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Solution
Table of Contents
Task: A written response to the questions. 2
1.2 Implementation of policy initiatives and practices. 3
1.3 Impacts of People Performances on approach to rewards. 4
Impacts of organisational performance on approach to rewards. 4
1.4 Types of benefits offered by different organisations. 5
2.1 Business Context of the Reward Environment. 8
2.2 Ways in which benchmarking data can be gathered and measured. 9
2.3 Organisational Reward Packages and Approaches. 10
2.4 Legislative Requirements that Impact Reward Practice. 11
Working Time Regulations (1998) 11
3.1 Approaches to Performance Management. 12
Performance review meetings. 12
3.2 Role of People Practice in Supporting Line Managers on Rewards Judgment 13
3.3 Line managers make reward judgements. 13
Task: A written response to the questions
1.1 Principles of Rewards
Transparency
Transparency in rewarding means that the criteria for determining rewards is clear and openly communicated to employees as evidenced by REBA (2021). This allows them to understand what behaviors or goals will lead to higher compensation and advancement opportunities. It guides rewarding by creating clarity around expectations. However, complete transparency also poses challenges in that employees may only focus on rewarded goals at the expense of other important tasks. It can be difficult to transparently and objectively communicate all factors considered in complex reward decisions.
Fairness
Fairness means that employees are compensated in a way that maintains subjective and objective perceptions of impartial treatment. According to Wales (2023), the principle guides rewarding by helping to motivate high performance and encourage retention, as workers feel their contributions are valued. However, absolute fairness is difficult to achieve, as not all roles and performances can be equally assessed. It also challenges companies to differentiate rewards for higher or poorer performance without compromising fairness. Small differences in compensation can unintentionally create perceptions of bias or unfairness.
Both principles aim to encourage high performance through rewarding (Devon, 2023). Transparency provides direction while fairness preserves motivation. However, each faces challenges in objective implementation across diverse roles, contributions and workstyles. Though imperfect, upholding transparency and fairness as guiding principles helps reconcile performance and rewarding in a mutually agreeable manner for employers and employees. Achieving the right balance is important to optimise productivity and engagement.
Importance of reward on organisational culture and performance management
Rewards play a vital role in shaping organisational culture and driving performance. A rewards system that is aligned to business strategy and goals, emphasises fairness and transparency culture, and recognises different types of valuable contributions; helps reinforce the behaviors that are most critical for business success. According to Tenny (2023), it motivates employees to consistently perform at a high level and go above and beyond to serve customers and achieve targets. Rewards also foster employee loyalty, engagement and satisfaction by ensuring effort matches outcome. A culture where commitment and excellence are incentivised and rewarded promotes higher productivity, innovation and overall organisational effectiveness (Anees, 2023). A strategic, well-administered rewards system is thus a key lever for any company’s success.
1.2 Implementation of policy initiatives and practices
Policy Implementation
Implementing a new policy requires planning across stages;
Consultation – The first stage is consultation where leadership presents the draft policy to gather early feedback from internal and external stakeholders. According to Hendricks (2023), this helps identify any issues or unintended impacts before finalisation.
Planning- Next is the planning phase. The project team incorporates feedback to refine policy details. They also develop training and communication strategies to instruct all impacted parties.
Rollout- The third stage is the rollout. A broad communication launches to notify employees about coming changes. Training is implemented to ensure managers comprehend the policy and address questions.
Trial period- Following rollout is the trial period. The live policy is monitored over a set time frame to measure real-world results and identify any adjustments required before organisation-wide adoption.
Review- Data is analysed to evaluate if objectives are being met. Governance is established for ongoing compliance. Regular audits maintain long-term policy alignment with strategic goals as circumstances change over time. Through thorough execution of each unique stage, new policies can achieve smooth uptake, clarify responsibilities, and realize intended benefits while minimising unplanned impacts.
