Reward management is an integrated process that deals with the strategies, policies and practices required to ensure that

the value and contribution people make to achieving organizational, departmental and team goals is recognized and rewarded. Reward management is People Stake holder approach Integrated Strategic Evidence-based

Components of reward management: Non financial reward Job evaluation Grade and pay structure Market rate analysis Base pay Pay progression Contingent pay Service related pay Pension and benefit Allowances Performance mngt

Elements of total reward: Transactional rewards Tangible (financial) rewards arising from transactions between the employer and employees concerning pay and benefits. These are all extrinsic. Relational rewards Intangible (non-financial) rewards concerned with the work environment (quality of working life, the work itself, worklife balance), recognition, performance management and learning and development. Introducing total reward: 1. Clarify concept 2. Involve stake holders 3. Identify total reward elements 4. Prioritize 5. Make business case 6. Plan development 7. Communicate 8. Involve line manager 9. Implement 10. Monitor and evaluate Converge worldwide to be basically the same in each location. Diverge to be differentiated in response to local requirements.

International firms Those in which operations take place in subsidiaries overseas that rely on the business expertise or manufacturing capacity of the parent company. Multinational firms Those in which a number of businesses in different countries are managed as a whole from the centre. Approaches for expatriate pay: 1. 2. 3. 4. Home country based Host country based Selected country based Hybrid basis

Allowances Cost of living Hardship allowances Separation and clothing Social welfare to family Education to children Assistant in finding job for spouse Familiarity with culture and language Membership in social clubs Relocation Accommodation Company cars, etc

Non-financial rewards can be classified as follows: o Individual extrinsic rewards non-financial recognition, praise, feedback; o Individual intrinsic rewards fulfilling work, opportunity to grow; o Collective extrinsic rewards worklife balance policies, employee well-being services, concierge services, voluntary benefits, learning and development and talent management programmes; o Collective intrinsic rewards work environment enhancement, work system design. Contingent pay schemes: 1. Performance related

2. Contribution related

3. Competency related

4. Skills based Direct link between their pay progression and the skills they have acquired and can use effectively. Types of bonus schemes: 1. 2. 3. 4. 5. 6. Business performance scheme Individual scheme Team pay Combination plan Cash based profit sharing Gain sharing

Rewarding for business performance: Profit sharing Share ownership scheme Save-as-you-earn schemes Gain sharing

Types of recognition schemes: Day-to-day Public Formal

Determinants of pay level: Nature of external and internal labor market Classical economic theory Labor theory Human capital theory Efficiency wage theory Agency theory The effort bargain Factors affecting pay level: Financial circumstances of organization Supply and demand of labor Human capital policies Trade union pressure Internal relativities Inherent value of job Individual contribution Pay stance of the organization

Job evaluation: A systematic process for defining the relative worth or size of jobs or roles within an organization to establish internal relativities and provide the basis for designing an equitable grade structure, grading jobs in the structure and managing relativities. 1. Analytical a. Point factor rating b. Analytical job matching i. Role to grade ii. Role to role c. Factor comparison d. Tailor made, hybrid 2. Non analytical a. Job classification b. Job ranking c. Paired comparison d. Internal benchmarking 3. Market pricing

Reasons for unequal pay: Human capital differences Part time working Occupation segregation Workplace segregation Travel pattern Job grading Appraisal system Reward system Career breaks Poor union representation Retention measures Promotion schemes

Sources of market data: Online data General national published survey Local published surveys Sector surveys Industrial / occupational survey Management consultants database Special survey Pay clubs Published data in journals Analysis of recruitment data

Job advertisements Market intelligence

Narrow graded:

Broad graded:

Broad banded:

Career family:

Job family structure:

Employee benefit: 1. Personal security a. Health care

2.

3.

4. 5. 6.

7. 8.

b. Insurance cover c. Sick pay d. Redundancy pay e. Career counseling Financial assistance a. Company loans b. Season tickets loans c. Mortgage assistance d. Relocation package e. Fees to professional bodies Personal needs a. Maternity and paternity b. Leave c. Children care d. Sports and social e. Pre-retirement counseling f. Personal counseling g. Company discounts h. Retail vouchers Holidays Company cars Other benefits a. Free car parking b. Parties c. Breakfast d. Tea-coffee-cold drinks Voluntary benefits Concierge services

Flexible benefits: 1. Flex individual 2. Flex existing entitlement 3. Flex fund

Note: Draw table of example also

Two main types of occupational pension schemes: 1. Defined benefit (final salary) schemes 2. Defined contribution (money purchase) schemes

Defined benefit (final salary)

Benefits defined as a fraction of final pensionable pay.

Defined contribution (money purchase)

Benefits purchased as an annuity by an accumulation of contributions invested.

Benefits do not depend on investment returns or annuity rates. Employer contributes necessary costs in excess of employee contributions. Employer takes financial risk. Not easily portable to other employers. Benefits appropriate for long-serving employees with progressive increases in pensionable pay. Other schemes: Hybrid schemes Personal pension Group schemes Stakeholder pension Executive pension

Benefits dependent on investment returns, contributions, and cost of annuities at retirement. Employer contributions are fixed.

Member takes financial risk. Easily portable to other employers. Benefits appropriate for short-serving employees or those whose pensionable pay fluctuates.

Use of computers: The reward database Computer aided job evaluation Software packages Grade and pay structure modeling Pay review modeling o General review o Individual review o Equal pay review