. Reward system in private organizationPerformance Management. Wilson urges organizations to get away from thinking of the annualperformance appraisal process as performance management. He comments:"I would recommend that the organization refocus the performance appraisal process away fromall the varied attempts to justify its existence and concentrate instead on the process of managingperformance."The process of performance management reflects how the work gets done and creates theenvironment in which people feel valued for their achievements. The performance managementprocess includes four critical components: Focus on what is important to change or be improved. Measures to determine whether and how much progress is being achieved. Feedback so that performers will know whether and how much progress is being achieved. Reinforcement so that everyone celebrates achievements as they are unfolding.Indicators of successful performance management include thefollowing: All measures are understood by the employees, who can describe the importance of their activities to the agency. Measures address results and behaviors/processes. A tracking system is used to monitor performance in the areas identified. The performance measures and progress are displayed in a public area. Data on the performance charts is current. The team leaders/managers are actively engaged in coaching staff members and providing assistance to improve performance. Periodic celebrations mark achievements as they are realized. These celebrations are regarded positively by employees. Data indicate performance is improving.Digit #09{ROLL#AH531929} Page 19
  20. 20. Reward system in private organizationThe author recommends that organizations: focus on variables critical to success; create timely, chart-oriented feedback; create celebrations that mean something to the performers; use performance reviews as an opportunity to reflect "how we won" and "how we lost" make them as often as necessary to cement the learning; anchor the memory of achievements achievement-oriented firms measure a lot, accomplish milestones frequently, and do much celebrating; dont rely on annual performance appraisals as the sole source of feedback; when designing programs, avoid copying programs used by other organizations; and dont make the design process into the "lets make a form" game.The Dos and Donts of Effective Reward Programs. TheDos and Donts of Effective Reward Programs. Wilsonsummarizes his book by reviewing the fundamental principlesfor designing reward programs that work: Do it now! Putting off change only makes the situation worse. Keep your eye on the needs of the customer. The customer should be at the center of all measures, goals, and objectives. Take action, be proactive. Well-designed programs require management, which should focus on providing people with meaningful measures, real-time feedback, and ongoing reinforcement. Personalize rewards to their recipients. Rewards should be valued by the performer. The performer needs to see that the rewardDigit #09{ROLL#AH531929} Page 20
  21. 21. Reward system in private organization opportunities are directly linked to the effort and results taken and that there is an appropriate benefit to the organization. By personalizing the reward, you can anchor the meaning of the achievement more deeply than if you simply treat the reward as a mechanical administrative task. Make sure everyone can win. Reward programs built on the principles of competition or compliance is counterproductive, if not downright destructive. Make sure that rewards are contingent. Reward programs become entitlement programs when they lose their contingency on performance. Each reward should be fully earned and people should understand exactly what they have done to achieve it. Dont expect success all at once. The process of developing an effective program is one of change and continual improvement. Remember that you are in competition with other consequences. Reward programs simultaneously compete with negative reinforcements that occur throughout the organization. So rewards must be meaningful to the performer to have an impact. Do it from the heart. Rewards that are intended to be manipulative are not accepted by employees. The fundamental purpose of reward programs is to build a powerful partnership between the individual and the organization. Collaboration is an essential theme of success. Have fun while you are doing it. If a job is worth doing, it is worth measuring progress and celebrating achievements."In an organization where winning is recognized often, winningbecomes a habit."ASKARI BANK AND ORGANIZATIONAL BEHAVIOUR:Digit #09{ROLL#AH531929} Page 21
