Reward Management: Understanding Business Context, Key Principles, And Implementation Of Policies And Practices

Task 1

The reward management unit provides the learner with a wide understanding of how the business context drives reward strategies and policies, including labour market, industrial and sector trends, regional differences and trends in pay and international comparisons; the financial drivers of the organisation, the balance sheet and the impact of reward costs. The learner is required to gather and evaluate intelligence on a wide range of reward data and show how this impacts upon business decisions. The learner will acquire knowledge of the perspectives, principles and policies of reward from a theoretical and strategic focus and learn how to implement them in practice. The learner will be able to assess the contribution of reward to business viability and advise on the appropriateness of policies and practices to line managers to promote employee performance.

Learning outcomes

1 Understand the business context of reward and the use of reward intelligence.

2 Understand key reward principles and the implementation of policies and practices.

3 Understand the role of line managers in making reward decisions.

Assessment criteria

1.Understand the business context of reward and the use of reward intelligence

Assess the context of the reward environment and key perspectives that inform reward decisions.

Explain the most appropriate ways in which reward intelligence can be gathered and presented.

Understand key reward principles and the implementation of policies and practices

Evaluate the principle of total rewards and its importance to reward strategy.

Explain the significance of equity, fairness, consistency and transparency as they affect reward policies and practices.

Explain how policy initiatives and practices are implemented.

Understand the role of line managers in making reward decisions.

Explain the various ways in which line managers contribute to reward decision making.

Assess the contribution of extrinsic and intrinsic rewards to improving employee contribution and sustained organisation performance.

Your task

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: (AC 3.1) Explain the various ways line managers contribute to reward decision-making.

Evidence to be produced/required

You should relate academic concepts, theories and professional practice to the way organisations operate, in a critical and informed way, and with reference to key texts, articles and other publications and by using organisational examples for illustration.

All reference sources should be acknowledged correctly and a bibliography provided where appropriate (these should be excluded from the word count).

Guidance about the assessment:

• do make sure you refer to the assessment criteria (AC) above so you do not miss anything out in your answer. Sometimes one question will cover more than one AC, make sure you cover all the requirements in your answer, and make this clear in your heading;
• we strongly advise that you read the Assessment Guidance sheet provided (focus on the assessment criteria relevant for this assessment), in your pack, and/or on the Moodle. This helps with othe context of the assignment itself. The two documents work together to clarify what is required;

• you need to refer to best practice and relevant legislation where appropriate, and include reference to appropriate literature sources to demonstrate your wider reading;
• when referencing your research and wider reading, remember to include your sources in a Bibliography attached to your work (not included in the word count). Guidance on how to do this can be found on Moodle.  

How?

Your assessment should be submitted through Moodle, ensuring you have fully uploaded your work with attachments correctly.

When?

Submission due dates for each unit can be found on your study calendar. See our policies on Moodle for late submission and extensions.

Reward management in the organization is a very essential aspect of the organizations functions. This is because providing the rewards to the employees in monetary or non-monetary terms helps the employees to be motivated and to perform better. This function is beneficial for the company as well as for the employees. This report below discusses about the various aspects of rewards management. The first section of the report focuses on the environment of the rewards and the key perspectives that are being consider in order to make rewards decision. It also discusses about the concept of reward intelligence. The next section of the report discusses about the total reward strategy in the organizations like UBER and the last part of the report focuses on the implementation practices of the reward system in the company.

Rewards are the extra benefits that are gained by the employees in return of their effective performance. Rewards management is very necessary in the organization as it is the elements that act as the motivation factor in the organization. Reward system plays a very important role in the organization as well as for the employees (Armstrong and Murlis, 2007). The company has to make some of the reward system in the organization so that the employees can be retailed in the same. There are four M’s in the organization that are, Men, Material, Money and Machine. Men are one of the factors that are most important of all. Thus, Men or the human resource organization require be retaining and satisfying with the help of rewards. As far as the environment of the rewards is considered, the internal environment that affects the rewards involves culture of the organization, technology and the people (Jiang, Xiao, Qi and Xiao, 2009). On the other hand, the external environments of the company that affect the reward system are competitive forces, demography and global factors.

