Rewards

An HR manager must know the specific ways which could help him motivate his subordinates. People join organizations expecting rewards. Firms distribute money and other benefits in exchange for the employees availability ,competencies and behaviors. Generally there are four types of rewards:1.Membership and seniority. 2.Job status. 3.Competencies and 4.Performance.

Types of Organizational Rewards

Organizational rewards

Job Status Membership and seniority

Task Performance

Competencies

Job Status based rewards

Firms use Job evaluation Method which helps establish differentials in Status of jobs. Jobs that require more skill and effort ,more responsibility and have difficult working conditions would have more value and therefore be placed in higher pay grades. Firms that do have Job evaluation system still reward job status based on pay survey information about the labor market. High status job holders are also rewarded with more perquisites. One advantage of this method is that it helps maintain feelings of equity .Job evaluation tries to maintain internal equity while Pay Survey helps in Maintaining external equity. They also motivate employees to compete for higher status.

Disadvantages of job status based rewards Such benefits fail to motivate achievers to perform better. Just because he is holding high priced job he is awarded better, no withstanding his performance. Employees tend to exaggerate their job descriptions and job specifications to garner higher grades for their job.

2.Competency based Rewards

Competencies are reflected through skills ,knowledge and traits that lead to desirable behaviors. Where rewards are linked to competencies what emerges is the skill based pay. Competency based rewards have merits.-they develop better-skilled and flexible workforce. Consumer needs are met quickly. Quality of the work will improve Skill based rewards ,however, result in pay disparities which may demotivate employees.

Performance based Rewards

Most common performance based rewards are: Organizational rewards Profit sharing Stock Option Team rewards Gain sharing Special bonus Individual rewards Price rate Commission Merit pay Bonus

Pay and performance relationship

feedback to employee

Employee expects pay

Performance is evaluated

Employee considers

employee sets new expectations

Profit sharing

Here designated employees are allowed to share the profit earned by the company . Employee Stock option Plan Scheme(ESOPS) encourage workers to buy the share and reward them with dividends and appreciation of the shares.

Employee Stock Option Plan

Advantages The firm can receive favorable tax treatment on the earnings earmarked for use in ESOP. An ESOP gives employees a piece of action which help employees to share the growth and profit earned by the company Disadvantages Employees may be forced to join ,thus placing their financial future at greater risk. Another drawback is the use of ESOPS as a management tool to fend off unfriendly takeover attempts.

Team rewards Common in those companies which rely on teams to get work done. Some teams are awarded with special bonuses or gifts if they collectively achieve specific goals. A gain sharing plan is the type of team reward that motivates team members to reduce costs and increase labor efficiency in their work process. Typically the company shares the cost savings with employees.

Individual rewards

The most common is the piece rate which links pay to the units produced by the employee. Commissions are paid to sales people Merit pay based on individual s performance.

Common Executive Perks

TRANSPORTATIO FINANCIAL/LEGA MEMBERSHIP N L COMPANY CAR Financial Country club planning Car allowance Health club Tax planning/tax First class air preparation Luncheon club travel No or low company interest loans airplane usuage Legal counselling

Deciding and administering Benefits 6.3.Benefits. A benefit is a form of indirect compensation. Benefits often include retirement plans, vacations with pay, health insurance, educational assistance and many more programs. Benefits influence the decisions of employees about which particular employer to work for, whether to stay or leave empolyment,and when they might retire. However the unique characteristics of benefits sometimes make them difficult to administer. Eg,govt. involvement in benefits continue to expand.

Benefit objectives Typically ,benefits accomplish four objectives: 1.fostering external competitiveness. 2.Increasing cost effectiveness 3.increasing employee needs and preferences and 4. complying with legal compulsions

Funding of benefits Total benefit costs can be funded both by contributions made by employee Benefit plan can be funded by purchasing insurance provider Some large companies go for self funding of insurance.

Types of Benefits
GOVERNMENT MANDATED SECURITY WORKERS COMPENSATION UNEMPLOYMENT COMPENSATION SUPPLEMENTAL UNEMPLOYMENT BENEFIT SEVERANCE PAY RETIREMENT SECURITY EARLY RETIREMENT OPTION HMO /PPO HEALTH CARE PLANS LONGTERM CARE VISION CARE PRESCRIPTIONS DRUGS EMPLOYER VOLUNTARY HEALTH CARE MEDIAL AND DENTAL FAMILY ORIENTED Family and medical leave Dependent care Alternative work arrangements Time Off Lunch rest breaks Holidays and vacation Sick leave and paid time off SOCIAL AND RECREATIONAL

PRE-RETIREMENT OPTION PSYCHATRIC COUNSELLING DISABILITY RETIREMENT BENEFITS HEALTH CARE FOR RETIREES WELLNESS PROGRAMS Financial,insurance related

Managing an effective Benefit program

When top managers make benefit and services decision ,such as the cost decisions discussed above ,they consider the following :
Step.1 Set objectives and strategy for benefits Step.2 Involve participants and unions in benefit decisions Step.3 Communicate benefits effectively

Step 4 Monitor the costs closely

Benefits Administration.
With of myriad of benefit program ,it is easy for the organizations must make coordinated efforts to administer benefits programs. HR specialists and other managers are responsible for communication aspects of benefits administration. HR professionals are utilizing information systems to communicate benefits information

Flexible Benefits
A flexible benefits plan, sometimes called a flex or cafeteria plan, allows employees to select the benefits they prefer from groups of benefits established by the employer By making a variety of benefits available ,the organization allows each employee to select a combination of benefits within some overall within some overall limits.