Reward Management

khani.kalyani@gmail.com
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
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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.

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TYPES OF GRADE AND PAY STRUCTURE

Spot rates

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Contingent pay

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