5HR03 Reward for Performance and Contribution Task One – Guidance Document

Question

Task One – Guidance Document

You have received a request from a colleague for an understanding of issues relating to the impact of reward approaches and packages. They also want to understand how benchmarking data can inform reward approaches.

 

Generate a guidance document that covers these two areas, including current models and thinking around the subject. You may wish to break down the guidance document into the following sections:

Section 1 – The Impact of Reward Approaches and Packages

 

  • Evaluate the principles of reward and its importance to organisational culture and performance management. (AC 1.1)

 

  • Explain how policy initiatives and practices are implemented (AC 1.2)

 

  • Explain how people and organisational performance can impact on the approach to reward. (AC 1.3)

 

  • Compare the different types of benefits offered by organisations and the merits of each. (AC 1.4)

 

  • Assess the contribution of extrinsic and intrinsic rewards to improving employee contribution and sustained organisational performance. (AC 1.5)

 

Section 2 – Benchmarking Data to Inform Reward Approaches

 

  • Assess the business context of the reward environment (AC 2.1)

 

  • Evaluate the most appropriate ways in which benchmarking data can be gathered and measured to develop insight. (AC 2.2)

 

  • Develop organisational reward packages and approaches based on insight. (AC 2.3)

 

  • Explain the legislative requirements that impact reward practice. (AC 2.4)

Solution

Task 1- Guidance Document

Section 1- The Impact of Reward Approaches and Packages

1.1 Principles of Reward and Importance to Organisational Culture and Performance Management

Principles of Reward

A reward is a form of recognition to an individual either monetary or non-monetary. In an employment context, monetary include cash rewards with non-monetary including paid leave and fully paid pension. This is identified by CIPD (2021) as including employees being offered with a strategic/total rewards which include non-monetary benefits. Principles of rewards is as shown in figure 1 categories;

Figure 1: Rewards Categories

In a report by Bradley (2017) evaluating on the different principles of reward, reward principles which establish great organisations, a set of reward principles were noted. These are;

  • Creation of an appropriate and natural rewards experience– People management ought to be considered, communication and capacity development characterised by the rewards changes and workforce success. This is while engaging all the employees actively in change process to understand, accept and commitment in this process.
  • Aligning rewards with Business Goals to establish Win-Win Relationship– An employer and employees need to successfully establish a sustainable reward relations. For example, in context of Leia Technologies, to achieve a balanced win-win relationship, an entity create a successful direction with stakeholders of value to an entity. This is with Leia technology acknowledgement of rewards value.
  • Integrating Rewards– All the rewards are used for what they have been intended for. A detailed context of total rewards pay could be prioritised with the total rewards issued to the employees. For Leia Technology organisation case study, establishing a good workforce focusing on total rewards would be appropriate.
  • Rewarding employees with base pay– Base pay is applied to reward three different dimensions of an individual value. These are the skills and competencies importance to an entity and used to generate relevant results. An individual high-level performance over a specific period of time in their operations and collaborative team results. Further, this is relevant for achieving a high-level people practice informed by existing labour market demands.
  • Rewarding good results with variable remuneration– A significant area of an entity is putting immense efforts towards achieving stakeholders expectations and generating a sustainable future practice. By offering rewards to employees in an organisation for their results, variable remuneration (cash and equity), different stakeholders engage collaboratively hence a success attained. In figure 2 summary, Leia technologies case study organisation can potentially leverage on rewards to improve their agility, flexible strategies, adaptability, responsibility and successful in their business environment.

 

Figure 2: Outcomes of Rewards Provision and Variable Pay

Relevance to Organisational Culture and Performance

For organisation culture, a set of reward principles are used to express and reinforce set values and norms which make the organisation culture. According to Kerr and Slocum Jr (2015), good reward principles are followed in an entity by their people professionals to modify their organisation culture. In regard to Leia Technologies, reward principles appropriately harness the management ability to communicate good attitude and behaviours amongst the organisation members. Organisation culture can be amended to embrace successful change by engaging in a detailed communication based on a performance criteria. This is while embracing the entire rewards provision with consistency.

In a professional context, Obeidat et al. (2018) note the culture as being part of an entity life cycle affecting decision making process, career development and persuasive nature of their operations. The various principles of rewards in an entity culture are as illustrated in figure 3;

Figure 3: Principles of Rewards and Organisation Culture

In terms of performance, the Herzberg’s Two-Factor Principles Theory (IES, 2020) are applicable in highlighting the association of reward principles and performance. In line with this model, rewards are hygiene factors. The rationale of this is that improving hygiene factors lower scope of dissatisfaction in assigned job functions (see figure 4);

Figure 4: Rewards principles and Herzberg’s 2-Factor Theory

Additionally, CIPD (2021) by referencing on behavioral science theory evidenced on the need for people professionals prioritising on rewards for employees motivation. This is through designing, implementing and communicating on reward package. This is in line with McGregor’s Theory X and Y (Badubi, 2017) evidencing performance of employees as impacting different reward categories offered.

1.2 How Policy Initiatives and Practices are Implemented

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