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Solution
5HR03- Reward for Performance and Contribution
Table of Contents
1.1 Principles of Reward and Importance. 2
Impact on Eco-Insulate Organisation Culture. 2
Impact on Eco-Insulate Performance Management. 2
1.2 Contribution of extrinsic and intrinsic rewards. 3
2.1 Differences of types of grades and pay structures. 4
Formal Pay Structure; Multi-Graded Structure. 4
Informal Pay Structure; Individual Job Grades. 4
Main Differences; Standardisation and Flexibility. 5
2.2 Contingent rewards impact 5
Impact on Individual Performance. 5
Impact on Organisation Performance. 6
2.4 Merits of recognition schemes. 7
Non-Cash Awards (Tickets and Vouchers) 8
Legal factors (Aspect of the Reward Environment) 9
Economic Factors (Aspect of Reward Environment) 9
Social Factors (Aspect of Reward Environment) 10
3.2 Gather and Benchmark Data. 10
Approaches of Gathering Benchmarking Data. 11
Formal Approach (Factor Comparison) 12
Informal Approach (Job Classification) 12
3.4 Legislative requirements impacting reward practice. 13
National Minimum Wage Act 1998. 13
Working Time Regulations 1998. 14
Report
1.1 Principles of Reward and Importance
The different principles of rewards which can be considered include;
- Transparency
- Total rewards
- Consistency
Transparency– According to CIPD (2024), this is a principle which identify the need of having an elaborate information on employees pay and benefits.
Total Rewards– This is comprised of both financial and non-financial components of rewards. These include pay, recognition, work-life balance among others (CIPD, 2024a).
Consistency– By being consistent, the reward strategy offered are consistent and well aligned with employee’s needs. According to CIPD (2019), this is in varying organisation levels, positioning and divisions. This enhances fairness and clear alignment of individual goals and organisation objectives.
Impact on Eco-Insulate Organisation Culture
For the three identified reward principles, for Eco-Insulate context, they are achieved in addressing and building appropriate organisation culture. For example, for transparency, it enhances dependency levels as staff have knowledge/understanding on rewards. According to CIPD (2024), resentment/misunderstanding are mitigated.
For total rewards, an organisation culture of being valued is achieved. This is with all employees increasing their satisfaction scope and commitment in their roles.
In terms of consistency, CIPD (2024a) identify creation and sustaining relevant organisation culture informed by being treated equally hence credibility and fairness achieved.
Impact on Eco-Insulate Performance Management
For performance management, the different principles can be noted to be a driving force in successful organisation operations.
Considering transparency principle, this is associated with employees having a clear understanding of the expectations of their organisation in terms of performance. By improving their performance, they would receive an increased pay or promotion.
According to Manzoor et al. (2021), there is a direct correlation of employee’s performance and total rewards. This is since total rewards is holistically offered to assess staff performance and their development.
In regard to consistency, CIPD (2019) identify it as handling all people in the same way evidenced and paid for same outcomes/behaviours.
For all the principles, they enhance performance with the employees putting optimum efforts for meeting organisation target.
1.2 Contribution of extrinsic and intrinsic rewards
Extrinsic Rewards– Adopting the definition of CIPD (2021), extrinsic rewards are sourced from outside and used in motivating the employees for effectively executing their functions. Their rationale is encouraging employees in executing their functions effectively. The examples of extrinsic rewards include increased remuneration, incentives, promotions and more holiday pay.
Effectiveness
For extrinsic rewards, these are linked with increased staff motivation and contribution. According to CIPD (2024b), this is specifically for task-based workplace. For instance, bonuses could be issued to the employees as a strategy of increasing their pay after achieving specific key performance indicators. The outcome of this is increased performance and ensuring employees are achieving assigned roles.
For Eco-Insulate case, failure to receive the incentives contribute to employees dissatisfied and increased turnover. Through the provision of incentives for performance which are externally to their practice, monetary incentives are offered in a manner aligned with outcomes. According to Ali et al. (2021), this is relevant to encourage individuals and promote culture role based.
Intrinsic Rewards– These are defined to be intangible internal offers which are as a result of increased satisfaction of an employee from individual or professional gains as a result of execution of their functions. The benefits are aligned with individual satisfaction and professional growth. The examples are identified in Bukhari et al. (2023) to include annual recognition, pleasure of roles accomplishment and significance in workplace. These enhance likelihood of obtaining fresh experiences in an individual job positioning, engaged in making decisions and encouraged for their performance.
Effectiveness
These are noted to actively engage and appropriate to create broad, substantial motivation and being committed. According to CIPD (2021), all individuals ought to assume a feeling of being special in workplaces. This is with their employers trusting and acknowledging their hard work and maintaining commitment.
For instance, offering career growth opportunity for employees and popularising sense of ownership promote discretionary behaviour in Eco-Insulate. The outcome of this is leveraging on technology and innovativeness for executing their functions and proactiveness in solving all issues as opposed to reactive in nature. Hence, issuing intrinsic rewards enhance scope of loyalty in their organisation. This is owing to the elaborate understanding of organisation vision and target.
The intrinsic rewards could be prioritised as effective in achieving long-term gains including motivation. This is from staff interests, continuous development process and appropriate organisation image. Through a prioritisation on the rewards structures, Eco-Insulate manages to develop a sustainable background for improving organisation performance and holistic staff retention future based.
2.1 Differences of types of grades and pay structures
Formal Pay Structure; Multi-Graded Structure
multi-graded pay structure is a grade type which categorise different job roles based on pay issued which is formal. As evidenced in CIPD (2024c), the review of these pay grades are guided by skills, roles assigned, requirements and articulation. The pay progression is relevant and informed by need for the employees transitioning from one level to the other in the organisation. In this regard, the pay structure is inclusive of different grades which are relevant for Eco-Insulate since it contributes to pay determinants being transparent to all.
Informal Pay Structure; Individual Job Grades
This is informal grade with the organisation assigning different jobs a specific grading and aligned pay normally negotiated actively. According to Anshori et al. (2022), an organisation is not required to retain traditional pay structure with employees grouped in similar pay grades but employees’ rewards are informed by markets, input to their organisation and contribution. Considering the structure, Eco-Insulate is in a position of ensuring flexible in presenting and capturing talents in their pay package. Nevertheless, Lavee (2021) note that the weakness of this is potential pay disparity noted as characterised with unfairness. This is when different employees in similar job roles are paid the same which could be due to their bargaining power.
Main Differences; Standardisation and Flexibility
A major factor differentiating these structures include how they are standardised. As evidenced in Decius et al. (2021), pay strategy is well structured particularly in an event pay structure entail staff compensated in a way reasonable to different pay grades. This is as opposed to rewarding the employees differently despite of executing similar job functions.
This is different from individual job grades which are unclear and dependent on how they negotiate for every job identified to be sensible despite inequalities and frustrated employees.
A second difference is the flexibility. The flexibility scope is identified in CIPD (2024a) as individual job grade pay structure as facilitating Eco-Insulate working with an appropriate pay remuneration in a flexible manner. This is meant to attract best talents in line with market expectations.
Considering multi-grade pay structure, Sharma and Sharma (2024) identify it as being rigid as it is appropriate to maintain organisation structure and standards for organisation success relevant to assist them in reducing turnover levels and promoting the business morale scope.
2.2 Contingent rewards impact
Contingent rewards are form of remuneration associated with performance scope or attainment of assigned job functions (CIPD, 2022). Hence, a reward is noted to be contingent when it has been offered upon……
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