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Organisations are achieving better results, and greater employee engagement, by linking rewards directly to performance.

This approach can be highly effective at all levels, and in all functions of an organisation.

Reward Systems and Performance Management

Types of Reward Systems

Rewards Systems

Survey

Objectives of

Reward Systems

Rewards Systems Survey

Results

Conclusion

Employees would not do a better job just because there are incentives.

Types of Reward Systems

Reward systems at Work

Objectives of rewards may create temporary compliance, but in the long run, they are ineffective at maintaining positive changes in our behaviour.

Reward Systems

Preferences

A shift from fixed remuneration to rewards systems based on performance of the individual and the business as a whole.

Consequences:

An increased business risk placed on employees;

Reduces the power of trade unions and collective bargaining.

(Gerard, n.d.; Hamel, n.d.; Kohn, 1993)

(McLeod, 2007; Gerard, n.d.; Hamel, n.d.; Kohn, 1993)

Reward Systems Established at the Workplace

Reward system objectives should consider the behavioural impact on the organisation.

(Ryan, 2013)

Intangible or Non-Financial Rewards:

Recognition and Status;

Employment Security;

Challenging Work;

Learning Opportunities;

Flexible Work.

Two factor theory (Armstrong and Herzberg):

Recognition is an effective method of intrinsic employee rewards.

(Armstrong,2007)

Traditionally:

Attraction and

Retention

Motivation of

Performance

Create a Positive Organisational Culture

(Gerhart and Milkovich as cited in Gardner, Van Dyne, & Pierce, 2004)

Reward system can help the firm to create a positive culture.

Influences the human resources, entrepreneurial, innovative, competence based, fair and participative culture.

Reward systems have a direct link to effective performance.

A tie between valued rewards and the behaviors an organisation needs to succeed results in a reward system which is a positive contributor to the organisation's effectiveness.

SD Worx - a Belgian company:

A tailor-made system whereby apart from having a fixed remuneration, employees get to choose which benefit(s) suits them most.

Organisations that give the highest rewards tend to attract and retain more people.

BUT

Create inequality to those high performers compared to low performers.

A risk of damaging employees' morale if rewards are not identical.

(Lawler & Jenkins as cited in Gardner, Van Dyne, & Pierce, 2004)

(Lawler III, 1982)

It became evident that there is a ripple effect happening from the intangible rewards such as recognition of a job well done to the tangible rewards such as monetary rewards.

This approach motivates employees to excel and thus both the company and the employees benefit through such processes.

(Gerard, n.d.)

Negative Aspects

of

Reward Systems

Short term incentives:

based on an employee's past performance.

Long term incentives:

attempt to influence performance over a longer period of time.

Done through:

stock ownership or an option to buy company shares at a pre-determined and profitable price.

Demographics:

Age and Gender

(Lawler as cited in Bonsdorff, 2011)

Demographics:

Sector of Work

Relational (Intangible) or Non-Financial rewards

Short or long term incentives

Tangible or Financial rewards

Importance of reward systems to be designed based on employees' preferences.

A shift towards motivation and retention of employees through non-financial rewards.

Motivation derived from Reward Systems to enhance performance

Satisfaction with established Reward Systems

(Aguinis, 2009)

Cost

Improve on Skills and Knowledge

Rewards given in the form of seniority and rank.

Increase in pay depending on banding.

http://www.sdworx.be/

Reward systems can be a significant cost.

Strategic planning is needed to be able to maximise a rewards system full potential.

Encourage employees continuously to improve their skill sets.

The firm can pay employees based on their skill levels this will motivate employees to improve their skills in order to receive more benefits.

(Lawler III, 1982)

Directly:

Wage increases;

bonuses;

profit sharing.

Indirectly:

Supportive benefits (pension plans, paid vacations, commission, work-life focus, tuition reimbursement etc).

Trends in Rewards

(Rynes et al. as cited in Bonsdorff, 2011)

Link between intangible and tangible rewards:

Making pay for performance a reality;

Differentiating and rewarding ‘mission critical’ roles;

Increasing variable pay;

Centralization;

Market benchmarking.

(Armstrong, 2007)

Relational rewards are important to enhancing monetary rewards.

Paying more for retention or performance is often no longer available.

These shifts are occurring due to the impact of the global downturn and other macroeconomic trends in the global economy.

(“The changing face of reward”, 2010)

Hay Group (2010)

(Cable and Judge as cited in Bonsdorff, 2011)

Reward preferences relate to:

(a) job preferences;

(b) job search decisions.

Two factors which tend to change throughout one's career and across different types of work.

Compensation schemes can potentially be beneficial and decrease turnover.

However, they will not necessarily increase the quality of performance.

As Dr Frederick Herzberg states: “If you want people motivated to do a good job, give them a good job to do”.

Preference related to rewards systems change with age:

"a shift from pay rises to other benefits"

Classical studies:

"older employees preferred increased pension and related benefits and were willing to forego pay increases, additional vacations and shorter work weeks in order to acquire them”

(Kohn, 1993)

(Bonsdorff, 2011)

(Doerling et al as cited in Bonsdorff, 2011)

References

Aguinis, H. (2009). Performance Management (2nd ed.). Upper Saddle River, New Jersey: Pearson Prentice Hall.

