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REWARDING PEOPLEMin Khaung ( EMPA – 8 )
2
REWARD MANAGEMENT DEFINED
Reward management is concerned with the strategies, policies and processes required to ensure that the value of people and the contribution they make to achieving organizational, departmental and team goals is recognized and rewarded
Min Khaung ( EMPA - 8 )
3
AIMS OF REWARD MANAGEMENT
Reward people according to what the organization values, wants to pay for and for the value they create.
Support the achievement of business goals Promote high performance & Develop a
performance culture. Support and develop the organization’s
culture
Min Khaung ( EMPA - 8 )
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AIMS OF REWARD MANAGEMENT
Define the right behaviors and outcomes Align reward practices with employee
needs Help to attract and retain high quality
people Reward the right things to convey the
right message about what is important in terms of behaviors and outcomes.
Motivate people and obtain their commitment and engagement.
Min Khaung ( EMPA - 8 )
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AIMS OF REWARD MANAGEMENT Help to attract and retain the high quality people
the organization needs. Develop a positive employment relationship and
psychological contract. Align reward practices with both business goals
and employee values. Operate fairly – people feel that they are treated
justly in accordance with what is due to them because of their value to the organization
Min Khaung ( EMPA - 8 )
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AIMS OF REWARD MANAGEMENT Apply equitably – people are rewarded appropriately
in relation to others within the organization, relativities between jobs are measured as objectively as possible and equal pay is provided for work of equal value.
Function consistently – decisions on pay do not vary arbitrarily and without due cause between different people or at different times.
Operate transparently – people understand how reward processes operate and how they are affected by them. Min Khaung ( EMPA - 8 )
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THE REWARD SYSTEM
A reward system consists of the interrelated processes and practices that combine to ensure that reward management is carried out effectively to the benefit of the organization and the people who work there
Min Khaung ( EMPA - 8 )
REWARD SYSTEM PROCESSESBusiness strategy
Reward strategy
Total rewards
Financial rewards
Pay determination
Base pay management
Contingent pay
Employee benefits
Performance
Non-financial rewards
Recognition
Job design
Opportunity todevelop
Work environment
Performance management
9
THE REWARD STRATEGY
sets out what the organization intends to do in the longer term to develop and implement reward policies, practices and processes which will further the achievement of its business goals.
Min Khaung ( EMPA - 8 )
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REWARD POLICIES
Reward policies address the following broad issues: the approach to total reward; the scope for the use of contingent rewards
related to performance, competence, contribution or skill;
the role of line managers; transparency – the publication of information
on reward structures and processes to employees.
Min Khaung ( EMPA - 8 )
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TOTAL REWARD
Total reward is the combination of financial and non-financial rewards available to employees.
Min Khaung ( EMPA - 8 )
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TOTAL REMUNERATION
Total remuneration is the value of all cash payments (total earnings) and benefits received by employees.
Min Khaung ( EMPA - 8 )
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BASE OR BASIC PAY
The base rate is the amount of pay (the fixed salary or wage) that constitutes the rate for the job.
It may be varied according to the grade of the job or, for manual workers, the level of skill required.
Influenced by internal and external relativities.
Min Khaung ( EMPA - 8 )
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BASE PAY
The management of base pay uses the information from market pricing and job evaluation to design and operate grade and pay structures that cater for job-based pay and allow scope for pay to progress within the structure through person-based pay
Min Khaung ( EMPA - 8 )
PAY DETERMINATION
Pay determination is the process of deciding on the level of pay for jobs or people. Its aims, which frequently conflict, are:
1. To be externally competitive in order to attract, engage and retain the people required by the organization ( External Equity )
2. To be internally equitable in the sense that rates of pay correctly reflect the relativities between jobs( Internal Equity )
EXTERNAL EQUITY
Employees’ perception of external equity—which concerns the fairness of what the company is paying them compared with what they could earn elsewhere—are critical in such employment relationships.
Organizations with an external labor orientation must assess how their compensation compares with the compensation offered by other organizations.
