Components of Reward System Money isn't everything.

Some employers have found that even money and benefits together are not enough to retain employees and keep them happy. Experienced workers are the backbone of a successful company, and turnover and retraining are expensive. Total rewards is a business strategy to keep employees by providing intangibles such as a pleasant work environment and flexible time scheduling in addition to salary and the usual benefits.

Involvement and Development

Employees want to be involved in the company, and they want to feel like they are moving up in the company structure. According to the March 6, 2006 issue of "Fortune" magazine, the two reasons high-performance employees give most often for job changes are "I didn't fit in" and "I was going nowhere." When employees feel like they have some input and their complaints are listened to, they are more likely to take an active interest in the company and in their work. It is also crucial that employees feel like they are making progress in a company. "Fortune" also reports that several small pay and grade increases in a year are more likely to feel like progress than one large annual increase. A long spell without advancement can spark the beginning of an employee's search for a new job.

Pleasant Environment

Companies used to discourage overly personalized work spaces and worker socialization. Smart companies now encourage these activities, which cost the company nothing and enhance the work environment. A happy worker is a hard worker; it just makes sense to want to keep a job you enjoy. Nobody wants to leave a job she shares with friends. A worker is also more likely to stay late and come in on the weekends if the workplace is pleasant. Friendship, the maintenance phase of any relationship, includes a worker's relationship with fellow workers and with his boss. It is a lot easier to develop team spirit among people who enjoy each other's company.

Flexible Time

Each person's work-life balance is different. A parent with small children may want to be home in the evenings and occasionally needs time off for a doctor's appointment, school play, or important soccer game. A single person might want to take off early on Fridays. Some people would really like to come in at 10 a.m. and stay an hour or two later in the evening, and others want to work at home as much as possible. If the company accommodates these varied preferences, employees are unlikely to leave and take a chance on a more rigidly clocked job elsewhere. In many cases it does not really affect the company what hours are worked, as long as the work gets done.

The Benefits of a Rewards and Compensation Strategy There are not many second chances in running an organization. A misstep can cost thousands of dollars to correct. For instance, not setting up your compensation strategy correctly can mean youre not able to attract the talent you need. By contrast, your overall rewards and compensation strategy is one area where you get a second chance.

The following is my perspective on and suggestions for how to set up an employee rewards and compensation strategy, as well as strategies for each of those two systems. Optimize the Benefits of a Rewards and Compensation Strategy
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Many organizations set up an employee rewards systems after they set up a wage or salary system. But, by coordinating the two into a comprehensive rewards and compensation strategy, you can boost your profits and workforce productivity. Even better, by implementing an employee rewards system you get a second chance to optimize your overall compensation package. Keep in mind that some employee rewards systems are surprisingly cheap - even free. As organization people, we have the same motto in common: free is good. Components of an Employee Rewards and Compensation Strategy Components of an overall compensation and rewards strategy often include:

intrinsic rewards monetary rewards wages salaries commissions First, you must tailor your compensation strategy to your industry, your workforce, and your organization location. After we discuss that, well discuss reward strategies.

Compensation Strategies Range from Basic to Complex A compensation strategy ought to reinforce your organizations needs and v alues and can strengthen workforce alignment. A sound compensation plan will position your organization in its market, contribute to its reputation, and help you attract and keep employees. Compensation plans often include a range of components such as

