Total Rewards Management
Reward management is a strategic approach to incentivising your workforce to improve performance, engagement and morale:
* Reward employees according to a business’s values and that they are prepared, or are able, to fund
It rewards employees for the value they create and contributes to employee wellbeing.
* Reward the things that convey the right message about what is important in terms of behaviours and outcomes within a business.
* It helps to contribute to a strong, positive company culture
It strengthens your EVP (employee value proposition) – your EVP is what sets you apart from other employers (your competitors) and helps you attract top talent to your organisation
* It can help motivate employees and confirm their commitment to the business and engagement within it
Help to retain top talented individuals to your business.
* It increases productivity
* It helps you to build a strong reputation – this can be a key way to engage employees, contribute to a positive reputation and have a significant influence on your clients.
Importance of reward management
Typically, businesses are always switched on when it comes to policies surrounding employees’ lack of performance or failure to hit targets. Having a reward management programme in place helps to balance that and prevent a negative atmosphere resulting in a downturn in productivity and an uptick in employee turnover.
Principles of Reward
Development of reward principles based on values and culture. The project team developed a set of Total Reward principles based on four strands:
1. Pay,
2. Benefits,
3. Values, and
4. Career progression.
Recognition and Rewards: Rewards and recognition are considered powerful tools, which are used by an organization to motivate its employees.
Rewards and recognition are remuneration based systems, which include bonus, perks, allowances and certificates.
Remuneration methods :
Often people are under the impression that companies only offer remuneration based systems and not recognize the employees’ performance.
In an organization, you will find following systems in place to boost motivation in addition to the regular compensation.
1. Remuneration pay
2. Non-financial benefits
3. Share options
1. Remuneration Pay
Pay is an essential factor, which is closely related to job satisfaction and motivation. Although pay may not be a reward as this is a static amount, which an employee will be paid every month, it will be considered as a reward if similar work is paid less.
Additional Hour’s Rewards
This is similar to that of overtime. However, it is paid to employees if they put in an extra hour of work for working at unsocial hours or for working long hours on top of overtime hours.
Commission
Many organizations pay commission to sales staff based on the sales that they have generated. The commission is based on the number of successful sales and the total business revenue that they have made. This is a popular method of incentive.
Bonus
Bonuses will be paid to employees, who meet their targets and objectives. This is aimed at employees to improve their performance and to work harder.
Performance Related Pay
This is typically paid to employees, who have met or exceeded their targets and objectives. This method of reward can be measured at either team or department level.
Profits Related Pay
Profits related pay is associated with if an organization is incurring a profit situation. If the organization is getting more than the expected profits, then employees receive an additional amount of money that has been defined as a variable component of the salary.
Paid leave
A highly sought-after process, it offers additional vacation days, sick leave, or personal leave.
Fringe benefits
As an employee, you can receive supplemental benefits like health insurance, paid time off, and retirement plans.
Payment by Results
This is very similar to that of profit related pay. This reward is based on the number of sales and total revenue generated by the organization.
Piece Rate Reward
Piece rate reward is directly related to output. The employees get paid on the number of ‘pieces’ that they have produced. These pieces will be closely inspected to make sure that quality standards are being met.
2. Non Financial Benefits
Employees will not always be motivated by monetary value alone. They do require recognition to be motivated and to perform well in their work.
Professional development training This lets a company invest in employees’ skills and knowledge.
Job Enrichment
This is a common type of recognition that is aimed at employees to get motivated. Job enrichment allows more challenging tasks to be included in the day-to-day tasks performed by the employee.
Working the same way everyday may prove to be monotonous to the employees. Therefore, there will be a lack of interest and the performance drops.
Job Rotation
Unlike job enrichment, job rotation refers to shifting employees between different functions. This will give them more experience and a sense of achievement.
Teamwork
Teamwork is also considered as recognition. Creating teamwork between team members will improve performance at work. Social relationships at work are essential for any organization.
Healthy social relationships are considered as recognition to the employees. This improves their morale and performance.
Empowerment
Empowerment refers to when employees are given authority to make certain decisions. This decision making authority is restricted only to the day-to-day tasks.
By giving employees authority and power can lead to wrong decisions to be made which will cost the company. Empowerment will not relate to day-to-day functioning authority. This will make employees more responsible, vigilant and increase their performance.
Training
Many organizations place a greater emphasis on training. This is considered as recognition for employees. Training could vary from on the job training to personal development training.
Training workshops such as train the trainer or how to become a manager will give employees a chance to switch job roles and this will increase their motivation levels.
Awards
This again is an important type of recognition that is given to employees, who perform better. Organizations have introduced award systems such as best performer of the month, etc., and all these will lead employees to perform better.
Below are the main objectives of implementing a reward system :
1. Motivation
Reward systems act as a catalyst for motivation by directly linking desired behaviours and performance with positive reinforcement. This can take various forms, from bonuses for exceeding sales targets to public recognition for exceptional customer service.
