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Reward management
Definition according to Gunnigle and flood (1990), “ managing rewards involves the establishment &
maintenance of adequate renumeration systems which attract, retain & motivate the organisations
workforce in line with business objectives”
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Compensation practices must be relevant in a world where there is increasing competition &
awareness of the contribution of the human asset to overall organisational performance
...
Subsumed under the label reward management are
numerous objectives relating to human resource plans & business strategies, high performance &
continuous improvement, the satisfaction of individual wants and needs, cultural maintenance &
promotion of teamwork
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The design & implementation of a reward system has proven a difficult task for many businesses
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Actual reward satisfaction will be one of the key determinants of performance improvements
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Satisfaction depends on the amount received versus the amount the individual feels he/she
should receive
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Comparisons with what happens to others influences satisfaction
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Employees satisfaction with both intrinsic & extrinsic rewards received from their jobs
affects overall satisfaction
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People attach different values to their rewards effective rewards system should meet
workers needs
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Many extrinsic rewards satisfy workers only because they lead to other rewards e
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pay
increases satisfies because of what it can buy
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Extrinsic (tangible: pay, job security, working conditions) Vs intrinsic (autonomy,
responsibility, challenge) rewards
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Firms cost structure & competitive strategy: high volume low cost constraints ability of
organisation to provide expansive rewards
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Reward level – reward package must satisfy basic needs for survival, security & self –
development
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Individuality – must be flexible enough to meet individual needs of employees
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Trust – management & employees must believe in the reward system; employees accepting
that certain rewards will be forthcoming when relevant criteria are met, management
trusting that employees will perform at an appropriate level in return for such rewards
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Internal equity – rewards must be seen as fair when compared to others within the
organisation; criteria for allocating rewards should be equitable and clear
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External equity – rewards must be seen as fair when compared with others outside the
organisation
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Comparable pay rates affect companies ability to attract and retain
valuable employees
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- the reward package constitutes a core aspect of human resource and business planning process
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In designing the reward system it is important to consider external equity and to make sure the
reward offered is competitive but what is equally important for the individual is that they establish
an acceptable mechanism for grading and evaluating jobs
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Approaches to job evaluation
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Job evaluation schemes are commonly classified into:
Non analytical schemes
Making comparisons between whole jobs without analysing them into constituent parts or
elements
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(Points rating, hay method, competence based job evaluation)
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Judgements
are not quantified
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Simple and easy to understand
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Way of checking results of more sophisticated methods
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Not acceptable for equal – value cases
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Difficult to produce felt-fair rankings where demands vary significantly
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A ranking table is drawn up & jobs thus ranked
are arranged into grades
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Overall this is a method of job
evaluation that is most useful for small companies with a limited range of jobs to evaluate & with
limited resources available
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Advantages:
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Simple & easy to understand
Greater objectivity than ranking
Standards for making grade decisions included in the grade definitions
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Difficult to apply to complex jobs
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Not an analytical system
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To begin with the number of grades and the particular criteria for these grades are agreed,
so that for each grade there is a broad description of its key characteristics
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PAIRED COMPARISON:
More sophisticated than previous methods
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Advantages:
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Easier to compare one job from another at a time
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Limit to the number of jobs that can be ranked
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When a job is deemed to be of higher worth than the one its being compared with it is awarded 2
points; if it’s of equal worth 1 point and if it’s less worth it receives 0 points
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ANALYTICAL SCHEMES: POINTS RATING
Breaks each job down into a number of component job factors & analyses these separately
defined factors, which are assumed to be common to all jobs
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The selection of job factors here is critical
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POINTS RATING
Factor

Min

Low

Med

High

Responsibility
a) Financial
b) Quality
c) Equipment
d) Training
e) other

10
10
10
10
10

20
20
20
20
20

30
30
30
30
30

Total

40
40
40
40
40
200

Working
conditions
a) Hazardous 15
b) Unpleasant 10

30
20

45
30

60
40
100

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Most widely used method of job evaluation
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i
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ii
...

iii
...

iv
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Working conditions
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ANALYTICAL SCHEMES: HAY METHOD
One of the most widely used job evaluation methods worldwide
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Advantages:
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Wide acceptance
Consider range of factors
Higher level of objectivity
External comparisons available

Disadvantages:
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Degree of complexity
Standardised nature

-

Human judgement is required in the process
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The type of mental activity
involved; the complexity
abstractness or originality
required

Know how
Amount of practical &
technical or specialised
knowledge required
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Breadth of management
Requirement for skill in
motivating people

Impact of the job on dollar
magnitude
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It combines aspects of points rating & factor comparison
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( previous methods were “pay for the job”) – CBJE core principle
“pay for the person”
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Clear focus on the person

Disadvantages:
-vague in its terminology
- Complex
- Too much emphasis on skills and knowledge person has instead of output
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But it is not infallible
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However, it depends on the judgement of people with experience
and training requiring them to make decisions in a planned & systematic way, & job evaluation will
have a major impact on company pay structures & employee relations generally
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The introduction of job evaluation is a
complex process & it may be useful to seek expert advice & guidance in the initial stages staff should
be kept informed at all stages in the process

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