Reward Management
Introduction
Armstrong (2007) reward employees in a reasonable and consistent manner based on employees value to the organization to further achieve the organization's strategic goals. According to (Manus et al, 2003), total rewards include all types of rewards-indirect, direct, internal and external. Every aspect of the reward, namely the basic salary or contingent compensation, employee benefits and non-financial rewards are linked together. Ex INGO’s pay 13th month salary as bonus. According to Thompson, (2002) career opportunities, learning and development, the internal motivation provided by the work itself and the quality of work life provided by the organization.
The significance of total reward
Rewards can create a work experience that meets the needs of employees by formulating agreements to solve a wide range of problems, and by rewarding them with the most effective ways for resolving employees’ changing values, and encourages them to make more efforts (O’Neal,1998). Pfeffer (1998b) stated that creating an interesting, challenging and empowering work environment that enables individuals to use their abilities to do meaningful work and show appreciation for them may be a more positive way to enhance motivation and performance although creating such an environment may be much more difficult than simply turning the reward lever, it takes more time.
The Benefits of Reward Management
Greater impact: rewards and recognition for outstanding work performance can affect employee morale and job satisfaction. According to social communication theory, employees are obliged to respond with a higher level of participation after receiving rewards and recognition from the organization (Swapna, 2019). Ex: AIA Insurance, work with the best, employee will work alongside respected industry leaders and managers who will guide and develop the employee on shared path to success.
Enhancing the employment relationship : Employment relationships established through complete reward methods will maximize the use of relationships and transactional rewards, therefore will be more attractive to individuals (Armstrong, 2009). Ex: Google allows employees to set quarterly goals. Goals must be difficult and measurable. These goals set by employees have produced Google tools. These include the new search engine and Gmail (as searchable email). Employees put forward some ideas, these ideas have changed the face of Google (swipeclock.com, 2020)
Flexibility to meet individual needs: as pointed out by (Milkovich et al,1998) relationship rewards can make individuals more firmly secured to the organization, because they can answer those special personal needs. Ex: Dell formalized its flexibility policy to provide a support structure for all employees — saving $12 million annually in the process , no surprise that Dell, a major computer company, embraced technology wholeheartedly when it began building its flexible work culture in 2009 (business.linkedin.com).
Talent management: The talent life cycle is the way most people interact with organizations. Talent management is the management method of talent life cycle. The life cycle management level will determine the level of effectiveness of these talent investments (Schiemann, 2013).
Figure 1.1 Talent lifecycle.
Source W.A. Schiemann /Journal of World Business (2013)
The reward system
The main components are financial and non-financial rewards, which combine to form a total reward system. Performance management plays an important role in supporting non-financial rewards and can be used to inform performance or payment decisions. All these components collectively affect the performance level (Armstrong. 2014).
Figure :1:2
Source
: (Armstrong , 2014)
List of reference
HUMAN RESOURCE MANAGEMENT PRACTICEArmstrong, M., 2007. A Handbook Of Employee Reward Management And Practice. 2nd ed. London: Kogan Page.
Armstrong, M., 2009. Armstrong's Handbook Of Reward Management Practice. London: Kogan Page.
Bloom, M. and Milkovich, G.T., 1998. Relationships among risk, incentive pay, and commitment. Journal of Vocational Behavior,
Manus, T M and Graham, M D (2003) Creating a Total Rewards Strategy, American Management Association, New York
O’Neal, S (1998) The phenomenon of total rewards, ACA Journal, 7
Pfeffer, J (1998b) Six dangerous myths about pay, Harvard Business Review, May/June
Schiemann, W.A., 2014. From talent management to talent optimization. Journal of World Business,
Swapna, P., 2019. Reward and Recognition Impact on Job Satisfaction and Performance in retail sector: an Empirical Study from Andhra and Telangana. JOURNAL OF MECHANICS OF CONTINUA AND MATHEMATICAL SCIENCES, 14(5).
Thompson, P (2002) Total Reward, CIPD, London
Agreed.A motivated workforce can be a significant factor in organizational success. When employees are motivated to work at higher levels of productivity, the organization as a whole runs more efficiently and is more effective at reaching its goals. This is in contrast to an unmotivated workforce, who can negatively disrupt an organization and distract employees from their work. For this reason, it is imperative that managers understand the power of reward systems and how they are used to influence employee behavior. Rewards are positive outcomes that are earned as a result of an employee's performance. These rewards are aligned with organizational goals. When an employee helps an organization in the achievement of one of its goals, a reward often follows. There are two general types of rewards that motivate people: intrinsic and extrinsic (Chandra, Thripathi, Chaubey 2018)
ReplyDeleteOverall objective is to reward people fairly, equitably and consistently in accordance with their value to the organization in order to further the achievement of the organization’s strategic goals (Armstrong, 2007).
ReplyDeleteDear Nadee Weerasuriya , whilst agreeing on your discussion about benefits of reward management , further , Searle (1990) stated that rewards can be categorized into two broad areas, namely extrinsic rewards and intrinsic rewards.
ReplyDeleteExtrinsic rewards are usually financial or tangible rewards which include pay, promotion, interpersonal rewards, bonuses and benefits (Zaman, 2011).
Stoner and Freeman (1992) defined intrinsic rewards as the psychological reward that is experienced directly by an employee.
Hi Manjula according to Armstrong, (2014) Total rewards are the combination of financial and non-financial rewards made available to employees. The various aspects of reward, 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.
ReplyDeleteAgree Nadee. Further, according to Armstrong and Murlis (2004 p3), reward management is the process of formulating and implementation of strategies and policies that aim to reward people fairly , equitably and constantly in accordance with their value to the organization and also deals with the design, implementation and maintain of reward processes and practices that are geared towards the improvement of organizational , team and individual performance.
ReplyDeleteHi Sathyapriya ,according to Armstrong , (2014) reward management is concerned with the strategies, policies and practices required to ensure that the value of people and the contribution they make to achieving organizational, departmental and team goals is recognized and rewarded. It is about the design, implementation and maintenance of reward systems that aim to satisfy the needs of both the organization and its stakeholders and to operate fairly, equitably and consistently.
ReplyDeleteAgreed with your explanation and in addition of that in reward management compensation for good work may come in various forms. It could be money added benefits to your employees’ salary increment or a paid day off or an opportunity for growth or travel within the company. Having an effective system that compensates workers can contribute to their happiness. It also keeps them loyal to your company while at the same time making them eager to move up the internal ladder. That’s why the companies creating employment contracts, as well as a section on pay and benefits, they also included a section on the company’s rewards policy and procedures ( Metzler ,2006).
ReplyDeleteBimal I agreed with what you have stated according to Armstrong (2014) Financial rewards consist of job-based pay, which provides pay related to the value of the job, and personbased pay, which provides rewards that recognize the individual’s contribution. They also include employee benefits and pensions and financial recognition schemes. Non-financial rewards focus on the needs people have to varying degrees for recognition, achievement, personal growth and acceptable working conditions
ReplyDelete