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.
2. Definition of Reward
Management
โReward 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
organizationโ
(Armstrong and Murlis 2004)
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
โTotal Rewardโ Pay, non-pay, flexible
hours, cafeteria benefits
7. Rewards by Individual, Team,
Organisation
Individual: base pay, incentives, benefits
โ rewards attendance, performance, competence
Team
โ team bonus, rewards group cooperation
Organisation
โ profit-sharing, shares, gain-sharing
8. Motivation theories I
Maslowโs hierarchy of needs
โ Physiological, safety, social, esteem, self-
actualisation
Herzberg
โ Hygiene, motivators (e.g.,sense of
achievement)
McClelland
โ Learned needs
9. Motivation theories II
Vroomโs expectancy theory
โ Valance: attractive outcome
โ Instrumentality: performance results in desired
reward or achievement
โ Expectancy: effort will lead to level of
performance
Equity theory
โ fairness judged by comparison--internal,
external
10. Determining Reward: Job
Evaluation
Ranking of jobs by relative worth to the
organisation
Non-Analytical
โ whole jobs, paired jobs (matrix), job
classifications
Analytical
โข components, factors, competencies
โข points rating(e.g.; 1-10)
11. Pay & SHRM
Achievable organisational objectives
Clear link between pay and objectives
Contingency model:
โ Vertical fit--alignment of pay systems &
business objectives
โ 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
โ market rates 31%,
โ ability to pay 22%
Key factor in pay review
โ organisational performance 53%
โ inflation 44%
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
โRank & Yankโ Psychometric Scales
Critical Incident 360ยบ Appraisal
Frequent Review
Role of line manager
16. WHO DOES APPRAILSAL?
โโฆowned and driven by line-managerโ
(Armstrong, 2006)
360ยบ Appraisal
โ Managers (alone 180ยบ)
โ HRM personnel
โ Peers
โ Subordinates
โ Self
โ Customers (540ยบ)
18. Use by HR Practitioners
Annual Appraisal 83% Twice-yearly appraisal
Personal development 24%
68% Subordinate 20%
Self-appraisal Continuous
45% assessment 17%
Coaching 360ยฐ appraisal 11%
39%
Competence
Assessment 31%
19. Problems with PRP
Objectivity
Psychological contract & equity
Inhibits open discussion of training needs
Time consuming
short-termism
โPRP is not a silver bulletโ (CIPD)
Shift from โperformanceโ to โcontributionโ