HUMAN RESOURCE

1

• HUMAN RESOURCE
• What is reward ing?

Edited by Fabio Emanuele Noia, Link Campus
University of Malta, 2006
Chapter 9 Reward Management
Freely Inspired from Bratton J., Gold J., Human
Resource Management, Theory and Practice,
Palgrave, 2003 http//www.palgrave.com/business/br
attonandgold/
2

• Reward
• ____________
• Refers to all of the monetary, non-monetary and
  psychological payments that an organization
  provides for its employees in exchange for the
  work they perform.

Freely Inspired from Bratton J., Gold J., Human
Resource Management, Theory and Practice,
Palgrave, 2003
3

• How does reward relate to performance,
  flexibility, quality and commitment?

Freely Inspired from Bratton J., Gold J., Human
Resource Management, Theory and Practice,
Palgrave, 2003
4

• Managers are required to improve labor
  productivity and the quality of their
  organizations products while controlling labor
  costs.

Freely Inspired from Bratton J., Gold J., Human
Resource Management, Theory and Practice,
Palgrave, 2003
5

• Change
• ____________
• Change in job design has been followed by a
  change in reward strategies and practices (less
  collective, more individual negotiation).

Freely Inspired from Bratton J., Gold J., Human
Resource Management, Theory and Practice,
Palgrave, 2003
6

• The task
• ____________
• Every organisation has to decide how to design a
  reward system.

Freely Inspired from Bratton J., Gold J., Human
Resource Management, Theory and Practice,
Palgrave, 2003
7

• Likely objectives of the reward system
• ____________
• support the organization strategy
• Recruit qualified employees
• Retain capable employees so that turnover is held
  to an acceptable level
• Ensure internal and external equity
• Be sustainable within the financial means of the
  organization
• Motivate employees to perform to the maximum
  extent of their capabilities
• Streghten the psychological contract
• Promote organizational citizenship
• Comply with legal regulations
• Be efficiently administered.

Freely Inspired from Bratton J., Gold J., Human
Resource Management, Theory and Practice,
Palgrave, 2003
8

• Wage-effort bargain is central to the
  capitalistic employment relationship
• It entails two elements that are in contradiction
  with each other
• 1. cooperation between worker and employer is
  essential and fostered through the logic of
  financial gain for the worker
• 2. tensions and conflict are engendered through
  the logic that makes the buying of labor power
  the reward for one group and the cost for the
  other.
• Which characterises the instability and the
  continuous need for adjustment of the
  relationship.

Freely Inspired from Bratton J., Gold J., Human
Resource Management, Theory and Practice,
Palgrave, 2003
9

• A pay model
• Contains five building blocks
• Strategic perspective (linked to organization
  strategy)
• Reward objectives
• Reward options
• Reward techniques
• Reward competitiveness

Freely Inspired from Bratton J., Gold J., Human
Resource Management, Theory and Practice,
Palgrave, 2003
10

1. Strategic perspective cost leadership,
   differentiation, focus
2. Reward objectives recruit and retain,
   performance, commitment
3. Reward options base pay, performance pay,
   indirect pay
4. Reward techniques job analysis, job evaluation,
   appraisal
5. Reward competitiveness labour market, product
   market, organizational

Freely Inspired from Bratton J., Gold J., Human
Resource Management, Theory and Practice,
Palgrave, 2003
11

• Reward objectives
• ____________
• 3 behavioral objectives
• membership behavior to recruit and retain a
  sufficient number of qualified workers
• Task behavior to motivate employees to perform to
  the fullest extent of their capabilities
• Compliance behavior to encourage employees to
  follow workplace rules and undertake special
  behaviors beneficial to the organization without
  direct supervision or instructions.

Freely Inspired from Bratton J., Gold J., Human
Resource Management, Theory and Practice,
Palgrave, 2003
12

• Reward options
• ____________
• Individual rewards?
• Team rewards?
• Organizational rewards?
• All of them?

