Different Types of Employee Reward Strategies - Essay Example

Human Resource Management Table of Contents Table of Contents 2 Introduction 3 Different types of employee reward strategies 3 Reward strategy of Tesco 4 Importance of reward strategy in driving employee performance 5 Development employee’s recognition program 6 Recommendation 8 Conclusion 9 Reference list 10 Introduction According to Armstrong (2007), employee reward is one of the emerging international human resource strategies that are used in motivating employees. Organisations are assessing their employee’s performance and providing both financial and non-financial benefits to the efficient ones. Mainly, global organisations are using the reward programs to attract, retain and inspire highly efficient staff. Managers and employees are required to develop proper relationship in terms of increasing motivational factors. In the current study, Tesco has been selected in order to outline its reward strategies and the impact of such strategies in driving individual performance. Moreover, in the study, various compensation programs are outlined in order to rate the impacts of these in motivational aspects (Hu, Hsu and Cheng, 2004). Different types of employee reward strategies International human resource management provides higher emphasis on the financial and nonfinancial reward policies. Global retail giant like Tesco have multinational operational setup and is having more than 75000 employees. Thus, recognition is important for both employees and management in terms of developing the motivational and compatibilities to perform better. There are different types of reward policies that Tesco can execute to increase employability and employee performance level (Analoui, 2007). Incentive: It is a financial reward that is offered to the employees on the basis of the achievement. Employees who are able to perform more than the targeted margins are provided with the incentives. Retailers are using sale targets for each branches and individual employees. Management levels are assessing employees in terms of justifying their performance according to the previous targets. Developing Team: Non-financial reward strategy provides psychological satisfaction to the employees. Such strategy will increase mutual respect among the employees, which increases motivation level among them. In addition, such policy will increase inter personal association and respect among employees. Teams will be more efficient in terms of leading employees to work according to organisational values and predetermined targets (Armstrong and Armstrong, 2011). Employee Retention: Employees can be motivated with the strategy of retention. Such appraisal strategies help firms in reducing their cost. Training cost of new employees will be reduced as well as skills or talents can be retained. Firms will be developing products and service with quality. In the end, firms will be able to get more sustainability and growth. If the experienced employees are provided with economic benefit like salary hike or nonfinancial benefit like promotion, they will get motivated and remain loyal to the organisation. Self-Motivation: Langley (2011) argued that self-motivational strategies are related to the welfare of the employees or their families. In many organisations, employees are offered with recreational tours, children education, compensatory allowances, perquisites, pass for travelling and other compensatory factors. Such policies are helping different firms in rewarding and motivating employees. In addition, such motivation does not require any third parties. Employees find out the motivational factors in the job role self actuated manner. Reward strategy of Tesco Tesco is the largest UK based retailer and is having global presence in nearly 26 different European, American and Asian countries. They are having more than 75000 employees who are working in different country outlets. Such employees are seeking for constant development and reward policy in order to work efficiently. Tesco considers their employees as their major assets. Performance of the employees is highly counted as one of the major attribute for the overall organisational success. The firm is using appreciation strategies for their employees (Tesco plc, 2015). Main aims of the reward strategies of Tesco is divided into five different segment like Attract- Tesco is planning to recruit high skilled candidates and create higher attraction among the fresh graduates Motivate- Employees are provided with appraisal and incentive will increase the potential of employees in achieving business goals Recognise- Tesco will be admitting employee’s input and performance individually. This policy helps the management in improvising development strategies for the low efficient employees (Tesco plc, 2015). Align- They are also planning to increase the shareholder value as they consider motivated employees will be able to produce high quality products. Retain- employees will be more satisfied if they get effective rewards for their contribution. Gradually, loyalty of the employees increases and retention of skilled employees easy (Tesco plc, 2015). Moreover, the major features of the appraisal reward policy of Tesco are as follows: Annual bonus: The firm is providing annual bonuses for each employee related to their global business. Management is also planning to assess performance of the employees according to the yearly target sets. Employees and other top-level management are provided with an annual bonus along with their salary. It will increase the yearly income of Tesco employees (Tesco plc, 2015). Share incentives: Performance Share Plan is opted by the management of the firm in providing ownership of Tesco equity share among the management level. On the other hand, nearly 5,000 management level employees are appointed to distribute the share incentives (Tesco plc, 2015). Employees as shareholders: Tesco management implements more integrative planning for providing more values to the employees. “Share Incentive Plan” is enabling the employees to become shareholders and it reported with nearly 130 million shares. It has been observed that almost 200,000 of employees are getting the favour of all-employee schemes and nearly 140 million options invested in company shares for the “Save As You Earn scheme” (Tesco plc, 2015). Importance of reward strategy in driving employee performance Tesco is implementing reward strategies in order to increase employee performance in their global set up. Reward helps the HR management in order to strengthen employee actions as per the values of the organisation. Such promotional policy helps Tesco in developing quality products and increasing brand value. Many a time, reward polices helps in developing rate of the association and culture orientation among the multi cultural employees (McKnight, McDaniel and Ehmann, 