Internal reward environment:

It has been analyzed that internal culture and the beliefs of the company is the basis that whether the company would implement the reward system or not and what type of rewards are given to the employees in the company. As far as UBER is concerned, it has been analyzed that the company has the culture that can act as the competitive advantage for the firm. The company and the people bit understands the satiation of each other and thus the company recognized the parts of the employees bad provide them rewards according to the performance (Armstrong, Brown and Reilly, 2011). The company values suggest that UBER believes in encouraging, engaging and empowering people in order to support them. As far as technological advancement in the company is confided, UBER is the firm with high technological usage. Technology also favors the reward system as technological implementation in the reward system helps the company to analyze the performance of the company in quantities as well as qualitative manner. Thus, it becomes easy for the company to serve the people with the right amount of rewards (Perkins, White and Jones, 2016).

1.1 Assess the context of the reward environment and key perspectives that inform reward decisions

External environment:

Globalization is the first external environmental factor that affects the reward system of the company. This is because if the firm is operating in different countries, it has to implement the rewards system according to the country’s framework and thus UBER also believes in the same philosophy. The company believes in localization strategy and used it in all the countries to expand the business globally. Competitive forces or the competition in the market is also one of the factors that affect the reward system of the firm (Brown and Purcell, 2007). UBER is the company that has different competitors at different laces and thus it needs to consider their policies and system in order to frame its own system of rewards. Demography is also the factor of the external environment that can affect the rewards system of the company. This is because the people of different age in the employment gets motivated by different motivators thus rewards system should not always involving money in it.

Key perspective:

The key perspectives that are involves in the reward management to make the rewards decisions are:

• Trends in pay scale
• Minimum wage considerations
• Performance level of the employees
• Key performance indicators

Reward intelligence can be defined as the sources that are require in order gathering the data of the rewards regarding by the HR professional of the company. This data is being analyzed to make the reward decisions (Armstrong, Brown and Reilly, 2010). There are various sources that are available for HR to source that data. Some of them are discussed here:

CIPD research reports: Chartered institute of personnel and development is the institution that provides the information about the different aspects of HR functions. It provides the standard about the rewards management techniques that are prevailing. Thus, it provides different type of data that can be analyzed in order to make the rewards decisions in the company.

Regional and global pay trends: It has been analyzed that that the trends that are being followed by the companies in a region or globally provides the information about the rewards that has been given to the employees.

Working hours: Most of the companies these days believes in calculating the working hour of the employees and pay the employees with extra rewards and benefits who work more than the standard working hours set for them.

There are many other techniques that help in sourcing the data for reward intelligence such as labor market statistics, benchmarking, retail price index etc. UBER is the firm that believes in providing the benefits to its employees according to the performance (Shields,et al.2015). The company also treats the drivers as the employees and only and come up with different schemes for the drivers that forces the drivers to make more rides in a day.

Total reward is the modern strategy of rewards management. This strategy can be defined as the sum of the values of all the elements of the rewards package. The total rewards include five elements such as:

• Compensation
• Benefits
• Work life
• Performance and recognition
• Development and career opportunities

Compensation is the benefits that are received by the employees because of the name of the company they are scale with, benefits can be defined as any of the extra benefits the employee is getting other than the basic salary which are non-monetary in nature. Work life is the third element of total rewards; this means that the company provides some of the facilities to the employees in order to maintain their work life balance (Armstrong and Taylor,2014). Performance and recognition is the fourth element that is related to the performance of the employees and the recognition they are getting in front of all the other members of the company. Recognition is the very important part of the rewards system; this is because it is not necessary that every individual will feel happy by the monetary benefits. Getting recognition and fame in the organization motivates the employees to perform better (Njanja, Maina, Kibet and Njagi, 2013). The last element or the principle of total reward is development and the future opportunities that are available for the employees in the organization. It is very important for the employees to be in the organization that provides growth to them. This is because growth is one of the requirements of the employees from the company.

