Rewards & Compensation

Learning Objectives
By the end of this learning module, students will
be able to:
• Distinguish between total rewards and total
compensation.
• Explain what are Rewards.
• List and discuss the components of Reward Package.
• Identify the financial and non financial motivators at
the workplace.
• Analyze the importance of various components of
Reward Package.
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What is the function of HRM
The function of HRM
is to attract, retain
and motivate
employees at the
workplace.

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Class activity- Brainstorming\In pairs

Is there any difference between the total

compensation and total rewards? Which one is
bigger?

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Comparison:
Total compensation Total rewards
All forms of financial A total rewards system
returns and tangible comprises of financial and
services and benefits an non-financial elements
employee receives as a part used to attract and retain
of employment relationship workers and reinforce
desired behaviors.

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What is Total Rewards

• Total rewards is a system of rewards

that goes beyond compensation and
benefits and includes anything and
everything the employee values and
the employer is willing and able to
offer employees.

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TOTAL REWARDS – UNDERPINNING CONCEPTS

Two concepts underpin total rewards: intrinsic motivation and integration.

TOTAL REWARDS

Integration
Intrinsic motivation
A total rewards strategy involves
Intrinsic motivation arises from
the horizontal integration of
the work itself and its impact on
reward and other HR strategies to
the self‑generated factors that
achieve greater impact and
influence people’s behaviour.
internal consistency.

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 ACTIVITY- 1
TOTAL REWARDS ELEMENTS-SORTING

1)Sort the following into ‘Intrinsic’ and ‘Extrinsic’: (5 minutes)

 Recognition
 Work environment
 Base pay

 Learning and development

 Employee benefits

 Contingent pay
 Performance management

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Total Rewards
• A system of rewards.
• Not just compensation and benefits.
• Includes anything and everything employees value
and the employer is willing and able to offer.
• Includes financial and non-financial elements.
• Different value levels.

(Henderson, 2006; WorldatWork, 2008)

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 ACTIVITY-2
THINK-PAIR-SHARE ACTIVITY (ORAL)
 

POINTS FOR DISCUSSION:

 What benefits does the total rewards approach offer to an employer?

 What benefits does the total rewards approach offer to the employees?
 What are the pre-requisites for maximising the benefits of a total rewards approach?

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Important point !

The extent to which individuals realize and

value these components can vary
significantly among individuals, as well as
over time and across business and industry.

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What else do employees want?

Lets find out…!

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Class Activity: 15 minutes for Research

• In groups research on • Example : Google

the best company to
work for.
• Present what makes it
Life at Google. Inside Google's lair.flv
the best company to
work for
• Show a video..
• 5 mins per group

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What does this tell us?

• What do people want from their jobs?

• Money and……..

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Class Debate:

• Non Financial Rewards ( great place to work,

opportunities to learn and job security) are
more important than Pay

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Link findings to prior learning:
Maslow’s Theory

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Herzberg’s Theory

Weeks 6 & 7 - Conflict 18

Maslow & Herzberg Compared..

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• So what do we give
employees ?
• Compensation
• Benefits
• Work Experience
• Learning and Development
• Recognition, Achievement
and Growth

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Where does this bring us? ………..
The Total Rewards approach suggested by Michael
Armstrong includes the different components of rewards
to offer an employee the right mix of rewards to attract,
motivate and retain employees.

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 TOTAL REWARDS MODELS
• Many models of total rewards have Following is a list of some prominent
been produced. models:
• The purpose of the models is to  Towers Perrin Model
provide a framework for developing  WorldatWork Model
total rewards by identifying financial  Zingheim and Schuster Model
and non-financial elements and in
 Hay Group Model
some cases indicating how they
 IDS Model
relate to one another.
 Mercer Model
• They provide a basis for defining a
 Sibson Consulting Model
total rewards policy and for
communicating it to employees.
 Watson Wyatt Model

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 TOTAL REWARDS -TOWERS PERRIN MODEL
The upper two quadrants – pay and
benefits – represent transactional or
tangible rewards. These are financial in
nature and are essential to recruit and
retain staff but can be easily copied by
competitors.

The relational or intangible non-

financial rewards represented in the
lower two quadrants cannot be imitated
so readily and can therefore create both
human capital and human process
advantage.

• A matrix with four quadrants.

• The model also makes a useful distinction between individual and communal
rewards.
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 TOTAL REWARDS –WORLDATWORK MODEL

ELEMENTS
INFLUENCES ON PRODUCE
THE ELEMENTS ELEMENTS ENHANCED
RESULTS

• WorldatWork, formerly the American Compensation Association, introduced the concept of

total rewards in the 1990s.
• Their first model was produced in 2000 .
• The figure above is the model developed in 2020.
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 ACTIVITY- 1 Extended
TOTAL REWARDS ELEMENTS-SORTING

1) Sort the following into ‘Intrinsic’ and ‘Extrinsic’: (5 minutes)

 Recognition
 Work environment
 Base pay
 Learning and development
 Employee benefits
 Contingent pay
 Performance management

Sort the elements further into ‘Transactional’ and ‘Relational’ rewards.

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 Summary
 Rewards have various components
 Financial components
 Non financial components
 Employees are not motivated by merely financial
rewards
 Non financial rewards play an important role in
motivating employees
 Employers need to find the right mix and offer it to
generate a value proposition .
 Total Rewards approach: includes 5 components

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 CONCLUDING ACTIVITY
Q & A (5 minutes)

1) Is Total Reward an approach or a package?

2) Identify the transactional rewards that total rewards include.

3) Identify the relational rewards that total rewards include.

4) The Total rewards system is only focused on optimising employee

satisfaction. (True/False).
 Is it important across various HR functions that are part of the HR
strategy?
 What HR functions do Total Rewards influence?
 What outcome could a good Total Reward lead to in an organisation?
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Finally..Time for Questions

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