This document provides an overview of reward management systems. It defines reward management and discusses its aims and philosophy. The key elements of a reward system include policies, practices, processes like job evaluation and performance management, and procedures. Total reward looks at all aspects of compensation, including both financial and non-financial rewards. Different approaches are needed for rewarding directors/executives, sales staff, and manual workers. Common elements include base pay, bonuses, share options, benefits, and time/piece rates.
In this presentation, we will understand the meaning and factors of industrial relations, analyze the three aspects of industrial relations, meaning and functions of trade unions and discuss the influence of trade unios on business and human resource management.
To know more about Welingkar School’s Distance Learning Program and courses offered, visit:
http://www.welingkaronline.org/distance-learning/online-mba.html
This presentation discusses human resource management practices in the United States. It is presented by four group members and covers the following topics:
Part 1 discusses American national culture, describing characteristics like individualism, future orientation, and a can-do attitude.
Part 2 covers basic HRM practices in the US, including recruitment based on interviews and experience, training expenditures of $724 per employee annually, and a performance-based reward system.
Part 3 provides graphical comparisons of HRM metrics like training systems, labor costs, and hours worked in various countries including the US, Korea, Sri Lanka, and Germany.
The presentation concludes with a snapshot summarizing key cultural aspects of US business, including a performance-oriented
Human resources interventions focus on managing employees effectively and efficiently while facilitating organizational change. This includes goal setting, performance reviews, rewarding systems, career planning and development, managing diversity, and ensuring employee well-being. A career consists of a sequence of jobs held over a lifetime, including establishment, advancement, maintenance, and withdrawal stages. Career planning involves setting personal career goals and examining alternatives, while career development comprises organizational practices that help employees implement their career plans.
Human Resource Management Practices in japan Rahat ul Aain
Japan has traditionally emphasized long-term employment and seniority-based promotion and compensation. However, it is now converging towards more Western-style human resource management practices. Issues include an aging population, lack of gender diversity and equality in the workplace, and increasing "karoshi" or death from overwork. Reform efforts aim to introduce more flexibility and performance-based approaches to address business needs in a changing environment.
The document discusses strategies for human resource management. It addresses assessing staffing needs, motivating employees, developing performance incentives, empowering managers and employees, and establishing employee benefit plans. Failure of HR strategies can result from disrupted social structures, improper job matching, or lack of management support. The summary effectively conveys the key topics and ideas discussed in the original document in 3 concise sentences.
The challenges faced by female expatriateEKAGHNIDEY
The document discusses the challenges faced by female expatriates working abroad. It notes that while all expatriates face issues like culture shock, language barriers, and loneliness, female expatriates face additional challenges including lack of support from their organizations, limited professional networks, and uncomfortable working environments in countries with patriarchal societies. Individual barriers for women expatriates include balancing dual careers, family responsibilities, child rearing during overseas assignments, and biases in expatriate selection processes. The document recommends HR provide pre-departure cultural training, establish mentorship programs, and offer expanded support to help female expatriates overcome challenges.
The document discusses several key challenges in international performance management:
1) There are challenges in measuring performance across different subsidiaries and countries due to variations in environments, criteria validity, data uniformity, and cultural adjustments.
2) When appraising expatriates, it is important to consider their organizational role expectations, as well as the expectations of the parent company and host subsidiary, which can conflict.
3) Effective performance appraisal of foreign employees should consider their role beyond just tasks, and look at leadership, interpersonal skills, cultural adaptation, and how they meet the needs of multiple organizations.
The document discusses compensation management and defines compensation as all forms of financial returns, tangible services, and benefits that an employee receives during employment. It outlines different components of compensation including basic wages, incentives, and benefits. The objectives of compensation planning are discussed as well as theories of wage determination such as traditional theory based on market forces and theory of negotiated wages through collective bargaining. Different types of wages like time rates, piece rates, and minimum wages are also summarized.
In this presentation, we will understand the meaning and factors of industrial relations, analyze the three aspects of industrial relations, meaning and functions of trade unions and discuss the influence of trade unios on business and human resource management.
To know more about Welingkar School’s Distance Learning Program and courses offered, visit:
http://www.welingkaronline.org/distance-learning/online-mba.html
This presentation discusses human resource management practices in the United States. It is presented by four group members and covers the following topics:
Part 1 discusses American national culture, describing characteristics like individualism, future orientation, and a can-do attitude.
Part 2 covers basic HRM practices in the US, including recruitment based on interviews and experience, training expenditures of $724 per employee annually, and a performance-based reward system.
Part 3 provides graphical comparisons of HRM metrics like training systems, labor costs, and hours worked in various countries including the US, Korea, Sri Lanka, and Germany.
The presentation concludes with a snapshot summarizing key cultural aspects of US business, including a performance-oriented
Human resources interventions focus on managing employees effectively and efficiently while facilitating organizational change. This includes goal setting, performance reviews, rewarding systems, career planning and development, managing diversity, and ensuring employee well-being. A career consists of a sequence of jobs held over a lifetime, including establishment, advancement, maintenance, and withdrawal stages. Career planning involves setting personal career goals and examining alternatives, while career development comprises organizational practices that help employees implement their career plans.
Human Resource Management Practices in japan Rahat ul Aain
Japan has traditionally emphasized long-term employment and seniority-based promotion and compensation. However, it is now converging towards more Western-style human resource management practices. Issues include an aging population, lack of gender diversity and equality in the workplace, and increasing "karoshi" or death from overwork. Reform efforts aim to introduce more flexibility and performance-based approaches to address business needs in a changing environment.
The document discusses strategies for human resource management. It addresses assessing staffing needs, motivating employees, developing performance incentives, empowering managers and employees, and establishing employee benefit plans. Failure of HR strategies can result from disrupted social structures, improper job matching, or lack of management support. The summary effectively conveys the key topics and ideas discussed in the original document in 3 concise sentences.
The challenges faced by female expatriateEKAGHNIDEY
The document discusses the challenges faced by female expatriates working abroad. It notes that while all expatriates face issues like culture shock, language barriers, and loneliness, female expatriates face additional challenges including lack of support from their organizations, limited professional networks, and uncomfortable working environments in countries with patriarchal societies. Individual barriers for women expatriates include balancing dual careers, family responsibilities, child rearing during overseas assignments, and biases in expatriate selection processes. The document recommends HR provide pre-departure cultural training, establish mentorship programs, and offer expanded support to help female expatriates overcome challenges.
The document discusses several key challenges in international performance management:
1) There are challenges in measuring performance across different subsidiaries and countries due to variations in environments, criteria validity, data uniformity, and cultural adjustments.
2) When appraising expatriates, it is important to consider their organizational role expectations, as well as the expectations of the parent company and host subsidiary, which can conflict.
3) Effective performance appraisal of foreign employees should consider their role beyond just tasks, and look at leadership, interpersonal skills, cultural adaptation, and how they meet the needs of multiple organizations.
The document discusses compensation management and defines compensation as all forms of financial returns, tangible services, and benefits that an employee receives during employment. It outlines different components of compensation including basic wages, incentives, and benefits. The objectives of compensation planning are discussed as well as theories of wage determination such as traditional theory based on market forces and theory of negotiated wages through collective bargaining. Different types of wages like time rates, piece rates, and minimum wages are also summarized.
The document discusses four approaches to international compensation:
1. The going rate approach links expatriate pay to local market salaries in the host country. It aims to treat expatriates as local citizens. Advantages include equality with locals, simplicity, and host country identification, while disadvantages include pay variations and potential re-entry problems.
2. The balance sheet approach equalizes costs between international assignments and home country roles. It protects expatriates from financial impacts of living abroad. Advantages include equity and facilitating re-entry, while disadvantages include potential pay disparities versus locals.
3. The international citizen's approach uses a standard basket of goods to determine pay worldwide, rather than adjusting pay to perfectly match local costs.
