This document provides an overview of reward management (also known as compensation and benefit management). It defines reward management as dealing with strategies, policies and processes to recognize employee contributions both financially and non-financially. The aims of reward management are to motivate employees, align rewards with business goals, and develop a high-performance culture. These aims are achieved through developing strategies, policies and practices based on principles of fairness, equity, consistency and transparency. The key elements of a reward system include base pay, contingent pay, benefits, job evaluation, market analysis, grade structures and performance management. Factors influencing reward management include the organization's context and environment as well as conceptual factors related to strategic management and human behavior.

1. COMPENSATION MANAGEMENT
(or Reward Management
or
Compensation & Benefit Management )
Session on 01
MBA

2. PART 1 THE FUNDAMENTALS OF REWARD
MANAGEMENT
PART 2 THE CONCEPTUAL FRAMEWORK
PART 3 ESTABLISHING JOB VALUES AND
RELATIVITIES
PART 4 GRADE AND PAY STRUCTURES
PART 5 REWARDING AND REVIEWING
CONTRIBUTION AND PERFORMANCE
PART 6 REWARD MANAGEMENT FOR SPECIAL
GROUPS
PART 7 EMPLOYEE BENEFITS AND PENSION SCHEMES
REWARD MANAGEMENT PROCEDURES

3. Reward management defined
The aims of reward management
Achieving the aims
The reward system Elements of a reward System
Factors affecting reward management policy and practice
The development of reward management .

4. Question??????
Dear students do you know?
WHAT IS REWARD MANAGEMENT ?
Or
Compensation & Benefit Management ?

5.  Compensation?
 Benefit ?
 Management?

6. • something, typically
money, awarded to
COMPENSATION
someone in recognition of
loss, suffering, or injury.
BENEFIT
Management
• an advantage or profit
gained from something.
• the process of dealing
with or controlling things
or people.

7. REWARD MANAGEMENT
DEFINED:
Reward management deals with the strategies,
policies and processes required to ensure that
the contribution of people to the organization is
recognized by both financial and non-financial
means.
(strategies, policies and processes recognize to
give financial and non-financial reward.)

10. 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;
develop a high-performance culture.
motivate people and obtain their engagement and
commitment;
help to attract and retain the high-quality people the
organization needs;

11. ACHIEVING THE AIMS
The aims of reward management
are achieved by developing and
implementing strategies, policies,
processes and practices.

12. ACHIEVING THE AIMS:
By
 Reward philosophy
 Distributive justice
 Procedural justice
 Fairness
 Equity
 Consistency
 Transparency
 Strategic alignment
 Contextual and culture fit
 Fit for purpose
 Developing a high-performance culture

13. Reward philosophy
 Reward management is based on a set of beliefs
and guiding principles.
Reward management is based on a well-articulated
philosophy – a set of beliefs and guiding principles that are
consistent with the values of the organization and help to
enact them.
HR initiatives designed to achieve the motivation,
commitment, engagement and development of employees
at long term .

14. Distributive justice
Distributive justice refers to how rewards are
provided to people
(They receive what was promised to them and
that they get what they need.)

15. Procedural justice refers to the
ways in which managerial
decisions are made and reward
policies are put into practice.

16. Fairness
A fair reward system is one
that operates in accordance
with the principles of
distributive and procedural
justice. It also conforms to the
‘felt-fair’ principle formulated
by Eliot Jaques (3). This
states that pay systems will be
fair if they are felt to be fair.

18. Equity
Equity is achieved
when people are
rewarded appropriately
in relation to others
within the organization.

19. Consistency
A consistent approach to
reward management
means that decisions on
pay do not vary arbitrarily –
without due cause –
between different people or
at different times.

20. Transparency
Transparency exists
when people
understand how
reward processes
function and

21. Strategic alignment
The strategic alignment of
reward practices ensures that
reward initiatives are planned by
reference to the requirements of
the business strategy and are
designed to support the
achievement of business goals.

22. Contextual and culture fit
The design of reward
processes should be
governed by the context
.either university level
or college etc.

23. Fit for purpose
The formulation of reward
strategy and the design of the
reward system should be based
on an understanding of the
objectives of reward management
and should be developed to
achieve that purpose.

24. Developing a high-performance culture
A high-performance
culture is one in which
people are aware of the
need to perform well
and behave accordingly
in order to meet or
exceed expectations.

25. THE REWARD SYSTEM
What is the
reward
system?????

26. THE REWARD SYSTEM,
This consists of
Reward
strategies,
Reward
policies,
Reward
practices,
Reward
processes,
Reward
procedures,

27. REWARD STRATEGIES,
Reward
strategies
Are set out what the
organization intends
to do in the longer
term
to develop and
implement reward
policies, practices,
processes and
procedures
that will further the
achievement of its
business goals.
For example, an
organization may
have a strategy to
maintain
competitive rates
of pay.

