Reward Management or Strategy and Practice - Essay Example

Reward management is the process of coming up and executing plans to promote good results by rewarding excellence. “Reward Management is concerned with the formulation and implementation of strategies and policies that aim to reward people fairly, equitably and consistently in accordance with their value to the organization”(Armstrong and Murlis, 2004). It must be looked at as an elaborate process which is intentional and consistent. The aim here is to cause an individual, group or even groups to act towards a desired goal and maintain in a sustainable way some clear goal achieving behaviours. It is supposed to lead to motivation (Koehler, 2000). Reward management system has been evolving over the years. In the 1960s and 1970s most of the jobs were manual, and the employees were generally referred to as manual workers. They used to have wages. Organizations then had income polices, which were fixed. The worth and success of a worker was measured by a day’s work. The idea of rewarding good results was rarely practiced. In this atmosphere, workers were supposed to be satisfied with their wages and perform well in industries. There was a slight shift in the 1980s and 1990s (Heath, 1999). For the first time, we began to see services being appreciated, and the demand for knowledgeable workers began to be on the rise. The PRP-performance related payment system was introduced. Shares too came into the picture. Offering a service was treated with much more seriousness compared to the previous decade. Coming to the new millennium the reward management system was beginning to gather momentum. PRP was estimated to be at 98% as at 1998. It shot to 32% by the year 2004, later to 36% by the year 2007. Workers began associating payment to high performance. The idea of performance contracts and achieving some set targets has continued to grow among the leading organizations (Lawler & O’Toole, 2006). Rewards are of two types. We have got extrinsic rewards and intrinsic rewards. Extrinsic rewards are those that satisfy basic needs of an individual. They ensure that his/her survival is tranquil and that he can access basic services like food and security. It comes from the outside of the individual. Common extrinsic rewards include salary and grades. The threat of punishment can also be classified under this category. Intrinsic rewards tend to satisfy internal needs, which in this case are referred to as higher needs. They are about development and esteem, according to Intrinsic Motivation at Work (2009). Lawler & O’Toole (2006) argues that it is a satisfaction that comes from a status. This reward comes from interest or enjoyment in the job itself and not the external pressure as explained by Chip Heath (1999). Talent is simply defined as a special natural ability. Successful managers tend to redefine talent. They argue that the current definition is too narrow and that the definition makes it a preserve of a chosen few. They define talent as “a recurring pattern of thought, feeling or behaviour that can productively be applied”. More emphasis is put of the word “recurring”. Any recurring pattern of behaviour which is productive is a talent (Vincent & DeBree, 2009). The role of reward management is critical and enormous if talents are to be retained. Some of the obvious ways of rewarding talent include paying for overtime, indirect pays like benefits and shares; non-monetary benefits like recognition, basic pay e.g. salary, total reward pay among others as Berrett-Koehler (2000) argues. The first role of reward management is to instil a sense of progress. This means that as an employee works he/she can see positive changes. When the talent leads to better results at the place of work, targets are achieved with ease, expectations are met in time and generally there is growth. These make employees to feel a sense of reward. Progress is intrinsic in nature according to Berrett (2000) and Koehler (2009). It brings the feeling that an employee in important to that organization. High performance in a challenging environment is one of the biggest motivation factors to talent. It feels great to keep shining where others consider impossible to. In most cases, progress encompasses both intrinsic and extrinsic concerns of an employee. Better performance leads to more internal satisfaction and a better pay. According to Armstrong (2007), reward is not just about money. According to Armstrong (2010) employees feel that their life has a meaning which is being appreciated by others. Having a meaning for what one does is a reward. It is intrinsic too but very vital for motivation as explained by Thomas (2009). Inadequate motivation leads to poor performance. Some people are motivated by understanding the meaning of their talents, which attracts a chain of other rewards including money which, again, is an extrinsic reward. It makes workers feel that their time and energy is worth their vocation. They are excited about what they do and are eager to deliver the best results on the same. Meaningfulness makes one be proud of the choice of career and how to go about it (Harackiewicz & Sansone, 2000). It easily brings a sense of ownership in the activity