The document discusses international human resource management (IHRM). It defines IHRM as managing organizational human resources at an international level to achieve objectives and competitive advantage globally. IHRM includes typical HR functions like recruitment, selection, training etc. at an international scale along with activities like global skills management and expatriate management. The objectives, needs and functions of IHRM are explained. Key activities involved in IHRM are discussed along with issues like managing international assignments and culture. Effective IHRM implementation requires determining international operations strategy and ensuring standardized or localized HR policies. Staffing policies in IHRM like ethnocentric, polycentric and geocentric approaches are also summarized.
Recruitment is the process of searching for prospective employees and stimulating them to apply for jobs in an organization. It involves recruitment planning, strategic development, searching, screening, and evaluation and control. Selection ensures an organization has the right number and kind of people in the right place at the right time. The selection process includes preliminary interviews, selection tests, employment interviews, background investigations, selection decisions, physical examinations, job offers, contracts of employment, and evaluating the selection program. Together, recruitment and selection are fundamental HR processes for building an organization's human resource capacity and delivering quality service.
Strategic human resource management (SHRM) aligns a company's human resource strategies and policies with its business strategies and objectives. The document discusses key concepts in SHRM including determining strategic objectives, developing action plans, the four components of SHRM, and linking business and HR strategies. It also covers frameworks for SHRM such as strategic fit, distinctive HR practices, and theoretical perspectives including fit, functional, economic, and typological. Examples are provided of alternative HR strategies in different industries and contexts.
Staffing recruitment and selection of INTERNATIONAL HUMAN RESOURCES MANAGEMENTAparrajithaAriyadasa
In staffing in international business, HR managers must determine when or where to expatriation. Expatriate workers are frequently assigned to key positions in overseas operations. Human resource managers must also decide on the issue of compensation. The compensation of expatriate workers must be examined along with compensation of local workers and the compensation of workers in the home country. Differences in compensation packages have significant implications on staffing success, expatriate performance and business performance. HR managers must also address the issue of repatriation. Repatriation happens when the worker needs to come back to the home country, usually to continue working for the company. Repatriation also happens when the expatriate worker retires. These issues have significant effects on the perspectives and performance of expatriate workers and local workers, and the effectiveness of IHRM in staffing.
This document discusses various types of performance-linked pay programs. It describes individual incentive programs like commission and individual performance-related pay that reward individual output. Group programs like profit-sharing and gain-sharing that compensate employees based on group or organizational performance are also discussed. The document outlines some criticisms of traditional merit pay programs and contrasts performance-linked pay with other compensation approaches like salary and bonuses. Both the potential benefits of performance pay in improving motivation as well as the risks of damaging relationships and risk-taking are presented.
This document discusses adopting an investment perspective when managing human resources. It argues that employees should be viewed as human assets or investments rather than variable costs. Viewing employees as investments allows organizations to strategically develop policies to increase the value of employees and gain a competitive advantage. However, investing in human capital also carries more risk than physical assets since employees can leave the organization. The document recommends organizations evaluate and retain valuable employees in order to maximize returns on their human resource investments.
Training and development of international staffVirda Azmi
The document discusses providing training and development to international staff being sent to Japan, China, South Korea, and Singapore. It covers the need for cross-cultural training to facilitate expatriate adjustment. It also outlines a 5-phase process for designing effective cross-cultural training programs: 1) Identifying assignment type, 2) Conducting a needs analysis, 3) Establishing goals and measures, 4) Developing and delivering the program, 5) Evaluating the program. Key cultural differences across the countries in areas like management style, business structure, teams, and communication style are also summarized.
Expatriate training and development is becoming a critical part of human resources for firms competing globally. Many multinational companies have established their own training centers and universities to develop employees' skills and provide cultural awareness programs before international assignments to better assist with adjusting to new cultures abroad. The training focuses on creating cultural awareness, learning the host country's language, and practical assistance to help expatriates and their families rapidly adapt to unexpected events when taking up roles in other countries.
International training strategies aim to bridge cultural gaps between parent and subsidiary organizations. There are four main training strategies: using expatriates for short or long-term assignments, influencing training based on subsidiary staffing orientation, driving training budgets based on parent-subsidiary control linkages, and determining training extent and content based on position roles and responsibilities. Cross-cultural training focuses on cultural awareness and host country fit, and aims to increase knowledge and skills for living and working abroad through planned interventions. Effectiveness is measured by cognitive, affective, and behavioral changes during and after training. The international training process involves identifying objectives, assignment types, training needs, goals/measures, developing/delivering programs, and evaluating outcomes.
The document discusses international human resource management (IHRM), which involves managing human resources across national borders. IHRM differs from domestic HRM in several ways, such as requiring more HR activities to deal with taxation, culture, and legal issues in multiple countries. It also requires a broader perspective to meet diverse needs. Managing employees across cultures and countries presents various challenges for IHRM, such as high expatriate failure rates, developing a globally dispersed workforce, and overcoming cultural and legal differences between locations. Globalization and pressures of competitiveness have increased the importance of effective IHRM for international organizations.
Strategic human resource management (SHRM) involves using people strategically to achieve organizational goals. There are four main approaches to SHRM: resource-based, high-performance management, high-commitment management, and high-involvement management. SHRM requires understanding the internal and external environment, including trends in technology, organizational structure, employee values and attitudes, management practices, demographics, and international factors. The environment shapes HR strategies around skills, training, compensation, and organizational design.
Compensation Management importance and factors influencing compensationalisdq550
Compensation is what employees receive in exchange for their work, including both monetary and non-monetary benefits. It is important for both motivating employees and reducing costs for organizations. Many factors influence compensation, including external factors like the labor market, cost of living, unions, and laws, as well as internal factors like the organization's compensation policies, ability to pay, job analyses, and individual employee performance. Effective compensation systems can help organizations attract, retain, and motivate talented staff.
The document discusses performance management in an international context. It covers key topics such as performance appraisal versus performance management, setting individual performance goals, identifying variables that affect expatriate performance like compensation, task, and cultural adjustment, appraising performance using different criteria, providing feedback and opportunities for improvement, and linking rewards to results. Challenges in managing performance globally include cultural impacts on processes and assessing subsidiary performance given external forces and the international environment.
This slideshow focus on the challenges associated with expatriate management. It divided into five parts: expatriate selection, expatriate Training &development,expatriate compensation,repatriates retention and a case study about P&G Expatriate Program.
This document provides an overview of key topics in international human resource management (IHRM) including approaches to staffing foreign operations, reasons for international assignments, types of international assignments, and the roles of expatriates and non-expatriates in supporting international business activities. It also discusses calculating return on investment for international assignments and the various roles of the corporate HR function in managing international operations.
The document discusses various components of international compensation packages. It begins by defining compensation and its objectives. It then covers principles of compensation, approaches in different countries, factors influencing compensation amounts, and theories of compensation. The document also discusses base salary, incentives, allowances, taxes, retirement benefits, and other typical components of an international compensation package. It notes challenges around managing compensation globally due to exchange rates, cost of living differences, and other complexities.
This document discusses repatriation and career issues faced by expatriates returning to their home country or headquarters. It identifies challenges with effective repatriation including organizational factors like lack of formal repatriation programs, individual factors like career anxiety and work adjustment, and social-cultural factors like difficulty reestablishing social networks. Successful repatriation requires managing the repatriation process, having a repatriation program, and employing repatriation strategies.
This document discusses ethics in performance management. It begins by defining ethics and explaining that ethical performance management involves planning, managing, appraising, and monitoring employees based on principles of fairness, objectivity, transparency and good governance. It then discusses the importance and objectives of ethics in performance management, including building trust, improving decision making, and attracting and retaining talent. The document also outlines principles, guidelines and causes of poor ethics in performance management systems. Finally, it discusses the dangers of poor ethics, such as decreased employee performance and relations.
