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Reward management.

Extracts from this document...

Introduction

Part A Introduction Reward management relates pay and other benefits to objectives of the company and the individual. Reward Management is of fundamental importance in relation to good management. Without a solid approach towards reward management, an organisation is likely to have an unsatisfied or unmotivated workforce. It covers both strategy and practice in regards to pay systems. It has to support the achievement of the business strategy. The overall aim of reward management is that employees should be rewarded for the value they create. Individual Pay is important to the individual worker, as it is the foremost reason why most go to work. According to Milcovich, Newman and Milcovich (2001, p6): "employees may see {reward} as a return in exchange between their employer and themselves, as an entitlement for being an employee of the company, or ... for a job well done" (original emphases)1 An organisation's reward policy has to take account of individual needs and what influences employee satisfaction with their needs. There are many different ways to reward staff for their performance, but it is essential that the members of staff value the rewards that are on offer. They also have to believe that, in order to obtain a better reward, they have to put in a better performance. Many organisations use contingent pay, pay that is related to "performance, competence, skill or service" (Armstrong, 2003) This results in many different forms of reward for the individual. It can be a cash lump sum, which leads to incentives such as bonus schemes, profit sharing, and share ownership. ...read more.

Middle

This depends on the organisations core values, and if it chooses the correct contingency pay scheme, it will have employees who are working in harmony with the businesses needs and goals. It supports and promotes the behaviour that the organisation is looking for from staff. If an organisation can develop a competitive pay policy, it will be able to attract and retain a higher standard and quality of employee. By using the different types of reward structure, an organisation can decide whether or not it wants to be customer based, or performance based, or something else. If the organisation chooses the wrong strategy, it can send the wrong messages to not only staff, but to customers also. If an organisation has the wrong reward system in place, it is extremely likely that staff turnover will be high, resulting in high costs for the organisation. The reward management keeps the staff in the company which gives the business stability. When an organisation is first setting up, a good, albeit small, reward strategy will contribute a lot to the company, and could even keep it going in the long run. Even if at the start it is using non-cash rewards, such as having a party for all those involved if the strategy rewards those who stuck with the company during the hard times, it will acquire a good reputation, and in the future will be able to attract more workers. Therefore, an organisation benefits greatly from a good reward strategy, even a small, seemingly insignificant strategy. ...read more.

Conclusion

A competency-based pay system is flexible and allows for personal development. But, in order for it to be successful, the competencies should be clearly defined and measurable with the desired outcomes attached. Blane and Rivershire should remember however that competency levels can be complicated to introduce, and that it will not be a quick solution for them. But, for BRBS, they will have to do something drastic in order to secure their staff and increase their position in the top 20. The second part of the strategy that could be applied to BRBS is an employee recognition scheme. These are about celebrating achievement and encouraging even greater effort in the future. They have become increasingly popular in acknowledging the efforts and achievements of staff. An awards scheme can create much goodwill for relatively modest expenditure. This will appeal to BRBS, who are looking to cut back costs. A key benefit of a recognition programme is that it allows an employer to highlight desired actions and behaviours, holding up as role models those employees who best characterise them. A successful scheme can help to motivate employees, create a culture of customer service and raise performance company-wide. Increasingly, employees qualify for awards when their actions are seen to embody company values. This would further move Blane and Rivershire towards the customer service industry that they want. Another positive factor about the employee reward scheme is that it can be done quickly and cheaply, therefore, it can put in place before the competency related pay scheme. But as more often than not, employee recognition schemes do not provide much money, it could only be used as a supplement to the competency related pay scheme. ...read more.

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