Words of wisdom

‘Organizations would be far less effective systems than they actually are if
economic rewards were the only, or even the principal, means of motivation
available.’
‘There is no such thing as a good pay system; there is only a series of bad ones. The
trick is to choose the least bad one.’
The Nature of Reward Management
Reward refers to all of the monetary, non-monetary and psychological payments
that an organization provides for its employees in exchange for the work they
perform.
Reward (or compensation) management is a core facet of the employment
relationship.
An organization can provide two types of reward: extrinsic and intrinsic.
The mix of extrinsic and intrinsic rewards provided by the employer is termed the
reward system, the monetary or economic element of the reward system is termed
the pay system.
Why Reward Systems?
The only way employees will fulfill your dream is to share in the dream. Reward
systems are the mechanisms that make this happen. "However, reward systems are
much more than just bonus plans and stock options. While they often include both
of these incentives, they can also include awards and other recognition, promotions,
reassignment, non-monetary bonuses (e.g., vacations), or a simple thank-you."5
"The journey is the reward," says Steve Jobs.
You Get What You Reward
The greatest management principle is that the things that get rewarded get done.
"You get more of the behavior you reward. You don't get what you hope for, wish for
or beg for. You get what you reward."7
When your employees do hit the target and meet a stretch standard you set for
them, reward them immediately.
Never stall. By doing this, you help employees directly connect the reward with
behavior and higher performance they've attained.4 "Fail to reward the right
behavior and you will most likely get the wrong results.

Strategic Reward Systems

Pay for Performance
Reward Systems consist of the following elements:
Financial Rewards – Compensation
1. Base Salary
2. Pay Incentives
3. Employee Benefits

Non-financial Rewards
1. Intrinsic Rewards – centers on the work itself
2. Praise, recognition, time off and other rewards given to the employee by
peers or superiors.
Reward Systems in most cases should be consistent with other HR
systems.
The Reward System is a key driver of:
1. HR Strategy
2. Business Strategy
3. Organization Culture

Reward objectives
Any organizational reward system has three behavioural objectives:

1. membership behaviour to recruit and retain a sufficient number of qualified

workers

2. task behaviour to motivate employees to perform to the fullest extent of their

capabilities

3. compliance behaviour to encourage employees to follow workplace rules and

undertake special behaviours beneficial to the organizations without direct
supervision or instructions.

Paradox and Reward

There are some fallacies and inconsistencies inherent in reward systems.

 Fostering commitment via variable pay may be undermined if reward is not

paid due to the company’s poor financial performance.
 Performance-related pay is open to subjectivity and inconsistency, and can
create tensions which undermine workers’ intrinsic motivation.

 All may result in a breach of the psychological contract, weakening employee

commitment.

 Reward practices are dictated by perceptions of power between labour and

management. Pay systems will change according to their effectiveness in the
effort-wage relationship with the balance of power.