Reward
Strategies
Rewards
Saying ‘thank you’ for a job well done,
and thereby motivating the recipient to
continue to do those things that benefit the
organization
Rewards
Extrinsic Intrinsic
•Responsibility
Non-Financial •Interesting work
Financial
•Personal growth
•Diversity of
activities
1: EXTRINSIC FINANCIAL
REWARDS
• Wages
• Bonuses
• Profit-sharing
• Vacations
• Sick leave
• Purchase discounts
2. EXTRINSIC NON-FINANCIAL
REWARDS
• Office furnishings
• Lunch hours
• Parking spaces
• Work assignments,
locations
• Business cards
• Secretary
• Titles
REWARD
STRATEGY
LAWLER’S MODEL OF REWARD
STRATEGY
RESOURCES
INDIVIDUAL &
ORGANIZATION REWARD
CORPORATE ORGANIZATIONAL
DESIGN SYSTEM BEHAVIUOR
GOALS & &MANAGEMENT
OBJECTIVES STYLE
ENVIRONMENT
Reward system – An important means of communication
RELATIONSHIP BETWEEN HR & REWARD
PRACTICES & BUSINESS PERFORMANCE
JOB
SATISFACTION
EMPLOYEE BUSINESS
INVOLVEMENT / PERFORMANCE
COMMUNICATION
HR PRACTICES
DYNAMIC REWARD STRATEGIES
RESPONSIBLE, DYNAMIC AND DYNAMIC REWARD
FLEXIBLE HR STRATEGIES
PROFESSIONALS
ALIGNING REWARD SYSTEM WITH
STRATEGY
BUSINESS
STRATEGY
PEOPLE
REQUIREMENT
PREVIOUS
REWARD
METHODS
CHANGES TO
REWARDS
EFFECTIVE REWARD STRATEGY
EFFECTIVE
REWARD
STRATEGY
WELL WELL DESIGNED PAY EFFECTIVE &
DEFINED & REWARD SUPPORTIVE
GOALS & PROGRAMMES HR
OBJECTIVES ACCORDING TO THE
NEEDS
BALANCED, PRACTICAL REWARD
STRATEGY MODEL
EMPLOYER’S EMPLOYEE’S
PERSPECTIVE PERSPECTIVE
ORGANIZATION COMPETENCIES
CAPABILITIES
BUSINESS EMPLOYMENT
DEAL DEMOGRAPHICS
STRATEGY
ORGANIZATION
STRUCTURE VALUES
TOTAL REWARD STRATEGY
PAY BENEFITS
LEARNING & WORK
DEVELOPMENT ENVIRONMENT
IMPOROVED BUSINESS RESULTS & ALIGNED EMPLOYEE BEHAVIOURS
CONFLICTS
• Focus on individual performance in
teams
• Lack of customer service rewards
• Lack of relationship between pay &
performance
• Absence of learning and development
• Pay levels and benefits entitlement
strongly related to the length of service
• Lack of variable portion in pay
PERFORMANCE RELATED PAY
• Score card driven bonus
– Customer satisfaction
(customer survey)
– Shareholder returns
(profitability vs. targets)
– Process excellence
– Learn ‘n’ Grow
Reward Policies
Reward Policies
Reward Policies provide guidelines for the
implementation of reward strategies and the design
and management of reward process.
Considerations
• The level of reward
• The relative importance attached to market
rates and equity
• Attraction and retention
• The relationship of rewards to business
performance
• Total reward policy
Considerations
• The scope for the use of contingent rewards related to
performance, competence, contribution or skills.
• Assimilation policies
• The degree of flexibility required.
• The role of line managers.
• Involve employees in the design of reward systems
• Communicate the reward policies to employees
• Transparency.
Level of Reward
• Organizations philosophy about Rewards:
– High payer, Average , Below Average
• Policy depends on a number of factors:
– Level of performance
– Competition for good quality people
– Tradition stance & organizational culture of the
company
– Affordability
Market Rate and Equity
• Policy needs to be formulated on the extent to
which rewards are market driven rather than
equitable.
– Obtain and keep high quality staff
– Response to market pressures
• Market considerations will derive levels of
pay in the organization.
Attraction policies
• Career prospects
• Training and development
• Intrinsic interest of the work
• Flexible working arrangements
• Work life balance
Retention policies
• Capelli says “market determines the movement of
employees, not the company”
• Talent management (attraction and retention of
quality employees)
• Talent management policies
– To attract employees
– To develop employees
– Retain employees
– Motivate employees
Talent Management Policies
• Talent Management Process:
– Employer of Choice
– Recruitment procedures
– Designing jobs and roles
– Opportunities to develop skills
– Working environment
Talent Management process
– Work life balance
– Leadership qualities of line managers
– Recognition
– Conducting talent audits
Reward to Business Performance
• Link between reward and business performance.
• Gain sharing
– A commitment to employee involvement that ties additional
pay to improvements in workforce performance.
• Profit sharing
– A plan under which an employer pays to eligible employees,
as an addition to their normal remuneration, additional sums
in the form of cash or shares in the company related to the
profits of the business.
Total Rewards
The total reward policy should state that
although contingent rewards play an
important part in the reward policies of the
organization other forms of non financial
reward are regarded as being equally
important
Contingent Rewards
Pay for individual that is related to
performance, competence, contribution or
service.
Assimilation Policies
• How existing employees should be
assimilated into revised pay structure.
– Red circling (identifying and dealing with
overpaid people)
– Green circling (identifying and dealing with
underpaid people)
Flexibility
• Flexing Company Cars
– Trading up
– Trading down
– Trading out
Flexible Holidays
Flexible Pensions
Flexible private medical Insurance
Role of line Managers
• Direct interaction with employees
• Trained
Involving Employees
• Employees should be given voice in the
design and management of reward processes.
Communication to Employees
• Reward processes are powerful media for
conveying messages to employees about the
organizations values and the contribution
they are expected to make in upholding those
values and achieving the organization’s goals.
Transparency
• Reward process should not be secret activity.
– Pay progression
– Lack of understanding breeds suspicion.
THANKS
