(Solution) CIPD Level 5 5HRO3: Reward for Performance and Contribution


Table of Contents

Introduction. 3

Task One – Written Response. 3

1.1 Principles of reward and its importance to organisational culture and performance management. 3

1.2 How policy initiatives and practices are implemented. 4

1.3 How people and organisational performance can impact on the approach to reward. 4

1.4 Different types of benefits offered by organisations and the merits of each. 5

1.5 Contribution of extrinsic and intrinsic rewards to improving employee contribution and sustained organisational performance. 6

3.1 Different approaches to performance management. 7

3.2 The role of people practice in supporting line managers to make consistent and appropriate reward judgements. 9

3.3 How line managers make reward judgements based on organisational approaches to reward. 9

Task Two – Briefing Paper 11

2.1 The business context of the reward environment. 11

2.2 The most appropriate ways in which benchmarking data can be gathered and measured to develop insight. 12

2.3 Organisational reward packages and approaches based on insight. 13

2.4 The legislative requirements that impact reward practice. 14

References. 16


This report entails the concepts surrounding how rewards are made in an organisation and contribution to performance. The report entails two parts. Part one entails the written response to areas, such as the reward principles, role of culture and performance management, and intrinsic and extrinsic rewards. Part two is a briefing paper on the future reward approaches.

Task One – Written Response

1.1 Principles of reward and its importance to organisational culture and performance management.

Sufficient rewards are important in attracting and retaining talent (Ahmad et al., 2019). The rewards show the level of value that the company has over its employees. Two principles of rewards include;

Observing the concepts of transparency, consistency, and fairness: This principle involves the company applying a consistent and acceptable approach during calculations of the individual rewards (Smit and Montag-Smit, 2019). It is also imperative to be open and ensure that the employees understand how the reward decisions have been arrived at. Fairness and equality involves the pay and benefits not being discriminatory to the employees. Observing these dimensions ensures employee satisfaction and motivation.

Balancing intrinsic and extrinsic aspects: Sufficient rewards are founded on the total rewards concept. According to Cotton (2022), the total rewards concept involves the tangible and intangible elements valued by the people. The tangible aspects include the salary and benefits. They are mainly financial while the intangible aspects in rewards include recognition, sense of accomplishment, and acknowledgment for one’s performance.

Importance of Culture and Performance Management in Rewards 

Organisational culture entails the norms, beliefs, and values guiding the company’s actions (Roscoe et al., 2019). A company characterised by the values of equality, integrity, and diversity will ensure that every reward decision is aligned with these philosophies. An example is applying the value of equality to ensure that each individual receive similar rewards based on the company’s structure. The role of performance management is to ensure that the level of rewards are aligned with the individual’s output, value, and contribution to the company. Conducting a performance appraisal helps in determining the level of rewards that the employees are interested in and the combination of reward aspects, including learning and development.

1.2 How policy initiatives and practices are implemented.

Policy or initiative implementation starts by setting agenda, collecting sufficient information about the issue in question, formulating and implementing a plan, and doing a follow-up, monitoring, and evaluation (Hermawan, 2021). An example of a policy at Home International would be introducing a flexible reward system to the employees based on their demographics. At Home International, there is a high turnover of employees aged 18-32 and high retention of those 48-68 years. This policy would ensure that each individual, across the different demographics receives rewards according to their expectations. For instance, a millennial employee would be more interested in work-life balance and support during their career advancement (Egerova et al., 2021). The generation Z employee would be more focused on a dynamic and inclusive working environment. These preferences are different for the baby boomers, who prefer more goal-centric environment and formal interaction.

Implementing such a policy would involve engaging the different employees to assess their needs and expectations. Involving the employees would also be vital in developing a policy that is aligned with one’s preferences. At Home International, this step can be accomplished through interviews and surveys to gather sufficient information, both qualitative and quantitative. A checklist would also be important to map out all the issues that Home International employees relate to high turnover, especially the young individuals. Through collaboration, it would be essential to ensure that all the stakeholders are committed and satisfied with the activities in the plan. Developing the policy plan would involve seeking input from the employees on the key areas. In the flexible and total reward example at Home International, developing the plan would involve establishing what the workforce would consider essential in the reward management. The best practice is to have a list of what the employees prefer in the total rewards concept, including the base salary and the different benefits (Tessler and Mannor, 2020). The implementation process further involves monitoring and evaluation to ensure that the policy is aligned with the objectives and agenda (Leicht-Deobald et al., 2022). The monitoring would involve evaluating the employees’ expectations and level of satisfaction with the level and diversity of the rewards. The best practice is to engage the employees for feedback and level of contentment with the rewards and areas that they feel should be further considered. An example is the level of satisfaction for the young employees at Home International on the different forms of rewards. The monitoring and evaluation would further involve collecting sufficient quantitative and qualitative data on the policy.

