- November 2, 2018
- Posted by: Support Team
- Category: Blog
What is Reward Management?
Reward Management is concerned with the formulation and implementation of strategies and policies. The aim is to reward people fairly, equitably and consistently in accordance with their value to the organization.
Compensation and Reward Management is a Strategic Matter.
Compensation would include rewards when you offer monetary payment, such as incentives, various bonuses and performance bonus. Organisations reward their staff when they attain the goals or targets that they have jointly set with the employees. Rewards can be non-monetary such as a paid vacation for two.
When we mention about compensation, it refers to a salary scale for different levels. Generally, it is classifying the salary scale into non-executive, executive and managerial before the salary range is established.
Objectives of Reward Management
1. Support the organisation’s strategy
2. Recruit & retain
3. Motivate employees
4. Internal & external equity
5. Strengthen psychological contract
6. Financially sustainable
7. Comply with legislation
8. Efficiently administered
Defined as a continuous process of assessing and measuring the performance of an individual and aligning it with the organizational goals. It is the job of the HR people to design an effective performance management system.
Why Performance Management?
It is an expansion of the word “PERFORM” which explains;
P – Potential
E – Enthusiasm
R – Reliability
F – Flexibility
O – Orientation
R – Re engineering
M – Motivation
Why Link Reward to Performance
To connect two ends of the rope, a knot is required; to make it lengthy and useful for long run. Likewise, the tie up between the reward and performance should be made for employee retention and their commitment to work. It ultimately improvise the contributing factor of the employee. Employees should perform well to be rewarded and the approach designed for this is “Pay for Performance”. Apart from the base pay, which is based on job description, a variable pay should be announced for their outstanding performance. Although the pay raise motivates the employees to an extent, ultimately they want them to be appreciated and recognized in a society for their work.
Role of Compensation and Reward in Organization:
Compensation and Reward system plays vital role in a business organization. Since, among four Ms, i.e Men, Material, Machine and Money, Men has been most important factor, it is impossible to imagine a business process without Men. Land, Labor, Capital and Organization are four major factors of production. Every factor contributes to the process of production or business. It is evident that other factors are in-human factors and as such labour plays vital role in bringing about the process of production. Labour therefore expects to have fair share in the production process.