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Reward Management

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What is pay

Pay is the basic reward an employee receives, usually a wage or salary a payment made to an employee in return for his/ her contribution to the organization

Is

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Reward Management

The formulation and implementation of strategies and policies that aim to reward people fairly, equitably and consistently in accordance with their value to the organization. It deals with the design, implementation and maintenance of reward practices that are geared to the improvement of organizational, team and individual performance.

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Objectives of Reward Management

To

attract suitable qualified person to the organization To motivate employees To retain most appropriate employee with in the organization To comply with legal requirements To ensure equity To control employee cost

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Significance of PM
Employer

considers it as an expenditure Employee views as an income PM reduces the conflicts

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Factors affecting wages/salaries

Government Trade

legal legislations

unions Cost of living Demand and supply Productivity Financial ability to pay Competitive pay

VARIABLE PAY
Tying pay to some measure of individual, group, or organizational performance.

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Types of Incentive Plans

INDIVIDUAL GROUP Piecework Team Plan Standard hour Gain sharing options Bonuses Merit pay Sales incentives ENTERPRISE Profit sharing Stock

Conditions Under Which IndividualBased Plans Are Most Likely to Succeed

When

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the contributions of individual employees can be accurately isolated. When the job demands autonomy. When cooperation is less critical to successful performance or when competition is to be encouraged.

Conditions Under Which TeamBased Plans Are Most Likely to Succeed

When work tasks are so intertwined that it is difficult to single out who did what. When the firms structure and systems facilitate the implementation of teambased incentives. When the objective is to promote entrepreneurship in self-managed work groups.

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Conditions Favoring Gain sharing Plans

Gain sharing is most appropriate in situations where the demand for the firms product or service is relatively stable. If a firm has multiple plants with varying levels of efficiency, the plan must take this variance into account so that efficient plants are not penalized and inefficient plants rewarded.

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Conditions Favoring Profit sharing Plans

Most attractive to firms facing highly cyclical ups and downs in the demand for their product. When used in combination with other incentives, corporate wide programs can promote greater commitment to the organization by creating common goals and a sense of partnership among managers and workers.

Pay for Performance: The Challenges

The

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Do Only What You Get Paid For Syndrome Negative Effects on the Spirit of Cooperation Difficulties in Measuring Performance The Credibility Gap Job Dissatisfaction and Stress Potential Reduction of Intrinsic Drives

Meeting the Challenges of Pay for Performance Systems

Link

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Pay and Performance Appropriately Use Pay for Performance as Part of a Broader HRM System Build Employee Trust Use Multiple Layers of Rewards Increase Employee Involvement Use Motivation and Nonfinancial Incentives

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Designing Effective Reward Systems

Reward

system must meet an individuals needs. Rewards should compare favorably with other organizations. Distribution of rewards must be perceived to be equitable. Reward system must recognize different needs.

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FRINGE BENEFITS

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FEATURES OF FRINGE BENEFITS

An employee enjoys them in addition to the salary he/she receives. They are not given for specific jobs performed but to make jobs more attractive. They are not linked to productivity so do not reward performance in any way, criteria used is other than performance. They have an indirect impact on workers efficiency. If impact is direct, it is not a fringe benefit.

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Types of Fringe Benefits

Pay

for time not worked Employee security Safety and health Welfare and recreation Old age and retirement

Flexible Benefits Plans (Cafeteria Plans)

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Benefit plans that enable individual employees to choose the benefits that are best suited to their particular needs

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Flexible Benefit (Cafeteria) Plans

Advantages
more appreciation of benefits offered better match between benefits and employee preference

Disadvantages
increased

costs

design and administrative