1.Summarise the recent trend of reward systems in India. The current trend is one of integrated reward approach.

Reward system usually mean the financial reward on organization gives its employees in return for their labour. While the term reward system, not only includes material rewards, but also non-material rewards. The components of a reward system consist of financial rewards (basic and performance pay) and employee benefits, which together comprise total remuneration. They also include non-financial rewards (recognition, promotion, praise, achievement responsibility and personal growth) and in many case a system of performance management. Pay arrangements are central to the cultural initiative as they are the most tangible expression of the working relationship between employer and employee. The integrated reward system includes: Job evaluation and profiling Defining key performance indicators Analysis and modification of pay levels and structures to reflect both internal and market relativities Designing of performance evaluation processes Structuring of individual, team and corporate performance bonuses Social climate surveys with focus on remuneration Designing flexible benefits plans Implementation of new reward components in compensation package Implementation and assistance in change communications Training for internal specialists in reward structure planning and maintenance Performance Based Reward is based on the definition of key performance indicators identified as part of job evaluation, and linking these indicators with reward components. A combination of performance measuring system and additional motivational components delivers an integrated performance-based reward system. Flexible Benefit Schemes are a modern approach to the management of budgets for staff remuneration. Employee benefits constitute a considerable portion of staff costs, but they are often expended without the desired effect since employees do not perceive the full value of benefits. This system increases the effectiveness and enable better control. Why reward system is required? These components will be designed, developed and maintained on the basis of reward strategies and policies which will be created within the context of the organizations between strategies, culture and environment: they will be expected to fulfill the following broad aims;

1. Improve Organizational Effectiveness: Support the attainment of the organization's mission, strategies, and help to achieve sustainable, competitive advantage. 2. Support and change culture: Under pin and as necessary help to change the 'organizational culture' as expressed through its values for performance innovation, risks taking, quality, flexibility and team working. 3. Achieve Integration: Be an integrated part of the management process of the organization. This involves playing a key role in a mutually reinforcing and coherent range of personal policies and process. 4. Supportive Managers: Support individual managers in the achievement of their goals. 5. Motivate Employees : Motivate employees to achieve high levels of quality performance. 6. Compete in the Labour Market: Attract and retain high quality people. 7. Increased Commitment: Enhance the commitment of employees to the organization that will a) want to remain members of it, b) develop a strong belief in and acceptance of the values and goals of the organization and c) be ready and willing to exert considerable effort on its behalf. 8. Fairness and Equity: Reward people fairly and consistently according to their contribution and values to the organization. 9. Improved Skills : Upgrade competence and encourage personal development. 10. Improved Quality: Help to achieve continuous improvement in levels of quality and customer service. 11. Develop team working : Improve co-operation and effective team working at all level. 12. Value for money: Pride value for the money for the organization. 13. Manageable: Be easily manageable so that undue administrative burdens are

not imposed on managers and members of the personal department. 14. Controllable: Be easily controllable so that the policies can be implemented consistently and costs can be contained within the budget.

Summaries the recent trend of reward systems in India.

Summaries the recent trend of reward systems in India. Analyze it with respect to your organization or an organization you are familiar with and discuss its impact on productivity. Describe the organization you are referring to.

Rewarding employee performance and behaviour is an important part of HRD. Appropriate rewards not only recognize and motivate employees, but also communicate the organizations values to the employees. Rewards may be given to individualists as well as to teams, departments and other units within the organization. Rewards reinforce specific behaviors, thereby arousing and sustaining specific motives. Consequently, what is rewarded in an organization influences the motivational climate. The only way employees will fulfill your dream is to share in the dream. Reward systems are the mechanisms that make this happen. However, reward systems are much more than just bonus plans and stock options. While they often include both of these incentives, they can also include awards and other recognition, promotions, reassignment, non-monetary bonuses (e.g., vacations) or a simple thank-you. RECENT TRENDS A FEW EXAMPLES Its an annual affair at Genpact to identify 35 star leaders within the company and fly their families on a vacation. This is apart from regular ritual of recognizing high performing leaders in every board meeting. Even as salary levels soar and are a given in the current war for talent, more and more companies are fumbling for the ideal mix of non-compensation rewards to retain leaders. Retaining and rewarding leadership is a hot button issue facing most organizations. Increasing complexity of hiring leadership talent in the face of burgeoning market

