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Reward System

The document discusses compensation and reward systems for employees. It defines different types of compensation, including direct financial compensation like wages and salaries, indirect financial compensation like benefits, and non-financial compensation like intrinsic rewards. It also outlines different models for linking pay to performance, including individual, team, and company-wide plans. Finally, it provides steps for planning an effective reward program and factors to consider for improving reward effectiveness such as linking rewards to performance and ensuring they are valued.

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sagar
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294 views18 pages

Reward System

The document discusses compensation and reward systems for employees. It defines different types of compensation, including direct financial compensation like wages and salaries, indirect financial compensation like benefits, and non-financial compensation like intrinsic rewards. It also outlines different models for linking pay to performance, including individual, team, and company-wide plans. Finally, it provides steps for planning an effective reward program and factors to consider for improving reward effectiveness such as linking rewards to performance and ensuring they are valued.

Uploaded by

sagar
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Reward System

HR Management Strategy
Model
Select

Attract
HR Strategy

Desired
Results

Rewards
Engage

Retain

Develop

Employee Compensation

Compensation: An Overview
CompensationThe total of all rewards provided
employees in return for their services.
Direct Financial Compensation Consists of the pay
that a person receives in the form of wages, salaries,
bonuses, and commissions.
Indirect Financial Compensation All financial
rewards that are not included in direct compensation.
Non-financial Compensation Consists of the
satisfaction that a person receives from the job itself or
from the psychological and/or physical environment in
which the person works.
All such rewards comprise a total compensation program.

Wages versus Salaries

Wages

generally refer to hourly


compensation paid to
operating employees;
the basis for wages is time.

Salary

is income that is paid to an

individual not on the basis of


time, but on the basis of
performance.

Total Compensation

Hourly Wages
Salary
Monetary
Bonuses
Rewards Commissions
Pay Incentives
Extrinsic
Rewards
Compensation
of
Employees

Intrinsic
Rewards

Insurance
Retirement
Paid Vacations
Benefits Food Services
Credit Union
Recreation

Recognition
Promotion Opportunities
Working Conditions
Interesting Work

Consequences of Pay
Dissatisfaction

Performance
Desire for
more Pay

Strikes
Grievances

Absenteeism
Turnover

Search for job


Psychological
Withdrawal

Pay
Dissatisfaction

Lower
Job
Attractiveness
Dissatisfaction Dispensary
of job
Visits

Absenteeism

Poor Mental
Health

Pay for Performance /


Competence
Pay for performance refers to any
compensation method that ties pay to the
quantity or quality of work the person
produces.
Variable pay plans are pay for performance
plans that put a portion of the employees pay
at risk, in return for the opportunity to earn
additional pay.
Individual
Team
Company

Individual-Based Plans
Individual-based plans are the most widely
used pay-for-performance plans in industry.
There are several plans that can be used:
merit pay, bonus programs, and awards.
Advantages of individual-based plans:
rewarded performance is likely to be repeated
financial incentives can shape an individual's goals
they help the firm achieve individual equity
they fit in with an individualistic culture.

Team Based Plans


Team-based plans attempt to support other
efforts to increase the flexibility of the
work force within a firm.
These plans normally reward all team
members equally based on group
outcomes.
The advantages of team based pay-forperformance plans include they foster
group cohesiveness and they facilitate
performance

Companywide Plans
Companywide plans offer a feasible alternative to
the incentive plans discussed in previous slides.
Profit Sharing: A compensation plan that results in the
distribution of a predetermined percentage of the
firms profits to employees.
Employee Stock Option Plan (ESOP): A defined
contribution plan in which a firm contributes stock
shares to a trust/employees.
Gain Sharing: Plans that are designed to bind
employees to the firms performance by providing an
incentive payment based on improved company
performance

Planning Reward Program

Step
Step
Step
Step
Step
Step
Step
Step
Step

One Target Your Audience


Two Choose the Goal
Three Build a Budget
Four Develop Criteria
Five Choose the Awards
Six Communicate the Program
Seven Measure the performance
Eight Present the Award(s)
Nine Evaluate the Program

Improving Reward Effectiveness


Effectiveness of the rewards can be
improved by considering the following
factors.
Link rewards to performance
Ensure rewards are relevant
Use team rewards for interdependent
jobs
Ensure rewards are valued
Beware of unintended consequences

Essentials

Simple

Equitable

Economical

Flexible

Supported by workers and unions

Motivating

Prompt payment

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