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Reward StrategiesReward Strategies

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RewardsRewardsSayingSaying thankthank youyou for for aa job job wellwell done,done,

andand therebythereby motivatingmotivating thethe recipientrecipient toto

continuecontinue toto dodo thosethose thingsthings thatthat benefitbenefit thetheorganizationorganization

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RewardsRewards

ExtrinsicExtrinsic IntrinsicIntrinsic

ResponsibilityResponsibility

Interesting workInteresting work

Personal growthPersonal growthDiversity ofDiversity ofactivitiesactivities

FinancialFinancial

NonNon--

FinancialFinancial

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1: EXTRINSIC FINANCIAL1: EXTRINSIC FINANCIAL

REWARDSREWARDS

Wages

Bonuses

Profit-sharing

Vacations

Sick leave Purchasediscounts

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2. EXTRINSICNON2. EXTRINSICNON--FINANCIALFINANCIAL

REWARDSREWARDS Office furnishings

Lunchhours

Parkingspaces

Workassignments,

locations

Businesscards Secretary

Titles

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REWARD

STRATEGY

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LAWLERS MODELOF REWARDLAWLERS MODELOF REWARD

STRATEGYSTRATEGY

RESOURCES

ENVIRONMENT

CORPORATEGOALS &

OBJECTIVES

ORGANIZATIONDESIGN

&MANAGEMENT

STYLE

REWARDSYSTEM

INDIVIDUAL &

ORGANIZATIONALBEHAVIUOR

Reward systemReward system An important means ofAn important means of

communicationcommunication

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RELATIONSHIP BETWEENHR & REWARDRELATIONSHIP BETWEENHR & REWARD

PRACTICES & BUSINESS PERFORMANCEPRACTICES & BUSINESS PERFORMANCE

JOBJOB

SATISFACTIONSATISFACTION

EMPLOYEEEMPLOYEE

INVOLVEMENT /INVOLVEMENT /

COMMUNICATIONCOMMUNICATION

BUSINESSBUSINESS

PERFORMANCEPERFORMANCE

HR PRACTICESHR PRACTICES

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DYNAMICREWARDSTRATEGIESDYNAMICREWARDSTRATEGIES

DYNAMIC REWARD

STRATEGIES

RESPONSIBLE, DYNAMIC AND

FLEXIBLE HR

PROFESSIONALS

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ALIGNING REWARDSYSTEM WITH

STRATEGY

BUSINESS

STRATEGY

PEOPLE

REQUIREMENT

PREVIOUS

REWARD

METHODS

CHANGES

TO

REWARDS

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EFFECTIVE REWARDSTRATEGYEFFECTIVE REWARDSTRATEGY

EFFECTIVEEFFECTIVE

REWARDREWARD

STRATEGYSTRATEGY

WELL

DEFINED

GOALS &

OBJECTIVES

WELL DESIGNED

PAY & REWARD

PROGRAMMES

ACCORDING TO THENEEDS

EFFECTIVE &

SUPPORTIVE

HR

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CONFLICTSCONFLICTS

Focus on individual performance inteams

Lack of customer service rewards Lack of relationship between pay &

performance

Absence of learning and development

Pay levels and benefits entitlementstrongly related to the length of service

Lack of variable portion in pay

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PERFORMANCE RELATED PAYPERFORMANCE RELATED PAY

Scorecarddriven bonusScorecarddriven bonus

Customer satisfaction(customer survey)

Shareholder returns

(profitability vs. targets)

Process excellence

Learn n Grow

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Reward Policies

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Reward Policies

Reward Policies provide guidelines for the

implementation of reward strategies and the designand management of reward process.

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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

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Considerations

The scope for the use of contingent rewards related toperformance, 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.

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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 thecompany

Affordability

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Market Rate and Equity

Policy needs to be formulated on the extent towhich rewards are market driven rather than

equitable. Obtain and keep high quality staff

Response to market pressures

Market considerations will derive levels ofpay in the organization.

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Attraction policies

Career prospects

Training and development

Intrinsic interest of the work

Flexible working arrangements

Work life balance

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TalentManagement Policies

TalentManagement Process:

Employer of Choice

Recruitment procedures

Designing jobs and roles

Opportunities to develop skills

Working environment

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TalentManagement process

Work life balance

Leadership qualities of line managers

Recognition Conducting talent audits

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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 sumsin the form of cash or shares in the company related to the

profits of the business.

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Total Rewards

The total reward policy should state thatalthough contingent rewards play an

important part in the reward policies of theorganization other forms of non financialreward are regarded as being equallyimportant

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Contingent Rewards

Pay for individual that is related to

performance, competence, contribution orservice.

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Assimilation Policies

How existing employees should beassimilated into revised pay structure.

Red circling (identifying and dealing withoverpaid people)

Green circling (identifying and dealing with

underpaid people)

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Flexibility

Flexing Company Cars

Trading up

Trading down Trading out

Flexible Holidays

Flexible Pensions

Flexible private medical Insurance

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Role of lineManagers

Direct interaction with employees

Trained

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Involving Employees

Employees should be given voice in thedesign and management of reward processes.

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Communication to Employees

Reward processes are powerful media forconveying messages to employees about the

organizations values and the contributionthey are expected to make in upholding thosevalues and achieving the organizations goals.

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Transparency

Reward process should not be secret activity.

Pay progression

Lack of understanding breeds suspicion.