This document provides an overview of reward management systems. It defines reward management and discusses its aims and philosophy. The key elements of a reward system are described, including total reward, policies, practices, processes, and structures. Specific reward strategies for directors/executives, sales staff, and manual workers are also outlined.
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.
The document discusses four approaches to international compensation:
1. The going rate approach links expatriate pay to local market salaries in the host country. It aims to treat expatriates as local citizens. Advantages include equality with locals, simplicity, and host country identification, while disadvantages include pay variations and potential re-entry problems.
2. The balance sheet approach equalizes costs between international assignments and home country roles. It protects expatriates from financial impacts of living abroad. Advantages include equity and facilitating re-entry, while disadvantages include potential pay disparities versus locals.
3. The international citizen's approach uses a standard basket of goods to determine pay worldwide, rather than adjusting pay to perfectly match local costs.
The document discusses international human resource management (IHRM). It defines IHRM as managing organizational human resources at an international level to achieve objectives and competitive advantage globally. IHRM includes typical HR functions like recruitment, selection, training etc. at an international scale along with activities like global skills management and expatriate management. The objectives, needs and functions of IHRM are explained. Key activities involved in IHRM are discussed along with issues like managing international assignments and culture. Effective IHRM implementation requires determining international operations strategy and ensuring standardized or localized HR policies. Staffing policies in IHRM like ethnocentric, polycentric and geocentric approaches are also summarized.
Recruitment is the process of searching for prospective employees and stimulating them to apply for jobs in an organization. It involves recruitment planning, strategic development, searching, screening, and evaluation and control. Selection ensures an organization has the right number and kind of people in the right place at the right time. The selection process includes preliminary interviews, selection tests, employment interviews, background investigations, selection decisions, physical examinations, job offers, contracts of employment, and evaluating the selection program. Together, recruitment and selection are fundamental HR processes for building an organization's human resource capacity and delivering quality service.
Strategic human resource management (SHRM) aligns a company's human resource strategies and policies with its business strategies and objectives. The document discusses key concepts in SHRM including determining strategic objectives, developing action plans, the four components of SHRM, and linking business and HR strategies. It also covers frameworks for SHRM such as strategic fit, distinctive HR practices, and theoretical perspectives including fit, functional, economic, and typological. Examples are provided of alternative HR strategies in different industries and contexts.
Staffing recruitment and selection of INTERNATIONAL HUMAN RESOURCES MANAGEMENTAparrajithaAriyadasa
In staffing in international business, HR managers must determine when or where to expatriation. Expatriate workers are frequently assigned to key positions in overseas operations. Human resource managers must also decide on the issue of compensation. The compensation of expatriate workers must be examined along with compensation of local workers and the compensation of workers in the home country. Differences in compensation packages have significant implications on staffing success, expatriate performance and business performance. HR managers must also address the issue of repatriation. Repatriation happens when the worker needs to come back to the home country, usually to continue working for the company. Repatriation also happens when the expatriate worker retires. These issues have significant effects on the perspectives and performance of expatriate workers and local workers, and the effectiveness of IHRM in staffing.
This document discusses various types of performance-linked pay programs. It describes individual incentive programs like commission and individual performance-related pay that reward individual output. Group programs like profit-sharing and gain-sharing that compensate employees based on group or organizational performance are also discussed. The document outlines some criticisms of traditional merit pay programs and contrasts performance-linked pay with other compensation approaches like salary and bonuses. Both the potential benefits of performance pay in improving motivation as well as the risks of damaging relationships and risk-taking are presented.
This document discusses adopting an investment perspective when managing human resources. It argues that employees should be viewed as human assets or investments rather than variable costs. Viewing employees as investments allows organizations to strategically develop policies to increase the value of employees and gain a competitive advantage. However, investing in human capital also carries more risk than physical assets since employees can leave the organization. The document recommends organizations evaluate and retain valuable employees in order to maximize returns on their human resource investments.
Training and development of international staffVirda Azmi
The document discusses providing training and development to international staff being sent to Japan, China, South Korea, and Singapore. It covers the need for cross-cultural training to facilitate expatriate adjustment. It also outlines a 5-phase process for designing effective cross-cultural training programs: 1) Identifying assignment type, 2) Conducting a needs analysis, 3) Establishing goals and measures, 4) Developing and delivering the program, 5) Evaluating the program. Key cultural differences across the countries in areas like management style, business structure, teams, and communication style are also summarized.
Expatriate training and development is becoming a critical part of human resources for firms competing globally. Many multinational companies have established their own training centers and universities to develop employees' skills and provide cultural awareness programs before international assignments to better assist with adjusting to new cultures abroad. The training focuses on creating cultural awareness, learning the host country's language, and practical assistance to help expatriates and their families rapidly adapt to unexpected events when taking up roles in other countries.
International training strategies aim to bridge cultural gaps between parent and subsidiary organizations. There are four main training strategies: using expatriates for short or long-term assignments, influencing training based on subsidiary staffing orientation, driving training budgets based on parent-subsidiary control linkages, and determining training extent and content based on position roles and responsibilities. Cross-cultural training focuses on cultural awareness and host country fit, and aims to increase knowledge and skills for living and working abroad through planned interventions. Effectiveness is measured by cognitive, affective, and behavioral changes during and after training. The international training process involves identifying objectives, assignment types, training needs, goals/measures, developing/delivering programs, and evaluating outcomes.
The document discusses international human resource management (IHRM), which involves managing human resources across national borders. IHRM differs from domestic HRM in several ways, such as requiring more HR activities to deal with taxation, culture, and legal issues in multiple countries. It also requires a broader perspective to meet diverse needs. Managing employees across cultures and countries presents various challenges for IHRM, such as high expatriate failure rates, developing a globally dispersed workforce, and overcoming cultural and legal differences between locations. Globalization and pressures of competitiveness have increased the importance of effective IHRM for international organizations.
Strategic human resource management (SHRM) involves using people strategically to achieve organizational goals. There are four main approaches to SHRM: resource-based, high-performance management, high-commitment management, and high-involvement management. SHRM requires understanding the internal and external environment, including trends in technology, organizational structure, employee values and attitudes, management practices, demographics, and international factors. The environment shapes HR strategies around skills, training, compensation, and organizational design.
Compensation Management importance and factors influencing compensationalisdq550
Compensation is what employees receive in exchange for their work, including both monetary and non-monetary benefits. It is important for both motivating employees and reducing costs for organizations. Many factors influence compensation, including external factors like the labor market, cost of living, unions, and laws, as well as internal factors like the organization's compensation policies, ability to pay, job analyses, and individual employee performance. Effective compensation systems can help organizations attract, retain, and motivate talented staff.
The document discusses performance management in an international context. It covers key topics such as performance appraisal versus performance management, setting individual performance goals, identifying variables that affect expatriate performance like compensation, task, and cultural adjustment, appraising performance using different criteria, providing feedback and opportunities for improvement, and linking rewards to results. Challenges in managing performance globally include cultural impacts on processes and assessing subsidiary performance given external forces and the international environment.
This slideshow focus on the challenges associated with expatriate management. It divided into five parts: expatriate selection, expatriate Training &development,expatriate compensation,repatriates retention and a case study about P&G Expatriate Program.
This document provides an overview of key topics in international human resource management (IHRM) including approaches to staffing foreign operations, reasons for international assignments, types of international assignments, and the roles of expatriates and non-expatriates in supporting international business activities. It also discusses calculating return on investment for international assignments and the various roles of the corporate HR function in managing international operations.
The document discusses various components of international compensation packages. It begins by defining compensation and its objectives. It then covers principles of compensation, approaches in different countries, factors influencing compensation amounts, and theories of compensation. The document also discusses base salary, incentives, allowances, taxes, retirement benefits, and other typical components of an international compensation package. It notes challenges around managing compensation globally due to exchange rates, cost of living differences, and other complexities.
