As cited in Armstrong (2002, p 4) “a reward system consists of financial rewards (fixed and variable pay) and employee benefits which together comprise of total remuneration. ” It is moreover made up of non-financial rewards such as recognition, praise and personal growth. In general cases performance management processes are included. The combination of each and every one of them encompasses the total reward system. Recommendation for monetary remuneration may well be performance related pay.
“Performance related pay (PRP) offers individuals financial rewards in form of increment to basic pay or cash bonuses, which are related to an evaluation of performance, generally in relation to approved objectives. ” (Armstrong 2002). The advantages of PRP to the employer are that rewards are given only for good performance. It is reasonable to employees as they will be aware of the fact that they will be remunerated for their effort if they meet the strategic objectives.
The advantages of PRP to the employees is that it motivates them to work harder, giving them an opportunity to boost basic earning as well as increase commitment and loyalty to the organisation. However the disadvantages of PRP for employers are that it is complex, highly-priced, it is not
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CBP sometimes referred to as skills-based pay which is another form of reward system. “CBP can be defined as a technique of gratifying individuals for the variety, intensity and types of skills and knowledge that they are proficient in using for the job. ” (Marchington, 2005). The advantage of CBP is that it encourages staff to enhance skills. It rewards input moderately than output of performance, i. e. specific skills/ qualities, problem solving, decision making, leadership, achieving qualifications. However the complexity linked with CBP is that it is hard to calculate fairly and expenditures could possibly rise.
To make Refusenick PLC staff work more effectively motivation and productivity need to be increased within the organisation. Few changes in the performance and reward system need to be made. “The main purpose of performance management is to improve the performance of all employees across the whole organisation; employee development therefore is a key issue. To increase performance it is necessary for the organisation to have a set of effective development programmes that are accessible to everyone. ” (Currie, 2006, P. 162)
It is vital for the organisation to understand their employees in order to succeed as it is there behaviour and optimism within job roles which enables the business to work towards success. There are a number of theories which Refusenick PLC can consider and apply in order to make sure performance and reward systems are good enough to adapt to employees to their job roles in a much more appropriate manner. * Hackman and Oldham (1976, 1980) Job characteristic model – may prove useful as by following the theory they could obtain individual results on how each individual differs and how employees respond to nature of design of their work.
Through surveys they could allocate people to the roles which best suit them. * Maslow’s hierarchy of needs: Maslow classified five human needs which are based on progress of an individual, what goals they have and what importance it holds. Again through questionnaires and other forms of communication with staff they could obtain vital research on their employees in order to improve reward systems through understanding their behaviour and interests. * ERG theory: Alderfer (1972) proposed three categories which are similar to Maslow’s classification.
After obtaining results on employees interests and behaviour at work, if they were to add both extrinsic rewards as well as intrinsic motivations depending on what best suits the employees at work, they could make the environment at work a lot more positive by ensuring staff safety and security within the job roles allocated as well as make them feel wanted, part of the organisation through participation in tasks as well as giving recognition for work (praise when achieved goals). (Williams, 1998, P. 190/ 200)
“The way employees feel about their job and their workplace determines how motivated they are. There is a clear link between job satisfaction and productivity. ” (Business link, 2008). Therefore it would be ideal for Refusenick PLC to get feedback from their staff in person or via staff surveys. This is a good method in which they will be able to obtain information on how employees feel about their job roles, the support they have and need, they could also get suggestions on how to improve the business.
By carrying out this method not only would Refusenick PLC be getting feedback but also staff involvement in the business, which helps motivate staff as they feel a part of the organisation through participation in further enhancements. Recognition of staff contribution through regular appraisals and positive feedback also help reduce distance between all workers and communication levels rise which helps build a friendly working environment for all.
Another way in which they could make the workplace more successful is through trade union recognition, as through partnership between employer and employees they can overcome problem through clear understanding and constructive communication. By involving everyone from employers to employees they can increase work capital, and productivity. Both parties should be reasonable and understand one another’s needs in order to get the most out of their inputs. Negotiating plays a key role, however if problems can be resolved between both parties, they should be able to find solutions to arguments or uncertainties raised.
(Employee relations forum, 2010) Job satisfaction depends partially on tangible rewards; and the culture of the organisation plays a key significance as well. Tangible rewards such as certificates and awards can be given to show recognition of outstanding work and progression, however instead of just focusing on one person if they were to focus on awarding people on group and team work would be much ideal, as by doing so there is chance of more communication between the staff, and it also enables staff to learn much more when working as a group or team.
Individuals come from different backgrounds, different personnel and profession work experience, therefore after completing projects, meeting targets etc, the employees are bound to feel a sense of accomplishment which should increase motivation as well as create a more sociable, comforting environment. A supplementary reward incentive that could be introduced by Refusenick PLC is gain sharing.
‘GainSharing’ is a method which make available to employees, share in the financial gains made by a business as a consequence of its enhanced performance. It is also designed to improve productivity through employee involvement, with the gains shared amongst employer and employees “Pension is another form of reward that can be taken into consideration. Pension can be seen as a form of delayed pay. ” (Marchington, 2005.
p360) according to Tyson (2006, p 311) “pensions are an essential feature of the reward package, in regards to being an employer of choice, and because pension costs can amount to as much as 20 percent of the annual payroll. ” Refusenick PLC however, should consider switching from final salary pension and offer Money purchase pension instead as this will mean the company will face fewer risks in the longer run.
Non financial incentives that might be introduced by Refusenick PLC can be training and development. Training staff improves performances, therefore if Refusenicks PLC added some training facilities within the organisation they could benefit a lot as by doing so staff skills would improve and develop, which would increase the working standards with hopes of promotions. Other benefits that could be envisaged are company cars, private health insurance or even travelling opportunities.