PERKINS, S.J. and White, G. (2020) Reward Management: Alternatives, Consequences and Contexts. 4th ed. London: Chartered Institute of Personnel and Development. The ability to design and implement a compensation strategy and overall reward approach is an important aspect of the role of a human resources professional and is part of our professional map. Expectation theory is the theory that postulates that we choose our behavior based on the desirability of the expected results of the action. It was most prominently used in a work context by Victor Vroom[21], who sought to establish the relationship between performance, motivation and ability and to express it as multiplicative – where performance equals motivation x ability. There are many attractions to this type of approach, especially for employers who can target their motivational efforts and expect a definable mathematical return for them. Because it is a theory of cognitive processes based on how employees perceive rewards, these three theories and their variants have been used in countless research studies and continue to shape the practice of reward management to this day. Strategic reward management doesn`t always have to include rewards in the form of payments. Often, employees get smaller, more personalized rewards like meal vouchers, event tickets, or even an extra day of annual vacation.
This type of reward system is usually effective with lower-level employees to motivate them to progress. Typically, companies are always involved when it comes to policies that address employee underperformance or failure to achieve goals. A rewards management program helps compensate for this and avoid a negative atmosphere that leads to decreased productivity and increased staff turnover. Rewards give you the opportunity to increase productivity in a way that aligns with your company`s values and culture. Instead of offering financial rewards or perhaps an extra day off for great work, consider offering other incentives that encourage teamwork or consideration for others in the workplace, as well as incentives that promote the quantity and quality of work. Identifies the risks that people working in rewards management see as their biggest challenges, and to what extent their organizations can manage them Ensure that the “vertical” integration of employee reward approaches with business objectives and the “horizontal” integration of rewards policy with broader HR policies are ensured. Performance appraisal is the method used to evaluate and review an employee`s job performance. [30] It compares employees` work behaviour with the standards set by organizations to provide feedback on job performance.
Performance evaluations are a form of motivation through positive or negative reinforcement, depending on the outcome. Typically, this information is obtained annually through interview and questionnaire functions, which are primarily conducted in the management of large organizations to reach the full potential of employees. [31] The goal is to align and manage all organizational resources “to achieve the best possible performance” by improving your current staff by encouraging, setting goals and correcting past mistakes. [32] Edward Lawler of the University of Southern California found a study showing that 93% of companies use annual reviews.[33] Total compensation includes all aspects of work that people enjoy, including aspects such as flexible work options or fair compensation, in addition to compensation and benefits. Total compensation has an impact on cultural change, as it can focus in part on employee empowerment. The main objective is to increase people`s willingness to work in a company, increase their productivity[8] and align their actions with the strategic objectives and cultural beliefs of the organization or company. [4] First, the management team must assess the type of rewards that employees within the organization will respond to well, and then determine under what circumstances employees are eligible to receive the awards. This involves making a list of achievements and behaviours that are deemed useful.
This may include closing a number of deals, getting a certain number of names in customer referrals, getting in touch with a promotion, or something else. Ensure that reward decisions are fair, processes and outcomes are transparent, and measures are reviewed to ensure they have been implemented correctly. In its simplest form, the reward consists of three pillars. These are base salary, variable compensation and benefits. The first basis of the reward starts with the base salary. This is an agreed sum of money awarded to an employee in exchange for an agreed service specified in the relevant employment contract or income-based agreement (ABA). The basic salary is fixed, regular and guaranteed. Another form of reward is variable payment. Variable compensation in the traditional sense is a performance-based method of remuneration and can take many forms. Unlike base salary, variable pay can be inconsistent, as the name suggests.
Variable compensation can be linked to factors such as output, hiring, or other key performance indicators. Variable remuneration can take the form of commissions, bonuses or incentive plans. The benefits are also used as a reward. Benefits are tangible items that may include company cars, company shares, or vacation pay entitlements to incentivize employees. [4] However, these three reward pillars apply to only one type of reward, extrinsic reward. [9] A very common example of strategic reward management is the form of performance-based commissions. This is often a system used in sales jobs because it encourages employees to work harder for additional sales. In some cases, sales jobs are entirely commission-based, which would require detailed hierarchical structures of salary commissions based on the number of sales the employee brings.
Other sales jobs offer a reward-based strategy that only offers a commission when an employee makes sales above a certain amount. This type of reward system works well because employees know exactly what they need to do to earn additional commissions.