This document discusses repatriation and career issues faced by expatriates returning to their home country or headquarters. It identifies challenges with effective repatriation including organizational factors like lack of formal repatriation programs, individual factors like career anxiety and work adjustment, and social-cultural factors like difficulty reestablishing social networks. Successful repatriation requires managing the repatriation process, having a repatriation program, and employing repatriation strategies.
This document discusses ethics in performance management. It begins by defining ethics and explaining that ethical performance management involves planning, managing, appraising, and monitoring employees based on principles of fairness, objectivity, transparency and good governance. It then discusses the importance and objectives of ethics in performance management, including building trust, improving decision making, and attracting and retaining talent. The document also outlines principles, guidelines and causes of poor ethics in performance management systems. Finally, it discusses the dangers of poor ethics, such as decreased employee performance and relations.
This document provides an overview of reward management systems. It defines reward management and discusses its aims and philosophy. The key elements of a reward system are described, including total reward, policies, practices, processes, and structures. Specific reward strategies for directors/executives, sales staff, and manual workers are also outlined.
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.
This document discusses reward management and reward systems. It covers:
1. Reward management aims to recognize employee contributions and align rewards with business goals to promote high performance.
2. A reward system includes interrelated processes like business strategy, reward strategy, performance management, and job design that ensure effective reward management.
3. Key elements of a reward system include financial rewards like base pay, contingent pay, benefits; and non-financial rewards like recognition, development opportunities, and work environment. Grade and pay structures provide the framework to implement pay policies.
Total rewards is a concept that describes all the tools available to an employer that may be used to attract, motivate, retains and engages the employee.
Total rewards may also refer to the function or department within HR that handles compensation and benefits, or the combined intrinsic and extrinsic rewards (or value) that an employee perceives.
The document discusses compensation and performance management. It defines compensation as all forms of financial returns and benefits received by employees. Compensation systems aim to attract, retain, and motivate employees to achieve organizational goals. Internal pay structures consider job roles, skills, and market pay levels to ensure internal equity. Performance management links pay to individual, team or organizational performance through various pay for performance plans like bonuses and incentives. Performance is typically evaluated through annual appraisals, but these can be subjective so organizations aim to improve the process.
This document provides an overview of compensation models and strategies. It discusses the key components of a compensation system including objectives, policies, techniques and how they are related. The objectives aim for efficiency, fairness and compliance. Policy choices involve internal alignment, external competitiveness, employee contributions and management. Techniques implement the policies to achieve the objectives. The document also outlines different perspectives on compensation and the incentive and sorting effects of compensation systems on employee motivation and behavior.
The document discusses compensation and total rewards. It defines compensation as the total payments provided to employees in exchange for work performed, including pay, incentives, and benefits. Total rewards refers to all aspects of an employee's work experience, including compensation, benefits, work environment, career development opportunities, and recognition. The purpose of a total rewards approach is to attract, motivate, and retain talented staff through an effective compensation strategy.
The document discusses compensation and benefits in the public and private sectors. It covers total compensation packages, which include pay and benefits. It describes different types of compensation systems such as point-factor job evaluation, ranking, and broadbanding used to determine pay. Performance-based pay systems that differ from traditional seniority-based systems are also discussed. The key elements of compensation systems including equity, job evaluation methods, salary surveys, and incentive pay plans are summarized.
The document discusses compensation and benefits in the public and private sectors. It covers total compensation packages, which include pay and benefits. It describes different types of compensation systems such as point-factor job evaluation, ranking, and broadbanding used to determine pay. Performance-based pay systems that differ from traditional seniority-based systems are also discussed. The summary provides an overview without copying significant content from the document.
The document discusses principles and objectives of compensation management. It outlines that compensation management aims to establish an equitable reward system through principles like ability to pay, equity, performance orientation, and legal compliance. The primary objectives are equity, efficiency, macroeconomic stability, and optimal allocation of labor. Secondary objectives include acquiring competent employees, compliance, cost control, and retaining talent. Compensation is used to recruit, retain employees, increase morale, and reward performance.
Reward management aims to reward employees fairly based on their value and contributions. It involves analyzing compensation strategies to ensure pay and benefits are equitable. Reward management considers both financial rewards like pay raises as well as non-financial rewards like recognition or increased responsibilities. The goal is to motivate employees and link rewards to business goals and strategies. There are two main types of rewards - intrinsic rewards that provide personal satisfaction, and extrinsic rewards like bonuses that are meant to incentivize performance and productivity. An effective reward system supports business objectives, recruits and retains talent, and motivates employees while complying with legal standards.
Benchmarking is a process of comparing performance metrics and business practices to other organizations in order to identify areas for improvement. It involves identifying best practices, measuring performance against others, setting targets, and implementing changes based on findings. There are different types of benchmarking including strategic, performance, and process benchmarking. The benchmarking process involves planning, collecting data from benchmarking partners, analyzing performance gaps, and improving practices. Benchmarking helps organizations learn from others, improve performance, and prioritize resources.
This document discusses linking employee performance to pay. It explains that organizations typically have pay bands for different employee levels and categories. Within each band is a minimum and maximum pay, with increments given for meeting or exceeding expectations. Performance can be linked to short-term incentives for annual performance or long-term incentives for sustained high performance. While performance-based pay aims to motivate employees, it also presents challenges in ensuring fairness, transparency, and buy-in from employees and unions. Ethics are important to consider in performance management systems to promote fair treatment and uphold organizational values.
This document discusses compensation and employee benefits. It defines compensation as remuneration received by employees in exchange for their contributions. Compensation management is part of human resource management and helps motivate employees. There are different types of compensation including base pay, incentives, and benefits. Benefits provide indirect value to employees and include legally required programs as well as voluntary benefits provided by employers. The document outlines considerations for establishing compensation and benefit programs.
The document discusses several aspects of an HR staffing system including:
1. The goals of an effective HR staffing system are to recruit talent, develop and retain employees, and build a reputation as an employer of choice.
2. Recruitment and selection involves the full process from advertising jobs to selecting candidates. Understanding job qualifications is key to hiring.
3. Compensation and benefits are important for attracting qualified candidates and maintaining positive employee morale. Pay should be competitive.
4. Performance management ensures employees understand expectations and are developed, recognized, and either retained or removed based on performance.
5. Professional development and promotion opportunities like training and succession planning are important for retaining and engaging employees
establishing strategic pay plans
equity and its impact on pay rates
job evaluation methods
how to create a market-competitive pay plan
pricing managerial and professional jobs
contemporary topics in compensation
This document discusses pay-for-performance and compensation strategies. It suggests that compensation should reinforce behaviors like attraction, retention, development, and performance. Several theories are discussed on how to motivate employees, including expectancy theory, equity theory, and goal-setting theory. The document concludes that a well-designed compensation plan linking pay to performance can generally improve individual and organizational performance, though it must be implemented carefully and consider fairness.
Strategic Remuneration - Using remuneration to enhance performanceGeorge Vorster
This document discusses different remuneration strategies used by organizations, including market-based remuneration and merit pay. Market-based remuneration focuses on internal parity and paying employees based on their job grade, but does not link pay to individual performance. Merit pay determines base salary based on job ranking and gives merit increases based on performance judgments, but research shows employees often do not believe their pay is truly linked to performance due to difficulties in objective measurement and potential for favoritism. Neither strategy fully achieves the goals of being perceived as fair by employees and motivating high performance.
Strategic role of compensation, strategic compensation policy, total compensa...Ramona Beharry
This PowerPoint deals with the Strategic role of compensation in the organization. States how you develop a total compensation strategy and also strategic compensation planning.
