Designing an Effective Reward System Introduction Human resource plays an important role in organizations. They are responsible for ensuring that the organization runs effectively and efficiently and that the goals set are achieved. They run the organizational structure and are the key aspects in the firms. The human resources manager is faced with a great challenge of recruiting competent people to work in organization as well as ensuring less worker turnover rates. He is the most important leader in the firms and the is responsible if the workers do not perform as expected or if there are complains arising due to salaries and remuneration or lack of performance.
It is thus essential to have an effective and a well-coordinated reward system where elements such as compensation, benefits, total reward, reward management and total pay are considered. When designing an effective and efficient reward system where the employee is the key concern, a holistic approach should be used. This provides and encompasses all the elements in employee remuneration and rewards and in most cases proves to be the most efficient. Holistic approach- the total reward system The system tends to encompass the values and gains of employees by enhancing the employer- employee relationship derived from a reward aspect in the human resource framework.
It is a holistic approach that addresses the complex reward issues regarding payment, benefits, work environment, training and development by integrating human resource disciplines (Sandstrom, 2008, p. 74). The system gives an outlay of four items that should be considered though this may not necessary be adopted by all organizations. Different agencies have unique frameworks and may choose to adopt a separate structure or system of rewarding.
The aspects considered include payments that are the direct finance tools like the base pay, variable incentives for pay, stock and equity programs and programs on monetary recognition. Next are the benefits accruing and include the indirect financial rewards such as health and welfare benefits, vacation and savings plans and any other paid time offs. The need for careers development is essential and includes learning and careers training, supporting performance and succession planning systems. The fourth item is the work environment which refers to the programs and programs relating to organizational climate, diversity, culture, performance support and work balance (Armstrong, 2007, p.
113). The life balance relates to the flexibility in the work arrangements, organizational reputation, challenges and the quality of relationships. The total rewards system may be influenced by the firm’s strategies, employee preferences, cost among other variables like taxation. Reward management The human capital procedures have many elements each of which play an important role. They encompass how work is processed, decisions are made and management of people. Moreover, it includes the type of people relating to skills, education and attitudes and their rewards based on performance.
Reward management differs among various organization due to the differences in the business contexts and strategies and must be created to support the human capital needs (Wright, 2006, p. 143). In this case, a best fitting reward system should be adopted that encompasses the needs of a particular organization and not based on other firms. The concept of rewards has expanded to an overall value proposition to include benefits, remuneration and carriers. Remuneration- these will include both the base salary and long and short term incentives.
The human resources manager need to realize that the other reward elements are important and not just the pay. Most misconceptions arise when it is conceived that pay represent the solutions for attracting talent, reducing turnover, providing motivation and reducing the challenges (Beardwell and Claydon, 2010, p. 82). Benefits- these accrue to items derived such as cars, superannuation work or life benefits among others. The workers of an organization have needs and these benefits are chosen depending on the needs of the employees and those that best provide solutions to these problems.
Since the needs differ among various employees and also change with time, the organization should have flexible benefit packages and plans that best suit the diverse and changing nature of the needs. Careers- employees look for alternatives and growth opportunities and may forgo even very well paying jobs and better benefits for the chances to learn, grow, acquire new skills and advance in their careers. The careers package should involve a talent build or buy strategies that provide for training, development, growth opportunities, stretch assignments, later career movements and career incentives (Armstrong, 2007, p. 109).
To most employees, careers provide the most affluent and future value of staying in the organizations and if not met then it could result to high turnover rates. The management of rewards ensures that such aspects are met and growth and expansion chances are provided. Reward management is essential and ensures that no individual gain is derived at the expense of the employees and that no capital is lost due to mismanagement. It is important as it bring transparency after evaluations, creates a high performance culture, generates returns on program investment and supports the employment brand.
It also ensures that the employees receive payment fairly based on the work done and achievements. Compensation and benefits The traditional system of rewarding incorporated the salaries and health benefits as the major components of the pay. The human resource should ensure that they offer competitive base salaries and flexible payment options in addition to flexible, customizable health plans that suit all individual according to their specific needs (Pilbeam and Corbridge, 2011, p. 137). This is because different families have various home situations, are varied and the health plans providing benefits cannot be easily standardized Work experience and total pay The human resource should ensure that work experiences are improved in order to enhance a total reward system.
Major characteristics of work experiences include the recognition of good work and achievements. Moreover, a great corporate culture, job design and physical work spaces, skill development and opportunities for career development form part of the work experiences aspects (Zingheim and Schuster, 2001, p. 33-40). A balance between work and personal life needs to be achieved by the workers so as to have less collisions with management and thus to create a good work experience. Conclusion Due to the current growth in economy and human capital, the human resource managers find it increasingly difficult to come up with an effective labour in organization fuelled by the poor remuneration strategies.
Employees are fully seeking environs that provide good career development, great payment and benefit plans and a proper integrated system. The manager thus should ensure that the strategies used for their employee recruitments, training, development and growth are geared towards the settlement of individual employee’s needs.
This is because there are separate consumer needs and preferences among the employees and thus the management should meet this. Failure mostly leads to massive employees turnover rates. References Armstrong, M, (2007), A handbook of employee reward management and practice, London: Kogan Page. Beardwell, J, and Claydon, T, (2010), Human Resource Management: a contemporary approach, Harlow: Pearson Education Ltd. Pilbeam, S, and Corbridge, M, (2011), People Resourcing and Talent Planning: HRM in Practice, 4th ed. Harlow: Pearson Education.
Sandstrom, N, (2008), EOn’s Ahead, People Management, London: CIPD Publications. Wright, A, (2006), Reward Management in Context, London: CIPD. Zingheim, P, and Schuster, J, (2001), Winning the Talent Game: Total Reward and the better Workforce Deal Compensation and Benefits Review. Vol. 17, No. 3, Summer, pp. 33-40.