Employee reward within ‘HRM’

Systemic integration?

Locating ‘the new pay’: a perceived dichotomy

• From stable contexts, mass production and hierarchical organisation for ‘scientific management’ and standardised, incremental pay progression

• To unpredictable, globalised competition, fluid organisation, service orientation, needing management- workforce shared responsibility for performance and contingent reward

Heery (1996)

Strategy, HRM and reward• If HRM is synonymous with (proactively defined) strategy, it

appears to be a logical progression that, consequent on choosing an ‘HRM approach’ to people management, there will be a ‘strategic’ approach to reward as an HRM sub-system.

• But while this model assumes business-goal directed and unified rational organisations, with integrated managerial strategies, in the complex and socially constructed world of eg large multinational firms, empirical evidence suggests an opportunistic mix of corporately planned and locally situated reaction towards employment practices, with reward management as a dynamic, flexible and emergent phenomenon (eg Bloom et al, 2003; Brown and Perkins, 2007).

• Influences on reward design and practice may be understood in this way, accounting for factors such as equity, as well as ethical and moral considerations beyond unquestioning acceptance of ‘strategic reward’ as a self-evident choice (Kessler, 2007).

Source: Perkins, White and Cotton ‘A ripping yarn: an intelligent approach to a complex subject’, People Management, October, 2008

Accumulated human capital (‘talent’)

Institutional features eg• Intermediation – employer associations/trade unions• Institutional investor influence • Legal and social norms

Employee work–life constraints and opportunities

Management style – autocratic/democratic

Demand for capacity to perform work tasks

Supply: availability + willingness to accept employment/direction

Degree of emphasis on short-/long-term recognition: transactional v. relational contract

Employee expectations

Reward choices

Competition for work and

workers

Mediating factors:

• Organisation characteristics

• Perceptions of internal and external equity

• Shared experience of effort-reward deal- making (mutual trust affecting perceived outcomes’ legitimacy)

Employee reward: keeping the big picture in perspective

Actors in employee reward management under the HRM

HR specialists encounter expectations about people and the role expected and tolerance for procedure or ambiguity when advising specific organisation managements.

Strategic reward implies a unitary view of the employment relationship where management provide the objective lead.

But even in the most hard-edged individualised contexts, line management aspirations willing pluralism to go away in relations with employees may not be enough.

One implication is for HR to move beyond traditional concerns with designing and administering pay structures and/or incentive arrangements, salary market survey and review planning, in reaction to internal or external stimuli, to a more proactive engagement to synchronise organisation-wide people management top-down and bottom-up.

Summary• HRM is an idea about socio-economic

organisation as well as a set of employment relationship practices.

• HRM ideas reflect sources: do they transplant across contexts?

• Strategic reward ideology within HRM reflects not only orientations to relations in employment but also strategy: pre-determined or emergent.

• There is a significant opportunity for HR ‘thinking performers’ to diagnose contexts and shape action choices mindful of the logical consequences.