wages salaries commissions bonuses Much of a successful compensation strategy, especially in a competitive market, depends on what your competitors compensation systems include. Here are some of the most common components to consider when developing a compensation strategy. Employee Wages and Salaries I use wage to mean hourly pay and salary to mean annualized pay. No matter how you pay your employees, its important to perform regular salary benchmarking and to use up-to-date, specific data for your positions. PayScale has great information and resources, as well as helpful tools for you to use to make the most of the information. Another source to check data through is the Department of Labor. The Washington Employment Security Department is another potential data source. The data will likely be a couple of years old, so it ma y need to be aged to bring it up to current levels. I use the Bureau of Labor Statistics inflation calculator to help me age data. The calculator lets you plug in the a mount and year of the data and will show you a result corrected for inflation. This is generalized, and if you can find better inflation data for your area, use that instead. Compensation Strategy Whats your strategy for paying your employees? You may choose to set your wage or salary levels at the mid -range of your market. If you choose to pay lower than the market rate, you may not attract the star employees. If you do not need to attract star employees, do not pay the extra amount that will attract them to work for you. On the other hand, if you do need stars and you get too zealous about attracting them by being at the top of the market you may find yourself in a pickle when they want a raise. Then youll need to exceed the market, or risk the employees going to a competitor. Wages or salaries are often referred to as the base, meaning they form the basis of employee compensation, even if they are the entire employee compensation. This definition will be important later on. Commissions Commissions can be used several different ways:

Replace a salary after an employee gets seasoned in the field. Take the place of ever paying salary and wages. Be blended with salary and wages the whole time Consider using commissions to supplement salaries (often called base plus commission) up to a certain percentage. You could also use different percentages to emphasize particular needed results. You could tie commissions to performance and sales to induce employees to achieve higher levels. Some successful companies give high salaries and low commissions, and some do the opposite. They choose depending on the industry expectations and the workforce development strategy. Bonuses. Wages, salaries, and commissions can all create a bow wave. That is, future wages, salaries, and commissions must exceed the current levels to seem to the employees like improvements. This can be true even if the economy is bad and revenue is down. In my experience, bonuses are best used as rewards. I know some industries have long considered them as employee entitlements. However, if they become part of the base t his way, they make the bow wave taller and harder for you as the employer to top in the next compensation negotiation. Another possible outcome is your employees will expect bonuses regularly even if their performance does not warrant them. A Lesson Learned from AIG AIG is to me an example of what can go wrong with bonuses that become part of base pay. Regardless of what you hear about AIGs performance bonuses, I have a hard time accepting the concept that employees who supposedly performed so well had to have the government essentially buy 80% of the company. Not only was it hard to choke down the first time we heard

about it as taxpayers and employers initially, now we find out they are given quarterly! If you think of this as an employer, it may aggravate you to lose one of the tools you can use to legitimately encourage higher employee performance levels. Employee Reward Strategies Range from Basic to Complex Developing an employee rewards strategy is really the place to play, have fun and be creative. Reward strategies can be uniquely yours, and distinguish your company as the place to work. This is an excellent opportunit y for reinforcing your organizations brand. Giving gift certificates or cards in a down economy is great. Several organizations may join together to promote each others organization by giving gift certificates to each others companies as a reward for good performance. Employees meeting a performance goal or working together to meet an extremely tight timeframe may be good cause to treat them to a party or picnic. Some organizations even give away trips as rewards to their top sales producers. Workplace Environment Dont forget that your workplace environment can also be a huge benefit to employees. That is why I consider it part of an employee rewards system. Here is a list of ways you can make your work environment more positive for your employees Support your high achievers. High achievers want to work with other high achievers. They know that even a few low achievers will consume most of the attention of an organization and suck the life out of it. Set up performance improvement programs for your low achievers, and hold them accountable for following-through. If performance does not improve, help them transition out of your organization. Give respect. Empower your employees who have proven to you that they have good judgment by allowing them to make recommendations on how to handle difficult situations. Be kid-friendly. Pair up with an area day-care provider to make day-care available to your employees at a discount. Having children close by is not only a great comfort to parents but saves the enormous late -fees they have to pay if they get caught in traffic or have to work late to make or answer that last phone call before leaving for the day. Make transportation green and cheap. Transit passes offered in your organization are a great way to participate in making your organization environmentally sensitive. Who knows? There may be governmental inducements available to you for doing that. Promote healthy choices. You can also pair up with a neighborhood athletic club or gym, either for gift certificates or reduced membership for your employees. How to Evaluate a Reward and Compensation Strategy How long have you tried to make your reward and compensation strategy work? If there are cycles involved in your organization, you might want to wait to get all the way through a cycle so you can evaluate the benefits of your rewards and compensation strategy or system under the full range of common circumstances. Did your employee rewards and compensation strategy or system, especially the rewards, achieve the results you intended? If not, try something else. Keep trying and be sure to have fun with it! Certain neural structures, called the reward system, are critically involved mediating the effects of reinforcement. A reward is an appetitive stimulus given to a human or some other animal to alter its behavior. Rewards typically serve as reinforcers. A reinforcer is something that, when presented after a behavior, causes the probability of that behavior's occurrence to increase. Note that just because something is labelled a reward does not necessitate it as a reinforcer. A reward can only be said to be a reinforcer if its delivery has increased the probability of a behavior.[1] Reward or reinforcement is an objective way to describe the positive value an individual ascribes to an object, behavioral act or an internal physical state. Primary rewards include those that are necessary for the survival of species, such as food, sexual contact, or successful aggression.[2] Secondary rewards derive their value from primary rewards. Money is a good example. They can be produced experimentally by pairing a neutral stimulus with a known reward. Things such as pleasurable touch and beautiful music are often said to be secondary rewards, but such claims are questionable. For example, there is a good deal of evidence that physical contact, as in cuddling and grooming, is an unlearned or primary reward.[3] Rewards are generally considered more desirable than punishment in modifying behavior.[4]

