Question:
Assessment brief/activity Using your own organisation (or one with which you are familiar), investigate the reward environment and produce a written report in which you:
1. Assess the context of the reward environment and the key perspectives that inform reward decisions. In this section you should: Use an appropriate analysis tool to identify the internal and external factors.
Analyse the particular impact of business drivers and related factors on reward decisions.
Give examples of different ways of gathering and presenting reward intelligence.
2. Demonstrate your understanding of key reward principles and the implementation of reward policies and practices. In this section you should:
Evaluate the principle of total rewards and its importance to reward strategy.
Identify and explain the importance of equity, fairness, consistency and transparency in terms of how they should underpin reward policies and practices. You may illustrate your understanding of these key principles by referring to topical reward matters.
Assess the contribution of both extrinsic and intrinsic rewards to improving employee contribution and sustained organisation performance. Refer to academic research and the literature in this area and illustrate with examples of good practice.
Explain how reward policy initiatives and practices are implemented in your chosen organisation.
3. Demonstrate your understanding of the role of line managers in making reward decisions.
In this section you should:
Explain the various ways line managers contribute to reward decision-making.
Solution/Answer
Table of Contents
2.0 Context Reward Environment and Key Perspectives Informing Reward Decisions. 3
2.1 External and Internal Environmental Analysis. 3
2.2 Impact of business drivers and related factors on reward decisions. 6
2.3 Gathering and Presenting Reward Intelligence. 8
2.3.2 Retention Figures and Salary Surveys. 9
2.3.3 Challenges in Recruitment and Attitude Surveys. 9
3.0 Key Reward Principles and Implementation of Reward Policies and Practices. 9
3.1 Principle of Total Rewards and its Importance. 9
3.2 Equity, Fairness, Consistency and Transparency in Underpinning Reward Policies and Practices. 11
3.4 Reward Policy Initiatives and Practices Implementation in ADIA company. 13
4.0 Roles of Line Managers in Rewards Management. 13
5RMT: Reward Management
1.0 Introduction
In contemporary organisations, they put immense efforts in their pay and benefits as they are critical to attract, retain, and engage their employees. Based on the CIPD (2019) definition, a reward is inclusive of the financial provisions that are offered to the employees and are inclusive of cash pay and broader benefits package, including the pensions, paid leaves, among others. In some organisations, it is also inclusive of the non-pay benefits, which is identified as the total rewards. CIPD (2020) further introduces the strategic rewards, which is a long-term approach of organisations reward policies and practices for supporting the business objectives. It is inclusive of all aspects of the work that are valued by the employees, which are tangible and intangible and inclusive of the reward strategy. Based on this background, this report intends to evaluate the reward management, the relevance of the reward intelligence, reward principles and policies, and best practice in implementing these rewards. The organisation of focus is the XXX organisation which is the leading value for money connectivity providers. The organisation is founded on simplicity, affordability, reliability, and fair connectivity, which is in existence to all providers. The organisation is characterised by features of pay increase, non-consolidated pay rises, bonus rewards, and recognition, and non-cash rewards. Based on this, the reward environment has been evaluated and its influence on the reward decisions being noted and how it influences the implementation of the policies and practices.
2.0 Assessing the Context of Reward Environment and Key Perspective Informing Reward Decisions
A reward environment is characterised by the different activities which are invested in designing and implementing reward policies and practices for supporting and advancing the set organisation objectives. For the effectiveness of the reward environment, the decision made needs to be in alignment with an entity performance objective and their visibility to the employee, which influences the motivation of excelling in distinct performance areas and rewards. This is affirmed by Bosse and Phillip (2016) report that points out the agency theory that is based on the existence of a direct association between the different reward systems for performance as a critical achievement. This is as evidenced in an organisation culture and majorly phenomenal as a consequence of the noted and eventual employee and organisation operations management.
2.1 External and Internal Environmental Analysis
As highlighted in CIPD (2017), the reward environment has a critical role to play in establishing the reward decision process. Through the identification of the different factors, it is possible to identify the extent to which the employee’s interests are appreciated in their workplaces. In the context of TalkTalk operations, their employees are significantly committed based on the scale of their appreciation in their roles. The outcome of the reward environment analysis, which is a strategic reward, is more ideal in motivating employees’ efforts.
- Internal Analysis
SWOT Analysis
This tool represents the strengths, weaknesses, opportunities, and threats. These factors are used to demonstrate best the external factors that influence the success of an organisation. The applicability of SWOT analysis in reward management is informed by CIPD (2020a) report that notes that SWOT analysis is best used as a framework to match organisation goals, programs, and capacities to the environment of their operation.
- Strengths
Strengths include the different factors that an organisation can best perform, which leads to them leveraging on a competitive advantage. They include the advantages organisation leverage as opposed to others in the same business environment. For the XXX, they are identified as an employer brand, diverse employees’ backgrounds, and high-level management. In their reward management system, the XXX organisation ensures that they carry out a reward-based analysis to evaluate their strengths and rewards availability. The performance management analysis to inform on the reward decisions is anchored on the use of modern technology. Further, the XXX HR management consistently engages employees both formally and informally to appreciate their needs, which inform reward management decisions made. Recently, XXX has established a total reward system, which is a strategy that integrates both the monetary and non-monetary rewards intended to harness the level of commitment and motivation of the employees.