2006). Rewards increase the rate of the satisfaction among the global employees. They will be working more efficiently in order to give something in return to organisation. Loyal employees will like to stay with the organisation for a longer term. Such policy will be reducing the recruitment costs. Employees are promoted to higher posts and experiences of them are used in developing quality of the products and service. Line managers are empowered so that they are able to encourage the floor staff highly. Reward influences retail employees to increase the quality in their products and service. Global customers are requiring high satisfaction from shopping experience. It has been observed that employee’s loyalty also impacts on customer satisfaction levels. Moreover, satisfied employees will be more productive when they are working as a team. Gradually, attrition rate reduced in the Tesco global set up (Perkins and White, 2008). Tesco will be enjoying certain benefits of the strategic recognition of employees. Major benefits can be outlined as follows: Increasing Quantifiable Trade Results: Tesco management will be able to develop the standards for increasing measurable results from the operations. The firms are able to increase various factors. Intrinsic and extrinsic rewards are provided to the employees so that they can perform in a better manner. Retain expertise and talented employees: Tesco is able to retain their experienced employees and maintain high quality products and on store services (White, 2009). Employee Engagement: Rewarding the employees also includes higher employee engagement. They will be eager to work better than earlier situations. Management of employees: Tesco is able to manage their employees effectively with the help of rewards and appreciation. Increase social value: Tesco is increasing the social values of employees in order to increase commitment. Development employee’s recognition program In the contemporary era, it has been observed that the firms are using different types of employee recognition plans that are enabling highly effective reward strategies in order to obtain high performance. Employee’s recognition program will be developed in some stages (McKnight, McDaniel and Ehmann, 2006). Firstly, the HR managers of the firm have to identify criteria for employee rewards. Firms like Tesco are providing operational targets and behavioural set for the employees. Management have to judge employee performance on the basis of benchmarks or target set. Secondly, HR managers have to provide relevant reward to the employees who are able to meet the criteria or rewards (Hu, Hsu and Cheng, 2004). Thirdly, employee rewards must be personalised so that employee can be appraised as per position, job roles and team oriented performance. Such strategies are used by Tesco to appraise their global segment of employees. Fourth, regular appreciation of employees is an effective one that greets the efficient employees on completion of any job, weekly performance results or team assignment fulfilment. This is a continuous process that helps the management in increasing employee motivation to perform better in the near future. In the fifth stage, self-esteem needs are fulfilled as one of the major appraisal or reward strategies. Tesco is implementing strategies like building teams, recognition and promoting the employees job roles. Finally, the firm will be providing more intrinsic and team oriented rewards. Management need to execute the reward planning in the actual practices (Armstrong and Armstrong, 2011). Addams equity theory can be used in order to balance the rewards offered and contribution employees. According to the theory, distributive justice needs to be maintained between the employee input and organisational output. Figure 1: Adams Equity Theory (Source: Beardwell and Thompson, 2014, pp. 472) Recommendation Tesco is having reward strategy that helps them in maintaining higher motivational level for the employees. However, reward system is facing some limitation and following recommendation can be provided to increase the efficiency of reward policy. Holistic: The reward strategy of Tesco must include the ‘employment value proposition like the salary, benefits and careers development. Such process will increase psychological satisfaction among employees. Integrated: Financial and nonfinancial rewards must be connective and those must be complementing each other. Such policy will help Tesco management in providing employees with reward alternatives. Aligned: Tesco is leader of employment source in the global segment. Thus, some unique appraisal strategies can be used to attract more skilled and potential employees. Entry level graduates and other experienced candidates are able to differentiate Tesco as their employer preference. Measurable: Both the financial and nonfinancial benefits must be outlined by the firm so that employees can understand what they are going to get. Conclusion In the current study, various types of reward strategies are outlined on behalf of the global retail organisation. Mainly, global firms are using reward strategies for developing employee’s performance. Tesco is one of the biggest employment sources of the global segment and having almost 75000 employees. The organisation is facing the challenge of diverse employee backgrounds, so they are implementing modified reward and motivational strategies as per the employee group. The organisation is offering employees with intrinsic and extrinsic rewards. Financial and nonfinancial benefits attract employees more than the other firms. Tesco provides the rewards like incentives, developing teams, employee retention, annual bonus and share incentives. Reference list Analoui, F., 2007. Strategic human resource management. London: Thomson. Armstrong, M., 2007. A handbook of employee reward management and practice. London: Kogan Page. Armstrong, M. and Armstrong, M., 2011. Armstrongs handbook of strategic human resource management. London: Kogan Page. Beardwell, J. and Thompson, A. (2014). Human resource management. Harlow: Pearson Education Limited. Hu, H., Hsu, W. and Cheng, B., 2004. Reward allocation decisions of Chinese managers: Influence of employee categorization and allocation context. Asian Journal of Social Psychology, 7(2), pp.221-232. Langley, A., 2011. Employee reward structures. London: Spiramus Press. McKnight, B., McDaniel, S. and Ehmann, V., 2006. Try point incentives for employee reward and recognition. Nursing Management (Springhouse), 37(12), pp.42-45. Perkins, S. and White, G., 2008. Employee reward. London: Chartered Institute of Personnel and Development. Tesco plc, 2015. Tesco plc. [online] Available at: [Accessed 12 Jun. 2015]. White, G., 2009. Managing Employee Performance and Reward: Concepts, Practices, Strategies - Edited by John Shields. Industrial Relations Journal, 40(2), pp.173-175. Read More