INTRODUCTIONINTRODUCTIONTHE OBJECTIVES OF A REWARD STRATEGYTHE OBJECTIVES OF A REWARD STRATEGYTHE ELEMENTS OF REWARD STRATEGYTHE ELEMENTS OF REWARD STRATEGYMANAGEMENT APPRAOCH TO REWARDMANAGEMENT APPRAOCH TO REWARDREASONS TO LINK PAY TO PERFORMANCEREASONS TO LINK PAY TO PERFORMANCEDEVELOPING A REWARD STRATEGYDEVELOPING A REWARD STRATEGYTYPES OF REWARDTYPES OF REWARDGLAXCO WELLCOME & HALIFAX PLCGLAXCO WELLCOME & HALIFAX PLC

MBA-SHRMMBA-SHRMEMPLOYEE REWARD SYSTEMEMPLOYEE REWARD SYSTEM

LECTURE-7LECTURE-7

2

INTRODUCTIONINTRODUCTION

Employee Reward is about how people are rewarded in accordance with their value to an organisation.

Torrington & Hall note hat our attitude to pay is bound up in historical views on pay and attitudes towards capitalism. The concept of `fair day's pay for a fair day's work` is generally accepted but few people can define the term `fair`.

It involves both financial and non-financial reward which consists of an organisation's integrated policies, processes and practices for rewarding its employees in accordance with their contribution, skill and competence framework of an organisation strategies (Armstrong, 2004).

3

THE OBJECTIVES OF A REWARD STRATEGYTHE OBJECTIVES OF A REWARD STRATEGY

Armstrong and Mullins (1994) suggest that reward management strategies must:

Be congruent with and support corporate values and beliefs.

Be linked to organisational performance Drive and support desired behaviour at all levels. Fit desired management styles Provide the competitive edge needed to attract and

retain the level of skills the organisation needs.

4

THE ELEMENTS OF REWARD STRATEGYTHE ELEMENTS OF REWARD STRATEGY

1. BASE PAY

2. ADDITIONAL TO BASE PAY Individual performance related pay Bonuses-lump-sums paid for successful performance Incentives-target related pay to motivate people Commissions-Percentage on sales value Service related pay-increasing pay scale Skill based pay-knowledge based Allowances

3. EMPLOYEE BENEFITS Pension Company car Annual holidays, Insurance cover and sick pays

5

MANAGEMENT APPROACH TO REWARDMANAGEMENT APPROACH TO REWARD

Generally, the approach to reward adopted by employers takes one of three forms:

Focus on service -is characterised by open-ended agreements about continuity of employment, incremental pay scales ad annual reviews.

Focus on skills – produces higher rates of pay with greater skills.

Focus on performance –emphasises target setting, adapting to change and a close relationship between what the employee achieves and what the employee is paid.

6

REASONS TO LINK PAY TO PERFORMANCEREASONS TO LINK PAY TO PERFORMANCE

MOTIVATION RETENTION PRODUCTIVITY COST-SAVINS EMPLOYEECOMMITMENT

7

DEVELOPING A REWARD STRATEGYDEVELOPING A REWARD STRATEGY

Reward strategies deal with issues concerning: Pay structures The use of job evaluation The approach to keeping with market rates Paying for individual performance, competence or

skills. Team pay Relating bonuses to organisational performance The provision of pensions and benefits.

8

TYPES OF REWARDTYPES OF REWARD

Type of reward Type of effortIndividual Basic WageReward Over time Time: maintaining work attendance

CommissionsBonusesMerit Competence: completing task without error

paid leaveBenefits

Team Reward Team Bonuses Co-operation with co-workersGain sharing

Organisational profit sharingReward Share ownership

Gain sharing

Source: Bratton and Gold, Human Resource Management: Theory and

Practice

9

REWARD STRATEGY OF GLAXO WELLCOMEREWARD STRATEGY OF GLAXO WELLCOME

Competitive market rates to attract, develop, motivate and retain quality staff.

Levels of reward that vary, depending on the contribution of the individual, team and operating company to overall business success.

Designed to maximise the potential contribution of all employees.

Cost-effective employees choice in determining component parts of their own benefits package.

10

HALIFAX PLCHALIFAX PLC

Change the emphasis from measuring the job and its accountabilities to recognising the person and the contribution they make to the business.

Reflect the way the organisation is changing staff to be more responsive and flexible to customers needs.

Improve reward for excellent performance by freeing up salary ranges.