Unit-5REWARD SYSTEM

DEFINITION Reward Management is about the

development, implementation, maintenance, communication and evaluation of reward processes.

These processes deal with the assessment of relative job values, the design and management of pay structures, performance management, the provision of employee benefits and pensions.

OBJECTIVES What the organization values and want to pay for

The value they create for their organizations

The right behaviors and actions of the employees in order to reinforce appropriate behaviors and outcomes

Foster and maintain a high performance work culture

Motivate employees in order to obtain their commitment and engagement

OBJECTIVES Attract and retain talents the organisation

needs Emphasize the right mix of financial and non-

financial rewards Develop a positive employment relation and

psychological contract Align reward practices with the business

strategy of the organisation and communicate business values and direction to employees

Operate in ways that are fair, equitable, consistent and transparent.

COMPONENTS Financial reward – Salary, Wages, Incentives,

etc.,

Non-financial reward – Medical Insurance, Life insurance, subsidized canteen, subsidized transport, free uniforms, interest free loans, etc.,

Psychological satisfaction – Social interactions with others in the workplace, job training, career advancement opportunities, recognition,

DIMENSIONS Intrinsic Reward – Psychological reward that is

experienced directly by an individual. Ex: Feelings of accomplishment, Increased self-esteem, satisfaction of developing new skills, sense of fulfillment, etc.,

Extrinsic Reward – A reward that is provided by outside agent, such as a supervisor or work group. Ex: Bonus, promotions, increase in salary, perks, appreciation or praise, etc.,

CONSTRAINTS Statutory compulsions Industry wise wage boards Operative long term settlements Lack of mutual trust Lack of visional and innovative approaches Lack of commitment Lack of system Fear on personal authority

LINKAGE BETWEEN THE REWARD AND PERFORMANCE

Value of reward

Received Effort-reward probability

Efforts

Abilities and Traits

Task Perceptions

Performance accomplishm

ent

Intrinsic Reward

Extrinsic Reward

Satisfaction

IMPLICATIONS FOR MANAGERS Determine the rewards valued by each

subordinate.

Determine the performance desired

Make the performance level attainable

Link rewards to performance to maintain motivation

Analyze what factor might counteract the effectiveness of the reward

IMPLICATIONS FOR ORGANIZATIONS The organisation’s reward system must be

designed to motivate the desired behaviour and results.

The jobs should be designed to the employees to fulfill some of the higher needs such as independence or creativity

The immediate supervisor has an important role in the motivation process. He has to trained in the motivation process and given enough authority to administer rewards.

MONETARY AND NON-MONETARY REWARDS

MONETARY REWARDSNON-MONETARY

REWARDS

Salary increments Promotions with

increments Paid up insurance Loans Transport(Car/Two

Wheeler) Telephone Profit sharing

Free Lunch Picnics Dinner with boss Birthday treats Trophies Certificate Letter of

Appreciation Vacation trips Special Leave