Reward Management
.jpg)
Reward
Management
Reward management is
concerned with the strategies, policies, and processes required to ensure that
the value of people and the contribution they make to achieving an organizational
goal is recognized and rewarded
Literally, the term
rewards can be defined as a particular monetary return, object, or event that an
employee receives in exchange for his/her work or for having done something
well
Reward System
The Total Reward System
comprises the extrinsic and intrinsic reward mechanisms available to an
employer to motivate, attract and retain employees. Different combinations of
rewards will generate different employer-employee relationships
·
Reward Strategy
Reward
strategy sets out what the organization intends to do in the longer term to
develop and implement reward policies, practices and processes which will
further the achievement of its business goals
·
Total Reward
The total reward is the combination of financial and non-financial rewards available to
employees
Reward
System and Employee Motivation
Reward
system is essential to the organization as it has become important in managing
employee's motivation. Over the last 25 years, other elements in compensation
have evolved to provide employers with a broad scope of reward, and thus, it
motivates the employees. The reward systems are directly and indirectly
involved in the vision and mission of the organization that gives sense to the employee
that a reward system will benefit both parties (Nurul
A N et al., 2021).
A
motivated person will result in a good performance as the employees know there
is a reward waiting at the end of every month. Reward systems have a huge
impact on organizations to retain and motivate the employees and as a result of
achieving high levels of performance (Nurul A N
et al., 2021).
Components of Reward System
Figure 01: Components of Reward System
·
Financial Rewards
Financial rewards have been recognized as
a major factor that motivates employees. It is also the main expense charged on
the profit and loss account of the organizations (Werner, 2004).
Therefore, it has to be managed carefully.
Ellis and Pennington (2004) found that direct financial rewards play a critical
role in attracting talented employees, and have a combined impact on the level
of work motivation of lower-level employees (Werner, 2004).
Eg: Organizations are highly concern about
financial rewards and many organizations are practicing special performance
base variable pay to enhance employee’s performance through financial rewards.
·
Non-Financial Rewards
Nyandema and Were (2014) in their study
stated that career development management and coaching/mentoring are the viable
components of employee motivation and that a congenial work environment is the
most important factor of intrinsic reward that many organizations offer to
appreciate employees. The study concluded that self-esteem and appreciation for
work also motivate employees (Dhanonjoy Kumar et
al., 2015).
Eg: Most of apparel companies in Sri Lanka
are introducing coaching and mentoring programs to retain operational level
employees. They are believing that, mentoring programs will lead to enhance the
performance of operational level employees and it’s a tool to retain them as
well.
References
Amstorng, 2012. Handbook of Human Resource
Management Practice. 12th ed. Londan: Kogan Page.
Amstrong, 2011. Hand
book of Startegic Human Resource Mnagement. 5th ed. Londan: Kogan Page.
Dhanonjoy Kumar et
al,, 2015. Impact of Non-Financial Rewards on Employee Motivation. Asian
Accounting and Auditing Advancement, Volume VOL.05, pp. 31-39.
Franco-Santos, M.,
2015. Reward Systems. Mays School of Business, Texas A&M University.
George W. Bohlander
& Sccott A. Snell, 2015. Principles of Human Resource Mnagement. 16th
ed. Delhi: Cengage Learning India (Pvt) Limited.
Nurul A N , Sabiroh M
S & Eliy Nazira M N, 2021. The Effects of Reward System on Employees’
Performance. Faculty of Business and Management, Universiti Teknologi
MARA, Perlis Branch, Arau Campus,, pp. 41-51.
As a common theory, there were many discussions held by presenting the link between the satisfactions with financial and esteem rewards like higher salary, bonuses, promotion, commissions, and other incentives (Dropulic, 2014).
ReplyDeleteAgree. The most powerful argument advanced for financial and non financial rewards is that those who contribute more should be paid more (Armstrong, 2012).
DeleteAccording to (Thomas, et al., 1997), 360 appraisals provide an opportunity to subordinates to express their views on Management about their behaviors and style. Hence, this can help employees to identify their strengths and weakness in the overall point of view, which the weakness can be mitigated by training and development processes. Further, it enhances two-way communication and increase confidence of subordinates that their voice is respected (Thomas, et al., 1997).
ReplyDeleteYes. Agreed. 360-degree feedback, also known as multi-source assessment, is a process in which someone’s performance is assessed and feedback is given by a number of people who may include their manager, subordinates, colleagues and customers. This is the most common approach and is more properly described as 180-degree feedback (Armstrong, 2009).
DeleteOne of the critical factors of employee turnover is lower salary. When employees receive lower salary and insufficient financial rewards, they tend to stay no longer with the organization (Lavob, 1997). Therefor it is important that an effective reward system is present in the organization to minimize turnover. We can say that there is a direct relationship between rewards and turnover.
ReplyDeleteAgreed. Liu et al (2006) supposed that the there are five crucial influencing factors
Deleteof employee turn over: work content, promotion system, salary, subjective perception about the selectable jobs and affective commitment. Total rewards provide employees with good work environment as well as development and career opportunities. It can significantly increase the employees’ retention rate and productivity (Liu et al., 2006).
According to Armstrong, (2012) The three main parts of reward management are discussed and examined: the structure and elements of reward systems, the notion of total rewards, and the contribution provided by strategic reward management procedures. This section also discusses the unique characteristics of international reward policy and practice. Armstrong, (2012).
ReplyDeleteReference
Armstrong, M. (2012). Armstrong’s handbook of reward management practice : improving performance through reward. London: Kogan Page.
The key purpose of this reward mechanism is to provide a safe and comfortable
Deleteenvironment for employees. Normally, this element of the reward package refers to the
physical setting in which employees work (e.g., size of the offices, desk space, temperature, work machinery, work materials). In some countries such as the UK, employers have, by law, a “duty of care” to look after the health, safety and welfare of their employees while at work. They are required to identify potential health and safety hazards and respond to eliminate them. Some international organizations, however, provide additional security and comfort to further please their employees (Thomas & Velthouse, 1990).
Good pointing on The reward systems are directly and indirectly involved in the vision and mission of the organization that gives sense to the employee that a reward system will benefit both parties (Nurul A N et al., 2021). Thus employee motivation should be done by the line manger therefore, motivated employee will achieve greater organizational efficiency.
ReplyDeleteThis comment has been removed by the author.
ReplyDeleteThis comment has been removed by the author.
ReplyDeleteHi
ReplyDeleteBased on the research done on 1,617 questionnaires in 257 enterprises, it found that in general the main incentives that stimulate the enthusiasm of employees are the
1)factors of performance
2)development and career opportunities in total rewards.
It is argued that the demographic factors, sexuality , age and educational level also should take into consideration when designing an effective total reward and recognition scheme
Yang, J. and Chen, H. (2019), "Can rewards incentives of non-state-owned enterprises realize co-win cooperation of workers, enterprises and the society? From the perspective of labour productivity, profit and labour absorption", Nankai Business Review International, Vol. 10 No. 2, pp. 179-206.