Freely Inspired from Bratton J., Gold J., Human
Resource Management, Theory and Practice,
Palgrave, 2003
13

• Reward options
• ____________
• Base pay irreducible wage or fixed salary
  (weekly, monthly, yearly), computed on time
  worked, rather than on results achieved, tends to
  reflect the value of the job itself as measured
  by some form of job evaluation. It is simple to
  administer and has psychological benefits (shows
  organizational commitment)

Freely Inspired from Bratton J., Gold J., Human
Resource Management, Theory and Practice,
Palgrave, 2003
14

• Reward options
• ____________
• Performance pay related to work behavior such
  as performance, learning or experience. Also
  called variable or contingency pay. Main types
  are performance related pay (post), incentive
  pay (pre), merit (outstanding past performance)
  commission, knowledge contingent pay (or
  skill-based), team based pay (based on
  contribution to the work team, such as the
  Scanlon programmes aiming at lowering labor costs
  and distribute benefits to workers), organization
  performance pay (based on profitability).

Freely Inspired from Bratton J., Gold J., Human
Resource Management, Theory and Practice,
Palgrave, 2003
15

• Reward options
• ____________
• Indirect pay or employee benefits such as
• health and life insurance
• Deferred income plans (retirement or pension
  plans)
• Miscellaneous benefits (from company car to club
  membership)

Freely Inspired from Bratton J., Gold J., Human
Resource Management, Theory and Practice,
Palgrave, 2003
16

• Reward techniques
• Internal equity refers to the comparison between
  jobs or skills levels inside the organization.
• It is established through 3 techniques job
  analysis, job evaluation, and appraisal

Freely Inspired from Bratton J., Gold J., Human
Resource Management, Theory and Practice,
Palgrave, 2003
17

• Reward techniques
• Job analysis the systematic process of
  collecting and evaluating information about the
  tasks, responsibilites and the context of a
  specific job.
• Process job analysis-job descriptions (with
  specifications and standards)-job evaluations-job
  structure

Freely Inspired from Bratton J., Gold J., Human
Resource Management, Theory and Practice,
Palgrave, 2003
18

• Reward techniques
• A job description is a written statement that
  explains the purpose, scope, duties, and
  responsibilites of a specified job.
• A job specification is a detailed statement of
  the human characteristics involved in the job,
  including aptitudes, skills, knowledge, physical
  demands, mental demands and the experience
  required to perform the job.
• A job performance standard is a minimum
  acceptable level of performance.

Freely Inspired from Bratton J., Gold J., Human
Resource Management, Theory and Practice,
Palgrave, 2003
19

• Reward techniques
• Job evaluation is systematic process designed to
  determine the relative worth of jobs within a
  single work organization.
• Process gather job analysis data-select
  compensable factors-evaluate the job (ranking -
  hierarchy, job-grading grades presented as
  steps, factor comparison a set of comparable
  factors, and point method points are used
  instead of monetary value).

Freely Inspired from Bratton J., Gold J., Human
Resource Management, Theory and Practice,
Palgrave, 2003
20

• Reward techniques
• Appraisal is the process of evaluating
  individuals in terms of their job performance.

Freely Inspired from Bratton J., Gold J., Human
Resource Management, Theory and Practice,
Palgrave, 2003
21

• Reward competitiveness
• ____________
• Reward relationships external to the organization
  (comparison with competitors)
• How should an organization position its pay
  relative to what competitors are paying?
• 3 options pay leader, match, or lag behind.

Freely Inspired from Bratton J., Gold J., Human
Resource Management, Theory and Practice,
Palgrave, 2003
22

• Reward competitiveness
• ____________
• Constraints in defining pay level policy are
• Labor markets (demand and supply)
• Product market (competition and product demand)
• Organization (strategy and profitability)

Freely Inspired from Bratton J., Gold J., Human
Resource Management, Theory and Practice,
Palgrave, 2003
23

• Establish pay levels
• ________________
• Combining the results of the job analysis (job
  structure based on internal equity criteria) and
  market pay data (external competitiveness
  criteria)(

Freely Inspired from Bratton J., Gold J., Human
Resource Management, Theory and Practice,
Palgrave, 2003
24

• Establish pay levels

OUR Pay trend line
Main Competitor Pay trend line
Competitiveness
v
Job structure
Freely Inspired from Bratton J., Gold J., Human
Resource Management, Theory and Practice,
Palgrave, 2003
25

• Legal framework and pay
• ____________
• Employment laws (equal pay, minimum wage, min
  hours laws)
• Manpower policies (education, training)
• Fiscal/monetary policies (government employment)

Freely Inspired from Bratton J., Gold J., Human
Resource Management, Theory and Practice,
Palgrave, 2003