Reward Systems

A Performance-Based Pay system is an increasingly popular compensation method used by organizations to increase productivity. A goal for all companies is to try and remain competitive and control costs, this is a reason for performance-based pay systems becoming more popular. This type of system attempts to link compensation to performance. (Gena Richter, 2002) These systems are directly tied to organization or individual performance and are most effective when based on objective measures of quantity or quality of performance. If we wish to have a direct impact on work motivation, it must be linked directly to the performance of desired behaviors. In order for to put this type of system into place, performance evaluations must be conducted regularly , as well as training and development for those with performance that isn't quite up to par. These additional resources will be necessary for our organization if we implement a performance based pay system. (William B. Bernathy, Ph. D., 2004)

A well-articulated compensation philosophy drives organizational success by aligning pay and other rewards with business strategy. It provides the foundation for plan design and administration and anchors current and future plans to the company's culture and values (Kaplan, 2006, p.32). Recognizing and rewarding achievement is the cornerstone of the company A’s compensation philosophy. The mission of the company is to attract, select, place and promote all individuals based on their qualifications. The company believes that performance-based compensation helps attract, develop and retain talented professionals. In addition to base pay which based upon local market conditions and targeted to be above market, the company provides the following types of potential compensation to reward performance:

Pay and reward systems exist in the form of pay, bonuses and benefits, financial and non-financial and designed to improve performance, increase motivation, staff retention and increase profitability. Appreciation and gratitude is widely received as reward and the opportunity for training and development for career progression.

Pay and Rewards – pay and rewards attract, motivate and retain staff. The employment contract which lists rewards, whether it be pay, bonus or benefits, can remove animosity amongst employees and employers. However, recent research reveals that employees are no longer motivated by a financial reward alone, but

The key components to developing effective Reward Strategy is to ensure that there are clearly defined goals to meet business objectives, that the reward programme meets the needs of both the organisation and its employees, and to ensure that this is then supported by effective HR policies. In order to ensure these criteria are met there are a number of factors which influence how reward strategy is developed which include both internal factors within the organisation itself, as well as external factors outside the organisation.

As the labor force becomes more highly developed and demanding, rivalry between organizations for talented employees is drastically increasing. It is extremely important that organizations make their company more enticing as an incomparable career opportunity. Instituting a total rewards system into an organization can do much to help it invite the paramount talent available and significantly condense turnover. The longevity of an organization’s employees is contributed to its total reward system. According to Heneman (2007), total rewards is defined as all of the tools, whether intrinsic or extrinsic, offered to the employer that may be employed to attract, motivate and retain employees. This could

Various conflicts in the RM system can affect the benefits that can be obtained. It has been argued that

The Hay model is an essential tool to consider when implementing a total rewards scheme, as in considering aspects of financial and non-financial pay, this provides a differentiated reward package making the organisation attractive to those with the desirable skills (Korn Ferry, 2016). Similarly, this can lead to the development of a total rewards programme which is cost effective whilst meeting needs of employees, thus retaining talented employees without negatively impacting the cash flows of the organisation, as to be reflective reward programmes need to consider organisational needs, particularly within tough financial periods (Armstrong et al., 2010). The Hay model provides a more holistic approach by considering the needs of the employer, such as improving performance, but also attends to the individualistic needs of the employee, by ensuring employees remain motivated and engaged (Korn Ferry, 2016). The Hay model is thus the best practice model for providing a bigger picture on employee engagement.

Reward and recognition programs must connect the needs and expectations of the workforce with the company’s overall goals and strategies. A program that reinforces important company values and goals will encourage employees to act in line with such goals and emphasize the importance of achieving these goals. Alternatively, rewards which do not connect with organizational goals may convey a misleading message and encourage employees to act in a manner that does not facilitate the

The purpose of this paper is to provide an analytical overview of compensation strategies within organizations. First, an analysis of the impact of various compensation methods and benefit programs on employees and organizations will be discussed followed by how salary and benefit administration strategies relate to organizational culture and performance. What are compensation and benefit strategies? Compensation and benefit strategies are ways that organizations can use pay and benefits to recognize and reward employees’ contributions to the organization’s success. (Noe, Hollenbeck, Gerhart, and Wright, 2004) Some examples are wage and salary administration, incentive pay, insurance, vacation leave

Organization reward and motivation Introduction Motivation Definition Motivating behaviors Individual characteristics and motivation Money as motivation Pay and motivation Pay administration Pricing job Wage and salary surveys Pay range 10.Evaluating the results of pay for performance Reward Definition Equity in reward Compensation as reward Objectives of compensation management Basic aspects of compensation Challenge affect compensation Merit of reward Relationship between reward and motivation Conclusion Reference Money as motivator The issue on money as a motivator first needs clear understanding on

They are far more than just bonus plans and stock options. Reward systems mostly include various awards, recognition, promotions, reassignment, non-monetary bonuses linked to the performance of the employees. It includes a variety of monetary as well as non-monetary rewards (Deeprose, 2007). Rewards are important motivators. Their effectiveness depends upon three factors: drives, preference value and satisfying value of the goal objects. Financial incentives are linked more effectively with basic motivation or deficiency needs (which are necessary for survival). Non-financial incentives are linked more closely with higher motivation or becoming needs (self actualization needs) (Tyson & York, 2000).

Being rewarded and recognised for their work or contribution is what keeps an employee motivated to work towards achieving the organisational as well as personal goals. When the employees is motivated by rewards, they will have job satisfaction consequently increasing the productivity of the organisation. It necessitates the need of managers to pay more attention in understanding their employees and come up with suitable types of reward systems for the organisation so that the employees are intrinsically and extrinsically motivated all the time. The hypotheses that I put forward here is to support this statement that effective reward management is critical to

Professor Edgar Schein of MIT’s Sloan School of Management emphasizes a need for behavioral change to take place at all levels of an organization if it is to be successful in the creation of a strong organizational culture. According to Professor Schein it is important to have more than an empowering process in place. Organizations need to have everyone at all levels of the organization actively working together to establish behaviors that lead to an environment in which equal partnerships and mutually helping relationships are the order of business (Kleiner & vonPost, 2011).

The Term, Compensation covers all employee earnings and rewards employees receive as payment for work completed. Armstrong (2006) define rewards management system as the formulation and implementation of strategies and policies, with the goal of rewarding employees fairly, equitably and consistently in accordance with their value to the organization and thus help the organization to achieve its strategic goals.