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Solution
Table of Contents
Task : A Written Response to the Questions. 2
Importance of principles of rewards to culture and performance management 2
1.2 Contribution of extrinsic and intrinsic rewards. 3
Contribution to Improved Employee Contribution. 3
Contribution to Sustained Organisational Performance. 3
Contribution to Improved Employee Contribution. 4
Contribution to Sustained Organisational Performance. 4
2.1 Grades and Pay Structures. 5
Multigraded/Narrow graded structure. 5
2.3 Organisational Benefits. 8
2.4 Types of recognition schemes. 9
Formal recognition scheme: implementing a Gainsharing program. 9
Informal Recognition Scheme: Employee of the Month” award. 10
3.1 Business context of the reward environment 10
3.3 Approaches to Job evaluation. 14
Non-Analytical Job Evaluation. 14
3.4 Legislative Requirements That Impact Reward Practice. 15
The National Minimum Wage Act 1998. 15
Task : A Written Response to the Questions
1.1 Principles of Rewards
Rewards are incentives or benefits given to employees that are linked to meeting certain goals or demonstrating desirable behaviors at work as defined by Cotton (2023). Rewards aim to motivate improved performance and retention through recognition and compensation. A reward system aims to motivate and encourage positive behaviors and outcomes. Two key principles are transparency and fairness;
Transparency
Transparency means the criteria for earning rewards is clear and understandable to all employees as evidenced by REBA (2021). For a system to be motivating, staff must know what they need to achieve to receive incentives. If aspects of the system are unclear or unknown, it reduces their incentive to work towards rewards.
Fairness
Fairness builds trust that efforts will be recognised objectively. CIPD (2022) points out that for a system to be seen as credible by employees, rewards must be allocated impartially based on achievements rather than personal biases. Favoritism or arbitrary decisions undermine perceived fairness. Staff will only feel motivated to work hard if they believe high performance makes them a strong candidate for rewards regardless of other factors. By making clear what employees are striving for and evaluating them without prejudice, transparency and fairness create certainty that dedication and results will lead to compensation. This certainty strengthens the motivational impact of the reward system.
Importance of principles of rewards to culture and performance management
Transparency and fairness are crucial principles for an organisation’s reward system to effectively support culture and performance management. At Home International, transparency in their reward policy is important as they now operate across several countries with different employment laws due to Brexit. Having clear and consistent criteria for Performance Related Pay that is understood globally will help motivate staff and reduce confusion.
Fairness in allocating rewards is also vital. Recently, factory operatives aged 18-32 have higher turnover. A transparent, fair system demonstrating that hard work leads to pay/progression increments regardless of age could help retention ( CIPD, 2024). If younger staff feel rewards are unfairly allocated to longer-serving, older employees, they may feel less inclined to stay.
An example of promoting fairness could be systematically measuring each factory staff member’s efficiency, productivity and quality of work against set KPIs (CIPD, 2022). Those who exceed targets could be in line for bonuses or promotions. This would reinforce that commitment, not tenure or age, determines rewards – motivating younger hires to invest in their careers at Home International. Transparency and fairness in rewards are thus central to managing culture and performance across the business’s many locations.
1.2 Contribution of extrinsic and intrinsic rewards
Extrinsic Rewards
Extrinsic rewards are incentives that come from outside the individual, such as salary increases, bonuses, benefits, and other financial compensation (Bravo, 2019). They are typically used to motivate employees to achieve specific performance targets and organizational goals.
Contribution to Improved Employee Contribution
Extrinsic rewards play a crucial role in motivating employees by providing them with clear, tangible goals to work towards. For example, at Home International, the implementation of performance-based bonuses for factory operatives could incentivize higher productivity and reduce turnover among the younger employees (aged 18-32). By aligning extrinsic rewards with performance metrics, the organisation can drive employees to exceed expectations, leading to increased overall productivity.