or job. Meaningfulness and purpose tend to go hand in hand. This makes one feel that they are not wasting their time. This is also important in the process of actualizing one’s desires. Understanding ones purpose accurately makes it easier for a person to act with restraint and to make sacrifices that are necessary to achieve the purpose (Weisbord & Janoff, 2000). A sense of competence is crucial while looking at a reward system. It is a bit different from progress or meaningfulness. An explanation by Cameron (2006) informs us that it is an awareness that one is doing what they are expected to do and that they are doing it well (Cameron, 2006). This makes them feel needed. Competence leads to motivation. It leads to a feeling that high quality work is being done with ease. This attracts complements from seniors or fellow workmates. Competence attracts extrinsic rewards. Managers can opt to raise the salary of a competent worker rather than lose them to another organization. It as well leads to promotion. In a nut shell, competence attracts other rewards going by John Byrne (2001). Physical rewards have their place in the development and retaining of talents. Some of these rewards include money, houses, trophies, medals among many others. They make employees or workers in general to gauge the worth of their talent. This makes them feel recognized and appreciated by other people. It is a reward system that is popular. Besides, it opens them up to many other possibilities through the popularity of some of these rewards. Though its never meant to be a form of payment, it helps the workers live good lives and makes them feel appreciated which is the essence of motivation (Welsh & Byrne, 2001). In conclusion, reward management plays a vital role in attracting and retaining talent. The rewards have to be diverse according to CIPD (2007) and CIPD research (2012). They have to comprise both physical –extrinsic satisfaction and intrinsic satisfaction. Rewarding talent is very vital for excellence to be attained. Every organization should come up with a reward system that best suits its goals, aims and employees’ needs. Reward management should be dynamic because life itself is not stationary. It should evolve based of the needs of the workers so that there is no disconnect between the two groups i.e. employer and employees (Stumpf, Doh, & Tymon, 2010). For individuals, reward may include incentives, benefits and basic payments while team reward may include team bonuses. Organizational rewards may include profit sharing, shares and gain -sharing. The best methodology of reward should be employed so that it remains sustainable (Human Resource Management, n.d). The merits and demerits of the reward system of choice should be considered by the leadership system of an organization. Talents should be a delight to employees and the entire organization. They should inspire joy and desire to do more for better results. Extrinsic rewards are basically about survival meaning that they are not good enough to ensure excellence is achieved. They should be balanced with intrinsic rewards for the results to be optimized according to Harackiewicz & Sansone (2000). References Armstrong , M., & Murlis, H. (2007). Reward Management: A Handbook of Remuneration Strategy and Practice. London:Kogan Page. Armstrong, M. (2010). Reward Management. In Armstrong's Essential Human Resource Management Practice. (p. 267). Kogan Page. Cameron, J. (2006). Behavior analysis, rewards and extrinsic motivation. In Rewards and Intrinsic Motivation: Resolving the Controversy. (p. 70). IAP. CIPD (2007). Reward strategies. Annual survey report 2007 REWARD MANAGEMENT, 6. Retrieved from http://http://www.cipd.co.uk/NR/rdonlyres/08FE4AE7-7DD5-4185-9070-F34225A6EB0C/0/rewmansr0107.pdf Harackiewicz, M., & Sansone, C. (2000). Rewarding competence. In Intrinsic and Extrinsic Motivation: The Search for Optimal Motivation and Performance. Academic Press. Heath, C. (1999). On the social psychology of agency relationships: Lay theories of motivation overemphasize extrinsic incentives. In Organizational Behavior and Human Decision Processes. (pp. 25-62). Human Resource Management Strategies employed by HR Experts (n.d.). Retrieved from http://thinkingbookworm.typepad.com/blog/2012/04/human-resource-management-strat egies-employed-by-hr-experts-a-research-method-proposal.html Koehler, B. (2009). Intrinsic Motivation at Work. Cengage Learning. Koehler, B. (2000). Intrinsic Motivation at Work. Cengage Learning. Lawler, E., & O’Toole, J. (2006). The New American Workplace. Palgrave Macmillan. Stumpf, S., Doh, J., & Tymon, W. (2010). “Exploring talent management in India: The neglected role of intrinsic rewards. Journal of World Business, Thomas , K., & Tymon, W. (2009). Work Engagement Profile. CPP. Thomas, K. (2009). Intrinsic Motivation at Work. Berrett-Koehler. Vincent, B., & DeBree, S. (2009). Applications to organizational change and executive transition. In an early adopter of the Work Engagement Profile . New West Institute. Retrieved from http://www.newwestinstitute.com. Weisbord , M., & Janoff, S. (2000). Future Search. (2nd ed.). Berrett-Koehler. Welsh, J., & Byrne, J. (2001). 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