Motivating Employee Through Reward
Establish a pay structure
➢ Conduct Job Analysis
➢ Conduct Job Evaluation
➢ Determine the bases of your pay scale
Rewarding Individual Employees Through Variable-Pay Programs
➢ Piece Rate System
➢ Merit Base System
➢ Bonuses
➢ Skill Base Pay
➢ Profit Sharing Plan
➢ Gainsharing
➢ Employee Stock Ownership Plan
Developing a Flexible Benefit Package
➢ Modular Plan
➢ Core-Plus Option
➢ Flexible Spending Accounts
Employee Recognition Program
➢ Intrinsic Reward
➢ Extrinsic Reward
Motivating Employee Through Reward
Establish a pay structure
Developing a pay structure involves evaluating jobs and establishing associated salary ranges and grades
based on market data and the company’s compensation policy. The relative value of different roles is
based on factors including responsibility, experience and education, key skills, effort/impact, and working
conditions. A well-designed and transparent pay structure should help an organization attract and retain
talent be perceived as fair and equitable.
The steps involved in establish a pay structure:
1. Conduct a job analysis. A job analysis involves identifying the essential tasks and
responsibilities of a job, including knowledge skills and abilities.
2. Conduct a job evaluation. Determine the relevance and value of the job to the
organization. This involves comparing or evaluating roles based on criteria such as the
required education and experience, skills, effort, level of responsibility or authority and
potential revenue impact. In order to avoid introducing bias, the role should be evaluated
based on the job criteria, not a specific employee in that role.
3. Determine the basis for your pay structure. Use one or both of the following methods
to do so:
• Market Pricing (or benchmarking). Setting a salary range based on market
data. Note that job titles and descriptions aren’t necessarily consistent across
companies and industries. When conducting research, consider job details or
descriptions to select appropriate salary benchmarks.
• Pay grades. Establishing salary ranges for job groups. Pay grades are salary
ranges established for groups of jobs with a similar value to the organization.
For example, multiple sales roles may be included in the same grade if they
require the same education, experience, skills and responsibility. In practice,
then, the salaries of every sales person in the same grade would fall between
the minimum and maximum of the range.
Rewarding Individual Employees Through Variable-Pay Programs
➢ Piece Rate System
Piece rate refers to a wage determination system in which the workers get paid by result like each unit of
production at a fixed rate.
➢ Merit Base System
Merit pay is defined as an increase in pay based on the criteria set by an employer or organization. It is
also known as pay-for-performance wherein a company offers incentives to higher-performing
employees on a regular basis. The purpose of merit pay entails providing employees raises in their base
salary or bonuses in exchange for their performance. It is offered to employees who perform their tasks
well and meet easily measurable criteria.
➢ Bonuses
A bonus is a financial compensation that is above and beyond the normal payment expectations of its
recipient. Companies may award bonuses to both entry-level employees and to senior-level executives.
Bonuses may be dangled (Hanging) as incentives to prospective employees and they can be given to
current employees to reward performance and increase employee retention.
➢ Skill Base Pay
Skill-based pay is a model of compensation in which a person's skills and experience determine their
salary. For example, under the skill-based pay model, a team lead with several decades of management
experience may earn higher compensation than a less-experienced candidate applying for the same
position.
➢ Profit Sharing Plan
A profit-sharing plan is a way for employers to provide employees with a portion of the business's profits,
based on quarterly or annual earnings. Contributions are given out on a regular basis, or are put into a
fund that is made available at a later time, such as when the employee retires.
➢ Gainsharing
Gainsharing aims to increase company profitability by seeking higher levels of participation
and employee performance. Employees receive a financial share of the profit of the company gained by
a performance improvement they helped design. Gainsharing aims to eliminate waste in processes and
motivate employees to work hard. It’s a group-based initiative in which employees work together to improve
performance, which results in financial gains for the organization.
➢ Employee Stock Ownership Plan
An employee stock ownership plan (ESOP) is an employee benefit plan that gives workers ownership
interest in the company in the form of shares of stock.
Developing a Flexible Benefit Package
➢ Modular Plan
➢ Core-Plus Option
➢ Flexible Spending Accounts
