Reward Management

Learning Outcomes

Define reward management

Explain aims of reward management

Briefly explain the components of a reward system

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Learning Outcomes Cont… Explain the concept of total

reward

Identify the significance of total reward

Define the term pay management

Explain factors affecting pay management

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REWARD MANAGEMENTReward management is concerned with formulation and implementation of strategies and policies with the purpose to reward people fairly, equitably and consistently in accordance with their value to the organization and thus help the organization to achieve its strategic objectives.

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NEED OF REWARD MANAGEMENT

Reward people according to what the organization values and wants to pay for

Reward people pay for the value they create

Reward the right things to convey the right message

Develop a performance cultureMotivate people and obtain their

commitment and engagement 5

NEED OF REWARD MANAGEMENT CONT…

Help to attract and retain high quality people within the organization

Develop a positive employment relationship and psychological contract

Align reward practices with both business goals and employee values

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TOTAL REWARDTotal reward includes all types of rewards, indirect and direct and intrinsic and extrinsic. Each aspect of reward, namely base pay, contingent pay, employee benefits and nonfinancial rewards, which includes intrinsic rewards from work itself, are linked together and treated together.

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MODEL OF TOTAL REWARDS

PAY/REWARD

• Base pay

• Contribution pay

• Shares

• Profit sharing

TRANSACTIONAL

RELATIONAL (INTANGIBLE)

IND

IVID

UA

L COM

MU

NAL

BENEFITS

• Pensions

• Health care

• Perks

• Flexible benefits

LEARNING AND DEVELOPMENT

• Workplace learning

• Training

• Performance management

• Career development

WORK ENVIRONMENT

• Core values

• Leadership

• Employee voice

• Job/work design

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PAY MANAGEMENTPay Management is the HRM function that deals with development, implementation and maintenance of a base pay system that is fair.

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WAGE & SALARYBase Wage Salary

As per payment base

Wage is paid according to the number of units produced or sold

Salary is paid according to the time spent for working

As per types of jobs

production and sales employees

Clerical, supervisory and managerial employees

As per time of payment

Daily or hourly Weekly or monthly

As per nature of work

Work is measurable clearly and quantitatively

Work is subjective and difficult to measure quantitatively

As per accounting base

Considered as expenses to calculate production cost or gross profit

Considered as expenses to calculate net profit

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FACTORS AFFECTING PAY Government legal requirements Trade unions Cost of living Demand and supply Productivity Financial ability Competitive pays

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PAY MANAGEMENT PROCESS

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CHALLENGES FOR PAY MANAGEMENT

Prevailing wage or salary rates Union power Wage and salary policies and

adjustments Pay secrecy and pay openness Competency-based pay Vs

skilled- based pay13

QUESTIONS/SUGGESTIONS

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