Download - reward-systems
REWARD SYSTEM
IT’S ALL ABOUT PEOPLEAND
RELATIONSHIP
CONTENTS
INTRODUCTION
PURPOSE OF REWARD
CATEGORIES
TYPES OF REWARDS
ADVANTAGES &DISADVANTAGES
CONCLUSION
INTRODUCTION
• Wilson (1995) defines reward systems as follows:“A reward system is any process within an organization
that encourages, reinforces, or compensates people for taking a particular set of actions. It may be formal or informal, cash or noncash, immediate or delayed”
•The reward and recognition industry had its roots in the depression years of the 1930’s.
•It was during that time that pioneers such as E.F. MacDonald and Edward Maritz began to sell their jewellery, watches and other merchandise to corporations as sales incentives and service awards for employees.
PURPOSE OF REWARD
ATTRACT, MOTIVATE AND RETAIN
CATEGORIES
• As referred by Michael Armstrong (2007), all aspects of rewards, namely base pay, contingent pay, employee benefits and non- financial rewards, which include intrinsic rewards from the work itself, are linked together and treated as an integrated and coherent whole .
• Intrinsic reward: is personal, it includes feelings of satisfaction to have finished a particular task.
• Extrinsic reward: outside the control of the employee. It includes incentives, share options, pension schemes, insurance and crèches.
The lack of attention to these details could create de-motivation and dissatisfaction.
Types of
Reward
Payment by results
Time rates
Individual/group performance-related pay
Skill-competency based pay
Cafeteria or felxible bnefit
system
TYPES OF REWARDS
Time rates
This reward system is related to the number of hours worked and it experience rather than performance. It gives importance on the value of the task rather than on the value of the skills, abilities the employee brings to the job, or on the quantity or quality of performance.
Advantages: It is open to inspection; It creates stability and retention of employees. system is easy to administer and allow labour cost to be predicted;
It does not emphasise quantity of output to the detriment of quality.
Disadvantages:
Employees are not motivated to become more productive.
This happens because both good and bad performers are rewarded for the reason why they are in the same grade.
Payment by result
It links pay to the quantity of the individual’s output. The pay is usually linked to the number of units of work produced.
Advantages:
The employee is motivated to put effort so he can increase his income;It is fair because the reward is related to the level of production; wages are linked to production and less supervision is required.
Disadvantages:
It is difficult to measure output in certain jobs, safety standards could be compromised.
Individual/group performance-related pay
It considers not only results or output but also actual behaviour in the job. It consist of a lamp sum, or a bonus as a percentage of basic salary with quality of permormance determing the magnitude of the percentage increase
Advantages:
It combines goals with emotions, there is a congruency between organisational and personal goals, the remuneration packaging is fair, the culture of organisation is supportive, employees receive useful feedback
Disadvantages:
There is not attempts made to relate individual performance to organisational objectives, appraisal is not conducted fairly,open communication between manager and subordinates is descouraged, poor performancers are punished
Skill-competency-based pay
It places the emphasis on inputs that consist of knowleadge, skills and competencies injected into the job by employees
Advantages:Fair amount of consultation and employee participation;
there is a strong encouragement in changing behaviour; there is an appropriate level of training and much time is invested in the process
Disadvantages: Skills obsolence which could be arise in condition of changing
technology; it is possible that this system do not pay attention to the skills that are no longer significant or they are not required at all
Cafeteria or flexible benefit system
The felxible benefit system is a departure from the traditional model of a single system of remuneration for everybody” (Meyer, 2000)
It is calculated within an overall remuneration or compensation package and it includes a lot of benefits.
Advantages:
Employees choose benefits to meet their needs, during periods of change it is an harmonise rewards, employees are given a sense of control and involvment, employers are seen as more responsive to employees’needs.
Disadvantages:
Choices can cause problems , the schemes can be complex to operate
Example
Employee Recognition Gone Wrong , Then Right
http://www.youtube.com/watch?v=KFplP0ZNzjQ&feature=PlayList&p=E9E0E27B199F9547&index=0&playnext=1
CONCLUSION
Thanks for Listening
Queries?