Notesale: Turn your study into money

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REWARD
(Own lecture notes) Reward: how the organization values you and what you have to offer
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Strong influence on persons behaviour
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New pay - emphasis based, encourage behaviour
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Reward package: financial + non financial + giving employees choices
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Affordability is a key
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Fixed:
guaraneteed, lot more flexibility
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Fixed - predictable, health,
pension, benefits
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Executive Pay: don´t do too much,
overpay, till you don´t know how much is done, pay does not always
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Flexible package=
advantage = administration, nature, more jobs
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Strategic Reward= no raise in the reward if
the objectives are not met BALANCE!!!
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Profit
margins in orgaisations are many times tighter than used to be, makes it more difficults to oganise pay
structure, government have cut their expenditure, employers have to be more creative, thinking of
non financial rewards that still motivate, Right reward package (when tighter labour market, harder to
recruit, more difficult to develop reward packages that suit employees
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KEY QUESTiONS ABOUT PAY PACKAGE
Key questions: How much should we pay? what the pay package should include? – major
determinants of organisational profitability, standard of living (family, holiday, luxury etc), motivation
to wok, ability to recruit-competitive in labour market?,competition for good staff in between
organisations –CIPD surveys)
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Major questions to be considered while creating pay structure: what are we seeking to achieve in
designing or redisigning our payment systems? Competitors what doing? Positioning to compete
effectively in market? Constraints that have to be faced in own reward system? How to avoid
demotivating staff when making pay decision? What extent to let employees or representatives to be
involved in determining pay decisions?

Amstrong and Brown (2009) 4 key written components in reward strategy: 1) statement of intentions
(what the rewawrd system is seeking to achieve , what initiatived have been choosen to achieve
these) 2) Explanation fo above in more detail „rationale“ – objectives in more depth+org rew policy
how supports the above, statement of the business that underpinds the strategy, should include
costings, benefits expected, indication to evaluate success 3) explanation fo guiding principles (used

to develope intiatives+used in future to adapt those) – statements about ethical issues –
commitment co core principles – equality – men vs women, fair dealing, rewarding of individual
performance 4) Implementation plan – setting out exactly what initiatives are brought forward,
when, who has responsibility for and cost of those
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Two main groups: Variable (irregular, variable amount, usualyl
discretionary) and Fixed (regular, rarely variable, usually contractual) elements
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Variable: varied by the employe or employer
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Basic rate: irreducible minimum rate of pay
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Plussage: sometimes basic has additon in recognition of an aspect of working conditions or employee
capability
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company cars, subsidised
meals, childcare vouchers, private health insurance, staff discount occupational pensions
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sometimes built into basic rate, regular feature of contract of
employment so that payment is unvarying, shift working occasional- short-lived, making the
premium a variable elemnt of payment
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paid to 58% of employees in the UK private sector,
only 22% in public sector(van Wanrooy 2013)
Bonus: different type of variable payment – gratuitous payment by employer, not directly earned,
difference between incentive and bonus, employee has no entitlement to the payment as a result of
a contract of employment, cannot be assured of receiving it in return for a specific performance,
common example – xmas bonus
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less freedom when making this decision
rather than making up the pay package
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19/hr
UK 2013) equal pay law
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= restrict the amount of

additional pay
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Limit
below impossible to attract or retain people with required skills and experience, product and labour
market pressures effectively set a ceiling and floor to overall pay levels for any one job or individual
(Gerhart 2009)
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Major factor when
set pay rates, some employers pay over the market rate to secure the services of the most talented
employees, others follow the market – pay below the market rate, other structures – flexibility, job
security, long term incentives to ensure effective recruitment and retention
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Accountants, craftworkers, - external employee grouping, assessment of
pay levels influenced by the going rate in the trade, similar situations with clearly understood and
readily transferable skill jobs (particularly if working with standard piece of equipment, driving heav
goods vehicles as vehicle common, roads the same, loads vary only, secretaries, switchboard
operators, PC operators)
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Market ratd for different job
types info in published journal INCOME DATA SERVICES (IDS), INDUSTRIAL RELATIONS SERVICES (IRS)
– focus on hard to recruit staff – PC staff
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Info on specific job types (international packages for expatriate
workers – collected by specialised consultants – can be obtained on payment of the appropriate fee
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INTERNAL LABOUR MARKET
labour markt within the organisation – needs to be managed to ensure effective performance
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Entreprise market is so
called because the individual enterprise defines the boundaries of the market itself – market
encompassing manual workers engaged in production processes, for whom the predominant pattern
of employment is one in whihch jobs are formally or informally ranked, jobs accoreded with highest
pay or prestige, usually with promotions, thoe at the bottom of the hierarchy being filled only fom
outside of enterprise = bottom most sensitive to the external labour market
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– this modues operandi main causes of
the problems being faced by executive
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Metaphor –sports tournament –
oganisation´s pay structure is likened to the prize distribution in a KO competition, such as is founf at
Wimbeldon Tennis Champ
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aim: attract best players to compete in the first round, then
subsewuently give players in later rounds an incentive to play at their peak
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= actual performance of individual receiving

