Reward Management.

Reward management is concerned with the formulation and implementation of strategies and policies that aim to reward people fairly, equitably and consistently in accordance with their value to the organisation. At Humba-HR-Consultants we always believe that happy employees makes an efficient and relaxed working environment. Therefore here are some fantastic pointers that will illustrate the importance of having a reputable-lucrative reward structure.

Reward management consists of analysing and controlling employee remuneration and all of the other benefits for the employees. Reward management aims to create and efficiently operate a reward structure for an organisation. Reward structure usually consists of pay policy and practices, salary and payroll administration, total reward, minimum wage, executive pay and team reward.

A reward strategy needs to make clear the aims of the various reward elements, integrate them coherently and tell employees what they can expect to receive and why. You’ll find here information on reward strategy and remuneration, pay structures, pay policy and practices, salary and payroll administration, total reward, minimum wage, executive pay and team reward. Reward management deals with processes, policies and strategies which are required to guarantee that the contribution of employees to the business is recognized by all means. Objective of reward management is to reward employees fairly, equitably and consistently in correlation to the value of these individuals to the organization. Reward system exists in order to motivate employees to work towards achieving strategic goals which are set by entities. Reward management is not only concerned with pay and employee benefits. It is equally concerned with non-financial rewards such as recognition, training, development and increased job responsibility.

There are two kinds of rewards:

Extrinsic rewards: concrete rewards that employee receive.

Bonuses

Salary raise 

Gifts

Promotion

Other kinds of tangible rewards

Intrinsic rewards: tend to give personal satisfaction to individual:

Information / feedback

Recognition

Trust

Relationship

Empowerment

Monogrammed name plaque

Intrinsic rewards makes the employee feel better in the organization, while Extrinsic rewards focus on the performance and activities of the employee in order to attain a certain outcome. The principal difficulty is to find a balance between employees' performance (extrinsic) and happiness (intrinsic).

The rewards also need to be according to the employee’s personality. For instance, a sports fan will be really happy to get some tickets for the next big match. However a mother who passes all her time with her children, may not use them and therefore they will be wasted.

When rewarding one, the manager needs to choose if he wants to rewards an Individual, a Team or a whole Organization. One will choose the reward scope in harmony with the work that has been achieved.

Individual Base pay, incentives, benefits.

Rewards attendance, performance, competence.

Team: team bonus, rewards group cooperation.

Organization: profit-sharing, shares, gain-sharing.

Pay is an important feature of human resource management - after all, it is the main reason why people work. It is a sensitive and controversial area that has been extensively debated at both practical and theoretical levels. The reward or compensation people receive for their contribution to an organisation includes monetary and non-monetary components. Remuneration does not simply compensate employees for their efforts - it also has an impact on the recruitment and retention of talented people.

The term 'reward management' covers both the strategy and the practice of pay systems. Traditionally, human resource or personnel sections have been concerned with levels and schemes of payment whereas the process of paying employees - the payroll function - has been the responsibility of finance departments. There is a trend towards integrating the two, driven by new computerised packages offering a range of facilities. These are described later in this chapter.

There are two basic types of pay schemes, although many organisations have systems which include elements of both:

There will be fixed levels of pay.  Therefore the wages or salaries will not vary from one period to the next; except in cases where it will be defined by pay increases and generally on an annual basis. There may be scales of payments determined by age, responsibility or seniority. Most 'white-collar' jobs were paid in this way until recently.

Reward linked to performance. The link may be daily, weekly, monthly or annualised. Payment for any one period varies from that for any other period, depending on quantity or quality of work. Sales functions are commonly paid on the basis of turnover; manual and production workers may be paid according to work completed or items produced. Catering staff typically rely on direct payment from satisfied customers in the form of service charges or tips (gratuities).

Both methods work smoothly, provided that scales are easy to understand and the methods of measuring completed work are overt, accurate and fair. However, there has been considerable dissatisfaction with the management of pay on both sides of the employment relationship. In recent years, attempts have been made to remedy the situation through new systems and a greater reliance on performance-related pay.

Every now and again we note that pay is a key element in the management of people. The importance of pay begins with pay administration that deals accurately and swiftly with payroll-related matters. Much of the information used by pay administrators is shared with the human resource function. Pay evaluation systems also impinge on human resource territory. Free market organizations are particularly concerned with performance-related pay as a motivating factor but this trend appears to be ideological. Current evidence shows that performance pay is likely to demotivate more people than the opposite which is motivate.