MODULE -3

REWARD MANAGEMENT
Reward management involves the analysis and effective control of employee remuneration and covers salary and all benefits. It assesses the nature and extent of rewards and the way they are delivered as well as considering their effect on both the organization and staff. SIX REWARD PRINCIPLES 1. Create a positive and natural reward experience 2. Align rewards with business goals to create a win-win partnership. 3. Extend people's line of sight. 4. Integrate rewards. 5. Reward individual ongoing value with base pay. 6. Reward results with variable pay.

REWARD SYSTEMS
Reward systems can address several important managerial objectives as they relate to employee motivation. A solid reward system requires concerted attention in its development. The following sections provide a basis for a well-constructed reward system.

Purposes of Reward Systems

Effective reward systems help an organization be more competitive, retain key employees, and reduce turnover Reward systems also can enhance employee motivation and reinforce the image of an organization among key stakeholders or future employees. proper rewards systems can reduce absences. Effective use of rewards can encourage employees to gain the skills that are necessary to help them and the organization grow. Finally, reward systems can also help with recruiting efforts. Just as happy customers may be the best advertisement for a particular product, happy employees are often a great tool for recruiting new employees and making the organization a workplace of choice

TYPES OF REWARDS
Extrinsic rewards Intrinsic rewards

SALARY STRUCTURE
Salary structure is the method in which salaries for a job are set. Market comparisons for a job type, and the pay set for positions above and below in the organizational hierarchy are the internal gauges for how a salary for a position should be set.

SALARY STRUCTURE FORMAT IN INDIA

INCENTIVES
Incentive is an act or promise for greater action. It is also called as a stimulus to greater action. Incentives are something which are given in addition to wagers. It means additional remuneration or benefit to an employee in recognition of achievement or better work. Incentives provide a spur or zeal in the employees for better performance. Types: MONETARY INCENTIVES NON-MONETARY INCENTIVES

INDIVIDUAL INCENTIVE PLAN

TYPES Bonuses Commissions Profit-Sharing Plans Piecework Referrals

GROUP INCENTIVE PLAN

Group incentive plans were designed for situations in which the goals of the project are best-suited to individuals working together rather than apart, as is common in creative agencies, such as advertising or film. When the work has to be done interdependently, there is a strong reason to base earnings on the performance of a group. Group incentive plans can reward things that individual incentive plans cannot, such as teamwork and cooperation. When an organization has many complex aspects to its business, group incentive plans are an appropriate way to structure the payment of employees.

TYPES OF GROUP INCENTIVE PLANS

Profit Sharing Vacations Quarterly Bonus

INDIVIDUAL V/S GROUP INCENTIVE PLNS

Identification An individual incentive plan is intended to reward individual workers based on reaching certain performance goals. A common example is giving a salesperson a bonus for reaching a specified production level or providing additional compensation to a factory worker for producing a desired number of goods during his shift. Group incentive plans are designed to reward each member of a team or organization for a joint accomplishment such as improving profitability or reducing expenses. Suitability An individual incentive plan is typically more appropriate where a worker's productivity does not depend on the performance of others, such as a salesperson who works independently and has complete control over outcomes. Group incentive programs can be suitable where individual contributions are more difficult to measure. An example is a profit-sharing program where all workers are rewarded based on the company's ability to reach an overall profitability goal. Group Incentive Considerations Group incentive programs can foster an atmosphere of teamwork and cooperation in an organization. Top performers may be more willing to help those who are struggling or are new to the organization when rewards are based on the performance of the group as a whole. On the other hand, top performers may come to resent underachievers that they view as unwilling or unable to make an equal contribution to the effort. Individual Incentive Considerations A major benefit of individual incentive programs is that they reward top performers for their efforts and can serve as a motivating force for goal-oriented employees. They may also help to motivate underachievers who previously may not have seen the purpose in putting forth extra effort. Potential drawbacks include the creation of a "dog eat dog" work environment where every worker puts her interests ahead of those of her co-workers and workers pushing the boundaries of ethical behavior to reach their goals, such as a salesperson who lies to prospects just to make a sale.

EMPLOYEE STOCK OPTIONS

An employee stock option (ESO) is a call option on the common stock of a company, granted by the company to an employee as part of the employee's remuneration package. Employee stock options are mostly offered to management as part of their executive compensation package. They may also be offered to non-executive level staff, especially by businesses that are not yet profitable, insofar as they may have few other means of compensation.