Internal reward environment

As far as UBER is concerned, it has been analyzed that the company focuses on providing many benefits to the employees along with the drivers who are working with the name of UBER. One of the reward management programs by UBER is called momentum. This program has been launched by the company in order to support and rewards the drivers of the company (Singh, 2007). This service has been developed in order to recognize the service that the driver partners of the company are giving and providing them the benefits such as being healthy and growth in their business etc. these benefits are not monetary but helping the drivers in one or the other way. The first element that has been given to the drivers was about the health insurance. This insurance is very important for drivers. Momentum also helps in reduced vehicle expenses; this is considered as the extra benefit for the employees or the drivers (Aguinis, 2009). Momentum also provides personal rewards for partners as well as the families of the drivers. This can be considered as the method to support the employees so that they can maintain the balance between the work and the life. The overall discussion suggests UBER is the fir that took initiatives for their employees in order to provide them with the rewards and adopts the technique or strategy of total rewards.

There are many factors that affect the rewards policies of the company. This is because it is very much important to consider all the legal and the ethical framework before implementing nay of the policy in the organization.

Equity: In any organization, if the employees are working on the same position in the similar situation than they compare the behavior and the benefits they are getting from the company (Azasu, 2012). The equity theory argues about the equality that should be maintained between the members who are working in the similar situations. This theory suggests that if a person is working and expects some outcome from that then he or she also expects the maintenance of equity in those outcomes. The outcomes in case of employees can be in there aspects. The first one is the equity in rewards, second is over rewarded and the third one is under rewarded (Bratton and Gold, 2012). If any of the employees feel under rewarded then it may hamper his work as he feels that he is not been treated equally like the other employees of the company.

Fairness: Fairness is also the subset of equity in the workplace environment. Fairness can be in terms of behavior, policies, and rewards etc. Fairness is the basis of all the policies that are been made in the company.

Consistency: consistency can be defined as the evenness in the process. In terms of rewards system in the organization, this has been analyzed that consistency should be maintained. This means that frequent modifications in the rewards policies of the organization confuse the employees as well as HR department of the company to calculate the rewards of the company.

External environment

Transparency: transparency can be defined in the ways that there is nothing hidden. The process of the organization should be transparent enough so that the employees feel safe and non-biased in the organization. This is the method that helps in associating the employees to the company (Rogers, B., 2015). As far as reward system is considered, transparency in the system results in providing every information about the policies of the company to the employees. This helps the employee to know about the rewards and the performance level so that they can work accordingly for achieving higher rewards.

In case of UBER, it has been analyzed that the rewards system of the company is very much transparent, fair and have equity. As far as consistency is concerned, it has been analyzed that consistency is not there in the rewards system of the company. Thus is because the company needs to make new modification every time to engage drivers to work and make more and more rides.

There is a proper procedure that needs to be followed by every organization in order to implement the new policies related to any of the function. In concern with reward system, it has been identified that the policies should be implemented in a sequential manner. Following are some of the steps that have been followed by almost all the companies including UBER:

Step 1:

Planning: It is the first step of every process or functions in the organization. In terms of reward system, it has been analyzed that planning involves determining the objectives of the policy, determining the need of rewards system in the company or making any changes that are required. Planning also involves the functions like deciding the team who will work of the process.

Step 2:

Analysis: Analysis is the process in which different steps need to be included. Analysis requires the company to analyze its current rewards system and along with that the organizational structure and culture (Meister, Willyerd and Foss, 2010). This is because the changes in the culture and the structure of the organization form the base of making changes in the reward system of the firm. As the structure of UBER is very much pen and the participative approach of management is followed, this suggests that the company should implement the policies of rewards that are more beneficial for the drivers as the company now consider drivers as their employees.

Step 3:

Development: This is the most crucial phase as the development of the new policy takes place at this stage. After analyze in all the situations and the factors, the team that has been delegated with the work needs to develop a policy to be implemented.

Step 4:

Approval of the policy: It is the major stage that needs to be considered. It is very much important to take the approval of the policy framed before its implementation. The approval should be taken from all the stakeholders that are relevant to the policy.

Step 5:

Implementation: Implementation of the policy after taking the approval is the final step. The implementation in the earlier stage should be done for testing and the final implementation is done after checking the test results. Pilot test is the method that has been used by the companies like UBER to test the results or the policies. Pilot testing helps the company to implement the policy in a part of the organization (Stoll, 2016). After implementation of the policies, it is required to circulate the information to all the employees so that the transparency can be maintained in the organization.

