Reward Systems
Every
organization’s reward system should focus on these major areas; compensation,
benefits, recognition and appreciation (Sarvadi, 2010). Benefits such as car
loans, medical covers, club membership, ample office space, parking slots and
company cars are ways of rewarding and employees do note the types of benefit
that their organization offers.
Recognition
and appreciation are another integral component of a winning strategic reward
system. Recognition is to acknowledge someone before their peers for desired behavior
or even for accomplishments achieved, actions taken or having a positive
attitude. Appreciation on the other hand centers on showing gratitude to an
employee for their actions. Such rewards help employees to gauge their
performance and know whether they are doing good or bad (Sarvadi, 2010).
The total reward system
Total
reward describes a reward strategy that brings components such as learning and
development together with aspects of the work environment, into the benefits
package. In the total reward system both tangible and intangible rewards are
considered valuable. Tangible rewards arise from transactions between the
employer and employees include rewards such as pay, personal bonuses and other
benefits. Intangible rewards have to do with learning, development and work
experience. Examples of these types of rewards are opportunity to develop,
recognition from the employer and colleagues, personal achievement and social
life. The aim of total reward is to maximize the positive impact that a wide
range of rewards can have on motivation, job engagement and organizational
commitments. The component of the total reward can be described as in the
following figure. (Amstrong and Brown, 2006, p.22)
The
purpose of total rewards is to create a cluster where all the different reward
processes are connected, complementary and mutually reinforcing each other. In
order to achieve internal consistency, the total reward strategies are
horizontally integrated with human resources activities and vertically
integrated with business strategies. (Amstrong and Brown, 2006, p. 23)
The benefits of a total reward system
· Greater
Impact – When different types of rewards are combined, they will have a deep
and long-lasting effect on the motivation, commitment and engagement of
employees.
· Enhancing
the employment relationship –Total reward appeals more to employees due to the
fact that it makes the maximum use of relational as well as transactional
rewards.
· Enhancing
cost effectiveness – because total rewards communicates effectively the value
of the whole reward package, it minimizes the undervaluing of the true costs of
the packages.
· Flexibility
to meet individual needs – due to the variety of rewards, the total reward is
able to answer the individual needs of the employees and hence bind them more
strongly to the organization.
· Winning
the war for talent – because relational reward processes are more difficult to
replace than individual pay practices, total reward gives the organization the
ability to attract and retain talented employees by differentiating their
recruitment processes and hence
becoming “a great place to work.”
Difference between financial and
non-financial benefits
Motivating
employees can be challenging for any business owner or manager. In some
organizations, financial rewards are enough to get the most out of employees.
While in other organizations, other types of incentives may be more effective.
Differences between financial and non-financial rewards are simple to
distinguish, in some respects, but their impacts on and employee’s performance
can be somewhat more difficult to measure.
List of Reference
Jenkins, D., &
Lawler III, E. E. (1992). Strategic Reward Systems. California. Retrieved from http://ceo.usc.edu/pdf/T922205.pdf
Kiyoshi, T. (2006).
Sarvadi, P. (2010). The Best Ways to Reward
Employees. Entrepreneur Magazine
this is good title. the rewards system is very important for building employee morale and job satisfaction. ultimately it contributes to the success of the organization.
ReplyDeleteThe capacity of line managers to actively engage and encourage their employees, as well as the ability of the organization to properly communicate what it is seeking to achieve through corporate objectives, is critical to the success of a complete compensation system. A comprehensive reward strategy is a tool that can help with employee engagement; but, it will not engage people in and of itself unless managers understand what engagement means and, more importantly, how to implement it in their daily actions. While complete reward as a philosophy emphasizes all areas of the employee proposition, pay remains the bedrock upon which all else is constructed. It is still a major factor in deciding whether or not to join a company. Employees should not forget about their base wage, which must be fair and equitable, just because other aspects of the job package are highlighted.
ReplyDelete