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Solution
Table of Contents
Task One- Report Section One. 2
Reward Principles and Organisational Culture. 2
Importance to performance management 3
1.2 Policy initiatives implementation. 3
1.3 People and organisational performance impact 4
For people performance, the impacts include; 4
For organisation performance, the impact include; 4
1.3 Benefits offered by organisations. 5
1.4 Extrinsic and intrinsic rewards. 5
2.1 Business context of rewards. 6
2.2 Benchmarking data gathered and measured. 7
2.3 Organisations use insight 8
Task Two-Report Section Two. 9
2.4 Legislative requirements that impact reward practice. 9
3.1 Performance management approaches. 10
3.3 Line managers make reward judgements. 12
Evaluating fairness and equity. 13
Task One- Report Section One
1.1 Principles of reward
In modern organisations reward management, prioritising on various principles is important. According to CIPD (2023), principles or rewards forms the basis/background of effective decision making on rewards. Principles of rewards are;
Intrinsic and extrinsic rewards– For appropriateness of rewards, they need to include both intrinsic and extrinsic motivation rewards (Karayanni & Nelken, 2022). The intrinsic rewards are popularly used for informing personal achievement, professional growth and sense of accomplishment. Conversely, extrinsic are tangible rewards which are external to a personal and basically provided by supervisors/managers.
For positives, offering both intrinsic and extrinsic increase all the employees satisfaction. According to Kim et al. (2020), in a long-term basis, intrinsic rewards are beneficial, working appropriately for organisations with employees motivated and enjoying their works. Conversely, extrinsic are appropriate for short-term basis for prompt completion of organisation goals. For negatives, they all loose effectiveness with time as employees view their work as less fulfilling (Khan et al., 2013).
Transparency– To guarantee transparency, decisions on rewards must be appropriately communicated (Akash et al., 2019). All stakeholders must be involved for making decisions on rewards. For positives, this form of reward offer employees with an opportunity for understanding their pay rates and how reward systems are operating. The negatives as identified in Engelmann et al. (2019), include transparency leading to discomfort amongst the employees.
Fairness– In providing rewards, fairness is achieved when all the people practice professionals and line managers are compliance with equality in payment in rewards provision. According to Abdin et al. (2019), the positives of this include all staff feeling as being treated in just. However, for negatives, fairness can lead to “knock-on” factor where a division of employers and employees occurs.
Reward Principles and Organisational Culture
Different principles of rewards influence organisation culture through developing appropriate behaviours and attitudes in an entity. For example, in my organisation, in creation of innovative couture, employees are rewards for their creativity. The outcome of this include my organisation developing appropriate culture essential for an increased employees retention. According to Asatiani et al. (2021), the rewards which are set within realms of principles of rewards link to staff for organisation values and purpose since they assist in integrating appropriate values and ethos in a culture. Nevertheless, failure in designing rewards by considering reward principles have negative implication of this is staff dissatisfaction and potential of unfairness (Kashan et al., 2021).
Importance to performance management
An embrace of fairness and transparency increase level of staff motivation and satisfaction essential for organisation goals and objectives. In Tweedie et al. (2019), reward is essential in improving performance as it harness employees interests in progressing with hard work. Further, performance management assists in tracking progression and rewarding people input to organisation. According to Pulakos et al. (2019), the negative implication include the management failure in rewarding individuals for best performance. In an organisation such as GA pensions, this could lead to decrease in performance and increased absenteeism.
In summary, for GA Pensions, in order to succeed in their business environment, investing in the identified principles of rewards is essential. This is for development of an appropriate organisation culture and also performance. This is in their highly competitive business environment.
1.2 Policy initiatives implementation
Policy initiatives in rewards are used to assist an organisation in designing and implementing rewards fairly, transparently and with equality (d’Eon, 2019). For instance, for GA pensions, this can include total reward policy and equality in rewards.