Best Practice
Best practice in managing the policy implementation process with a focus on the following;
Ensuring inclusion across all employee demographics is paramount for change management success. Focus groups with diverse teams allow different viewpoints to influence planning. Surveys benchmark comprehension among all after rollout. Training acknowledges various learning styles to optimize understanding. Representative pilot teams provide early feedback represent all. The review examines impact through an equity lens to identity any disparities. Change agents reflecting the full workforce composition aid two-way communication. Post-implementation audits continue engaging underrepresented groups to sustain buy-in long-term. As evidenced by Google’s approach, capturing varied viewpoints throughout via these practices helps policy alignment by addressing all potential concerns upfront.
1.3 Impacts of People Performances on approach to rewards
People performance has a significant influence on how rewards should be structured and administered as evidenced by CIPD (2023). Firstly, different performance levels require tailored incentive structures. High performers may respond best to more significant variable pay linked to stretch targets, whereas average performers need attainable goals to stay motivated.
Secondly, team dynamics need consideration – inter-dependent roles require group-based rewards to encourage collaboration, whereas individual contributors can be rewarded individually. Thirdly, tenure impacts rewards – longer-serving staff may value separate career progression paths including promotions, whereas younger employees prefer training and skills development opportunities as part of their compensation. By taking a nuanced, people-first approach that acknowledges these varied performance and demographic factors, organisations can design rewards systems that maximally drive engagement and productivity across diverse workforces ( Armstrong, 2006).
Impacts of organisational performance on approach to rewards
An organisation’s performance impacts its rewards approach. According to CIPD (2023), when performance is good, rewards can focus more on recognition versus incentives. Poor performance may require a stronger incentive-based rewards program to motivate improved results. As Home International reviews policies to cut costs, increase profits and reduce high factory turnover, its organisational performance directly impacts the rewards approach. With rapid global growth in online furniture sales during the pandemic, the company needs rewards targeting newer priorities around sustainability and operational efficiency. For example, incentives linked to waste reduction, quality output or on-time delivery tied to stretching sustainability and profitability goals can boost motivation. Additionally, with younger factory operatives experiencing higher turnover, rewards focused on skills development, career progression and work-life balance may help retention. Tailoring incentives to roles addressing organsational priorities, from newer product lines to importing/exporting challenges from Brexit, can optimise performance. A strategic, agile rewards system responsive to business context ensures goals are properly incentivised.
1.4 Types of benefits offered by different organisations
Benefit 1: Retirement Benefits
Retirement benefits are plans and programs that help employees save for their golden years after leaving the workforce, such as 401(k) accounts with employer matching contributions (U.S. Department of Labor, 2019). Companies like Microsoft and IBM offer 401k plans to help employees save for retirement. Matching contributions and growth potential in the market make 401ks valuable long-term financial benefits.
Similarities
Both Microsoft and IBM offer 401k retirement plans to their employees as a key benefit. The plans work in a similar way – employees can contribute pre-tax dollars each pay period, and both companies match a percentage of contributions to encourage savings. This allows employees of both companies to save for retirement in a tax-advantaged way with added incentives in employer matching funds.
Differences
Microsoft and IBM 401k plans differ in some details. According to Davis (2016), Microsoft offers a higher maximum employer matching contribution of 9% versus 6% at IBM. Microsoft limits investment choices to their custom target date funds, charging lower fees but giving employees less control over asset allocation. On the other hand, IBM allows employees to choose from a broader selection of investment options for their retirement savings (Whitehead, 2023).
Benefit 2: Performance Related Pay
Performance related pay refers to additional compensation provided to employees based on their individual achievement and contribution as evidenced by CIPD (2022). It rewards and motivates superior performance by financially recognising employees who exceed expectations, deliver exceptional results or help the organization succeed. The extra pay is usually distributed through annual bonuses, profit-sharing, stock options or merit-based salary increases. Both Microsoft and IBM offer performance-related pay to employees to reward and motivate good performance.