  22. 22. Reward system in private organizationIntroduction of Askari Bank:The bank was founded in 1992, and in the 15 years since, its growth andsuccess patterns have far outgrown industry standards. It is a matter ofpride for Askari to be able to offer one of the widest arrays of productsto its customers through its extensive branch network all over thecountry. Just like innovation brings improvement, and progress offersthe promise of perfection. Askari bank is evolving, and its desire to growwith time coupled with its employee’s firm commitment to maintainingexcellent standards of banking quality and services. InternationalDivision strives to place at the disposal of our branch network, efficientcorrespondent banking arrangements on global basis. The Legal AffairsDivision is responsible for managing all legal matters pertaining to bank.Askari Bank’s Core Values:Askari bank is committed to satisfy customer’s needs which must befulfilled within a professional and ethical framework. It subscribe to aculture of high ethical standards, based on the development of rightattitudes. Askari bank believes in core values as the essential andenduring tenets of the organization - the very small set of guidingprinciples that have a profound impact on how everyone in theorganization thinks and acts. They higher authorities give significantimportance to all employees. The intrinsic values, which are the cornerstones of Askari banks corporate behavior, are commitment, integrity,fairness, team-work and service.Organizational Behavior:The main reason for this project was to analyze the behavior of theemployees and manager in the Askari bank. 26 permanent and 4contractual employees are working under the supervision of BranchManager. The manager is working with this branch for 5 years. As he isacademically able to perform the job and Askari bank fulfils hisfinancial needs so he is working over here.Digit #09{ROLL#AH531929} Page 22
  23. 23. Reward system in private organizationLeadership Styles:The leadership style of manager in the Askari bank is a balance of bothpeople oriented and task oriented leadership and because of this balancethe employees are satisfied with their jobs and absenteeism, grievancesand turnover is low. The path-goal theory of leadership highlights fourstyles of leadership.1. Directive:The manager of Askari bank clarifies the goals to be achieved by hissubordinates and means to reach those goals. The manager treats hissubordinated equally and maintains the discipline of the workingenvironment.2. Supportive:The employees of Askari bank can easily approach their managerbecause their manager shows great concern for the status, needs andwellbeing of employees. He provides social support to help employeescope with stressful situations.3. Participative:The manager of Askari bank encourages and facilitates the involvementof his subordinates in decisions. He consults with his subordinates andask for their suggestions and takes their ideas into serious considerationbefore making a decision.4. Achievement Oriented:The Askari bank’s manager sets challenging goals for his subordinatesand expects high level of performance. He continuously seeksimprovement in their performance and shows them a high degree ofconfidence that employees will accomplish their goals.Feedback Sources:Feedback originates from social sources as well as non-social sources.1. Social Sources of Feedback at Askari bank:Social sources of feedback include supervisors, clients, colleagues andproject leaders. The feedback at Askari bank is only given by thesupervisor means the branch manager for the employees working underthe branch manager. The branch manager observes the employee’sDigit #09{ROLL#AH531929} Page 23
  24. 24. Reward system in private organizationbehavior and performance throughout the year, and manager is the onlyperson who fills the annual confidential reports of the employees onwhich the promotion, pay increments and other rewards depends.2. Non-Social Sources of Feedback at Askari bank:The manager at Askari bank looks at the daily reports of deposits andloan disbursements and compares it with earlier dates and assigned tasksand then gives the feedback. With the help of these reports, the managercan easily analyze his employee’s performance.MARS model of Individual behavior and performance:The Askari bank depends on its employees to satisfy the customers andfulfill other organizational objectives. For understanding the individualbehaviors and performance of employees, I used the MARS model. PER FORMANCE APPRAISAL:It is the key process to any organization try to increase or maintain itseffectiveness because the action of employees affect the optimal use ofthe organizational capital, technological and marketing recourses.Despite the obvious importance of marketing accurate appraisals of anemployees performance consist of a list of a key traits or cost relatedvariables. Both appraisals instruments are limited from the stand point ofcounseling or developing an employee.Give Employee Results Establish Performance Goal Praise/RewardPerformance Reviewing Legal Requirements :Before carrying out anyperformance appraisal system the first step is to take into considerationthat what are the legal requirements. First the organization see that whatperformance shave to be appraised and up to what extent and it is afterreviewing the laws the organization is ready to conduct job analysis.APPRAISAL METHODS AND INSTRUMENTSThe methods used for appraisal of the employees are c a t e g o r i z e d i n t ot wo b r o a d c a t e g or i e s . F i r s t i s t h e comparative method includes. Ranking, forced distribution, paired distribution critical incident methodand essay approach. And the absolute standard method includes rating scaleswhich is further divided into graphic and non-graphic scales,MBO(management by objective) and finally the combination methods.Digit #09{ROLL#AH531929} Page 24