the pay is less important
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certain pay
rates are expected by those who have achieved the required qualification and it is accepted by
everyone that this is a fair basis for rewarding people
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Each job assimilated to
appropriate grade and payment
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Fairness and objectivity are core, wage budget divided
among employees on the basis of the nature
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Usage of JE has
increased recently (used in 40% in UK, higher proportion still in larger ones CIPD 2012)
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very widely used in the
private sector as well
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–continue to hold
true
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Not to be misunderstood following points have to be made: 1) concerned with the job
not the performance of individual, individual merit not assessed
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3) job evaluation dos not eliminate collective
bargaining where trade unions are recognised, determines the differential gap between incomes,
does not determine pay levels or annual pay rises 4) only a structure of pay is produced, other
elements (premia, incentives) not determined by the method
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AMstrong and Murlis (2007)
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Lately computer assisted job evaluation systems – information gathered
from job analysis questionnaires – process, point values plotted on a graph, or listed from highest to
lowest, points ratings matched with cash amounts, decisions made on point ranges equate with
various pay grades
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Salary-modelling software is widely available to help with this process
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Problem: costs money introducing JE
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COLLECTIVE BARGAINING
4th approach-determining pay rate through collective negotiations with trade unions, other employee
representative
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recent decades- CB
decentralised to a company or plant level in the manufacturing sector
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Wanrooy (2013) 23% have terms and conditions
determined this way, CB in only 13% of workplaces
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negotiation
–
staff+management+reference to external labour market rates, size of jobs, established internal pay +
other factors (unions representatives reference to employee need house prices are rising ad
affordable accommodation is hard to find, both sides referring to the balance sheet, employers
arguing profit margins are too tight to afford substantial rises, union counterparts seek to gain share
of any increased profits for employees
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EQUITY
whatever method package used –have to be equitable, inequity can be highly damaging to
organisation
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when unfair leads to job
shrinking, low trust employee relations , not just payment matter has to be fair but be as well
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Internal statistics on inequality published eeach year United Nations –
Human Development Reports – level of equality in a society is measured using the Gini coefficient
internationally accepted measurement tool 0 – 100 ( 100 all the wealth in the hands of individual –
most unequal, 0 wholly equal all) most unequal country Namibia, western most une USA, UK
following, Northern European more equal- Sweden, germany, Denmark, Germany, Japan close to top
in most equal
INTERNATIONAL DIVERSITY
Despite globalization, multinational corporations there are distinct national variations
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Different attitudes toward payments, employee attributes, huge differences in taxation, social
security regulation
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Setting minimum wage, men and women treated equally required,
refraining from interfering pay determination matters
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In private sector – trade union – limited role, management deciding who
should be paid what
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GERMANY
More centralisation, pay largely determined at industry level not governmental level
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employers not permitted to
undercut agreed minima , can supplement them with locally agreed discretionary emoluments
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Large firms only most senior managers on
ondividual contacts – 2% of total workforce
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government
sponsored profit sharing arrangement common too, attractive renumeration form – thirteen month
bonus payments in December
JAPAN
resembles the system of Germany – comprises industry level pay scales agreed between firms
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collective bargaining not really
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3 factors determining individual´s pay: 1)career category 2) age/seniority 3) rand
and class
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each category
different base pay with reference to age (60) reference to skill/effort (40%)
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earnings go up with
each year until age 50, after that decline steadily
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however seniority plays part in the skil based payments too,
minimum time to serve in each class before promotion
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SCANDINAVIA
Norway, Sweden, Finland very much more centralised payment arrangements than elsewhere,
government playing decisive role across most industries
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typically long term deals – once agreed
lasts for 3 yrs at least
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result: high
degree of similarity in grading schemes across industries, relatively low level of social inequality
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Performance
related pay (PRP) very common, team based
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Armstrong and Brown (2009)
graph – rewarding job – 4 categories of rewards – each has equal potential (individual, Transactional,
Relational, Communal)
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resolutions: employ fewer more high paid
to do job more efficiently, another: keep a lid on payment levels look for other wasy to reward staff
effectively - kinda total reward package
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Intangible rewards: much harder, much more important over the long term to improve
the value of these but that is harder to achieve and evaluate, intrinsically rather than extrinsically
motivating, cannot be directly provided by manager, money given but intangivle internally
generated
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BUT what manager can do: try to
create and sustain a culture in which employees achieve intrinsic motivation
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Until 1996 8500 staff paid on
standard terms and conditions – negotionated nationally for civil servantsworkign across government
departments
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“Invest” aim toincrease attractiveness of a carees within CPS, help retain staff
+substantially improve performance
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New strategy: job evaluation system (ensuring each job is fairly graded according to skills
and responsibilities), new performance appraisal system (strengthen links between pay and
individual effort), existing Civil Service benefits package enhanced with new elements: childcare
services, counselling service,enhanced taining and development oopotunities for staff = easier career
progression within CPS, employees sponsored to attain professional qualifications, e learning
packages
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in future intended to introduce long service aad, recognition of individual
achievemtns through formal letters of recognition from senior managers
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Result: Brings some good: more open culture and fairer pay system BUT openness is not
soo good not always at least
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In public sector you would know anyway thanks to grade and
task based rate
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One thing it has certainly
done: envy all the greater

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