The NEED FOR Reward Management Business Essay

Reward management in an enterprise organisation is basically the way in which that particular business varieties and implements strategies and regulations to praise the employees to a good standard and in accordance with how the company values them. Incentive management in an enterprise organisation usually includes the business analysing and handling the employee's remuneration and all the other benefits for the employees.

The primary goal of prize management in an enterprise organisation is to pay back the employees rather for the work that they have completed. The primary reason reward management is present running a business organisations is to stimulate the employees for the reason that particular company to work hard and try their best to attain the goals that are set out by the business enterprise. Reward management running a business organisations not only consist of financial rewards such as pay nevertheless they also consist of non-financial rewards such as worker recognition, staff training/development and increased job responsibility.

Reward management in a company organisation handles the design, implementation and maintenance of pay back routines that are intended for the improvement of the business enterprise organisations performance.

The Importance of Reward Management

The components of reward management in a business organisation are all the things that they use to catch the attention of potential employees into their business which include salary, add-ons, incentive pay, benefits and employee growth opportunities such as professional development and training opportunities. Having an incentive management system set up provides the business numerous advantages, especially in small to medium size organisations where in fact the managers will need to have a good romance with the employees. Pay back programmes have became very successful in motivating employees and in turn boost the performance of the company as a whole.

Below are a few of why an incentive system is important

Mutually beneficial- An incentive system is beneficial not and then the worker but also to the organisation. The worker will feel more encouraged to work harder. insurance agencies an incentive system in place the employee will feel more focused on their work and their efficiency will increase. A rise in productivity will benefit the company. Therefore an incentive system is mutually good for the staff and the company.

Motivation-A compensation system will inspire employees by achieving focuses on and organisational goals in trade for rewards. An incentive system is great at motivating employees however they may also be motivated to establish themselves to the company.

Absenteeism-A prize system will reduce absenteeism in the organisation. Employees like being compensated for a job done well and when there is a reward system in place, employees will be less inclined to be ringing in sick and not showing up for work. Also with an incentive system in place the employees will be clearer about the focuses on and goals of the company as they will be rewarded when reach certain goals. So by having a reward system as an incentive they'll be less likely to be absent from work.

Loyalty-A prize system will increase the employee's loyalty to the company. By a reward system being set up the employee feels valued by the organisation and knows that their judgment matters. If an employee is happy with the prize system, they are more likely to appreciate workplace and remain devoted to the organisation

Morale-Having an incentive system in place providing employees with incentives and reputation will enhance their morale. By stimulating employees to meet goals and targets it gives them clear focus and purpose which will their morale. With the employees morale being boosted this will increase the morale of the complete organisation. This is all right down to a reward system in the company.

Teamwork- The prize system will improve the teamwork heart in the company. The reward system will promote teamwork to the employees. The employees will continue to work together as part of a team to accomplish their targets in return for rewards. Teamwork within the company will help increase efficiency and generate a happier workplace. That is another reason why reward systems are essential running a business organisations.

Types of Pay back Systems

There are several ways to classify rewards; the three most usual types are as follows

Intrinsic Rewards Vs Extrinsic Rewards-

Intrinsic rewards will be the personal satisfaction you get from the work itself eg having pride in your projects, having a feeling of accomplishment or being part of any team. If an employee experiences feelings of achievements or personal progress from the job, this might be labelled as an intrinsic incentive.

Extrinsic rewards would include money, campaigns and other benefits. Extrinsic rewards are external to the job and result from another source, usually management. If a worker receives a salary increase or a promotion, this would be labelled as an extrinsic incentive.

Financial Rewards Vs Non-Financial Rewards-

Financial rewards are those that will enhance the employees financial well-being directly eg bonus, increase in wages and revenue sharing schemes.

Non-financial rewards do not enhance the employee's financial position directly but make the job more attractive. A number of the Non-financial rewards a business company offer might include-an attractive pension design, access to private health care, help with long-term sickness, crЁche facilities, counselling services, staff restaurant etc.

