NAME OF COURSE:
”REWARD MANAGEMENT PRACTICE”
NAME OF BOOK: REWARD MANAGEMENT
PRACTICE
AUTHORS:
MICHAEL ARMSTRONG
MARCH,2019
IB&M
CHAPTER 1 AN OVERVIEW OF REWARD
MANAGEMENT
REWARD MANAGEMENT DEFINED
Reward management is concerned with strategies,
policies and processes required to ensure that the value
of people and the contribution they make to achieving
organizational, departmental and team goals is recognized
and rewarded. It is about the design, implementation and
maintenance of reward systems( interrelated reward
processes, practices and procedures) that aim to satisfy
the needs of both the organization and its stakeholders
and to operate fairly, equitably and consistently.
These systems will include arrangements for assessing
the value of jobs through job evaluation and market
pricing, the design and management of grade and pay
structures, performance management processes, scheme
for rewarding and recognizing people according to their
individual performance or contribution and/or team or
organizational performance, and the provision of
employee benefits. Reward systems are described.
It should be emphasized that reward management is not
just about financial reward, pay and employee benefit. It is
equally concerned with non-financial rewards such as
recognition, learning and development opportunities and
increased job responsibility. There is an ethical dimension.
Reward management policies in association with HR policies
can help to create a working environment that provides for
the just, fair and ethical treatment of employees.
AIMS OF REWARD MANAGEMENT
Support the achievement of business goals through high
performance;
Develop and support the organization’s culture;
Define what is important in terms of behaviours and
outcomes;
Reward people according to the value they create;
Reward people according to what the organization values;
Align reward practices with employee needs;
Help to attract and retain the high-quality people the
organization needs;
Win the engagement of people.
ACHIEVING THE AIMS IN GENERAL
The overall approach to achieving reward aims is based on
a philosophy and takes into account factors related to
distributive and procedural justice, fairness, equity,
consistency and transparency. It is also concerned with
achieving strategic alignment and cultural/contextual fit,
developing a high- performance culture and segmentation.
PROCEDURAL JUSTICE
• The viewpoint of employees is given proper
consideration.
• Personal bias towards employees is suppressed
• The criteria for decisions are applied consistently to all
employees
• Employees are provided with early feedback about the
outcome of decisions.
• Employees are provided with adequate explanations of
why decisions have been made.
FAIRNESS
EQUITY
Equity is achieved when people are rewarded
appropriately in relation to others within the organization.
Equitable reward processes ensure that relativities
between jobs are measured as objectively as possible and
that equal pay is provided for work of equal value.
Consistency
A consistent approach to reward management means that
decisions on pay do not vary arbitrarily-without due cause-
between different people or at different times. They do not
deviate irrationally from what would generally be regarded
as fair and equitable.
TRANSPARENCY
Transparency exists when people understand how reward
processes function and how they are affected by them. The
reasons for pay decisions are explained at the time they are
made. Employees have a voice in the development of
reward policies and practices.
ACHIEVING THE SPECIFIC AIMS
HELP TO ATTRACT AND RETAIN HIGH-QUALITY
PEOPLE
RATES OF PAY IN THE MARKET PLACE
EFFECTIVE REWARD IN THE BEST PERFORMING
FIRMS
The best-performing firms as established by Watson Wyatt
(2002) view their reward pro- grammes differently form the
lower- performing organizations:
• Top firms are more likely to use rewards as tools to engage
people in improving business performance.
• These firms make greater efforts than others to
communicate their plans and to measure reward plan
effectiveness.
• They are more likely than the rest to link rewards to their
organization’s business strategies.