Frederick Herzberg

Employee reward encompasses how people are rewarded in accordance with their value to an organization. It is about both financial and non-financial rewards and includes the strategies, policies and processes used to develop reward systems.

The aim of employee reward systems and practices is to help attract, retain and motivate high-quality people. In return for their commitment, employees expect financial rewards such as salary, fringe benefits, bonuses or share options. They also look for other rewards such as recognition of competence, achievement, responsibility, influence or personal development. Getting employee reward strategies wrong can often have a significant impact on motivation, commitment and morale.

Performance-related pay was the big idea of the 1980s and reflected the wish to move away from service-related pay and collective bargaining. The early schemes were revised in the 1990s and new ideas such as skills-based pay were introduced. Today, linking pay to a wider definition of employees’ contribution in terms of input and output is popular and is also known as ‘merit pay’.

Variable pay is usually tied to the performance of the company or business, an individual’s contribution or a combination of the two. It usually takes the form of bonuses, share options and one-time awards for significant accomplishments.

Profit-sharing refers to the strategy of creating a pool of money that can be distributed to the employees according to a stated percentage of company profits.

Share options, once the preserve of senior management, are becoming increasingly popular and reward employees’ commitment. A share option gives long-term ‘vested’ employees the right to buy a specified number of the company’s shares at a fixed price for a specified period of time. After this period of time, employees can ‘exercise’ their share options and sell or retain the shares. The gain or loss lies in the difference between the fixed price and the market price.

Employee recognition strategies include luncheon vouchers, birthday parties, employee of the month/year, department/company recognition boards and privileges such as starting late and finishing early.

FOLLOW-ON QUESTIONS…

1. What’s the aim and practice of employee reward system?

2. What are benefits/limitations of different companies’ points of view related to reward systems?

3. How important do you think fair pay is in general? What about groups of workers, notably women who are consistently paid less than their male counterparts?

4. How big factor is pay in reward systems in motivating workers?

5. What do you think about pay being linked to experience? Should pay be based more on merit, or experience, or time spent with the company?

Case study «An attractive remuneration package»

ISSUE

As the state pays less and less in old age pension, it is becoming increasingly important for those who want to enjoy their ‘golden years’ to have their own private pension arrangements. In order to satisfy the growing need for private pension arrangements, you and your colleagues have recently set up your own company to offer a range of financial services and products. Your target market is small- and medium-sized companies, in which the directors have not made sufficient arrangements for their own pensions.

The services that you will offer are:

1. pension audit (to identify the pension required)

2. pension advice (to look at present pension provision and identify possible alternative providers)

3. pension products (to sell pension schemes).

As you and your colleagues spend a great deal of your time out of the office with clients, you need an assistant to manage the office in your absence. You envisage that this will be a key position (more than simply an administrative job), as the person recruited will have a lot of customer contact, often giving advice and even selling products. You need to agree on a remuneration package that will attract the right person.

AGENDA

1. Presentation of the problem

2. Discussion of alternatives

3. Decision on next step

4. Action plan

Дата добавления: 2015-11-14