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Reward systems in International Human Resources Management
1. IHRM
REWARD
SYSTEMS
L7
APARRAJITHA ARIYADASA
( B.Sc (J’pura), B.Sc. (OUSL), Post. Grad. Dip. In IP
Law(wales), LLM (Colombo)
Lecturer in University of Plymouth (UK), Lymkokwin
(Malaysia), SLIIT, ICBT, IICT University of Cambodia
Attorney-at-Law, Senior Partner ATD Legal Associates
(www.atdlegalassociates.com), atdlegalassociates@gmail.com
5. WHAT IS
REWARD
MANAGEMEN
T?
• Reward management defined
• The aims of reward
management
• The philosophy of reward
management
• The elements of reward
management
• Total reward
• Reward management for
directors and executives
• Reward management for sales
staff
• Paying manual workers
6. DEFENITION 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.
7. • Reward management consists of
• analysing and controlling employee
• remuneration,
• compensation and
• all of the other benefits for the employees.
8. AIMS OF REWARD MANAGEMENT
• Reward management aims to
• create and efficiently operate a reward structure for an
organization.
• Reward structure usually consists of pay policy and practices,
salary and payroll administration, total reward, minimum wage,
executive pay and team reward.
9. reward people according to what
the organization values and
wants to pay for; reward people
for the value they create;
reward the right things to convey
the right message about what is
important in
terms of behaviours and
outcomes;
10. • develop a performance culture;
•
• motivate people and obtain their commitment and engagement;
•
• help to attract and retain the high quality people the organization
needs;
•
• create total reward processes that recognize the importance of both
financial and non-financial rewards;
•
• develop a positive employment relationship and psychological
contract;
•
11. • align reward practices with both business goals and employee values;
as Brown (2001) emphasizes, the ‘alignment of your reward practices
with employee values and needs is every bit as important as alignment
with business goals, and critical to the realization of the latter’;
•
• operate fairly – people feel that they are treated justly in accordance
with what is due to them because of their value to the organization: the
‘felt-fair’ principle of Jaques (1961);
•
•
12. • apply equitably – people are rewarded appropriately in relation to
others within the organization, relativities between jobs are measured as
objectively as possible and equal pay is provided for work of equal
value;
•
• function consistently – decisions on pay do not vary arbitrarily and
without due cause between different people or at different times;
•
• operate transparently – people understand how reward processes
operate and how they are affected by them.
•
13. The philosophy of reward management
• achieve fairness, equity, consistency and transparency in operating the reward system
• about investing in human capital from which a reasonable return is required, then it is proper to reward people
differentially according to their contribution (ie the return on investment they generate).
• it addresses longer-term issues relating to how people should be valued for what they do and what they
achieve
• Reward management adopts a ‘total reward’ approach, which emphasizes the importance of considering all
aspects of reward as a coherent whole that is integrated with other HR initiatives designed to achieve the
motivation, commitment, engage-ment and development of employees. This requires the integration of reward
strategies with other HRM strategies, especially those concerning human resource development. Reward
management is an integral part of an HRM approach to managing people.
14. The elements of
reward management
• A reward system consists of:
•
● Policies that provide guidelines on
approaches to managing rewards.
•
● Practices that provide financial and non-
financial rewards.
•
● Processes concerned with evaluating the
relative size of jobs (job evaluation) and
assessing individual performance
(performance management).
•
● Procedures operated in order to maintain
the system and to ensure that it operates
efficiently and flexibly and provides value
for money.
Reward
system
15. Reward strategy
•Reward strategy sets out what the
organization intends to do in the
longer term to develop and
implement reward policies, practices
and processes that will further the
achievement of its business goals.
16. ECONOMIC THEORIES EXPLAINING PAY
LEVEL
Name of theory Summary of theory Practical significance
The law of supply Other things being equal, if there is a Emphasizes the importance of
and demand surplus of labour and supply exceeds labour market factors in
the demand, pay levels go down; if affecting market rates.
there is a scarcity of labour and demand
exceeds the supply, pay goes up.
Efficiency wage Firms will pay more than the market Organizations use efficiency
theory rate because they believe that high wages theory (although they
levels of pay will contribute to increases will not call it that) when they
in productivity by motivating superior formulate pay policies which
performance, attracting better candidates, place them as market leaders
reducing labour turnover and persuading or at least above the average.
workers that they are being treated
fairly. This theory is also known as ‘the
economy of high wages‘.
17. Human capital A worker has a set of skills developed Employees and employers
theory by education and training which each derive benefits from
generates a stock of productive investment in creating human
capital. capital. The level of pay should
supply both parties with a
reasonable return on that
investment.
Agency theory The owners of a firm (the principals) are A system of incentives to
separate from the employees (the agents). motivate and reward
This difference can create ‘agency costs’ acceptable behaviour. This
because the agents may not be so process of ‘incentive alignment’
productive as the principals. The latter consists of paying for
therefore have to devise ways of measurable results that are
motivating and controlling the efforts deemed to be in the best
of the former. interests of the owners.
The effort bargain Workers aim to strike a bargain about the Management has to assess
relationship between what they regard as what level and type of
as reasonable contribution and what inducements it has to offer in
their employer is prepared to offer to return for the contribution it
elicit that contribution. requires from its workforce.
18. Reward policies
•
• Reward policies address the following broad issues:
•
● the level of rewards, taking into account ‘market stance’, ie how internal rates of pay should
compare with market rates, for example aligned to the median or the upper quartile rate;
•
• achieving equal pay;
•
• the relative importance attached to external competitiveness and internal equity; the approach
to total reward;
•
• the scope for the use of contingent rewards related to performance, competence, contribution
or skill;
•
• the role of line managers;
•
• transparency – the publication of information on reward structures and processes to
employees.
•
19. TOTAL REWARD
• Total reward
•
• Total reward is the combination of financial and non-financial rewards available to employees.
•
20. Total remuneration
•
• Total remuneration is the value of all cash payments (total earnings)
and benefits received by employees.
•
21. 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 manual workers, the level
of skill required.
•
• Base pay will be influenced by internal and external relativities. The internal rela-tivities
may be measured by some form of job evaluation. External relativities are assessed by
tracking market rates. Alternatively, levels of pay may be agreed through collective
bargaining with trade unions or by reaching individual agreements.
•
• Base pay may be expressed as an annual, weekly or hourly rate. For manual workers this
may be called a ‘time rate’ system of payment. Allowances for overtime, shift working,
unsocial hours or increased cost of living in London or elsewhere may be added to base pay.
The base rate may be adjusted to reflect increases in the cost of living or market rates by the
organization, unilaterally or by agreement with a trade union.
22. • 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. It does not determine the level of pay directly. Job evaluation can
be analytical or non-analytical. It is based on the analysis of jobs or roles, which leads to the production of job
descriptions or role profiles. Job evaluation is described in Chapter 44.
•
•
23. • 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. A policy decision may be made on how internal
rates of pay should compare with external rates – an organization’s
market stance. Market rate analysis is described in Chapter 45.
•
24. •
• Grade and pay structures
•
• Jobs may be placed in a graded structure according to their relative size. Pay
levels in the structure are influenced by market rates. The pay structure may
consist of pay ranges attached to grades, which provide scope for pay
progression based on perfor-mance, competence, contribution or service.
Alternatively, a ‘spot rate’ structure may be used for all or some jobs in which
no provision is made for pay progression in a job. The various types of grade
and pay structures are described in Chapter 46.
25. •
• Contingent pay
•
• Additional financial rewards may be provided that are related to
performance, competence, contribution, skill or experience. These are
referred to as ‘contingent pay’. Contingent payments may be added to
base pay, ie ‘consolidated’. If such payments are not consolidated (ie
paid as cash bonuses) they are described as ‘vari-able pay’. Contingent
pay schemes are described in Chapter 47.