28. Reward policies,
Reward policies, which set guidelines for decision
making and action.
For example, an organization may have a policy that sets the
levels of pay in the organization compared with median market
rates.

29. REWARD PRACTICES,
It consist of the grade and pay structures,
techniques such as job evaluation, and schemes
such as contingent pay used to implement reward
strategy and policy.
For example, the policy on pay levels will lead to
the practice of collecting and analyzing market
rate data, and making pay adjustments that reflect
market rates of increase.

30. Reward processes,
Reward processes, which consist of
the ways in which policies are
implemented and practices carried
out,
for example the way in which the outcomes of
surveys are applied and how managers
manage the pay adjustment and review
process.

31. REWARD PROCEDURES,
 Reward procedures, which are operated in order
to maintain the system and to ensure that it
operates efficiently and flexibly and provides
value for money.
 For example, a procedure will be used for
conducting the annual pay review.

32. ELEMENTS OF A REWARD SYSTEM
Business strategy
Reward strategy and policy
Base or basic pay
Contingent pay
Employee benefits
Allowances
Total earnings
Total remuneration
Job evaluation
Market rate analysis
Grade and pay structures
Performance management
Non-financial rewards
Total reward

33. Business strategy
 The starting point of the reward system is the
business strategy of the organization.
 This identifies the business drivers and sets out the
business goals.
It include items such as
 high performance,
 profitability,
 productivity,
 innovation,
 customer service,
 quality, price/cost leadership and the need to satisfy
stakeholders – investors, shareholders, employees
and, in local authorities, elected representatives.

34. Reward strategy and policy
 The reward strategy flows from an analysis of the
business drivers
 The reward strategy will define longer-term
intentions in such areas as pay structures,
contingent pay, employee benefits, steps to
increase engagement and commitment and
adopting a total reward approach.

35. Base or basic pay
 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 shop floor workers, the level of skill
required.

36. Contingent pay
Additional financial
rewards may be
provided that are
related to performance,
competence,
contribution, skill or
experience.

37. Employee benefits
 Employee benefits include
 pensions,
 sick pay,
 insurance cover,
 company cars and a number of other ‘bonus’.
 They consist of elements of remuneration
additional to the various forms of cash pay and
also include provisions for employees that are not
strictly remuneration, such as annual holidays

38. Allowances
 Allowances are paid in addition to basic pay for
special circumstances (e.g. living in London) or
features of employment (e.g. working unsocial
hours).

39. Total earnings
 Total earnings (financial rewards) consist of the
value of all cash payments
(base pay, contingent pay and allowances, i.e.
total earnings).

40. Total remuneration
 Total remuneration consists of the financial
rewards represented by total earnings plus the
value of the benefits received by employees.

41. Job evaluation
 Job evaluation is a systematic process for
defining the relative worth or size of jobs within an
organization in order to establish internal
relativities and provide the basis for designing an
equitable grade structure, grading jobs in the
structure and managing relativities.

42. Market rate analysis
 Market rate analysis is the process of identifying
the rates of pay in the labour market for
comparable jobs to inform decisions on levels of
pay within the organization and on pay structures.

43. Grade and pay structures
 Jobs may be placed in a graded structure
according to their relative size. In such a
structure, pay is influenced by market rates, and
the pay ranges attached to grades provide scope
for pay progression based on performance,
competence, contribution or service.

44.  Define individual performance and contribution
expectations, assess performance against those
expectations, provide for regular constructive
feedback, and result in agreed plans for
performance improvement, learning and personal
development.

45. Non-financial rewards
 Non-financial rewards do not involve any direct
payments and often arise from the work itself,
for example






achievement,
autonomy,
recognition,
scope to use and develop skills,
training,
career development opportunities and high-quality
leadership.

46. Total reward
Total reward is the
combination of financial
and non-financial
rewards available to
employees

47. FACTORS AFFECTING REWARD MANAGEMENT
POLICY AND PRACTICE
These consist of contextual factors and
conceptual factors

48. CONTEXTUAL
FACTORS
External
environment
The internal
environment
The internal environment:
consists of the organization’s culture and its
business, technology and people
The external environment :
competitive pressure, globalization, and
changes in demographics and employment.

49. conceptual factors
 Are relating to theories and beliefs about
 strategic management,
 total reward,
 human capital management,
 the factors affecting pay levels,
 motivation,
 engagement,
 commitment and the psychological contract.

50. COMPENSATION MANAGEMENT
(or Reward Management
Compensation & Benefit Management )
Session on 02
MBA