- Weaknesses
Weaknesses are inclusive of the factors that hinder procedures undertaken by the employee’s resources and people for harnessing the performance and individual performance. The weaknesses faced by XXX that influence their reward management include limitations in the budgeted resources in reward management. Also, as a result of the COVID-19 pandemic, the number of customers has substantially decreased owing to the lower growth and development in the UK business environment. The decreased economic business environment has a negative implication on the economic performance of the organisation.
- Opportunities
Opportunities are positive factors that an organisation can leverage to boost its business portfolio. For XXX, the opportunities which are also linked to the reward management include the existing modern technology opportunities to the benefit of the employees’ scope of operations. Also, as a result of Brexit in UK, there is an opportunity of XXX expanding their operations in more regions in the UK market and expand to other countries. This is coupled with the possibility of engaging more qualified staff in their roles by engaging a competent and diverse workforce. The link between the opportunities and the reward management practices is evident in the efficiency of the reward systems and the extent to which they ensure the effectiveness of a compensation system for their employees matching the organisation contributions.
- Threats
Threats are inclusive of factors that have a negative implication on an organisation business operation. Appropriate examples of threats influencing XXX include a strategic shift in the market demands, supply chain issues, and a reduced number of staff. There is also anticipation that different threats could directly affect organisation operations. The increased competition in the communication organisations in the UK has been a significant threat to XXX, increasing the organisation employees reward management systems. Competitiveness influences employee retention levels and the level of workforce skills, which also impact the financial performance of an entity. It is only the employees who are manageable to an organisations are engaged.
2.1.2 External Analysis
PESTEL Analysis
PESTLE analysis is used in the evaluation of politics, economic, social, technology, environment, and legal factors. These factors have a direct impact on the identification of both the external and macro forces affecting an entity. As noted in CIPD (2020b), the PESTLE analysis is used in providing compelling professional insights into the external factors that impact an entity. In regard to the ability to make reliable decisions on the reward decisions, PESTLE analysis is essential.
- Political
The major political factor in the UK currently is Brexit. As noted in CIPD Community (2020), this has a direct influence on the reward decisions made between the workforce and their leaders. This is on top of the tax policies which have recently been passed in UK, which are directly deducted from the employee’s salaries. This is on top of the policies that have been passed in the UK that have a direct influence on the employment statuses classifying them into casual contracts and permanent staff. All these factors have a direct impact on XXX reward management strategies.
- Economic
The economic factors identify the unemployment rates, tax rates, and direct foreign investment. In UK, since the Brexit, XXX external business environment has significantly reduced. This is on top of the entire GDP, reducing due to the global economic slowdown. As a result, the performances of XXX has dramatically slowed down and scaling down their recruitment and also the reward s increment for the employees. This has nevertheless had minimal impact on the remuneration structure of the XXX organisation and also the bonuses and incentives which are offered based on the performance of the employees.
- Social-cultural
This is identified as an emerging trend in the social business environment. It is essential in dictating the extent of employee diversity, background, culture, and qualifications. In the UK, the middle-class is currently significantly high, with the level of education being equally broad. As such, there is a need for identifying the fitting rewards to employees with the identified factors. In XXX, HR ensures that they link the social-cultural characteristics of the employees and their level of expertise to set the reward strategies.
- Technology
In the UK business environment, there are continuous technologies that are currently in emergence, which are robotics and artificial intelligence. These technologies have significantly affected the work that was previously being done by the employees. To avert this, XXX uses the technology as an enabler of their operations and, as such, not a determinant in eliminating the employees from their roles. There is a reward that is offered by XXX to their most innovative employees mainly being able to revolutionalise the communication sector where they operate.
- Environmental
Environmental factors include global warming and the need for the use of sustainable resources and ethical sourcing. In XXX, part of their values is ensuring affordable and ethical connectivity to all employees. In this case, having a holistic remuneration customised to the effectiveness of sustainability of their employees in their roles is priotitised.
- Legal
Legal factors entail the existing policies in a specific operating environment. There are strict legislations in UK that have a direct influence on the operations of the communication industry where XXX operates. The most basic legislation is the Equality Act 2010, which stipulates that an employee should not be discriminated against and provided with lower remuneration when compared with individuals working on similar roles. This is what guides the XXX in their roles, and this has led to the organisation operating within strict strategies. All these are directly linked with the reward management best practices.
2.2 Impact of the analysed factors on Reward policy in the organisation
As illustrated in figure 1, effective reward management is directly influenced by the aspects of economic positioning, organisation culture, and hierarchical structure. The effectiveness of these strategies is determined by the performance management strategy that is put in place in an organisation and aligning the expectations of the employees to their performance and effectiveness in their roles. For instance, in XXX, they conduct quarterly performance appraisals, which are generally intended to ensure that they manage a continuous practice of the employee’s performances. As noted in CIPD (2018), the organisation culture identifies the extent to which there prevail different shared beliefs, varying assumptions, and values governing the employees behaviours in their organisations. The administration of the organisation and how they relate with the employees has a critical role to play in establishing the success of the reward decisions. This is since they play the role of an arbitrator between the HR manager and the employees and also the line managers.
For the external factors,……………………………….