•
26. • Employee benefits
•
• Employee benefits include pensions, sick pay, insurance cover,
company cars and a number of other ‘perks’ as described in Chapter
48. They comprise elements of remu-neration additional to the various
forms of cash pay and also include provisions for employees that are
not strictly remuneration, such as annual holidays.
27. Total reward
• TOTAL REWARD
•
• The concept of total reward has emerged quite recently and is
exerting considerable influence on reward management. This
section of the chapter begins by defining what it means. The
importance of the concept is then explained, and the section
continues with an analysis of the components of total reward. It
concludes with a description of how a total reward approach to
reward management can be devel-oped.
•
28. Total reward defined
•
• As defined by Manus and Graham (2003), total reward ‘includes all
types of rewards
•
• – indirect as well as direct, and intrinsic as well as extrinsic’. Each
aspect of re-ward, namely base pay, contingent pay, employee benefits
and non-financial rewards, which include intrinsic rewards from the
work itself, are linked together and treated as an integrated and coherent
whole. Total reward combines the impact of the two major categories of
reward as defined below and illustrated in
29. transactional rewards
• – tangible rewards arising from transactions between the employer and
employees concerning pay and benefits; and
2) relational rewards –
intangible rewards concerned with learning and development and the work
experience.
•
•A total reward approach is holistic: reliance is not placed on one or two
reward mechanisms operating in isolation, and account is taken of every way
in which people can be rewarded and obtain satisfaction through their work.
The aim is to
31. Reward management for directors and
executives
• Principles of corporate governance relating to
remuneration of directors
• The key principles of corporate governance as it
affects the remuneration of directors, which emerged
from various reviews, namely the Cadbury, Greenbury
and Hampel Reports, are as follows:
32. ● Remuneration committees should consist exclusively of non-
executive directors. Their purpose is to provide an independent basis
for setting the salary levels and the rules covering incentives, share
options, benefit entitlements and contract provisions for executive
directors. Such committees are accountable to share-holders for the
decisions they take and the non-executive directors who sit on them
should have no personal financial interests at stake. They should be
constituted as sub-committees of company boards and boards should
elect both the chairman and the members.
•
33. ●Remuneration committees must provide a
remuneration package sufficient to attract, retain
and motivate directors but should avoid paying
more than is necessary. They should be sensitive
to wider issues, eg pay and employment
conditions elsewhere in the company.
•
34. ● Remuneration committees should take a robust line on the payment of
compen-sation where performance has been unsatisfactory.
•
● Performance-related elements should be designed to align the
interests of direc-tors and shareholders.
•
● Any new longer-term incentive arrangement should, preferably,
replace existing executive share option plans, or at least form part of
an integrated approach, which should be approved by shareholders.
•
35. ● The pension consequences and associated costs to the company of
increases in base salary should be considered.
•
● Notice or service contract periods should be set at, or reduced to, a
year or less. However, in some cases periods of up to two years may
be acceptable.
36. Reward management for sales staff
•Elements of directors’ and senior executives’
pay
•
•The main elements of directors’ and senior
executives’ pay are basic pay, bonus or incentive
schemes, share option and share ownership schemes.
•
37. Basic pay
• Basic pay
•
• Decisions on the base salary of directors and senior executives are
usually founded on largely subjective views about the market worth of
the individuals concerned. Remuneration on joining the company is
commonly settled by negotiation, often subject to the approval of a
remuneration committee. Reviews of base salaries are then undertaken
by reference to market movements and success as measured by
company performance. Decisions on base salary are important not only
in themselves but also because the level may influence decisions on the
pay of both senior and middle managers. Bonuses are expressed as a
percentage of base salary, share options may be allocated as a declared
multiple of basic pay and, commonly, pension will be a proportion of
final salary.
•
38. Bonus schemes
•
• Virtually all major employers in the UK (90 per cent according to recent
surveys by organizations such as Monks and Hay) provide annual incentive
(bonus) schemes for senior executives. Bonus schemes provide directors and
executives with cash sums based on the measures of company and,
frequently, individual performance.
•
•Typically, bonus payments are linked to achievement of profit and/or other
finan-cial targets and they are sometimes ‘capped’, ie a restriction is placed
on the maximum amount payable. There may also be elements related to
achieving specific goals and to individual performance.
39. Share option schemes
•
•
• Many companies have share option schemes that give directors and
executives the right to buy a block of shares on some future date at the
share price ruling when the option was granted. They are a form of
long-term incentive on the assumption that executives will be motivated
to perform more effectively if they can anticipate a substantial capital
gain when they sell their shares at a price above that prevailing when
they took up the option.
•
•
•
40. Executive restricted share schemes
•
• Under such schemes free shares are provisionally
awarded to participants. These
• shares do not belong to the executive until they are released or vested; hence they
are ‘restricted’. The number of shares actually released to the executive at the end of
a defined period (usually three or, less commonly, five years) will depend on perfor-
mance over that period against specific targets. Thereafter there may be a further
retention period when the shares must be held, although no further performance
conditions apply.
•
•
•
41. •There are no hard-and-fast rules governing how
sales representatives should be paid. It depends
on the type of company, the products or services
it offers its customers and the nature of the sales
process – how sales are organized and made. The
different methods are described in Table 42.2.
42. Paying manual workers
•The pay of manual workers takes the form of
time rates, also known as day rates, day work, flat
rates or hourly rates. Incentive payments by
means of payment-by-results schemes may be
made on top of a base rate.
•
43. Time rates
•
• These provide workers with a predetermined rate for the actual hours they work.
Time rates on their own are most commonly used when it is thought that it is
impossible or undesirable to use a payment-by-results system, for example in
maintenance work. From the viewpoint of employees, the advantage of time rates is
that their earnings are predictable and steady and they do not have to engage in
endless arguments with rate-fixers and supervisors about piece rate or time
allowances. The argument against them is that they do not provide a direct incentive
relating the reward to the effort or the results. Two ways of modifying the basic time
rate approach are to adopt high day rates, as described below, or measured day
work.
44. •
•
•Time rates may take the form of what are often called high
day rates. These are higher than the minimum time rate and
may contain a consolidated bonus rate element. The underlying
assumption is that higher base rates will encourage greater
effort without the problems created when operating an
incentive scheme. High day rates are usually above the local
market rates, to attract and retain workers.