  25. 25. Reward system in private organizationAppraisal Methods Followed By " C o mp a r a t i v e methods" and second is the"Absolute standard methods”. The Askari BankA s k a r i B a n k i s o u r l o c a l b a n k wh i c h i s t r yi n g t o i mp r o v e i t sapproval process and method used by them,. But at this point there are very fewmethods used for the appraisal of the employees. Basically they use criticalincident method for the appraisal of the middle level managers.METHODS / TECHNIQUES OF PERFORMANCE EVALUATION:There are four methods of performance evaluation.1. RATING SCALE:In this method you have to give the rate toi n d i v i d u a l performance on the scale basis, this method is preciseand simple as compared to other methods.2. Check List:The rater has to select only that statement which bestdescribed the performance and individual. In order to measure theperformance, we can assign the weight to it will become weighted checklist, it will help to check the performance and this practical is standard.3. Forced Choice:It is a method of set choice. In this method you havet o develop a set of employees and give them the numbers on raters ownobservation.4 . Critica l Incidence TechniqueIn this method the rater has keep in account positive andnegative behaviors in sequence, these are called incident criticaltechniques. At the end of year in neEmployee motivation:The employees working at Askari bank are motivated to achieve thedesired goal and complete the assigned tasks and they put forth enoughcontinuous effort for a certain amount of time to achieve their goal.Ability:The employees of Askari bank have the ability, knowledge and physicaland mental skills that are required to achieve the organizational goals.They have natural talent that helps them to learn specific tasks morequickly and perform them better.Digit #09{ROLL#AH531929} Page 25
  26. 26. Reward system in private organizationEmployee Competencies:Employees at Askari bank have multiple competencies that includesgeneric and job specific skills required for the job. The competencetriangle at Askari bank consists of three sets of generic and job specificcompetencies.1. Professional Competence:The employees working for different products of the Askari bank likeAskari Home Financing, Askari Car Financing and Askari Agriculturefinancing are specific to their task and position. The employees of thesedepartments have specific knowledge of their product.2. Human Competence:The employees of Askari bank, who are involved in customer relationjobs for social interaction, have special communication skills requiredfor their job.3. Business Competence:The manager of Askari bank has a particular understanding of thebusiness language, customer skills and general knowledge of theorganization. He has the required business knowledge and it is hisbusiness competence.Person Job Matching:At Askari bank, individuals and their competencies are being matchedwith their jobs. For this they adopt two strategies, they select thoseapplicants whose competencies best fits to the job and train them todevelop required skills and knowledge.Role Perception:The manager of Askari bank clearly describes the responsibilitiesrequired by the organization from them. Employees are also givenfrequent performance feedback.Behavior Modification:As the staff of Askari bank knows that there is a system of annualconfidential report according to which their performance is analyzed andDigit #09{ROLL#AH531929} Page 26
  27. 27. Reward system in private organizationrewards are distributed so they don’t get late for their work and completetheir task on time. This is the way how Askari bank successfullyimplemented behavior modification, particularly to reduce absenteeismand increase job performance and satisfaction by giving rewards.Sources of Power in Askari Bank:1. Legitimate Power:The manager holds legitimate power which gives him formal andinformal authority to make others follow him. He has the power to makehis subordinated come on Sundays and stay for longer hours withoutextra pay and employees abide by him.2. Reward Power:The manager has the control over the allocation of rewards. His formalauthority gives him power to distribute organizational rewards like payincrement, appreciation letter, promotion.3. Coercive Power:As the manager have the formal authority with which they can demotetheir employees, if he is not satisfied by any employee’s performance hefirst warn the employee verbally then gives him written warning andthen termination letter is given to the employee.4. Expert Power:The manager and his subordinates of Askari bank have the knowledgeand skills required for their work on the basis of these expertise’s theycan influence the surroundings.Sexual Harassment:In Askari bank, they have a system of complain in case of any personfeel harassed and this system is completely confidential. If anyone teasesanybody, he/she can complain easily and without any hesitation.Organizational and Team Environment:Digit #09{ROLL#AH531929} Page 27
