Reward Systems in Organizations

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Reward System

Reward system is the general term that refers to all forms of payment or rewards going to employees at all organizational levels and arising from employment in an organization (Armstrong & Murlins, 2012).

Overview of Different Modes of Reward System

Figure 01: Different model of reward system

Source - (Kalaiseylan, S., 2009)

Objective of Rewards

·         Increase Productivity

·         Above Average Performance

·         Morale Booster

·         Control Tardiness and Absenteeism

·         Create Job Satisfaction

·         Reduce Grievances

Factors Influencing Reward System

There are a number of factors as argued by Machendia (2010) that influence the reward system payable to employees. Machendia categorised them into either external or internal factors.

Among the external factors are the following,

·         Competitors.
·         Advanced Technological Developments.
·         Labour Market.
·         Cost of Living.
·         The Economy.
·         Business Strategy.
·         Job Evaluation and Performance Appraisal.
·         Affordability.
·         Board of Directors.

Global Context

Toyota implements a reward system consisting of three aspects: seniority based system, an enormous portion of bonuses payment on term performance/ team based reward system and total health management.

Reward System at ABC Apparel Sri Lanka

Shop floor employees

·         Bonus

·         Attendants Incentive

·         Productivity Incentive

·         Free foods, Transport, Medical and Uniforms

Staff

·         PRP – Performance Related Pay

·         Bonus and Refreshments, Holiday Packages

Above (DGM, GM)

·         Vehicle Loans (As personal choice) , Fuel

·         Refreshments – Overseas / Local Holiday Packages

·         Loyalty Cards

Other rewards

·   Employees received training in computer skills, English language skills and Leadership abilities.

·      Organized annual ‘Empowered Women of the Year’ award.

·   Provide within country or between country Job rotations for employees to develop their skills.

Conclusion

A good reward system aims to encourage employees to work harder, and align their goals with those of the organization they work for. The present trend towards performance-related reward systems is intended to guide to larger rewards and motivation for those that contribute the foremost. As the human resources director of Flow pack Engineering said (quoted in Bratton), 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."

References

Armstrong , M. & Murali, H., 2012. Reward Management. In: London: Biddles Limited.

Bratton & Gold, 2007. Human Resource Management Theory and Practice. 04 ed. s.l.:Palgrave Macmilan.

Kalaiseylan, S., 2009. What are Financial and Nnon-financial Incentive "Employment comments".

Machendia, S. 2010. Human Resources Management: Factors Influencing Employees’ Remuneration.

 


Comments

  1. Saranyah MBA 2117 April 2021 at 10:10

    Reward management is a good motivational practice that companies use in order to reward their employees for their success and achievement. According to few studies there are important criteria that should be followed to have a successful reward system. Otherwise it will create conflict among employees.Ex: Performance measurement should be valid and understandable to the employees.

    ReplyDelete
  2. Ruwan Herath19 April 2021 at 03:39

    Reward management is concerned with the formulation and implementation of strategies and policies, the purposes of which are to reward people fairly, equitably and consistently in accordance with their value to the organization and thus help the organization to achieve its strategic goals(Armstrong, 2006).

    Since there are financial & nonfinancial rewarding it can be linked with maslow’s hierarchy of needs theory I guess. However, having an effective reward management system will help to organizational success as author described.

    ReplyDelete
  3. Shri20 April 2021 at 23:43

    When we look at the way an organization benefits, we focus more on the financial rewards that will most likely be consumed and finished quickly. In this article, the author gets a chance to talk about non-financial rewards that are long lasting but not overly focused. I appreciate of directing ideas towards a dimension that most people do not pay attention to.

    ReplyDelete
  4. dulanjali29 April 2021 at 09:19

    As per Study.com in 2016 having a good reward system helps keep employees happy, loyal to the company. Rewards, like public recognition and additional pay, motivate employees to work harder. Reward management is important for the following reasons,
    1.Retain employees
    2.Attract new employees
    3.Avoid the cost of hiring and training new employees
    4.Build loyalty & honesty
    5.Create healthy work environment
    6.Encourage positive attitude & behavior

    ReplyDelete

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