Similarities
Both Microsoft and IBM tie a portion of employee compensation to performance to motivate achievement of goals. Their performance-related pay programs financially reward and recognise individuals exceeding expectations. The systems are designed to reinforce the link between effort, performance and financial success through extra pay for strong contribution.
Differences
While Microsoft and IBM both provide performance-related pay, they differ in implementation. Microsoft’s bonuses are heavily weighted to top performers, concentrating reward (SHRM, 2012). IBM takes a broader approach with modest annual increases distributed across salary bands based on manager evaluation. This recognises a wider range of contributions compared to Microsoft’s focus on star achievers.
1.5 Contributions of extrinsic and intrinsic rewards to improving employee contribution and sustained organisational performance
Extrinsic rewards
Extrinsic rewards are external incentives provided to employees to motivate performance, such as bonuses, commissions, public recognition and gifts ( SHRM, 2021). They come from outside the individual.
Contributions- Extrinsic rewards can first enhance employee motivation and effort towards achieving goals. By financially rewarding high performance through bonuses and commissions, employees are encouraged to contribute at maximum capacity ( Munir et al. 2016). Secondly, extrinsic rewards help retain top talent. When organisations openly recognise and materially compensate top performers, it signals to employees they will be sufficiently rewarded for great work. This drives talent retention which supports an organisation maintaining strong performance over the long term.
Positive impacts- Potential positive impacts include increased effort, productivity and motivation to perform at higher levels in order to earn rewards. Employees may feel properly recognized for their accomplishments.
Negative impacts- However, over-reliance on extrinsic rewards can reduce intrinsic motivation if employees perceive the work itself is not inherently interesting or meaningful. It may encourage short-term thinking rather than focusing on long-term goals. Extrinsic rewards are also financially costly for organisations and can damage collaboration if they promote competition over cooperation between employees.
Intrinsic Rewards
Intrinsic rewards are internally satisfying feelings like pride in one’s work, sense of achievement and personal development that motivate employee performance as evidenced by Wellnesss (2019).
Contribution- Intrinsic rewards first enhance internal motivation since employees find the work inherently meaningful and engaging. This leads to higher quality performance driven internally rather than just for external rewards (Khan et al. 2017). Second, intrinsic rewards promote learning and development when employees gain new skills or find solutions through their work. This continuous self-improvement contributes to better performance over time and ensures an organisation maintains a skilled and adaptive workforce capable of sustained high performance (Yasmeen et al. 2013). Intrinsic rewards help sustain contributions even without external motivators.
Positive impacts- Potential positives are high employee engagement and motivation driven internally rather than externally. Creativity and innovation may flourish when employees derive satisfaction from the work itself.
Negative impacts- However, reliance solely on intrinsic rewards requires work be inherently interesting, which is not always possible. Not all jobs are equally fulfilling or meaningful. Lack of external recognition could negatively impact morale.
2.1 Business Context of the Reward Environment
The current economic climate presents both opportunities and challenges for effective reward strategy as evidenced by Dinu (2021). Inflation and talent shortages mean retention is crucial, while belt-tightening requires optimal productivity. An agile, inclusive approach tailored to organisational priorities yet responsive to external realities can position rewards as a driver of both employee commitment and financial performance through this uncertain period.
External factors
Macroeconomic conditions like inflation and skills shortages directly impact total reward budgets. According to REBA (2023), rising living costs require compensation reviews to retain staff. Demographic shifts towards preferring benefits over base pay necessitate flexible packages. Regulatory changes to minimum wage or pension rules necessitate immediate policy adjustments. Brexit impacts the employment market through new immigration rules.
Internal factors
Organisational performance driving profits affects the budget attainable for incentives. Companies facing losses may reduce or defer bonuses. High growth enables competitive benefits to attract talent.
Shifting business priorities as strategies evolve also influence rewards. If sustainability becomes key, incentives incorporate green metrics (WTW, 2023). Office restructuring impacts benefits structures. Employee feedback shows prevalent needs – families appreciate healthcare; remote workers value technology allowances. These internal insights and external realities must inform a dynamic, responsive total rewards strategy. Packages balancing competitive pay with non-financial perks optimize motivation and firm success across fluctuating conditions.
