(Solution) CIPD 5HR03 Reward for Performance and Contribution


Table of Contents

1.1a Impact of rewards; short/long-term and effectiveness. 2

1.1b Fairness of Reward Systems; Comparison. 3

1.1c Reward Strategies Link to Vision and Business Objectives. 6

1.1d Importance of Rewards Strategies. 7

1.2e Strategic and Total Rewards; Developing a Reward Strategy. 9

1.2f Balancing rewards between internal equality and external competitiveness. 11

1.3g Organisational Objectives; updates in the period; external environment impact on rewards updates; fair rewards distribution (equality, working hours and skill levels)  12

Achievement of organisational objectives. 12

Updates take place in the period. 13

External environment impacts. 14

Fairly rewards distribution. 15

1.4h Types of rewards. 15

1.4i Benefits Types. 16

1.4j Benefits system for organisation. 16

1.4k Employees value occupational pension. 17

1.5l Extrinsic and Intrinsic Rewards in Improving Organisation Contribution. 17

1.5m Performance-related pay in not-for profit organisations. 18

2.1, 2.2, 2.3a Factors of Organisation reward systems. 19

Internal Factors. 19

External Factors 20

2.1, 2.2, 2.3b Environment impact on rewards. 20

2.1, 2.2, 2.3c Intelligence sources for Reward Package. 21

2.1, 2.2, 2.3d Differences in pay and benefits based on each grade. 22

2.4e Laws in designing pay systems. 22

2.4f Gender-based pay gap. 22

2.4g Lower grade jobs and top management positions. 23

2.4h Consultations on pay system/increase. 23

3.1a Coaching and mentoring. 23

3.1b Pros and Cons of Performance Management Approaches. 24

3.2, 3.3c Trends relating  to role of line managers and HR professionals in reward decisions. 25

References. 26

1.1a Impact of rewards; short/long-term and effectiveness

Considering the reward system in Saudi Aramco organisation in Saudi Arabia (KSA) and Bahrain, the rewards can be categorised into intrinsic and extrinsic.

Intrinsic rewards- These are offered to the employees of an organisation. According to Manzoor et al. (2021) the intrinsic reward are offered to the employees who succeed in achieving completion of tasks and projects with success. For employees engagement, these are primarily psychological and based on efforts and individuals abilities.

According to Manzoor et al. (2021) the intrinsic rewards have a positive implication in eliciting an emotional reaction and work for motivating employees in continuing in improvement and sustainable behavioural changes when needed. For example, in Saudi Aramco, employees feeling appreciated lead to achieving a sense of satisfaction and achievement. This is better than money and bonuses.  Linking intrinsic rewards with performance, Zhao and Renard (2018) identified that intrinsic rewards lead to a positive emotional reaction and working for motivating employees to progressively harness sustainable behavioural changes based on demand.

Extrinsic rewards- In CIPD (2022) definition, extrinsic rewards include the financial/tangible rewards offered to the employees and entail pay raise, bonus and benefits. In Saudi Aramco, for employees taking part in different activities, they are offered with rewards, loyalty discounts, completing work for money and sport for trophies. Recognition for instance has been related to improvement of the level of job satisfaction and engagement of the employees. Sense of purpose in Saudi Aramco impact the employees commitment and satisfaction in their job roles.

In Emmanuel and Nwuzor (2021) report, extrinsic rewards are identified as positively and significantly impacting the employees motivation and organisation effectiveness relationship. For instance, in Saudi Aramco, extrinsic rewards offered are more tangible and linked with the employee status/holding financial value including promotions/gifts.

In short-term, considering the intrinsic and extrinsic rewards theory Malek et al. (2020), extrinsic motivation offer short-term outcomes. Their outcomes are weak and could even be detrimental in long-term. Conversely, Duan et al. (2020) used the intrinsic theory of motivation and highlighted that intrinsic rewards are long term as they are from an individual. For instance, in Saudi Aramco, existence of a strong link with motivation internally could lead to the employees drawing on the motivation for a long time.

Hence, considering Saudi Aramco scope of operations, intrinsic rewards are more effective. Nevertheless, they would compromise standards of quality and employees only working to achieve rewards. This can be managed by integrating extrinsic rewards.

 1.1b Fairness of Reward Systems; Comparison

According to CIPD (2021) pay fairness does not mean that all members in an organisation are paid similar amounts. In Saudi Aramco, two of the job positions which can be compared would include Human Resource (HR) Manager and senior projects manager. The comparison of compensation plan can be compared with Marathon Oil Corporation (MOC).

Human Resource (HR) Manager– In Saudi Aramco, the compensation system is as illustrated in table 1;

Table 1: Compensation Plan in Saudi Aramco and Comparison with a competitor

Senior Projects Manager– Considering the compensation for this job position in Saudi Aramco, the breakdown is as illustrated in table 2;

Table 2: Compensation Plan in Saudi Aramco and Comparison with a competitor

The internal tools are;

Responsibilities- According to AIHR (2022) pay fairness is identified to be in place when the employees are paid the same for executing similar functions. In Saudi Aramco, the pay is higher since they have more responsibilities due to the multiple subsidiaries used. This is as opposed to MOC which has its operations only in their headquarter.

Experience level- Considering the report in Greer and Carden (2021.) the employees experience has a significant implication on pay fairness. As shown in figure 1; the experience of the employees contribute to an increased pay.

Figure 1: Pay Fairness

Hence, for Saudi Aramco senior projects manager, an experienced employees would mean a high pay as opposed to MOC which even engages newly completed schools employee.

For the external factors, they include;

Unions- In KSA, ILO (2022) note that labour law represent trade unions in resolving challenges with remunerations. For the Saudi Aramco and MOC, their pay fairness is established by the labour union. Failure of offering employees above $20, 000 would mean going contrary to their agreement.

Geographical area- In Saudi Aramco and MOC, the employees operating in onshore and offshore, they are paid higher than the HR manager who are majorly operating from an office setting. The difference is with 10% of all the area of consideration.

1.1c Reward Strategies Link to Vision and Business Objectives

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