2. Engagement
Beyond sheer motivation, reward systems contribute significantly to employee engagement. When employees feel valued and appreciated for their contributions through well-designed rewards, they become more invested in their work and dedicated to the organisation’s success.
3. Accountability
Effective reward systems go beyond simply recognising achievements by promoting accountability among teams. This instils a sense of ownership and responsibility within individuals and teams, encouraging them to take initiative, strive for excellence, and hold themselves accountable for results.
4. Talent management
Competitive and attractive reward systems play a crucial role in talent management. They serve as a magnet, attracting top talent seeking opportunities for recognition, growth, and financial well-being.
Additionally, well-designed rewards contribute to employee retention by creating a sense of value and appreciation, discouraging them from seeking opportunities elsewhere.
5. Strategic alignment
Finally, reward systems play a vital role in ensuring alignment between individual goals and organisational objectives. By linking rewards to behaviours and outcomes that contribute to achieving the organisation’s strategic goals, you will find that you’ve created a unified force, much like what is taught in HR analytic courses.
Advantages of Introducing Rewards and Incentives
While we’ve outlined the broader benefits of reward systems for individuals and organisations, let’s see why they’re useful for both forces: employees and organisations.
For Employees
1. Greater motivation, job satisfaction, and sense of accomplishment
Well-designed reward systems directly link positive outcomes with desired behaviours, acting as a powerful motivator. This can be financial rewards for exceeding sales targets, public recognition for exceptional customer service, or offering additional paid time off for exceeding work hours.
2. Increased learning and development opportunities
Reward systems can be designed to incentivise continuous learning and development. This could involve offering additional training opportunities for exceeding performance goals or providing tuition reimbursement for completing relevant certifications. An HR analytics course equips you to analyse data on employee skills gaps and training effectiveness.
3. Improved well-being and sense of belonging
Effective reward systems go beyond financial incentives and recognise various contributions to the organisation. These could include acknowledging teamwork, celebrating individual milestones, or offering flexible work arrangements that promote work-life balance.
For Organisations
1. Improved employee performance and productivity
When employees feel valued and motivated by well-designed reward systems, they are more likely to put in their best effort. This can directly translate to improved performance, higher quality work, and increased efficiency.
2. Reduced turnover and absenteeism
Offering competitive rewards can be a powerful tool for attracting and retaining top talent. Additionally, a well-designed system that recognises and values employee contributions can foster a sense of loyalty and reduce the desire to seek opportunities elsewhere.
3. Enhanced employer brand and reputation
A well-designed reward system prioritising employee well-being, growth, and recognition contributes positively to an organisation’s employer brand. This can attract top talent seeking not just competitive salaries but also a company culture that values its employees and invests in their development.
Factors Behind Designing a Reward System
Designing an effective reward system requires careful consideration of various factors to ensure it truly motivates employees and delivers desired results.
Here are some key factors to consider.
1. Organisational goals and values
The primary purpose of the reward system should be to support and incentivise behaviours that contribute to achieving the organisation’s strategic goals. Analysing these goals and values helps determine which behaviours and outcomes should be rewarded. Consider opting for an HR analytics course to learn what factors you need to look out for.
2. Employee needs and preferences
Understanding your workforce’s needs and preferences is crucial if you’re planning to design a system that resonates with them. This includes factors like demographics, job roles, career aspirations, and preferred motivational styles. Conduct surveys and focus groups and analyse data on past responses to rewards for obtaining better insights.
3. Market competitiveness and industry standards
Staying competitive in the job market is essential. Researching industry benchmarks and analysing compensation and benefits offered by competitors helps ensure your reward system is attractive and retains top talent.
4. Budgetary constraints
Financial resources available for the reward system need to be considered realistically. Striking a balance between offering competitive rewards and maintaining financial sustainability is crucial.
5. Type of work and performance measurement
For creative or knowledge-based work, intrinsic rewards and recognition might be more effective than solely focusing on financial incentives. On the other hand, performance-based rewards like bonuses might be more suitable for jobs with clearly defined metrics and goals.
Conclusion
You can adopt the specific reward type based on your organisational goals and influence organisational outcomes.
Rewards and recognitions are equally important when trying to promote performance and morale amongst employees. The above methods can be used to motivate employees.
Since all the methods may not be applicable to the same organization, the organizations should make sure that they choose the best rewards that suit the organization.
Total reward is a reward strategy bringing together all the investments an organisation makes in its workforce (e.g. pay, pensions and learning and development), with everything employees value in working for an organisation, such as flexible working and career opportunities.
Overall, the outcomes of a reward system can include improved motivation, increased performance, higher employee retention, and incentivized consumer behavior.
By rewarding and recognising on a frequent basis, you can build a culture of appreciation that spreads throughout the company. This then motivates people to do more, and to perform better. It’s not just about completing projects or hitting sales targets either.
Advantages
1. Greater motivation, job satisfaction, and sense of accomplishment.
2. Increased learning and development opportunities.
3. Improved well-being and sense of belonging.
4. Improved employee performance and productivity.
5. Reduced turnover and absenteeism
RAJEEV VERMA 