Contribution to Sustained Organisational Performance
Extrinsic rewards help in attracting and retaining talent, which is vital for long-term success as evidenced by AIHR (2022). Competitive salaries and benefits can make Home International an attractive employer, reducing the costs associated with high turnover. Additionally, extrinsic rewards tied to performance improvements can lead to sustained high performance, as employees are continuously motivated to maintain or exceed their performance levels to receive these rewards.
One limitation of extrinsic rewards is that they may not always lead to long-term motivation. Employees might become reliant on financial incentives and may not perform well if these incentives are removed.
Intrinsic Rewards
Bravo (2019) further defines Intrinsic rewards as intangible rewards that come from within the individual. They are related to the satisfaction and fulfillment one gets from performing the work itself. At Home International, cultivating feelings of intrinsic reward could complement extrinsic strategies to boost retention.
Contribution to Improved Employee Contribution
Intrinsic rewards can lead to higher levels of engagement and job satisfaction. At Home International, recognising the contributions of long-term employees (aged 48-68) in the office can foster a sense of loyalty and commitment. Providing opportunities for skill development and career progression can make employees feel valued and invested in their roles, leading to improved performance and contribution (Manzoor et al. 2021).
Contribution to Sustained Organisational Performance
Intrinsic rewards contribute to creating a positive organisational culture where employees are motivated by more than just financial gain as further evidenced by Manzoor et al. (2021). By fostering a sense of purpose and belonging, Home International can build a dedicated workforce that is committed to the company’s long-term success. Employees who are intrinsically motivated are more likely to stay with the company, reducing turnover and maintaining continuity in performance.
A limitation of intrinsic rewards is that they can be harder to implement and measure compared to extrinsic rewards. Not all employees are motivated by the same intrinsic factors, and what works for one individual may not work for another.
For maximum benefit, a balanced approach combines extrinsic and intrinsic factors. Extrinsic rewards incentivise key short-term KPIs while intrinsic drivers cultivate engagement and skills for continuous long-term growth. Recognition also helps convert externally-motivated behaviors into feelings of inherent achievement and responsibility.
2.1 Grades and Pay Structures
Multigraded/Narrow graded structure
Multigraded/Narrow graded structures reward high performing employees who demonstrate mastery of complex skills or responsibilities ahead of their peers as evidenced by Davidson Morris (2023). By allowing flexible promotion through accelerated career paths, Home International can tap into an individual’s full potential sooner. However, frequently changing teams may disrupt collaboration as coworkers advance at different paces. Successful experiences in varied roles also depend on managing the social aspects of peer changes.
Broadband structures
Broadband structures reward longevity and stability in roles by collapsing wider career levels together. Employees benefit from less disruption as they progress within a broad span (Paydata, 2024). This provides continuity which supports strong relationship-building between stable and cohesive work teams. At Home International, human resources like leaders and professional development initiatives can also be deployed more efficiently across the broader career levels encompassed in each band. However, designing career paths that continually engage and challenge top performers within flatter structures may be difficult. Supplementary rewards like strategic project leadership or additional compensation may be needed.
Regular communication is also important to ensure personal goals stay aligned with team and company objectives as organisations adopt flexible structures. Opportunities for cross-functional and special project work can further motivate high achievers within bandwidths ( Levenson, 2012). Strategically supporting social bonds counteracts risks of disengagement or stagnation for exceptional talent. Structured mentoring also supports steady learning and growth within flattened systems.
Differences
Career pathing – Multigraded approaches allow for accelerated, flexible promotions to new roles and responsibilities. Broadband structures provide more stability and longevity within flatter career levels.
Collaboration – Frequent team changes that come with rapid individual advancement in multigraded structures can disrupt collaboration over time. Broadbanding fosters stronger, longer-term relationships through continuity in teams (Indeed Editorial Team, 2021).
Motivating top talent – It’s easier for multigraded organizations to continuously stimulate high performers through fast-tracked career growth. Broadband structures require strategic compensation and project leadership to engage exceptional employees within flatter bandwidths.
2.2 Contingent Rewards
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