Employee Reward

After engaging with ideas discussed in this text you should:

• be familiar with the alternative approaches to employee reward

• recognise the role of context in relation to employee reward

• be able to reflect systematically on the consequences of choices of approach in context

Map and compass: a plan of the book

What is employee reward?

‘A reward may be anything tangible or intangible that an organisation provides to its employees either intentionally or unintentionally in exchange for the employee’s potential or actual work contribution, and to which individuals attach a positive value…’

John Shields (2007)

The effort-and-reward bargain*

In its socio-economic relational context …

‘Every employment contract consists of two elements: (1) an agreement on the [reward] rate … (either per unit of time or per unit of output); and (2) an agreement on the work to be done.’

Hilde Behrend (1957)*

* Not a recent revelation, but it may be overlooked in ‘technique recipes’!

Reward systems

• Classical labour economics models may be viewed as ‘closed’ wage-setting systems.

• Occupational psychology may equally focus on stimuli internal to the individual organism.

• General systems theory (although not without critics) enables the analysis of effort-reward relationship patterns as ‘open’ systems that interact dynamically and reciprocally with the environment, to understand the way different reward systems operate in practice.

Orientations towards the workforce: reward management implications

Employee reward management contexts

Managers ‘should … try to define – given the current limitations of the environment, and the chances of altering them to make “elbow room” – what the best course of action might be.’

(Lupton and Gowler, 1969: emphasis in original)

Context factors: some examples (in no particular order)industry sector, age and scale of enterprise, state of economic conditions, legislation (eg national minimum wage, disclosure requirements on executive remuneration), extent of globalisation, presence or absence of trade unions, skills shortages/tightness of labour market(s)/‘talent war’ pressures, technological profile, geographical setting, local/transnationally mobile workforce, corporate governance priorities, rate of product/service change, duration of value-creation cycles, annual employee voluntary turnover, workforce demographics, ownership/finance capital investment profile, carbon footprint, management style and ‘values’, organisational ‘culture’, mergers and acquisitions planned/pending, joint ventures/partnerships

– you fill in the gaps (class exercise)

Summary• Reward defined – extrinsic and intrinsic• An effort bargain – relationship-based• Systems thinking – interacting factors• Employer-employee orientations• Corporate, national and international

contexts for thinking and acting on employee reward

Complementing the Employee Reward text, for an overview of employee reward follow the Internet hyperlink http://www.cipd.co.uk/subjects/pay/general/payrewrdovw.htm for a CIPD factsheet.

NB All citations in these slides can be traced to the list of references in the Employee Reward text.