demand is bringing companies under pressure to retain their top talent. The only way to reward and retain top leadership is by sharing the success of the company with them, says Piyush Mehta, senior V-P, Genpact. It is common to see firms ring fence their senior executives by devising long-term wealth certain opportunities in the form of retention pay, deferred bonus plans, stock options and shadow options. Companies are arriving at a reward system, which is linked with the companys performance. As a business leader in Accenture moves higher, the variable component in his compensation goes up. Equity has been quite effective as a leadership reward system. Conversely too, it works well as it makes leaders conscious of the fact that they carry the weight of the organization, says Rahul Varma, senior HR director, Accenture India. Employee stock plans offered by Indian firms in the past few years have been able to create the right setting than that MNC counterparts, says K Sudarshan, managing partner, EMA Partner International. Key employees feel a lot closer to centre of action with a belief that they are making a difference to the fortunes of the organization as opposed to large MNCs where the India business is still a small percentage of their overall numbers, he says. The attractiveness quotient for Indian companies is increasing all the time. Even though we see emergence of several employee millionaires, analysis caution, relying on generous compensation as the only strategy for retaining your key resources is a sure shot recipe for disaster. There is interplay of multiple factors which makes the organization a preferred destination for top talent and creates a long-term sustainable employer brand. Thats why the best employers need not necessarily be the best paymasters. First and foremost is to create a sense of ownership and belonging to the organization. Successful organizations have a culture which supports and encourages entrepreneurial behaviour, the freedom to make informed business decisions and above all eliminates the fear of failure, says Mr Sudarshan. This will work only if it goes hand-in-hand with standard compensation levels in the industry. HR fraternity believes ICICI Bank has done well on both fronts. They have provided great opportunities to their stars plus have locked in their key people with

significant stock options. It also helped that ICICI bank is growing more rapidly when compared to HDFC Bank and there is a great passion at work one can experience with senior people in ICICI group. HDFC Bank has largely adopted the ESOP route to reduce fixed cost but this has backfired in the long term because people moved on once the stocks vested and their exit barriers significantly reduced, says a head of headhunting firm. Bharti has largely taken the compensation route both fixed as well as long-term wealth creation opportunities for their people. Hutch has always retained their key people on the basis of the work culture and freedom to operate though the compensation levels have always been pegged lower than Bharti and Reliance. Aditya Birla Group has built a great sense of belonging for their leaders and has always been looked upon with the larger picture in mind. The chairman Kumar Mangalam Birla says a company executive also deploys his personal touch with his key managers who are valued. There is a great sense of security built in for key people, adds a senior HR consultant who has worked with the group. The Tata Group has always institutionalized the group and managers are empowered to take critical decisions like no other business house and there is a deep sense of loyalty to the group at senior levels. An ambitious business leader, believe HR fraternity, is constantly evaluating headroom for professional learning and growth and it is critical that the organization is capable of creating such opportunities. This keeps senior managers motivated with fresh challenges all the time. Today, theres a need to customize rewards both monetary or otherwise to suit individuals specific needs, says Mr. Mehta of Genpact. REWARD SYSTEM IN MY COMPANY: COGNIZANT A company gifting a small mug or a T-shirt with its logo may not be a very big thing for an employee who has decided to leave the organization. But, for those staying on, such gifts can make a lot of difference. Giving instant gifts to reward employees is catching up. Cognizant Technology Solutions with large software development centers in India, have used the instant reward scheme to motivate their employees.

Outwehing Others Wahl Cognizant is an incentive scheme for Cognizants employees. The instant reward is for contributing to the company, above and beyond the call of duty or for any exceptional performance. The scheme follows Cognizants earlier incentives for employees, such as iPods, cruises to the Bahamas, chartered trains to Pondicherry and chartered flights to Malaysia. Designed on the lines of a frequent flyer programme, Wah! helps Cognizant employees to earn reward points that can be accumulated and redeemed against Cognizant merchandise ranging from denim shirts to signature coffee mugs, watches to jackets, or even a DVD player. On its employee information portal, Cognizant publishes the reward points that employees can obtain for the efforts that they put in, beyond their core work definition. For example, works such as training, knowledge harvesting, recruiting, participation in quality audits and assessments and external certifications quality for reward points based on certain defined parameters. Wah! has been a big hit in Cognizant, so much so that it is one of the projects to be expeditiously institutionalized after being piloted in Hyderabad. It simply has outwahed every other spot reward and recognition programme attempted by Cognizant earlier. Wah! was piloted at Cognizants Hyderabad development centre in early 2005 and was institutionalized across all of its development centers in India early this year. Till date, 8,250 of the companys associates have been awarded Wah! points that can be redeemed for Cognizant branded merchandise. As one enters any of Cognizants offices, the branded merchandise is prominently displayed to remind and motivate employees to earn the gift of their choice, he says. This motivation prompts them to excel and take advice interest in contributing to multiple areas such as certification, quality or training. Even prospective applicants or interviewees notice the array of gifts that adorn the reception area. Posted by Satish Raj Pathak at 3:23 AM

