Doc reward 102539
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Reward management aims to reward employees fairly based on their value to the organization. It supports business strategy through attracting, retaining, and motivating employees. Basic reward types include extrinsic rewards like pay and benefits that satisfy basic needs, and intrinsic rewards like recognition that satisfy higher needs. Reward options include base pay, bonuses, benefits, and non-monetary rewards. Rewards can be given at the individual, team, and organizational levels. Performance appraisals are used to improve performance, increase motivation, identify development needs, and determine reward levels, though they have limitations.
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Doc reward 102539
- 1. Reward Management Managing Human Resources
- 2. Definition of Reward Management “Reward Management is concerned with the formulation and implementation of strategies and policies that aim to reward people fairly, equitably and consistently in accordance with their value to the organization” (Armstrong and Murlis 2004)
- 3. Shift in Jobs & Reward Systems 1960s & ‘70s – manual workers, piece-rates/wage drift, measured day work, incomes policies 1980 & ‘90s – service/knowledge workers, PRP, shares 2000s – Reward management – PRP 1998 20%, 2004 32%, 36% 2007 – “Total Reward”
- 4. Objectives of Reward Management Support the organisation’s strategy Recruit & retain Motivate employees Internal & external equity Strengthen psychological contract Financially sustainable Comply with legislation Efficiently administered
- 5. Basic Types of Reward Extrinsic rewards – satisfy basic needs: survival, security – Pay, conditions, treatment Intrinsic rewards – satisfy higher needs: esteem,development
- 6. Reward Options Base pay--fixed or minimum wage/salary Plussage--capability, qualification Premia/Overtime Performance related pay Indirect pay--benefits, non-cash, shares Non-monetary: recognition, advancement “Total Reward” Pay, non-pay, flexible hours, cafeteria benefits
- 7. Rewards by Individual, Team, Organisation Individual: base pay, incentives, benefits – rewards attendance, performance, competence Team – team bonus, rewards group cooperation Organisation – profit-sharing, shares, gain-sharing
- 8. Motivation theories I Maslow’s hierarchy of needs – Physiological, safety, social, esteem, self- actualisation Herzberg – Hygiene, motivators (e.g.,sense of achievement) McClelland – Learned needs
- 9. Motivation theories II Vroom’s expectancy theory – Valance: attractive outcome – Instrumentality: performance results in desired reward or achievement – Expectancy: effort will lead to level of performance Equity theory – fairness judged by comparison--internal, external
- 10. Determining Reward: Job Evaluation Ranking of jobs by relative worth to the organisation Non-Analytical – whole jobs, paired jobs (matrix), job classifications Analytical • components, factors, competencies • points rating(e.g.; 1-10)
- 11. Pay & SHRM Achievable organisational objectives Clear link between pay and objectives Contingency model: – Vertical fit--alignment of pay systems & business objectives – Horizontal fit--pay and HR practice support one another
- 12. Use of Reward Management (CIPD 2008) Written Reward Strategy 33% Total rewards approach 29% Key factor in salary level – market rates 31%, – ability to pay 22% Key factor in pay review – organisational performance 53% – inflation 44%
- 13. Incentive plans (CIPD 2008) Individual 60% Business results 51% Combination 50% Team-based 27%
- 14. Performance appraisal: MAJOR GOALS Improve performance Increase motivation identify training/development needs manage careers set levels of reward control
- 15. APPRAISAL METHODS OUT IN “Rank & Yank” Psychometric Scales Critical Incident 360º Appraisal Frequent Review Role of line manager
- 16. WHO DOES APPRAILSAL? “…owned and driven by line-manager” (Armstrong, 2006) 360º Appraisal – Managers (alone 180º) – HRM personnel – Peers – Subordinates – Self – Customers (540º)
- 17. PSYCHOMETRIC SCALES BARS--Behavior Anchored Rating Scale – Anonymous questionnaire – 1-7 “unacceptable” to “excellent” behavior BOS--Behavioral Observation Scale – Anonymous questionnaire – 1-5 “never” to “always” behavior traits
- 18. Use by HR Practitioners Annual Appraisal 83% Twice-yearly appraisal Personal development 24% 68% Subordinate 20% Self-appraisal Continuous 45% assessment 17% Coaching 360° appraisal 11% 39% Competence Assessment 31%
- 19. Problems with PRP Objectivity Psychological contract & equity Inhibits open discussion of training needs Time consuming short-termism “PRP is not a silver bullet” (CIPD) Shift from ‘performance” to ‘contribution’