Performance-Based Rewards Vs Membership-Based Rewards-

The rewards a business organisation provides with their employees can be predicated on either their performance or regular membership standards. Performance-based rewards are exemplified through commissions, piecework pay programs, incentive schemes, group bonus items, merit pay or other forms of purchase performance programs.

Membership-based rewards would include cost of living boosts, benefits and salary increase, seniority or time in rank, credentials or future potential.

Case Study

Tom Warner owned or operated a plumbing, heating system and air-conditioning business in Montgomery Region, Maryland. In the early 1990s, he encountered a problem. His main customers were commercial property management businesses plus they wanted to spend less. In order to do this; these commercial property management businesses made a decision to end their contract with Tom Warner and retain the services of their own "handymen".

Tom Warner didn't want to place off any of his 250-person labor force. He made a decision to reconstruct his workforce into territories. He allocated each staff member their own place and advised them to operate their territory as though they were operating their own business. He put each "area director" through trained in sales techniques, budgeting, negotiating, cost estimating and how to handle customer grievances.

Warner thought that if he previously technically superb, friendly, and ambitious employees, they could efficiently operate like small-town "handymen", even though they might be part of a large organisation.

Tom Warner's program proved to be very successful. The region directors developed a solid sense of take great pride in and ownership in their territories. Each staff could plan their own work, take care of their own equipment, develop their own estimates and promotional initiatives. They were the rewards that every staff desired.

Tom Warner's programed increased the employees' wages. A typical employee doing work for Warner before he unveiled the program was getting $60, 000. In the first yr of the program that employee was gaining $100, 000. In the second yr he was gaining $125, 000.

From a reward viewpoint, Warner's employees are really happy and Tom Warner's business grew by more than 200 % in 24 months.

Literary Review

According to the book "Human Reference Management in Ireland" 3rd model by Patrick Gunnigle, Noreen Heraty and Michael j. Morley:

Schuler (1995) describes lots of core objectives a business organisation must have in relation to the reward package deal that they offer.

Schuler areas that for a small business organisations reward package to be successful it must meet up with the following goals

It should entice potential employees- along with the organisations human being resource plan and recruitment and selection techniques the prize package deal should make potential employees want to work there. The pay back package including its mixture of pay, incentives and benefits should provide to attract ideal potential employees.

It should assist in retaining good employees- the compensation package deal must be recognized internally by the employees as fair and equitable and it should be recognized externally as competitive. Internally the employees should feel happy with the reward package and they should know that in comparison to other businesses it is a very competitive reward package so they won't want to leave and seek occupation elsewhere.

It should inspire employees- the compensation deal should help and assist motivating employees to work harder. By linking rewards to performance it will motivate employees to work harder as there can be an incentive component.

It should donate to human learning resource and proper business designs- the prize package should create a satisfying and supportive local climate to work in and therefore it ought to be perceived as a good place to work. This will likely benefit the business as it'll be appealing to the best applicants.

Reward management in business organisations is extremely important as the pay back package really helps to attract employees, hold on to employees and impact performance and behaviour at work.

According to the reserve "People Management and Development; Human being Resource Management at the job" by Mick Marchington and Adrian Wilkinson:

Lawler (1984) feels that a incentive system within the business organisation can affect a number of HR operations and practices, which in turn have a direct impact on the organisations performance all together.

Influence recruitment and retention: Lawler expresses that any business organisations that have a reward system in place will get and wthhold the most people. If better performers are rewarded more highly than poor performers. This also will impact recruitment and retention, so performance-based systems are more likely to catch the attention of high-performers.

For Example: When a business company rewards their employees with high salary, they will draw in more applicants which will permit the business more of a choice over selection and hiring decisions. This maybe will reduce labour turnover in the company.

Influence Motivation: Employees notice that by having a reward system in place, it places an importance on various activities and duties. Prize systems therefore have a motivational effect on the employees. Nevertheless the management must assimilate the pay back system with the behaviour they expect from the employees.

Influence Corporate Culture: The way in which the employees are rewarded will have a huge influence on the organization culture of the company.