2.2 Ways in which benchmarking data can be gathered and measured
Unemployment Data – Home International can review local unemployment rates where each of its offices are located to understand the labor market conditions. For example, if the youth unemployment rate is high for 18-32 year olds near the UK factory, Home International may need to offer more competitive pay and benefits to attract and retain workers. A lower local unemployment rate gives the company less incentive to increase compensation.
Strength – Unemployment Data Provides important context about local labor market conditions and competitors as evidenced by OECD (2023).
Weakness – However, it does not reflect internal issues, only a macro view.
Payroll Data – Home International should analyse its own payroll data to identify trends. For example, the data shows high turnover among 18-32 year old factory operatives. This suggests the current reward package is not competitive for younger workers. However, office employees aged 48-68 stick around longer. The rewards may better suit their needs and life stage. By comparing its own payroll data to market salary surveys, Home International can see if factory operative pay needs adjusted to the local living wage and become more attractive for younger candidates. Changes could include pay rises, bonuses, subsidised training or development opportunities. By reviewing local unemployment rates and its internal payroll data, Home International gains important insights into gaps in its current reward strategies. Tailoring packages to different age groups and job roles based on this analysis can help reduce costs from high turnover while improving recruitment and retention outcomes.
Strength – Payroll Data reveals internal trends specific to the organisation. According to Playroll (2022), it Shows what is and is not working for different employee groups.
Weakness – Looking only internally can provide a narrow view without industry benchmarks. More data needed for full picture.
2.3 Organisational Reward Packages and Approaches
Home International is reviewing its reward strategy to reduce costs and turnover. A key part of this is conducting accurate job evaluation and benchmarking pay competitiveness. Job evaluation involves systematically assessing the size and scope of roles.
Process of job evaluation
To properly evaluate the HR Administrator role, Home International gathered detailed information about the job requirements. They used questionnaires and interviews, as documented by Van Vulpen (2020), to conduct a thorough job analysis. This identified the core tasks involved, such as administering HR policies, utilizing administrative skills, and possessing strong communication abilities. Home International then selected an appropriate evaluation method involving ranking specific factors linked to the role. Clear job descriptions were drafted outlining the duties and qualifications. Evaluation panels independently rated the Administrator role based on the evaluated skills and level of complexity. The scores were reviewed for consistency and adjusted if needed. A final report presented all findings, thoroughly documenting the grading of the Administrator position. Home International committed to periodically reevaluating roles to ensure accurate assessments as duties change over time.
Two priority roles for evaluation are:
Manufacturing Operative: It requires physical dexterity and following processes to assemble furniture. There is limited decision-making power.
HR Administrator: Handles recruitment, payroll, and policy creation. Degree-level skills and independent judgement required. There is higher responsibility. Home International interviewed role holders to understand key duties. The manufacturing operative role scores lower on skill/accountability factors versus the HR role.
Salary Benchmarking
For manufacturing operatives, Home International analysed average wages on Glassdoor and Indeed for similar roles in the UK furniture industry. These sources showed salaries averaging £22-26k nationally. The HR Administrator role was benchmarked against Reed and TotalJobs data showing degree-level administration roles command £28-32k in comparable companies. CIPD Total Reward surveys also supported this range.
Benefits Benchmarking
Common benefits for manufacturing roles include basic private healthcare and pension contributions of 5% according to Aon surveys. Comparable professional roles offer enhanced benefits like private medical insurance, life assurance, 8% pension contributions and CPD support up to £500 annually.
Therefore, Home International proposes rewarding roles as:
Manufacturing Operative: £23k salary, private healthcare, 5% pension
HR Administrator: £30k salary, medical insurance, life assurance, 8% pension, £500 CPD budget. By conducting accurate job evaluation, Home International can justify pay differences. Benchmarking ensures packages are market-competitive to reduce turnover as intended. This evidence-based approach develops a sustainable reward strategy.
