Reward management ( part 1 )

REWARDING PEOPLEMin Khaung ( EMPA – 8 )

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REWARD MANAGEMENT DEFINED

Reward management is concerned with the strategies, policies and processes required to ensure that the value of people and the contribution they make to achieving organizational, departmental and team goals is recognized and rewarded

Min Khaung ( EMPA - 8 )

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AIMS OF REWARD MANAGEMENT

Reward people according to what the organization values, wants to pay for and for the value they create.

Support the achievement of business goals Promote high performance & Develop a

performance culture. Support and develop the organization’s

culture


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AIMS OF REWARD MANAGEMENT

Define the right behaviors and outcomes Align reward practices with employee

needs Help to attract and retain high quality

people Reward the right things to convey the

right message about what is important in terms of behaviors and outcomes.

Motivate people and obtain their commitment and engagement.


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AIMS OF REWARD MANAGEMENT Help to attract and retain the high quality people

the organization needs. Develop a positive employment relationship and

psychological contract. Align reward practices with both business goals

and employee values. Operate fairly – people feel that they are treated

justly in accordance with what is due to them because of their value to the organization


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AIMS OF REWARD MANAGEMENT Apply equitably – people are rewarded appropriately

in relation to others within the organization, relativities between jobs are measured as objectively as possible and equal pay is provided for work of equal value.

Function consistently – decisions on pay do not vary arbitrarily and without due cause between different people or at different times.

Operate transparently – people understand how reward processes operate and how they are affected by them. Min Khaung ( EMPA - 8 )

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THE REWARD SYSTEM

A reward system consists of the interrelated processes and practices that combine to ensure that reward management is carried out effectively to the benefit of the organization and the people who work there


REWARD SYSTEM PROCESSESBusiness strategy

Reward strategy

Total rewards

Financial rewards

Pay determination

Base pay management

Contingent pay

Employee benefits

Performance

Non-financial rewards

Recognition

Job design

Opportunity todevelop

Work environment

Performance management

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THE REWARD STRATEGY

sets out what the organization intends to do in the longer term to develop and implement reward policies, practices and processes which will further the achievement of its business goals.


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REWARD POLICIES

Reward policies address the following broad issues: the approach to total reward; the scope for the use of contingent rewards

related to performance, competence, contribution or skill;

the role of line managers; transparency – the publication of information

on reward structures and processes to employees.


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TOTAL REWARD

Total reward is the combination of financial and non-financial rewards available to employees.


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TOTAL REMUNERATION

Total remuneration is the value of all cash payments (total earnings) and benefits received by employees.


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BASE OR BASIC PAY

The base rate is the amount of pay (the fixed salary or wage) that constitutes the rate for the job.

It may be varied according to the grade of the job or, for manual workers, the level of skill required.

Influenced by internal and external relativities.


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BASE PAY

The management of base pay uses the information from market pricing and job evaluation to design and operate grade and pay structures that cater for job-based pay and allow scope for pay to progress within the structure through person-based pay


PAY DETERMINATION

Pay determination is the process of deciding on the level of pay for jobs or people. Its aims, which frequently conflict, are:

1. To be externally competitive in order to attract, engage and retain the people required by the organization ( External Equity )

2. To be internally equitable in the sense that rates of pay correctly reflect the relativities between jobs( Internal Equity )

EXTERNAL EQUITY

Employees’ perception of external equity—which concerns the fairness of what the company is paying them compared with what they could earn elsewhere—are critical in such employment relationships.

Organizations with an external labor orientation must assess how their compensation compares with the compensation offered by other organizations.

INTERNAL EQUITY Employees’ perceptions of internal equity—their

beliefs concerning the fairness of what the organization is paying them compared with what it pays other employees.

Organizations with an internal orientation spend time and effort comparing and analyzing pay differences among their own employees.

Pay practices, such as how much each person makes, are usually less secretive in these organizations than in organizations with an external orientation.

JOB EVALUATION

Job evaluation is a systematic and formal process for defining the relative worth or size of jobs within an organization to establish internal relativities. It is carried out through either an analytical or a non-analytical scheme.

MARKET PRICING & MARKET RATE ANALYSIS

Market rate analysisThe process of identifying the rates of pay

in the labor market for com-parable jobs to inform decisions on levels of pay within the organization.Market pricing

The process of making decisions on pay structures and individual rates of pay and obtaining information on market rates (market rate analysis).

GRADE AND PAY STRUCTURES

Jobs may be placed in a graded structure according to their relative size. Pay levels in the structure are influenced by market rates. The pay structure may consist of pay ranges attached to grades which provide scope for pay progression based on performance, competence, contribution or service.

OTHERS FACTORSContingent pay - Additional financial rewards may be provided that are related to performance, competence, contribution, skill or service in the grade.Employee benefits - pensions, sick pay, insurance cover, company cars.Performance managementNon-financial rewards - achievement, autonomy, recognition, scope to use and develop skills, training, career development opportunities and high quality leadership.

Transactional rewards

Relational rewards

Base pay

Contingent pay

Employee benefits

The work itself (job design)

The work experience

Totalremuneration

Non-financial rewards

Recognition, achievement, growth

Total reward

THE COMPONENTS OF TOTAL REWARD

PAY/REWARD• Base pay• Contribution pay• Shares/profit sharing• Recognition

TRANSACTIONAL (TANGIBLE)

RELATIONAL (INTANGIBLE)

IND

IVID

UA

L

CO

MM

UN

AL

TOTAL REWARD MODEL (TOWERS PERRIN)

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

FINANCIAL REWARDS

Financial rewards comprise all rewards which have a monetary value and add up to total remuneration:

base pay pay contingent on performance, contribution,

competency or skill pay related to service financial recognition schemes benefits such as pensions, sick pay and health

insurance

NON-FINANCIAL REWARDS

Non-financial rewards are those that focus on the needs people have to varying degrees for recognition, achievement, responsibility, autonomy, influence and personal growth

GRADE AND PAY STRUCTURES

Grade and pay structures provide the framework for base pay management so that an organization’s pay policies can be implemented

TYPES OF GRADE AND PAY STRUCTURES

Narrow-graded Broad-graded Broad-banded Career family Job family Pay spine

MODEL OF A NARROW-GRADED STRUCTURE ( MULTI GRADED STRUCTURE )

£

consists of a sequence of job grades into which jobs of

broadly equivalent value are placed.

MODEL OF A BROAD-GRADED STRUCTURE

£

Have six to nine grades rather than the 10 or more grades contained in multi-

graded structures

MODEL OF A BROAD-BANDED STRUCTURE

£

multi-graded structures into four

or five ‘bands

MODEL OF A CAREER FAMILY STRUCTURE

Level 1 Level 1 Level 1



Level 4

Level 5

£

Level 4

Level 5

Level 4

Level 5

Career families

JE points

Operation Finance IT

jobs in the corresponding levels across each of the

career families are within the same size range

MODEL OF A JOB FAMILY STRUCTURE

£

Job families

Operation

Finance

IT

Different job

families are

identified

A PAY SPINE

Pay spine

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Thank You

Reward management ( part 1 )

Business

Transcript of Reward management ( part 1 )