Professional Documents
Culture Documents
IN
PRACTICE
Reward Management
Outline
1. Reward 2. The reward management system
3. Total reward
4. Rewarding special groups 5. Managing reward systems 6. Summary
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1. Reward
Reward refers to all of the monetary, non-monetary and psychological payments that an organization provides for its employees in exchange for the work they perform.
Bratton & Gold (2007: 358)
The design and management of reward systems constitute one of the most difficult HRM tasks for the general manager.
Beer et al. (1984: 113)
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Extrinsic Intrinsic
Reward system
Pay system
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Reward system processes and activities Reward strategy Reward policies Total reward
Base pay Contingent pay (performance pay, variable pay) Employee benefits (indirect pay) Non-financial rewards Individual Team organizational
Type of reward
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3. Total reward
Figure 1: Types of employee reward Source: Bratton & Gold (2007: 373)
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3. Total reward
3. Total reward
Extrinsic
PAY/REWARD
Base pay Contribution pay Shares/profit sharing Recognition LEARNING AND DEVELOPMENT Workplace learning Training Performance management Career development Pensions
BENEFITS
Health care Perks Flexible benefits WORK ENVIRONMENT Core values Leadership Employee voice Job/work design (autonomy)
Figure 3: Model of total reward (Towers Watson) Source: Armstrong (2011: 745)
Intrinsic
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Almina Bei HRM in Practice Winter Term 2011 Reward Management (6 December 2011)
3. Total reward
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Figure 4: Components of executive compensation packages Source: Mathis & Jackson (2011: 415)
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Sales representatives
Salary only Salary + commission Salary + bonus Commission only Additional non-cash rewards
Manual workers
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Information about the tasks, responsibilities and the context of a specific job
Figure 5: The point system matrix Source: Bratton & Gold (2007: 385)
Almina Bei HRM in Practice Winter Term 2011 Reward Management (6 December 2011)
Controlling reward
Reward forecasting
Forecast future payroll costs Impact of pay reviews and contingent pay awards Pay review budgets set out the increase in payroll costs for either general or individual pay Based on the number of people employed and their present and forecast rates of pay Maintain control over payroll costs
Reward budgets
Compa-ratio analysis
Measures the relationship between actual and policy rates (midpoint or reference point) of pay as a percentage
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6. Summary
A Reward package is typically comprised of three key elements: financial reward, non-financial reward and perks or benefits An organization's reward strategy outlines the philosophy, principles and underpinning values that inform its reward system and the types of employee behaviors it wishes to promote Total reward includes extrinsic and intrinsic reward, as well as individual and organizational reward systems Groups like directors, sales representatives and manual workers have special reward systems The right pay can be determined through job analysis, job evaluation processes and market pay data It is necessary to consider the strategic, labor market, political, social, economic and legislative factors that act to shape the viability and acceptability of reward
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Bibliography
Basic Literature
Bratton , J. & Gold J. (2007). Human Resource Management. Theory and Practice. 4 th ed. London: Palgrave Macmillan.
Supplemental Literature
Armstrong, M. (2009). Armstrongs Handbook of Human Resource Management. 11th ed. London: Kogan. DeCenzo, D.A. & Robbins, S.P. (2010). Human Resource Management. 10th ed. Hoboken: Wiley. Harzing, A. & Pinnington, A.H. (Eds.) (2011). International Human Resource Management. 3rd ed. London: Sage. Mathis, R. L. & Jackson, J. H. (2011). Human Resource Management. 13th ed. Mason (USA): SouthWestern, Cengage Learning. Nieto, M.L. (2006). An Introduction to Human Resource Management. An Integrated Approach. London: Palgrave Macmillan. Wilton, N. (2011). An Introduction to Human Resource Management. London: Sage. York, K.M. (2010). Applied Human Resource Management. London: Sage.
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