For example: If the business company has a reward system set up that provides benefits for long-serving personnel, this will likely shape the existing culture into one where commitment is seen as central to the business organisations ideology. In contrast, in case a business organisation has an incentive system set up that rewards the employees for ground breaking behavior and ideas, this is more likely to shape the firms corporate culture into one where creative imagination and creativity is important.

Cost as an impact: Cost is an enormous factor and affect in the pay back system. Some business organisations might not be able to afford to set up and maintain the praise system; it could be too costly for them. Alternatively, some business organisations may well not want to spend the amount of money on an incentive system. This might demotivate the employees as they'll think that not worthwhile and this will have a direct effect on their performance in the organisation which in turn will in turn have a primary effect on the organisations performance all together.

According to the booklet "Human source of information management in Ireland" 4th model by Patrick Gunnigle, Noreen Heraty and Michael j. Morley:

Lawler (1977) features that in order for reward management to be successful the praise system needs to have the fundamental characteristics

Reward level- For reward management to be successful, the reward program must meet the employees basic needs for success, security and self-development.

Individuality- Along with gratifying the employee's basic needs, the reward system should be versatile enough to meet the employees varying specific needs.

Internal equity- The rewards must be observed as fair in comparison with others in the business. The conditions and known reasons for the allocation of rewards to employees should be equitable and clear to everyone in the company. The real reason for the allocation of rewards to employees should be communicated and accepted by all celebrations. The rewards should be applied constantly throughout the organisation.

External collateral- The rewards must be seen as fair in comparison with those offered for similar work beyond your organisation.

Trust- In order for reward management to reach your goals in the organisation, the management and the employees must have confidence in the pay back system 100 per cent. The employees must believe that and acknowledge that will receive rewards when they meet up with the relevant requirements. The management should trust that the employees will perform at a higher standard and the better to their ability in return for rewards.

According to Lawler (1977) for a business organisation to reach your goals in compensation management, he thinks that a praise system must have the characteristics listed above.

According to the publication "Human tool management" 6th release by De Cenzo and Robbins:

Armstrong and Murlis (1998) offer some extensive distinctions between the main types of incentive system

Gain Writing Schemes-the pay of several workers is linked to improvements in inside company output.

Employee Stock Possession Plans (ESOPs)-The business company offers company stock (at a lower rate than normal) to certain employees.

Profit-Sharing Schemes-The business company provides certain percentage of the finish of year revenue to the employees.

Skill-Based Pay Schemes-The business organisation rewards the employees with pay on the basis of job-related skills or competencies.

Individual Motivation Schemes-The business organisation rewards the employees for getting or exceeding specific proven performance criteria. Part- rate schemes will be the most clear form of individual performance related rewards.

Group Motivation Schemes-The business company rewards groups of employees with the same ideas they use on individual schemes. Used most commonly when group work or team work is present available organisation.

Conclusion

To conclude I will give a short run through the topics I have protected throughout this report.

I described and explained this is of what reward management is and exactly how organisations control rewards in organisations. Then i went on to go over the importance of incentive management within organisations, using this method I described the features of having reward systems in an organisation. These benefits included mutually beneficial, rises motivation, improves morale, increases the employees loyalty to the organisation, enhances teamwork and reduces absenteeism. I viewed commonly used pay back schemes. I looked at a case study about Tom Warner was pressured to prize his employees with plenty of responsibility; nonetheless it had an extremely successful outcome for him. Then i looked at the main aims that every reward system must have; catch the attention of potential employees, assist in keeping good employees, encourage employees, contribute to human resource and tactical business ideas. I described the direct impact an incentive system can have on the organisation as a whole ie impact on performance, impact on motivation, effect on the organization culture.

I viewed and explained the essential characteristics an incentive system must have to become effective. This is very important to management when making their prize system. They must check out and assess their current pay back system and make sure it offers the right characteristics. I then differentiated between the most typical types of prize schemes according to research I found on Armstrong and Murlis' viewpoint on pay back systems.

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