45. Summary of payment and incentive arrangements for sales staff
Method Features Advantages Disadvantages When
appropriate
Salary only Straight salary, no Encourage No direct When
commission or customer service motivation representing the
bonus rather than high through money; company is more
pressure selling; may attract important than
deal with the under-achieving direct selling;
problem of staff people who are staff have little
who are working subsidized by influence on
in a new or high achievers; sales volume (they
unproductive increases fixed may simply be
sales territory; costs of sales ‘order takers’);
protects income because pay customer service
when sales costs are not is all-important
fluctuate for flexed with
reasons beyond sales results
the individual’s
control
46. Salary plus Basic salary plus Direct financial Relating pay to When it is
commission cash commission motivation is the volume or believed that the
calculated as a provided related value of sales is way to get more
percentage of to what sales too crude an sales is to link
sales volume or staff are there, approach and extra money to
value to do may result in results but a base
ie generate sales; staff going for salary is still
but they are not volume by needed to attract
entirely concentrating the many people
dependent on on the easier to who want to be
commission – sell products not assured of a
they are those generating reasonable basic
cushioned by high margins; salary which will
their base salary may encourage not fluctuate but
high-pressure who still aspire
selling as in to increase that
some financial salary by their
services firms in own efforts
the 1980s and
1990s
47. Salary plus Basic salary plus Provide financial Do not have a When: flexibility
bonus cash bonus motivation but clear line of in providing
based on targets or sight between rewards is
48. Method Features Advantages Disadvantages When
appropriate
achieving and objectives can effort and reward; important; it is
exceeding sales be flexed to may be complex felt that sales
targets or quotas ensure that to administer; staff need to be
and meeting particular sales sales motivated to
other selling goals are representative focus on aspects
objectives achieved, eg may find them of their work
high margin hard to other than simply
sales, customer understand and maximizing
service resent the use of sales volume
subjective
judgements on
performance
other than
sales
49. Commission Only Provide a direct Lead to high- When: sales
only commission financial pressure selling; performance
based on a incentive; attract may attract the depends mainly
percentage of high performing wrong sort of on selling ability
sales volume or sales staff; ensure people who are and can be
value is paid, that selling costs interested only measured by
there is no basic vary directly with in making sales immediate sales
salary sales; little direct and not results; staff are
supervision customer service; not involved in
required focus attention non-selling
on high volume activities;
rather than continuing
profitability relationships
with
customers are
relatively
unimportant
50. Additional Incentives, Utilize May be When it is
non-cash prizes, cars, powerful difficult to believed that
rewards recognition, non-financial administer; other methods of
opportunities motivators do not payment need to
to grow provide a be enhanced by
direct providing
incentive additional
motivators
51. Payment-by-result schemes
•
• Payment-by-result (PBR) schemes provide incentives to workers by relating their
pay or, more usually, part of their pay to the number of items they produce or the
time taken to do a certain amount of work. The main types of PBR or incentive
schemes for individuals are piece work, work measured schemes, measured day
work and perfor-mance-related pay. Team bonus schemes are an alternative to
individual PBR and plant-wide schemes can produce bonuses that are paid instead
of individual or team bonuses, or in addition to them. Each of these methods is
described in Table 42.3 together with an assessment of their advantages and
disadvantages for employers and employees, and when they are appropriate.
•
52. REWARD STRATERGY
• Strategic reward
• Reward strategy defined
• Why have a reward strategy?
• The structure of reward strategy
• The content of reward strategy
• Guiding principles
• Developing reward strategy
• Components of an effective reward strategy
• Reward strategy priorities
• Examples of reward strategies
• Implementing reward strategy
• Reward strategy and line management capability
53. DEFINED REWARD STRATERGY
• Reward strategy is a declaration of intent that defines what the organization wants to do in
the longer term to develop and implement reward policies, practices and
• processes that will further the achievement of its business goals and meet the needs of its
stakeholders.
•
• Reward strategy provides a sense of purpose and direction and a framework for developing
reward policies, practices and process. It is based on an understanding of the needs of the
organization and its employees and how they can best be satisfied. It is also concerned with
developing the values of the organization on how people should be rewarded and
formulating guiding principles that will ensure that these values are enacted.
•
• Reward strategy is underpinned by a reward philosophy that expresses what the
organization believes should be the basis upon which people are valued and rewarded.
Reward philosophies are often articulated as guiding principles.
•
•
54. WHY HAVE A REWARD STRATEGY?
• In the words of Brown (2001): ‘Reward strategy is ultimately a way of thinking that you can apply to any reward
issue arising in your organization, to see how you can create value from it.’ There are four arguments for developing
reward strategies:
•
1. You must have some idea where you are going, or how do you know how to get there, and how do you know that
you have arrived (if you ever do)?
•
1. Pay costs in most organizations are by far the largest item of expense – they can be 60 per cent and often much
more in labour-intensive organizations – so doesn’t it make sense to think about how they should be managed and
invested in the longer term?
•
1. There can be a positive relationship between rewards, in the broadest sense, and performance, so shouldn’t we
think about how we can strengthen that link?
•
1. As Cox and Purcell (1998) write: ‘The real benefit in reward strategies lies in complex linkages with other human
resource management policies and prac-tices.’ Isn’t this a good reason for developing a reward strategic framework
which indicates how reward processes will be associated with HR processes so that they are coherent and mutually
supportive?
•
•
55. THE STRUCTURE OF REWARD
STRATEGY
•
• Reward strategy should be based on a detailed analysis of the present
arrangements for reward, which would include a statement of their
strengths and weaknesses. This, as suggested by the CIPD (2004e),
could take the form of a ‘gap analysis’, which
• compares what is believed should be happening with what is
happening and indicates which ‘gaps’ need to be filled. A format for
the analysis is shown in Figure 43.1.
56. • A diagnosis should be made of the reasons for any gaps or problems so that deci-sions can be made on what needs to be
done to overcome them. It can then be struc-tured under the headings set out below:
•
1. A statement of intentions – the reward initiatives that it is proposed should be taken.
•
1. A rationale – the reasons why the proposals are being made. The rationale should make out the business case for the
proposals, indicate how they will meet busi-ness needs and set out the costs and the benefits. It should also refer to any
people issues that need to be addressed and how the strategy will deal with them.
•
1. A plan – how, when and by whom the reward initiatives will be implemented. The plan should indicate what steps will
need to be taken and should take account of resource constraints and the need for communications, involvement and
training. The priorities attached to each element of the strategy should be indicated and a timetable for implementation
should be drawn up. The plan should state who will be responsible for the development and implementation of the
strategy.
•
1. A definition of guiding principles – the values that it is believed should be adopted in formulating and implementing the
strategy.
•
57. THE CONTENT OF REWARD STRATEGY
•
• Reward strategy may be a broad-brush affair simply
indicating the general direction in which it is thought
reward management should go. Additionally or
alternatively, reward strategy may set out a list of
specific intentions dealing with particular aspects of
reward management.
•
58. Broad-brush reward strategy
•
• A broad-brush reward strategy may commit the organization to
the pursuit of a total rewards policy. The basic aim might be to
achieve an appropriate balance between financial and non-financial
rewards. A further aim could be to use other approaches to the
development of the employment relationship and the work
environment, which will enhance commitment and engagement
and provide more opportunities for the contribution of people to be
valued and recognized.
60. •
• introducing a more integrated approach to reward management – encouraging continuous personal
development and spelling out career opportunities; developing a more flexible approach to reward that includes
the reduction of artificial barriers as a result of over-emphasis on grading and promotion; generally rewarding
people according to their contribution;
•
• supporting the development of a performance culture and building levels of competence; and
•
• clarifying what behaviours will be rewarded and why.
•
•
• Specific reward initiatives
•
• The selection of reward initiatives and the priorities attached to them will be based on an analysis of the
present circumstances of the organization and an assessment of the needs of the business and its employees. The
following are examples of possible specific reward initiatives, one or more of which might feature in a reward
strategy:
•
•
61. ● the replacement of present methods of contingent pay with a pay for contribution scheme;
•
● the introduction of a new grade and pay structure, eg a broad-graded or career family structure;
•
● the replacement of an existing decayed job evaluation scheme with a computer-ized scheme that more
clearly reflects organizational values;
•
● the improvement of performance management processes so that they provide better support for the
development of a performance culture and more clearly identify development needs;
•
● the introduction of a formal recognition scheme;
•
● the development of a flexible benefits system;
•
● the conduct of equal pay reviews with the objective of ensuring that work of equal value is paid equally;
•
● communication programmes designed to inform everyone of the reward policies and practices of the
organization;
•
● training, coaching and guidance programmes designed to increase line manage-ment capability (see also the
last section of this chapter).
62. GUIDING PRINCIPLES
• Guiding principles define the approach an organization takes to dealing with reward. They are the basis
for reward policies and provide guidelines for the actions contained in the reward strategy. They express
the reward philosophy of the organi-tion – its values and beliefs about how people should be rewarded.
•
• Members of the organization should be involved in the definition of guiding principles that can then be
communicated to everyone to increase understanding of what underpins reward policies and practices.
However, employees will suspend their judgement of the principles until they experience how they are
applied. What matters to them are not the philosophies themselves but the pay practices emanating from
them and the messages about the employment ‘deal’ that they get as a consequence. It is the reality that is
important, not the rhetoric.
