Lecture 10 (reward Management)

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Reward Management [email protected] Reward

management is concerned with the formulation and implementation of strategies and policies, the purposes of which are to reward people fairly, equitably and consistently in accordance with their value to the organization and thus help the organization to achieve its strategic goals. It deals with the design, implementation and maintenance of reward systems (reward processes, practices and procedures) that aim to meet the needs of both the organization and its stakeholders.

Aims reward people according to what the organization values and wants to pay for; ● reward people for the value they create; ●

● develop a performance culture; ● motivate people and obtain their commitment and engagement; ● help to attract and retain the high quality people the organization needs; ● create total reward processes that recognize the importance of both financial and non-financial rewards;

Cont,,,,,,,,,,,,,,,,, ● develop a positive employment relationship and psychological contract; ● align reward practices with both business goals and employee values; as Brown (2001) emphasizes, the ‘alignment of your reward practices with employee values and needs is every bit as important as alignment with business goals, and critical to the realization of the latter’; ● should be operated fairly, equitably and transparently –

The philosophy of reward management Reward

management is based on a well-articulated philosophy – a set of beliefs and guiding principles that are consistent with the values of the organization and help to enact them. These include beliefs in the need to achieve fairness, equity, consistency and transparency in operating the reward system.  The philosophy recognizes that if HRM is about investing in human capital from which a reasonable return is required, then it is proper to reward people differentially according to their contribution (ie the return on investment they generate).

Cont,,,,,,,,,,,,,,,,,  The

philosophy of reward management recognizes that it must be strategic in the sense that it addresses longer-term issues relating to how people should be valued for what they do and what they achieve. Reward strategies and the processes that are required to implement them have to flow from the business strategy.

Cont,,,,,,,,, Reward management adopts a ‘total reward’ approach, which emphasizes the importance of considering all aspects of reward as a coherent whole that is integrated with other HR initiatives designed to achieve the motivation, commitment, engagement and development of employees.  This requires the integration concerning human resource development. Reward of reward strategies with other HRM strategies, especially those management is an 

THE ELEMENTS OF REWARD MANAGEMENT

A reward system consists of: ● Policies that provide guidelines on approaches to managing rewards. ● Practices that provide financial and nonfinancial rewards. ● Processes concerned with evaluating the relative size of jobs (job evaluation) and assessing individual performance (performance management). ● Procedures operated in order to maintain the system and to ensure that it operates efficiently and flexibly and provides value for money.

Reward strategy 

It sets out what the organization intends to do in the longer term to develop and implement reward policies, practices and processes that will further the achievement of its business goals.

Reward policies ?????????????????????????????????????

Non financial rewards  These

are rewards that do not involve any direct payments and often arise from the work itself, for example, achievement, autonomy, recognition, scope to use and develop skills, training, career development opportunities and high quality leadership.

Reward strategy defined Reward strategy is a declaration of intent that defines what the organization wants to do in the longer term to develop and implement reward policies, practices and  processes that will further the achievement of its business goals and meet the needs of its stakeholders. Reward strategy provides a sense of purpose and direction and a framework for developing reward policies, practices and process. 

Cont…….. 

It is based on an understanding of the needs of the organization and its employees and how they can best be satisfied. It is also concerned with developing the values of the organization on how people should be rewarded and formulating guiding principles that will ensure that these values are enacted.

Cont,,,,,,,,,,,  Reward

strategy is underpinned by a reward philosophy that expresses what the organization believes should be the basis upon which people are valued and rewarded. Reward philosophies are often articulated as guiding principles.

Guiding principals,,,,,,,,  Guiding

principles define the approach an organization takes to dealing with reward. They are the basis for reward policies and provide guidelines for the actions contained in the reward strategy.

Cont,,,,,,,,,,,,,,,, They express the reward philosophy of the organization – its values and beliefs about how people should be rewarded. Members of the organization should be involved in the definition of guiding principles that can then be communicated to everyone to increase understanding of what underpins reward policies and practices.  Reward guiding principles may refer to concerns such as: 

Guiding principals ● developing reward policies and practices that support the achievement of business goals; ● providing rewards that attract, retain and motivate staff and help to develop a high performance culture; ● maintaining competitive rates of pay; ● rewarding people according to their contribution;

Cont,,,,,,,,,,,,,,,,,  recognizing

the value of all staff who are making an

effective contribution, not just the exceptional performers; ● allowing a reasonable degree of flexibility in the operation of reward processes and in the choice of benefits by employees; ● devolving more responsibility for reward decisions to line managers.



REWARD STRATEGY AND LINE MANAGEMENT CAPABILITY

Grade structure ??????????????

Pay structure  pay

structure defines the different levels of pay for jobs or groups of jobs by reference to their relative internal value as determined by job evaluation, to external relativities as established by market rate surveys and, sometimes, to negotiated rates for jobs.

Cont,,,,,,,,,,,, 

It provides scope for pay progression in accordance with performance, competence, contribution or service. There may be a single pay structure covering the whole organization or there may be one structure for staff and another for manual workers, but this is becoming less common. There has in recent years been a trend towards ‘harmonizing’ terms and conditions between different groups of staff as part of a move towards single status.

Cont,,,,,,,,,,,,,,, 

This has been particularly evident in many public sector organizations in the UK, supported by national agreements on ‘single status’. Executive directors are sometimes treated separately where reward policy for them is decided by a remuneration committee of nonexecutive directors.

Grade and pay structures should be: capable of adapting to pressures arising from market rate changes and skill shortages; ● facilitate operational flexibility and continuous development; ● clarify reward, lateral development and career opportunities; ● be constructed logically and clearly so that the basis upon which they operate can readily be communicated to employees; ● enable the organization to exercise control over the implementation of pay policies and budgets. ●

????????????????????????? 

TYPES OF GRADE AND PAY STRUCTURE

Spot rates 

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??????????????????????? 

Contingent pay

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