INTERNAL EQUITY Employees’ perceptions of internal equity—their
beliefs concerning the fairness of what the organization is paying them compared with what it pays other employees.
Organizations with an internal orientation spend time and effort comparing and analyzing pay differences among their own employees.
Pay practices, such as how much each person makes, are usually less secretive in these organizations than in organizations with an external orientation.
JOB EVALUATION
Job evaluation is a systematic and formal process for defining the relative worth or size of jobs within an organization to establish internal relativities. It is carried out through either an analytical or a non-analytical scheme.
MARKET PRICING & MARKET RATE ANALYSIS
Market rate analysisThe process of identifying the rates of pay
in the labor market for com-parable jobs to inform decisions on levels of pay within the organization.Market pricing
The process of making decisions on pay structures and individual rates of pay and obtaining information on market rates (market rate analysis).
GRADE AND PAY STRUCTURES
Jobs may be placed in a graded structure according to their relative size. Pay levels in the structure are influenced by market rates. The pay structure may consist of pay ranges attached to grades which provide scope for pay progression based on performance, competence, contribution or service.
OTHERS FACTORSContingent pay - Additional financial rewards may be provided that are related to performance, competence, contribution, skill or service in the grade.Employee benefits - pensions, sick pay, insurance cover, company cars.Performance managementNon-financial rewards - achievement, autonomy, recognition, scope to use and develop skills, training, career development opportunities and high quality leadership.
Transactional rewards
Relational rewards
Base pay
Contingent pay
Employee benefits
The work itself (job design)
The work experience
Totalremuneration
Non-financial rewards
Recognition, achievement, growth
Total reward
THE COMPONENTS OF TOTAL REWARD
PAY/REWARD• Base pay• Contribution pay• Shares/profit sharing• Recognition
TRANSACTIONAL (TANGIBLE)
RELATIONAL (INTANGIBLE)
IND
IVID
UA
L
CO
MM
UN
AL
TOTAL REWARD MODEL (TOWERS PERRIN)
BENEFITS• Pensions• Health care• Perks• Flexible benefits
LEARNING AND DEVELOPMENT• Workplace learning• Training• Performance management• Career development
WORK ENVIRONMENT• Core values• Leadership• Employee voice• Job/work design
FINANCIAL REWARDS
Financial rewards comprise all rewards which have a monetary value and add up to total remuneration:
base pay pay contingent on performance, contribution,
competency or skill pay related to service financial recognition schemes benefits such as pensions, sick pay and health
insurance
NON-FINANCIAL REWARDS
Non-financial rewards are those that focus on the needs people have to varying degrees for recognition, achievement, responsibility, autonomy, influence and personal growth
GRADE AND PAY STRUCTURES
Grade and pay structures provide the framework for base pay management so that an organization’s pay policies can be implemented
TYPES OF GRADE AND PAY STRUCTURES
Narrow-graded Broad-graded Broad-banded Career family Job family Pay spine
MODEL OF A NARROW-GRADED STRUCTURE ( MULTI GRADED STRUCTURE )
£
consists of a sequence of job grades into which jobs of
broadly equivalent value are placed.
MODEL OF A BROAD-GRADED STRUCTURE
£
Have six to nine grades rather than the 10 or more grades contained in multi-
graded structures
MODEL OF A BROAD-BANDED STRUCTURE
£
multi-graded structures into four
or five ‘bands
MODEL OF A CAREER FAMILY STRUCTURE
Level 1 Level 1 Level 1
Level 2 Level 2 Level 2
Level 3 Level 3 Level 3
Level 4
Level 5
£
Level 4
Level 5
Level 4
Level 5
Career families
JE points
Operation Finance IT
jobs in the corresponding levels across each of the
career families are within the same size range
MODEL OF A JOB FAMILY STRUCTURE
£
Job families
Operation
Finance
IT
Different job
families are
identified
A PAY SPINE
Pay spine
34
Min Khaung ( EMPA - 8 )
Thank You