Definition
In neuroscience, the reward system is a collection of brain structures which attempts to regulate and control behavior by inducing pleasurable effects. It is a brain circuit that, when activated, reinforces behaviors. The circuit includes the dopamine-containing neurons of the ventral tegmental area, the nucleus accumbens, and part of the prefrontal cortex.

Institutions related to reward system In india institutional set up for regulating compensation system is two fold viz wage board for regulating compensation in industries belonging to private sector like newspaper establishments and working journalists, while pay commission tend to regulate the compensation of public servants Wage boards: In 1950 and 1960 when orgnanised labour sector was set up at a nascent stage of its development without adequate unionnisation or with trade unions without adequate bargaining power Government in appreciation o f the problems which arise in the arena of wage fixation due to absence of such barganining power constituted wage board. The first wage board was set up in 1957 by the govt. For cotton textile industry and 30 wage boards have been set up so far and since then a large no of industries have ben brought under the control of wage board. Wage board seek to To improve conditions for better working industrial relations in the country To standardize wage structure uniformly across a given industry To pave the way for wage settlements in consonance of social and economic policies of the govt The wage boards are tripartite in which representative of employees, employer and independent members participate and finalize the recommendations Usually a member of the parliament is nominated as member to represent the public interest. The chairman is appointed by the govt in consulattion with chief justice of high court. Wage board consider ability to pay, prevalent system of payment, categories of employees and other matter of public interest. Minimum wage act 1948, Equal Remuneration act 1976, payment of bonus act 1965 Wage boards: statutory and non statutory in nature Set up to protect workers from exploitation from capitalists Tripartitite in character Chairman appointd by govt in consulation with chief justice Award of wage board valid for 3 years extended with mutual agreement

(1) The quorum for a meeting of a Wages Board shall consist of(a) the Commissioner of Labour or a Deputy Commissioner of Labour or an Assistant Commissioner of Labour, (b) four representative members, of whom two shall be representatives of employers and two shall be representatives of workers, and (c) one nominated member.

Pay commission 1 pay com: model employer, demand and supply inappropriate and payment of dearness allowance 2 pay: living wage essential for attractin competent employee and maintain efficiency 3 pay: equal pay for equal work, DA part of compensation structure 4 pay: 75% for emp drawing pay bet 3500-6000 and 65% for drawing above 6000 5pay: 40% inc in pay with30% reduction in manpower over a 3 year period increasing contract employment and greater accountability in govt sector 6 pay: 40% avg inc in pay group D category of employees abolished. Pay differentials bet senior and junior is increased to 1:12