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Reward Systems

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Why do we deal with reward systems?

incentives

motivation

business performance

business success

satisfaction

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•wage and salary regulations•profit sharing•company benefits

•personnel development and career opportunities•working hours and break control•work content and place design

Classification of incentive components

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• consistence and support to the corporate targets and strategies

• flexibility while changing of competitive and environmental conditions

• compliance of laws, standards and ethical principles

• consideration of stakeholder interests

General goals of reward systems

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Components of monetary incentive systems

fixed periodic payments salary

situation based fixed and variable payments

premiums, bonus …

indirect fixed periodic payments

health insurance, invalidity pension …

indirect monetary payments company car, mobile phone …

neutral payment components

participation (e.g. equities)

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Overview of wage and salary classes

certain wage rate per time

e.g. bonus for quality, punctuality

single/ group premium

e.g. time-based piece rates

e.g. christmas bonus

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Components of non monetary incentive systems

personnel development and career opportunities

social communication

group membership

cooperative management

working hours and break control

work content design

workplace design

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• flexible payment design employee is able to choose between different payment components

• in return for use of individual selection the employee disclaim a part of his salary

• characteristics:– individualization of payment components according to an specific

budget,– periodically returning option and– an offer with several alternatives

The Cafeteria-Approach

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advantages:• company can win new staff • and increase the connection of

the employees to the enterprise

• annual expenditures for this area are exactly calculable

• increased motivation of staff• through periodically returning

option employee can adopt his changed needs

• his job satisfaction as well as identification with his employer increase

The Cafeteria-Approach

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The Cafeteria-Approach

disadvantages:• in general awarded

achievements are easily considered as natural and expected incentive effects are missed

• some options limited by tax legislation and wage agreements

• good consultation of the employee is also often absent

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Conclusion• Incentives are drivers for motivation

successful performance • It depends on various factors (e.g.)

Company policy Competitive context law and regulations

mixed forms of monetary and non-monetary reward

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Thank you for your attention!!!