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Solution
Table of Contents
Task: Written Response to the Questions. 2
1.2 Extrinsic and intrinsic reward. 3
2.1 Types of grades and pay structures. 4
2.3 Merits of different types of benefits. 6
2.4 Different types of recognition schemes. 7
3.1 Business context of reward environment 8
3.2 Benchmarking data gathered and measured. 9
Definition of Benchmarking Concept 9
3.3 Approaches to job evaluation. 11
Non-Analytical Job Evaluation. 11
3.4 Legislative requirements. 13
National Minimum Wage Act 1998. 13
Working Time Regulations 1998. 13
Task: Written Response to the Questions
1.1 Principles of reward
Transparency– In an organisation provision of rewards, it needs to be characterised by a transparent approach with no favouritism (McMullen & Dahle, 2024). By being transparent, the employees are able to understand why they are rewarded in a particular manner while their colleagues are rewarded in a different way. This is meant for avoiding a feeling of dissatisfaction upon employees understanding they are rewarded distinctly from others.
For the negatives, as a best practice, CIPD (2024) note on the need for sufficient stipulation of rewards issued for avoiding lack of transparency. If effectively implemented, Home International for example could pursue an organisation culture of transparency. This is for enhancing employee’s retention successfully.
Fairness– For this principle, it ensures provision of rewards is fair and guided by employees performance level in executing their functions (Hareendrakumar et al., 2020). The rationale for embracing fairness is enhancing how staff are satisfied and showing commitment in implementing their roles owing to their awareness of being rewarded for executing functions.
The negatives of this principle include a challenge in balancing rewards for maximum employees’ satisfaction by entire stakeholders. According to CIPD (2024a), this is the case when the employees have different qualifications/person specifications and job description. For Home International case study, a fair-based practice promotes regularly reviewing reward structure and management of contracts. This would lead to Home International leveraging on competitive advantage in furniture industry and increased profitability.
Culture and Performance
The organisation culture identifying “how things are done here” is impacted by the reward strategy. For example, by being transparent, a culture of openness is initiated in an organisation. According to CIPD (2024b), this means that the employees feel appreciated and motivated in putting optimum effort in executing their functions. For Home International case study, the innovative staff are engaged in organisation culture promoting leverage in the functions of their furniture industry with success.
Similarly, to achieve performance, by issuing transparent and fair rewards, the employees feel appreciated for executing their functions in maximum (CIPD, 2024c). The rationale of this is the employees’ roles being in alignment with the set organisation SMART objectives. A case example is where bonuses are offered to the employees, they are noted to exercise discretionary behaviours in their operations. This would be the situation in Home International where bonuses are provided through performance-based system improving the factory practices by rewarding the employees well.
1.2 Extrinsic and intrinsic reward
Extrinsic Rewards
Extrinsic rewards are identified as comprised of bonus payments, promotions and publicly made recognition impacting employees input and performance. According to CIPD (2024d), extrinsic rewards being tangible, employees feel appreciated hence work hard and high performance for achieving set organisation objective. The examples of extrinsic rewards identified (promotion, increased remuneration and bonuses) guide achievement of staff motivation and as such high-level performance noted (Emmanuel & Nwuzor, 2021). Taking into account of Home International organisation, implementation of public recognition and promotions is implemented to enhance employee’s morale and long-term organisation performance. Also, the extrinsic motivation is relevant to enhance short term commitment and interest in roles success. For obtaining extrinsic rewards, staff invest a lot of time and input evidenced by level of competition.
In regard to limitations/cons, Sulistianta and Nanda (2022) note over-reliance of extrinsic rewards means high-level commercialised practices for staff therefore demotivation in roles implementation.
Intrinsic Rewards
These rewards are identified in CIPD (2024d) as intangible with examples including capacity development, commitment increase and sustainable staff engagement and performance. They are hence internally sourced and obtained owing to employees being automatically satisfied with their involvement in allocated roles.
For Home International case, a feel of their functions appreciation and aligned with value, beliefs and principles, they feel supported to pursue their roles in an entity.
Also, by issuing the intrinsic rewards, this promotes the employees motivation levels, satisfied and increased retention levels. According to Emmanuel and Nwuzor (2021), the rationale of this is organisations investments in individual and career development opportunities. Considering Home International organisation, a good organisation culture improves intrinsic motivation hence strongly motivated staff enhancing long-term performance.
The limitations/cons of use of intrinsic rewards is their personalised nature and different in various employees (Sulistianta & Nanda, 2022). A provision which is appropriate for an employee is not relevant to others therefore ineffectiveness of obtained results. A different con is intrinsic rewards being a challenge to establish relations with how they are productive.
For brief summary, despite extrinsic motivation being tangible and measured, the intrinsic rewards exist in an abstract form therefore challenges in evaluating them.
2.1 Types of grades and pay structures
Multi-Graded/Narrow Graded Structure– This entail existence of many or multiple grades. According to CIPD (2024e), the pay structure has high, medium and low salary scales in the provided pay structure. The relevance for use of the structure include progress from lower grade to high-level depending on efficiency in performance, experience gained and services provision. Through the strategy, different job functions have their pay levels informing career growth.
Broadband Structures– As opposed to the multi-graded/narrow graded structure, this form group traditionally existing grades to lower broad bands. In line with CIPD (2019), the various bands are informed by position in workplace, grades of pay and roles allocated. This provides a relevant strategy for controlling and directing employees remuneration and career development. For Home International, this is for enhancing employees pay and progression in their career hence increased bands.
Differences
Flexibility in remuneration management approach– Considering Multi-Graded Structures, they include multiple small grades having specified remuneration band facilitating less varying remuneration. In line with Troncia et al. (2021), employees progress is established based on how they perform, experienced, qualified with limited increased remuneration. By being rigid, organisations must clearly differentiate their job functions and career growth.
For broadband structure, integration of multiple numbers of traditional existing grades to lower broad bands as their priority is to grade, functions, function and pay.
In Home International case, the different strengths include management of employees pay and career growth. Annually, the organisation increase pay for their employees in different bands which is evidence of being flexible to promote their roles and implementing requirements of their positions.
Career Progress Implication– This is popularly used by organisations with multi-grade structure as employees are provided with detailed and increased promotion opportunities. In line with Holtschlag et al. (2020), the career progress is appropriate for employees with interest to progress in their careers. Due to narrowed level grading, appreciation of various conditions needs to be attained for elaborate promotions attained. On the other hand, broad bands are open based with broad pay bands facilitating sufficient increase in remuneration and to advance grades changing to enhance employment sector flexibility.
2.2 Contingent rewards
Performance-Related Pay
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