Managing rewards

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  • Created by: A92
  • Created on: 17-04-13 18:10


Reward management:

Reward management is an aspect of HRM that deals with the management of remuneration (extrinsic rewards) and management of intrinsic rewards.

Characteristics of rewards -

Whatever form it takes, a reward must have the following characteristics..

  • It must be relevant and important to the individual
  • It must have a value in itself or because of what it represents
  • It must be associated with, or serve, a purpose
  • It needs to have a behavioural effect on the person recieving the award
  • There must be conscious recognition on the part of the reciever and giver than an act of rewarding has taken place
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Reward categories -

Rewards are usually placed in the following categories..

  • Intrinsic rewards - (psychological rewards, i.e. praise  etc)
  • Extrinsic rewards - (intangible rewards, i.e. money, company car etc)

The belief that certain kinds of rewards, particularly monetary incentives, can deliver significant improvements in performance is shared by managers and employees.

Issues in paying employees:

Determining pay -

Overpaying or underpaying employees can both have serious consequences. Therefore, pay can be determined through job evaluation, as well as through external factors, including the levels of unemployment, and typical rates of pay locally. 

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Typical hourly payment systems -

  • Flat rate - (fixed amount over a fixed period of time)
  • Piece rates - (paid per item of work completed)
  • Group/team bonus - (measuring group performance and awarding payment to the group for increased output)
  • Rates for skills, shift premium and overtime premium - (unusual times of work etc)

Performance-related pay (PRP):

This uses financial incentives to link an individuals pay to his or her performance. PRP is often linked to performance objectives set for the individual as part of an annual apprasial process.

Incremental pay schemes - (length of service drives pay increases)

Job evaluation - (the value of the job can be determined in a systematic manner)

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following on

Job evaluation -

  • Non-analytical methods

- 'Job ranking' involves deciding the order of jobs, from the highest worth to the lowest.

- 'Paired comparison' involves each job being considered relative to each other job and is scored depeding on whether it is of lower, similar or higher value.

  • Analytical methods

- A points based system can be used, whereby the job is considered against a predetermined set of criteria and is scored against each of the criteria.

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Equal Pay:

  • Under current legislation, equal value claims can only be made if the employee to whom the claimant is comparing themselves to is of the opposite sex.
  • A points-based job evaluation scheme can help an organisation defend itself from claims, by demonstrating the different value of the jobs within the organisation.
  • Employees can now submit an equal value questionnaire to their employer to assist them with submitting this claim.
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Managing rewards

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