Reward Management
Part A
Introduction
Reward management relates pay and other benefits to objectives of the company and the individual. Reward Management is of fundamental importance in relation to good management. Without a solid approach towards reward management, an organisation is likely to have an unsatisfied or unmotivated workforce. It covers both strategy and practice in regards to pay systems. It has to support the achievement of the business strategy.
The overall aim of reward management is that employees should be rewarded for the value they create.
Individual
Pay is important to the individual worker, as it is the foremost reason why most go to work. According to Milcovich, Newman and Milcovich (2001, p6): “employees may see {reward} as a return in exchange between their employer and themselves, as an entitlement for being an employee of the company, or … for a job well done” (original emphases)
An organisation’s reward policy has to take account of individual needs and what influences employee satisfaction with their needs.
There are many different ways to reward staff for their performance, but it is essential that the members of staff value the rewards that are on offer. They also have to believe that, in order to obtain a better reward, they have to put in a better performance.
Many organisations use contingent pay, pay that is related to “performance, competence, skill or service” (Armstrong, 2003)
This results in many different forms of reward for the individual. It can be a cash lump sum, which leads to incentives such as bonus schemes, profit sharing, and share ownership. Then there is a consolidated increase to the basic rate of pay. This can be an incentive which aims to motivate the employee to achieve their objective and improve their performance, or it can be a reward, which provides recognition to the employee for their achievement.
But the organisation has to decide which method of contingency pay to use. It can use performance,
Introduction
Reward management relates pay and other benefits to objectives of the company and the individual. Reward Management is of fundamental importance in relation to good management. Without a solid approach towards reward management, an organisation is likely to have an unsatisfied or unmotivated workforce. It covers both strategy and practice in regards to pay systems. It has to support the achievement of the business strategy.
The overall aim of reward management is that employees should be rewarded for the value they create.
Individual
Pay is important to the individual worker, as it is the foremost reason why most go to work. According to Milcovich, Newman and Milcovich (2001, p6): “employees may see {reward} as a return in exchange between their employer and themselves, as an entitlement for being an employee of the company, or … for a job well done” (original emphases)
An organisation’s reward policy has to take account of individual needs and what influences employee satisfaction with their needs.
There are many different ways to reward staff for their performance, but it is essential that the members of staff value the rewards that are on offer. They also have to believe that, in order to obtain a better reward, they have to put in a better performance.
Many organisations use contingent pay, pay that is related to “performance, competence, skill or service” (Armstrong, 2003)
This results in many different forms of reward for the individual. It can be a cash lump sum, which leads to incentives such as bonus schemes, profit sharing, and share ownership. Then there is a consolidated increase to the basic rate of pay. This can be an incentive which aims to motivate the employee to achieve their objective and improve their performance, or it can be a reward, which provides recognition to the employee for their achievement.
But the organisation has to decide which method of contingency pay to use. It can use performance,
References: Books: Armstrong M, & Murlis H: Reward Management: A Handbook of Remuneration Strategy and Practice (1998) 4th Ed :Kogan Page Armstrong M: A Handbook of Human Resource Management Practice (2003) 9th Ed: Kogan Page Price A, (2004) Human Resource Management in a Business Context, (2nd Edition): Thompson pg526 Bibliography Holbeche, L: Aligning Human Resources and Business Strategy, (1999): Butterworth-Heinemann Storey, J: Human Resource Management, A Critical Text (1995): Routledge Harrison, R: Human resource management: issues and strategies (1993): Addison-Wesley, Sparrow, P: European human resource management in transition (1994): Prentice Hall