INTRODUCTION TO REWARD MANAGEMENT

Meaning of Reward Management

Reward management deals with the strategies, policies and processes required to ensure that the contribution of people to the organization is recognized by both financial and non-financial means.

Reward Management

Reward management is about the development, implementation, maintenance, communication, and evaluation of reward processes.

Characteristics of Reward Management

Reward Management and People Individual, group, employer satisfaction 2. Stakeholder Approach 3. Integrated Reward Management Integration of corporate, personnel and reward strategies. Resources Employees Development Organizational Effectiveness.
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Characteristics of Reward Management

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Strategic Reward management Evidence-Based Reward Management

Areas of Reward Management

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Non-Financial Rewards Employee Benefits- pension plan Pay Structures- wage and salary Performance Management and Measurement

Significance of Reward Management

Reward as source of Organizational effectiveness 2. Reward as medium between organization and employees 3. Reward as avenue of multiple motivations fulfillment
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6. Reward as a source of differentiation 7. Reward as source of employee involvement 8. Reward as source of innovation

Significance of Reward Management

4. Reward as factor of motivation 5. Reward as performance guide. 9. Reward as source of competitiveness 10. Reward as source of organizational harmony.

Project

Find out non financial reward given by at least 3 companies.

THE REWARD MANAGEMENT FRAMEWORK

Fundamental concepts: Resource-based view Human capital management HR process advantage Motivation theory Principal agent theory The psychological contract Primary aims: Support achievement of business goals Develop performance culture Reward people fairly Pay level concepts: Economic theories of pay Principal agent theory Human capital theory The effort bargain Tournament theory Equitable pay

Engage people: job design work system leadership reward

Value jobs: internally equitable externally competitive

Total reward

Financial rewards: Contingent pay Benefits

Non-financial rewards: Recognition Learning and development Work environment

High performance work system

Job evaluation Market rate analysis Grade and pay structure

Performance management Strategic integrated reward: vertical integration with business strategy horizontal integration with other HR strategies internal integration of reward practices Contextual factors: Internal: culture, sector, technology, people, social and political pressures External: globalization, market pay, unions, legislation

Manage rewards: Plan Evaluate Control

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Aims/objective of Reward Management

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To improve organization performance To encourage value added performance To support the management of the organizational culture To achieve integration To support management To empower individuals and teams To compete in the labor market

Aims/objective of Reward Management

8. To motivate 9. To increase commitment 10. To achieve fairness and equity 11. To support new developments 12. To enhance quality 13. To promote teamwork 14. To encourage flexibility

Factors influencing achievement of aims

Contextual Factors 1. Internal Context 2. External Context

Contextual Factors
Internal Context 1. Corporate culture 2. Strategy and rewards 3. Structure and rewards

External Context 1. Globalization 2. Employment trends 3. Demographic trends 4. Rates of pay in the marketplace 5. employment legislation 6. Trade union.

Fundamental concepts
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Resource based view Human capital management Human process advantage Motivational theory Instrumentality theory Content (needs) theory Process theory Cognitive evaluation theory Principal agent theory Psychological contract

1. Resource based view

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Financial Resource Physical resource Human resource General organizational resources

2. Human capital management

Human capital management is an integrated effort to manage and develop human capabilities to achieve significantly higher levels of performance.

3. Human process advantage

Human resource plays a key role in developing the processes and providing guidance to mangers on their implementation.

4. Motivation Theory
Intrinsic motivation Extrinsic motivation

5. Instrumentality theory

Money acts an instrument to achieve ends.

6.Content (needs) theory

All behavior is therefore motivated by unsatisfied needs

7. Process theory
It focus on how behavior changes and person comes to behave in a different way. Behavior change is rewarded.

8. Cognitive evaluation theory

Monetary rewards decreases the interest of people in the work. Ie extrinsic reward erode intrinsic interest.

9. Principal agent theory

Employees (agent) and employer (principal ) Employee- Pay Employer- more work.

10. Psychological contract

Employees perception and psychology

Treatment Security Pay Career

Employers perception and psychology

Competency

Effort
Loyalty commitment

Effective Reward Management

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Focus on alignment Ask employees what they want Measure and manage costs and risks Strengthen performance management system Sharply differentiate between top performances and everyone else Make greater use of incentive based pay

Effective Reward Management

7. Review incentive funding metrics and targets 8.Make communication and education a priority 9. Use long term incentives throughout the organization 10. Manage rewards in a truly integrated way

Prepared by : Asst. Prof. Shirufi Daruwala Sigma Institute of Management Studies