Line managers are the managers that are in direct authority with the departments. There are various departments in the companies like UBER such as marketing, HR, operations, technical, non-technical, customer service etc. Thus, each department has different line managers that take care of the employees in the particular department. As the rewards management and decision making is the functions of HR departments of the company. It is required to consult the line managers of the department to implement the rewards policy in the department or for the employees of different department (Rosenblat and Stark, 2016). This is because the line managers have direct contact with the employees and they have better knowledge of what people expect from the company and how they are performing. There are various roles that have been played by the line managers in making the decision regarding rewards. The first role played by the line manager is of framing the link between the employees and the HR. The line managers of the department provide the relevant information of the employee’s expectations to the HR department so that the decisions can be made regarding the reward policies. The next role that has been played by the line managers in reward decision making is related to sharing of performance level of the employees. The line managers have the records of the performance of the employees under their authority. This information also assists the decision makers to make the rewards decisions for the department. The line managers are the direct motivators for the employees. Thus it is very much essential for involving the views of line managers at the time of making any decisions (Malin and Chandler, 2016). The key indicators are also determined by the line mangers only because they know about the working processes of the department thus it is easy for them to take decision which employee should be judged in which manner. Above decision suggest that line managers have some of their roles related to HR department because of their functions of managing the employees. Line manages have the responsibility as well as authority to handle their employees and thus it is important that they are being involved in important decision making processes.

There are basically two types o rewards hat are being available for the employees in the organization.

Intrinsic rewards: these are the types of rewards that are associated with the feeling and the non-monetary benefits that are being given to the employees. They are not related to tangible aspects but have the element of feel and happiness in them. They are directly related to the performance of the employees and thus the employees who are performing well can automatically feel the sense of these rewards. Sense of achievement is the first element of this type of rewards. As the employee performs the task in efficient way, it automatically provides a sense of achievement by him and if this efficiency is acknowledged by others then it provide better feeling. Recognition in the organization at the award functions or any of the functions in the company also motivates the employees and considered as the rewards for the employees (Aubert, Garnotel, Lapied and Rousseau, 2014). This provides with the feeling of pride on their work.

Extrinsic rewards: Extrinsic reads are related to the physical rewards that are being provided to the employees. The extrinsic rewards are also related to the job performance of the employees so it is not necessarily being achieved every time when the task is accomplished. This is because it depends on the current policies of the company for the rewards. Some of the examples of extrinsic rewards is pay, compensation, bonuses, extra benefits such as medi-claim, insurance etc. these benefits are visible and can be enjoyed by the employees very much. This may not be associated with the recognition or the emotional aspect of the employees feeling but it provides the living benefits and arise the standard of living of the employees. This also benefits the family of the employees as the benefits are also enjoyed by them.

As far as the company like UBER is concerned, it has been analyzed that there are many extrinsic benefits that are provided to the employees such as drivers. This is because the extrinsic benefits are the medium to motivate the employees (Price, 2007). It has been recommend to the company that involving the intrinsic benefits may also provide a sense of appreciation and pride among the employees which can also enhances the perfume of the same. Dependency on the extrinsic pay related rewards should be shared with the intrinsic rewards as well. This develops the confidence of the, employees to work and recognition among the colleagues provides a sense of belongingness among the employees by the company. The employees feel important as the extrinsic rewards can be achieved by many but recognition or the intrinsic rewards are the things that can achieved only by making major efforts and leads to growth.

Conclusion:

This report concludes that reward system is the very integral and the important art of the company. It is essential to manage rewards system. This requires the analysis of environment of the rewards and the factors that affect the rewards system. UBER is the company that focuses on implementing the rewards system in order to motivate its driver to make more and more rides. This provides business to the company and rewards to the employees. The company should implement some of the intrinsic rewards as well along with the extrinsic rewards so that it benefits the families of the employees as well.

References:

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Armstrong, M. and Murlis, H., 2007. Reward management: A handbook of remuneration strategy and practice. Kogan Page Publishers.

Armstrong, M. and Taylor, S., 2014. Armstrong's handbook of human resource management practice. Kogan Page Publishers.

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