1.3 How people and organisational performance can impact on the approach to reward.

The approach to rewards is influenced by several aspects, including the person’s performance and that of a company.

People Performance

The positive impact of a person’s performance is to determine how sufficient the rewards should be. An individual that is performing exemplary will receive higher rewards to match their value and contribution to the company. Such an approach and relationship is essential in the individual’s motivation and satisfaction. Applying Herzberg’s two factor theory, as described by Thant and Chang (2021), sufficient rewards are important in employee satisfaction and high level of motivation, which also mean high retention rate. On the downside, a poor or low performance implies that the employees will be receiving low pay. The main challenge in this regard is further deterioration of the employee and organisational performance. Besides, the fluctuation in rewards based on performance may affect the sustainability of the rewards combination.

Organisational Performance 

The positive impact of organisational performance to rewards is to determine the combination of the reward aspects, including the tangible or intangible (Cotton, 2022 B). For instance, a company that is performing highly has the option of introducing a diverse rewards range, including the holidays and growth and development opportunities. These considerations are fundamental to the workforce performance and sustainability. The negative impact of using the company’s performance to inform the rewards is that a consideration of diverse reward elements, including the pay and benefits would be costly to the company (Core, 2020). For an organisation to live up to the workforce expectations after a high performance, it has to allocate sufficient resources. This means a stained financial health of the company.

1.4 Different types of benefits offered by organisations and the merits of each.

Reward benefits are additional aspects in the rewards besides the base salary. They can be monetary or non-financial. Examples of the rewards include life and health insurance, retirement, and car allowances. Two types of benefits include performance-related pay and share ownership. PRP involves linking the employee’s salary progression to the performance, which is examined based on the pre-set goals and objectives (Cotton, 2022 C). Notably, there are instances where the reward increment can be combined in the basic pay or lumpsums. Share ownership benefits refer to company arrangements where the workforce is provided with a chance to participate and take ownership of the company (Li et al., 2022. Owning part of the company means that the individuals participate in the decision-making process. The merits and demerits of share ownership include;

PRP-Enhances employee motivation and productivity. -Increases loyalty and efficiency.-Effective in the short-term. -Employees are more concerned with health and well-being.
Share Ownership-Involved employees in decision-making. -Promotes loyalty and commitment.-The company’s control is affected. -Affected decision-making process.

The similarities in the two types of benefits are that they both increase the employees’ loyalty, motivation, and commitment levels. PRP promotes commitment through acknowledging their value and level of contribution to the company. In share ownership, motivation and commitment are based on the workforce involvement in the decision-making process (Kruse, 2022). The main difference between the two benefits is that in PRP, it is more oriented towards the financial dimension whereas share ownership entails the decision-making process, power, and control. PRP is also short-term whereas share ownership occurs in the long-term.

1.5 Contribution of extrinsic and intrinsic rewards to improving employee contribution and sustained organisational performance.

Rewards can be categorised mainly into two dimensions of intrinsic and extrinsic. Intrinsic rewards are internal to the individual and are mainly psychological (Thomas, 2009). They are also untouchable and are mainly achieved after the employees complete their projects or tasks successfully. The rewards are also centred on one’s abilities and efforts. Examples of intrinsic rewards are the workforce pride in their work, feeling respected, self-growth, and a trusting leadership and management.

Increase the level of engagement. Increases the individual’s performance levels.There is a risk of one ignoring other important aspects at the workplace, such as safety. They still require the extrinsic aspects to be complete and achieve the desired effect.

Extrinsic rewards on the other hand are external and mainly involve the monetary value given to the individuals after accomplishing a task or expectations (Emmanuel and Nwuzor, 2021). Examples of extrinsic rewards include pay, bonuses, and the benefits. Extrinsic rewards get the term from being external to the company.

Places emphasis on the individual’s achievement and ensure the individuals feel appreciated. Increases motivation and commitment. Do not last long. There is a risk of the extrinsic rewards overshadowing the intrinsic ones.

How the Rewards Improve Workforce Contribution and Sustainable Performance

Intrinsic and extrinsic rewards are implemented together to achieve a desirable effect. Both intrinsic and extrinsic rewards increase the employees’ motivation and commitment levels, which are significantly linked to sustainable performance. Intrinsic rewards, such as recognition for high performance and sense of accomplishment increase the individual’s contribution to the company to achieve the set goals and objectives (Chanana, 2021). Further, rewards, such as learning and development ensure that the employees are equipped with knowledge and abilities for sustained performance.

3.1 Different approaches to performance management

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