2.4 Legislative Requirements that Impact Reward Practice
Reward practices within organisations are subject to extensive legislation that shapes both policies and working culture as evidenced by US Legal (2023). Comprehensive awareness and adherence to these regulations is crucial to ensure ethical, compliant remuneration systems.
Equality Act (2010)
The Equality Act consolidates various anti-discrimination laws into one statutory instrument. In terms of rewards, it prohibits pay and benefits discrimination based on certain protected characteristics such as sex, disability status, age and more (GOV.UK. 2010). When developing reward packages, policies must be carefully designed and applied to ensure equal treatment and pay transparency for all. This helps avoid potential claims of indirect discrimination, while promoting an inclusive culture.
Working Time Regulations (1998)
This legislation places limits on the maximum weekly working hours, including any overtime, to 48 hours on average unless the individual employee opts-out (ACAS, 2023). From a rewards perspective, it means accurately recording all hours worked to stay compliant. Benefits like flexible working options help businesses manage voluntary overtime effectively. The regulations aim to protect work-life balance and reduce fatigue-related health and safety risks. Organisations must structure working patterns and compensate additional hours appropriately. In both cases, thorough understanding and application of employment law principles supports ethical reward strategy design that considers all stakeholders and changing legal precedents over time.
3.1 Approaches to Performance Management
Performance review meetings
Conducted annually, typically between an employee and their direct manager, reviews aim to formally assess results over a set period as evidenced by CIPD (2022a). While structuring set times for feedback, research shows they often focus more on documentation than development. Feedback may also be subjective. Regular catch-up discussions could be more constructive for monitoring progress and reinforcing strong performance informally.
Benefits – Performance review meetings Provides structure for formal feedback annually. It allows direct assessment of goals accomplishments.
Drawbacks – It can be subjective. Also, it does not encourage continuous development.
360 degree
Gathering anonymous input from colleagues, subordinates and other contacts, 360 degree feedback provides a more rounded perspective beyond just the manager’s view (Beqiri, 2018). When implemented correctly with clear criteria and coaching, it yields genuinely insightful feedback to strengthen interpersonal skills. However, uncontrolled feedback also risks being misused punitively if not designed carefully. It also demands more coordination across networks.
Benefits – Offers multi-dimensional perspective beyond managers. Also, it identifies blind spots and areas for improvement.
Drawbacks – Requires resources to coordinate varied input. It Presents risks if not designed and used properly for development.
3.2 Role of People Practice in Supporting Line Managers on Rewards Judgment
People practices play a key role in equipping line managers at Home International to make consistent, objective reward decisions. With its global expansion and changing market dynamics, implementing robust processes is crucial. The two examples of the role of people practice in supporting line managers include;
Example 1: Standardised performance reviews
Home International could implement standardised performance review forms and processes to be used across all locations when evaluating employees. The forms would include criteria such as productivity, quality of work, health and safety compliance, and collaboration that line managers would use to assess performance and provide structured feedback (CIPD, 2022a). Employees would receive the reviews biannually to set goals and receive coaching. This gives managers documented evidence over time to make fair judgements about incremental pay increases or bonuses based on consistent factors. It also provides transparency so employees understand how their work is being assessed.
Example 2: Calibration sessions for line managers
To minimise unconscious bias, Home International could set up regular calibration sessions where line managers discuss benchmark cases as evidenced by Gandhi (2023). For example, monthly meetings could be held where managers evaluate anonymous sample cases to determine what constitutes “outstanding”, “effective”, or “needs improvement” performance for different roles. During these sessions, managers would discuss their reasoning to develop a shared understanding of performance standards and levels. This would help ensure consistency, especially when making judgements about employees in different roles or locations. If rewards are later questioned, the standards set collaboratively provide justification and transparency for the manager’s decisions. Both these examples would support Home International’s goals of cost-cutting and turnover reduction through fair, objective and defensible reward processes.
3.3 Line managers make reward judgements
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