  28. 28. Reward system in private organizationThe manager of Askari bank told me that the work is assigned in teamsand as the employees know that their performance is being observed sothey are motivated to work better.1. Reward Systems:The employees of Askari bank are partly rewarded for team performanceand this reward system make their team members work together moreeffectively. According to the manager the individual pay at the Askaribank is based on the combination of individual and team performance.2. Communication Systems:Communication system among team members at Askari bank isdesigned very properly, as it is very important even, when teammembers belong to one branch. Face-to-face dialogues and sometimestelephonic conversations are also used by the team members for theassignments and tasks.3. Physical Space:The layout of Askari Bank, improves the communication among teammembers. Team’s ability to accomplish tasks is also influenced by theenvironment of Askari bank.4. Organizational Environment:The working environment at Askari bank is very competitive whichmotivates employees to work together more closely. Team’s output ishighly demanded by the manager of Askari bank, which creates feelingof success in the team members, which motivate them to stay with theteam and organization.5. Organizational Structure:The organizational structure of Askari bank supports its teams andencourages interaction with team members and the supervisor. As theteam members are organized around the work processes rather thanspecialized task, so the team flourishes. The employees report to theirimmediate boss. Decisions of branch are taken by branch manager andhis supervisor, employees can only suggest.6. Organizational Leadership:In the Askari bank, teams are given support and are also provided teamleader’s couching and training. The performance of teams also dependsDigit #09{ROLL#AH531929} Page 28
  29. 29. Reward system in private organizationon their team leaders to a greater extent as they have the authority tosolve their problems and have the resources to accomplish their tasks.Team Norms:The Askari bank does not support the team norms of absence, as theemployees cannot be absent from the work. The employees work forlonger hours, when it is required by the manager or team leader, becamea team norm.Characteristics of Creative People:There are four general characteristics which I am going to analyze in theemployees of Askari bank.1. Intellectual Abilities:The employees as Askari bank, comes up with ideas with greatsignificance, they evaluate the usage of their ideas and they also knowtheir ideas apply in the real world. The manager said that his employeescommunicate their ideas and make me understand and support them.2. Relevant Knowledge and Experience:Employees of Askari bank possess knowledge and experience in theirfield. As the people of accounts have complete command over it,everyone has command over their tasks.3. Motivation and Persistence:The employees of Askari bank told me that they are motivated to workfor the achievement of tasks assigned to them. They continuously andpersistently work for completion of tasks and because of this motivation,they spend less time and get more work done.Digit #09{ROLL#AH531929} Page 29
  30. 30. Reward system in private organization4. Inventive Thinking Style:The manager of Askari bank takes risk for achieving organizationalgoals. He and his subordinates come up various new ideas and afteranalyzing ideas they take risk of applying these ideas in reality.5. Creative Work Environment:The manager said that if the employees have fear of job loss, they takefewer risks. Team members trust each other, communicate well and arecommitted to the assigned projects.SWOT Analysis:Strengths: Competitive staff Cooperative Executives Islamic banking Corporate & Investment Banking Group provides all requisite banking services for our corporate clientele in an efficient, dependable, consistent, and competitive manner – the objective being to become your “bank of first call” for all your financial needs. The main strength is that they have provided the name of person, designation, department and phone number for easy contact for customers on their websites. Askari bank established relationship with almost all top manufacturers and dealers of Samsung, Philips, LG and Dawlance. At its website all the features of all the products are given separately and the eligibility criterion is also given.Weaknesses: Profit rates are not higher than the competitors.Digit #09{ROLL#AH531929} Page 30
  31. 31. Reward system in private organization Loan rates are higher than the competitors. 360 degree feedback system not applied in Askari bank. No break is given to employees, which sometimes make them frustrated.Opportunities: The different products of Askari bank provides it with opportunities as its competitors are providing loan on easy term to the farmers for agriculture, livestock and vehicles like tractors, Suzuki.Threats:Competitor ABN Amro Bank Saudi Pak Bank Habib Bank Muslim Commercial BankCONCLUSION:There is all the reward systems are being discussed briefly which couldbe there in an organization and which could possibly give to theemployees by the management of an organization. There is also definedthat how the reward system could effect the organization and also theemployees life on the work place, it is also defined that how thecompensation could be responsible for the betterment and success of aworking organization.Recommendations:Digit #09{ROLL#AH531929} Page 31
  32. 32. Reward system in private organizationI just want to add one thing that they would have to over come thereference system and give the promotions who would be deserving notto the person who has the huge reference or relation with some highprofiled.References: Internet Askari commercial bankDigit #09{ROLL#AH531929} Page 32