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Recent Trend of Reward Systems in India Reward systems helps in increasing performance and creating happier employees. The greatestmanagement principle is that the things that get rewarded get done. All reward systems are based on theassumptions of attracting, retaining and motivating people. Financial rewards are an important componentof the reward system, but there are other factors that motivate employees and influence the level of performance.Those organisations which gives the maximum reward attracts and retains most people. Higher rewardswill give higher satisfaction. This will lead to lower turnover and more job applicants. It is difficult to retainthe best performers in any organisation. They will get higher offers from competitive organisations andmay leave the company. For retaining the best performers, the organisation needs to reward people at alevel above the reward standards in similar organisations.In some organisation, reward system is based on performance and skills of the employees. So higher rewards will motivate skilled employees to perform better. In hierarchical organisations, reward systemacts as a motivation for

lower cadre employees to learn those skills which will lead to promotion to thehigher levels. The reward system contribute to the overall culture and climate of organisations.Reward systems are a major cost factor in many organisations. There are some criteria for buildingeffective reward systems.* Give Value for the employees preference in the reward system. Employees prefer rewards in differentways like cash awards, plaques, recognition in award ceremonies and company newsletters.* Reward systems should simple and specific. Easy understanding of the system will make the systemwork effectively. Elaborate procedures, evaluations and review by different levels will lead to confusion among people. A line of sight should be maintained between rewards and actions.* Rewards should be timely. The recognition/rewards should be provided frequently enough to make performers feel valued for their efforts.* Reward systems should be fair and effective.* It should be reliable, that is, the program should operate according to its principles and purpose.* Involve people in the formulation of the reward system. By ensuring the participation of the people in the reward system, the company can empower them to do the needful. For most people, the most important reward is the pay they receive for their work. Effectively planned and administered reward systems will enhance motivation thus performance also. Employees who work hardand produce better quality products should get higher pay than the poor performers.

The employeesshould be satisfied with the rewards they receive for their good work. They should be given extrinsicrewards like pay, promotion and other status symbols. This will give them a feeling of competence,achievement, personal growth and selfesteem.In India, rewards are given in the form of financial benefits, incentives, profit sharing, gain sharing andstock options. Financial rewards are given to employees for their achievements. Pay is of many types likeCompetence related pay, Skill-based Pay, Team-based pay and merit pay. An Example of Reward System in India Reward system in SS Starch Industries :---------------------------------------I am familiar with SS Starch Industries,give description of the company here.At SS Starch rewards are clearly linked to performance. About half of pay is tied to company anddivisional performance. The reward system reinforces the company's high expectations of its employeesto grow, learn, and lead. The appraisal and reward system is aimed at increasing employee involvementin the goals and objectives of the organisation, and encouraging individuals to go beyond their scope of work, undertake voluntary projects that enable them to learn, and contribute innovative ideas in meetingthe targets of the company. Reliance places great emphasis on soft,

conceptual and cross-functionalskills, especially at managerial levels.The company's reward system improve performance throughout the organization. The employees aregiven good pay packets. SS is a hierarchical organisation. So the higher pay and benefits of higher positions motivates lower cadre employees to perform well and acquire promotions.Strategies for rewarding employees performance and contributions include both non-financial andfinancial mechanisms. Some of the primary ones are discussed below.* Progression through the salary range - Employees receives salary increases to recognize theattainment of new and/or the enhancement of existing skills/competencies or for assuming increasedresponsibilities within the scope of the current position. The salary increase represents a progressionthrough the salary range approved for the position.* Promotions - Promotions are typically associated with an increase in salary, and the increase may beany amount up to 10% of an employees current salary. The new salary also will be within the salaryrange approved for the position.* Merit Pay - Supervisors gives employees an annual merit increase to recognize consistently meritoriousperformance or successful completion of a project that had a significant impact on a department or thecompany itself. To be

eligible for a merit increase, employees must have been employed for at least sixcontinuous months and at least six months must have elapsed since the employee's last salary increaseor promotion.* Praise/recognition from supervisors - Praise and recognition from supervisors is consistently found tobe among the most important motivators. Employees want to be recognized and feel their contributionsare noticed and valued.* Bonus - Bonuses are paid on the basis of firm performance relative to the industry and on customer satisfaction.* Paid Leave - Supervisors may award employees up to 32 hours of paid leave annually in recognition of meritorious performance* Informal rewards - When warranted, supervisors may choose to give employees informal rewards for specific accomplishments/contributions. Supervisors can be creative in identifying informal rewards. Impact on productivity :------------------------The reward system has worked very well in SS starch. The employees developed new skills. This helpedthe company to produce quality products. SS' products are considered as high quality by the customersand orders are piling up. The managerial staff in the R&D department

are also paid and rewarded for their contribution to the development of new products. Productivity has increased with the team effort of all theemployees from the General Manager to the go down workers. Conclusion : ----------Human resources strategies, compensation and reward strategies and the culture the company has builtare critical to maintaining the environment needed to attract the types of workers who will allow the firm tostay on the cutting edge of changing technologies and markets in its industry. Its social contract thereforefocuses on providing a financially and psychologically rewarding place to work