HUMAN RESOURCE What is reward …ing?

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/brattonandgold/

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 organization’s 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. Strategic perspective: cost leadership, differentiation, focus Reward objectives: recruit and retain, performance, commitment Reward options: base pay, performance pay, indirect pay Reward techniques: job analysis, job evaluation, appraisal 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. OUR Pay trend line Main Competitor Pay trend line Establish pay levels 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