Felt-fair principle– In order to achieve this, Shields et al. (2020) note that the existing policy is assessed. According to Pulakos et al. (2019), the positives of this include being able to develop from what is provided in form of incentives for developing appropriate rewards for all. In GA pensions, this can also include assessment of what was appropriate and inappropriate with already available policies. The negative of this include being hard to satisfy all people with issued rewards.
Collaboration– In a policy implementation, there are multiple stakeholders involved. According to You et al. (2022), for GA pensions, all stakeholders must be actively consulted in implementation. This is to communicate on relevance of the reward policy and to encourage provision of their views and idea sharing. The positive of this is developing an all-inclusive policy. Nevertheless, the negative of this include being time intensive.
Role of line managers– The line managers are actively involved in ensuring that they integrate the rewards to be part of their actions. This is while communicating all changes to affected stakeholders. The positive of this is increasing acceptability of the policy to all.
Evaluation and measuring rewards success– As evidenced in Ilharco et al. (2019), people practice professionals are tasked with ensuring they are understanding the new policy appropriateness. This imply how successful or non-successful it is. In GA Pensions, the positives of this include identifying retention, motivation, satisfied with performance increased.
1.3 People and organisational performance impact
Adopting the definition of Ibrahim and Daniel (2019), people performance is employees capacity for completing their assigned roles and responsibilities based on their job description. Organisation performance is organisation capacity for achieving their set strategy.
For people performance, the impacts include;
Types of reward– According to CIPD (2023a), the examples of rewards can include basic or performance-related pay. The basic pay are offered to employees for having executed their functions in producing high quality goods and services.
Individual reward preferences– This factor impact the absenteeism level of the employees. For instance, in GA Pensions, the best practice entail responding to pay increase and competitive staff pay. Hence, based on preferences, GA pension could offer their employees extrinsic rewards for their motivation in focusing on production of high-level quality goods and services.
For organisation performance, the impact include;
Financial situation of an organisation– This is measured by the main metrics of profits acquisition, gross margin and the liquidity ratio. According to Agbenyegah (2019), with these metrics, organisations offer their employees with appropriate rewards for maximum satisfaction.
External pressures and competition– For instance, in Post COVID-19 economic recession, rewards offered by organisations is affected. According to Günther et al. (2020), these factors impact the competitiveness of an organisation in issuing the rewards and aligning their operations with external pressures.
1.3 Benefits offered by organisations
Car allowances
This is a non-monetary benefit where the employees are offered an allowance for purchasing a vehicle. The positives are immense costs saved from travel by employees, fuelling and maintenance costs. Also, Ilharco et al. (2019) note that employees motivation is increased for working hard and happiness feel. For a vehicle worth £500,000, an organisation is able to settle 70% of the costs with the balance settled by employee. The negatives include being cost-intensive to organisations. Also, with employers incurring most of the expense, performance is impacted.
Profit Sharing
According to Nuti (2023), this benefit is offered to employees after they achieve a set milestone of profitability. In GA Pension for instance, the positive of this entail employees maintaining their alignment with set objectives and goals. For instance, achieving a profit increase of 70% would mean an organisation offers 5% as profit sharing. Also, it positively increase employees retention in a long-term basis. Considering the negatives, it is challenging for employees to have a direct link of their functions to incurred profits. Also, it is demotivating when some of the employees are not considered when zero profits are made.
For similarities, car allowances and profit sharing are suitable to attract, retain, motivate and improve staff performance. They are also easily used with clear terms set for their implementation. In terms of differences, car allowance is costly to implement as opposed to profit sharing. This is with profit sharing having a higher return on investment as 65% of profits is retained by an organisation when they give 5% of profits out of 70% profit increase.
1.4 Extrinsic and intrinsic rewards
Extrinsic rewards are offered to the employees from an outcome of an assigned role/performance (Karayanni & Nelken, 2022). The example of this include salary, promotions and bonus. Intrinsic rewards normally emerge internally and are classified as long-term. Also, extrinsic rewards are tangible and support staff through assisting them in meeting their physiological needs and motivation. According Malek et al. (2020), intrinsic are non-monetary with staff feeling satisfied in their jobs, motivated, achievers and positive emotions.
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