Motivation in Practice Ch 14

Reward Management
 Reward management is concerned with the formulation and implementation of strategies
and policies that aim to reward people fairly, equitably and consistently in accordance with
their value to organization.
 It deals with the design, implementation and maintenance of reward practices that are
geared to improvement of organizational team and individual performance.
The Concept of Total Reward
The total reward concept emphasizes the importance of considering all aspects of reward as an
integrated and coherent whole. Total reward consists on all the elements of financial and non-
financial rewards. Both are linked together so that they are mutually supportive.
 Objective of total rewards policies is to ‘drive desired behaviors in your workforce’.
Components of Total Reward

Financial Rewards + Non Financial Rewards = Total Rewards

Where,
Financial Rewards = Basic Pay +Variable Pay + Share ownership + Benefits
Non Financial Rewards = Recognition +Opportunity to use and develop skills + Career
opportunities + quality of working life
Reward Systems
1) Financial Reward Systems
a) Hour or time wage rate Paying manual, clerical and non management works. If
permanent employees work for long time in a day, this system is used to pay
overtime, perhaps at a higher rate.
b) Piece rate A rate is fixed for the production of each unit.
c) Salary Most common form of payment for professionals, supervisory and
management staff.
d) Commission Mostly used in personal selling.
e) Performance related pay Mostly given in the form of bonus in addition to the
actual pay (salary).
f) Profit sharing Paid in addition to the actual pay to motivate and retain employees.
Some time in the form of cash and some times in share.
g) Fringe benefits None monetary form of rewards. (Indirectly finance is used for
such a benefits) like free insurance, company car, discount on company’s products.
2) Non Financial Reward Systems
a) Job rotation Simply switching persons from one task to another task. It gives the
workers multi skills.
b) Job enlargement Giving more tasks but no additional responsibility.
c) Job enrichment giving more tasks with new responsibility with some degree of
decision making authority.
d) Team working Employees work in small groups with common aim. Team working
lead workers to learn different skills.
e) Quality circles Voluntary groups of workers are encouraged to meet and discuss
work related problems and issues.
f) Target setting Targets are set to compare the performance with agreed objectives.
g) Delegation and empowerment Passing down of authority.