•
• Reward guiding principles may refer to concerns such as:
•
● developing reward policies and practices that support the achievement of busi-ness goals;
•
63. ● providing rewards that attract, retain and motivate staff and help to develop a high
performance culture;
•
● maintaining competitive rates of pay;
•
● rewarding people according to their contribution;
•
● recognizing the value of all staff who are making an effective contribution, not just the
exceptional performers;
•
● allowing a reasonable degree of flexibility in the operation of reward processes and in
the choice of benefits by employees;
•
● devolving more responsibility for reward decisions to line managers.
•
• An example of a statement of reward philosophy and guiding principles is given in Figure
43.2.
•
64. DEVELOPING REWARD STRATEGY
•
• The formulation of reward strategy can be described as a
process for developing and defining a sense of direction. The
main phases are:
•
1.The diagnosis phase, when reward goals are agreed, current
policies and practices assessed against them, options for
improvement considered and any changes agreed.
65. Reward philosophy Principles
●We will provide an innovative reward package ● Innovative and differentiated policies and
that is valued by our staff and communicated benefits.
brilliantly to reinforce the benefits of working
for B&Q plc.
●Reward investment will be linked to company ● Basic salaries will be competitive.
performance so that staff share in the success ● Total compensation will be upper quartile.
they create and, by going the extra mile, ● We share the success of B&Q with all
receive above average reward compared to employees.
local competitors. ● Increase variable pay as a percentage of
overall to drive company performance.
● Pay for performance.
●Performance objectives must have line of
sight for individuals/team.
●All parts of the total reward investment will ● Non-cash recognition is a powerful driver of
add value to the business and reinforce our business performance.
core purpose, goals and values. ● Pay can grow without promotion.
●Rewards are flexible around individual
aspirations.
●We will not discriminate on anything other
than performance.
66. detailed design phase
2. The, when improvements and changes are detailed and any changes tested (pilot testing is important).
•
2. The final testing and preparation phase.
•
2. The implementation phase, followed by ongoing review and modification.
•
• A logical step-by-step model for doing this is illustrated in Figure 43.3. This incorpo-rates ample provision
for consultation, involvement and communication with stake-holders, who include senior managers as the
ultimate decision makers as well as employees and line managers.
•
• In practice, however, the formulation of reward strategy is seldom as logical and linear a process as this. As
explained in Chapter 7, strategies evolve. Reward strate-gists have to respond to changes in organizational
requirements, which are happening all the time. They need to track emerging trends in reward management and
may modify their views accordingly, as long as they do not leap too hastily on the latest bandwagon.
67. COMPONENTS OF AN EFFECTIVE REWARD STRATEGY
Brown (2001) has suggested that effective reward strategies have three components:
1. They have to have clearly defined goals and a well-defined link to
business objectives.
•
1. There have to be well-designed pay and reward programmes, tailored
to the needs of the organization and its people, and consistent and
integrated with one another.
•
1. Perhaps most important and most neglected, there needs to be
effective and supportive HR and reward processes in place.
68. REWARD STRATEGY PRIORITIES
•
• The CIPD (2005d) survey into reward policy and practice
covering 477 organizations with 1.5 million employees established
that 45 per cent of employers had a formal reward strategy that was
aligned to the business and human resource strategies of the
organization. The top priority, , is supporting the goals of the
organization, followed by rewarding, recruiting and retaining high
performers.
•
69. EXAMPLES OF REWARD STRATEGIES
•
• The source of the following examples of reward strategies is e-reward (2004a).
•
• AEGON UK
•
• A good example of the development of a reward strategy is provided by AEGON UK, the insurance group with
4,000 employees. Like many companies, AEGON UK’s pay systems and supporting processes such as job evaluation
and performance appraisal used to stand alone, apart from other HR processes. The company has adopted a more
holistic approach to the development of its new reward system – which it calls the Human Resources Integrated
Approach – so that from every angle staff can look at the elements of reward, pay management, performance
management and career development and observe that they are consistent and linked. The stated objective of this
programme is ‘to develop a set of HR processes which are integrated with each other and with the business objectives’.
In other words, AEGON UK aims to ensure that the processes of recruiting, retaining and motivating people, as well as
measuring their performance, are in line with what the business is trying to achieve. The Human Resources Integrated
Approach is underpinned by a competency framework. The established competencies form the basis of the revised HR
processes:
•
•
70. ● Recruitment: competency based with multi-assessment processes as the
basic approach.
•
● Reward: market driven with overall performance dictating rate of progress
of salaries within broad bands rather then existing grades.
•
● Performance management: not linked to pay, concentrated on personal
develop-ment, objective setting and competency development.
•
● Training and development: targeted on key competencies and emphasizing
self-development.
•
71. Norwich Union Insurance
•
• Progression, Performance and Pay is the name given to Norwich Union
Insurance’s new total reward strategy. It comprises four main elements:
•
1. Reward – salary and benefits, variable pay, all-employee share option plan
and incentive awards.
•
1. Career framework – meaningful job content and career opportunities.
•
1. Performance – challenging work; recognition and brand supporting
behaviours.
•
1. Development – learning opportunities and personal development.
72. • The framework was accompanied by a commitment from
senior management:
•
● to recognize our best people through career opportunities and
reward packages;
•
● to develop all staff to their full potential;
● to widen career opportunities for all;
•
● to provide managers with the means to recognize and reward
performance locally.
•
73. • B&Q
•
• Will Astill, Reward Manager of B&Q, a retail chain with 25,000 employees, which completed a strategic
reward review in 2003, explained to e-reward that:
•
• An overriding theme running through our review was on the desirability of adopting a strategic
approach. It wasn’t a case of ‘let’s follow the best practice’, nor were we lured into adopting the
latest fads and fashions. Applying a bespoke system – taking what someone has done before
and adapting it to your organization – will not push you ahead of rivals. Our emphasis throughout
the two-year process was on what’s right for the busi-ness.
74. IMPLEMENTING REWARD STRATEGY
•
•Formulation is easy, implementation is hard. In
the UK more attention is now being given to how
organizations can make things happen. It is
recognized that a pragmatic
75. approach is required
• – what’s good is what works. It is also appreciated that imple-
mentation presents a massive change management challenge. The
practical advice on managing changes in reward systems given by
Paul Craven, Compensation Director, R&D, GlaxoSmithKline was:
‘Don’t expect people to change overnight and don’t try to force
change. It is better to reinforce desirable behaviour than to attempt
to enforce a particular way of doing things.’ The advice given by
Nicki Denby, Performance and Reward Director, Diageo was to:
•
76. ● keep it simple, but simple isn’t easy;
•
● ensure that the HR department is not developing policies and practices on
its own, which are then tagged as just another HR initiative rather than
something which is owned by the organization as a whole;
•
● not only explain the planned changes, the rationale behind them, and how
they affect the workforce, but also communicate details of who was
involved in the development process so that unnecessary fears are allayed.
•
77. • Will Astill of B&Q had three pieces of advice on implementation:
•
1. the value of in-depth employee consultation should never be
undervalued;
•
1. no initiative should be implemented without looking at the return on
invest-ment; and
•
1. evaluate the effectiveness of programmes and take action as required.
78. REWARD STRATEGY AND LINE
MANAGEMENT CAPABILITY
•
• The trend is to devolve more responsibility for managing reward to line managers. Some
will have the ability to respond to the challenge and opportunity; others will be incapable of
carrying out this responsibility without close guidance from HR; some may never be able to
cope. Managers may not always do what HR expects them to do and if compelled to, they
may be half-hearted about it. This puts a tremendous onus on HR and reward specialists to
develop line management capability, to initiate processes that can readily be implemented
by line managers, to promote under-standing by communicating what is happening, why it
is happening and how it will affect everyone, to provide guidance and help where required
and to provide formal training as necessary.