Armstrong, M. (2007). A Handbook of Employee Reward Management and Practice (2nd ed.). London: Kogan Page Limited.

Berlyne, D. (1975). Behaviourism? Cognitive theory? Humanistic psychology? To Hull with them all. Canadian Psychological Review/Psychologie Canadienne, 16(2), 69-80. http://dx.doi.org/10.1037/h0081798

Bratton, J. & Gold, J. (2007). Human resource management: Theory and practice (4th ed.). Basingstoke [England]: Palgrave Macmillan.

Bratton, J. & Gold, J. (2012). Human resource management: Theory and practice (5th ed.). New York: Palgrave Macmillan.

Frederick Herzberg: 2 Factor Hygiene and Motivation Theory. (2015). Accel-team.com. Retrieved 8 December 2016, from http://www.accel-team.com/human_relations/hrels_05_herzberg.html

Gardner, D., Van Dyne, L., & Pierce, J. (2004). The effects of pay level on organization-based self-esteem and performance: A field study. Journal Of Occupational And Organizational Psychology, 77(3), 307-322. http://dx.doi.org/10.1348/0963179041752646

Gerard, J. Disadvantages of Rewarding Employees With Gifts. Smallbusiness.chron.com. Retrieved 2 January 2017, from http://smallbusiness.chron.com/disadvantages-rewarding-employees-gifts-24166.html

Gilbreath, B. & Harris, M. (2002). Performance-based pay in the workplace: Magic potion or malevolent poison?. The Behavior Analyst Today, 3(3), 311-322. http://dx.doi.org/10.1037/h0099987

Hamel, G. Negatives of Motivating Employees With Financial Rewards. Smallbusiness.chron.com. Retrieved 2 January 2017, from http://smallbusiness.chron.com/negatives-motivating-employees-financial-rewards-37782.html

Jiang, Z., Xiao, Q., Qi, H., & Xiao, L. (2009). Total Reward Strategy: A Human Resources Management Strategy Going with the Trend of the Times. International Journal Of Business And Management, 4(11), 177. http://dx.doi.org/10.5539/ijbm.v4n11p177

Kohn, A. (1993). Why incentive plans cannot work. Harvard Business Review, 71(5). Retrieved from https://hbr.org/1993/09/why-incentive-plans-cannot-work

Lawler III, E. (1982). The strategic design of reward systems. University of Southern California, Los Angeles: Center for Effective Organizations. Retrieved from https://ceo.usc.edu/files/2016/09/1982_11-g82_11-Strategic_Designs_of_Reward_Systems.pdf

Lawler III, E. (2015). Performance Management: The Three Important Features You're Forgetting. Forbes.com. Retrieved 9 January 2017, from http://www.forbes.com/sites/edwardlawler/2015/04/15/performance-management-yet-another/#18189a6d6490

Shiyamala, S. (2012). Performance Management - Linking Reward To Performance. MBA Skool-Study.Learn.Share.. Retrieved 9 January 2017, from http://www.mbaskool.com/business-articles/human-resource/5260-performance-management-linking-reward-to-performance.html

Slideshare.net,. (2013). Reward motivational theories. Slideshare.net. Retrieved 8 December 2016, from http://www.slideshare.net/devz1235/reward-motivational-theories

Smith, D. & Shields, J. (2013). Factors Related to Social Service Workers' Job Satisfaction: Revisiting Herzberg's Motivation to Work. Administration In Social Work, 37(2), 189-198. http://dx.doi.org/10.1080/03643107.2012.673217

The changing face of reward. (2010) (1st ed., pp. 3-33). Los Angeles. Retrieved from https://www.haygroup.com/downloads/ca/misc/global_report_changing_face_of_reward.pdf

Van Eerde, W. & Thierry, H. (1996). Vroom's expectancy models and work-related criteria: A meta-analysis. Journal Of Applied Psychology, 81(5), 575-586. http://dx.doi.org/10.1037//0021-9010.81.5.575

von Bonsdorff, M. (2011). Age-related differences in reward preferences. The International Journal Of Human Resource Management, 22(6), 1262-1276. http://dx.doi.org/10.1080/09585192.2011.559098

What is Employee Performance Management ?. (2013). Peoplestreme.com. Retrieved 10 January 2017, from http://www.peoplestreme.com/what-is-performance-management.shtml

Lawler III, E. (2015). Performance Management: The Three Important Features You're Forgetting. Forbes.com. Retrieved 9 January 2017, from http://www.forbes.com/sites/edwardlawler/2015/04/15/performance-management-yet-another/#18189a6d6490

Lawler III, E. & Mohrman, S. (2003). Pay practices in fortune 1000 corporations. Worldatwork Journal, 12(4), 45-54.

Luthans, F. & Stajkovic, A. (1999). Reinforce for performance: The need to go beyond pay and even rewards.. Academy of Management Perspective. Retrieved 9 January 2017, from http://amp.aom.org/content/13/2/49.short

McLeod, S. (2007). BF Skinner: Operant Conditioning (1st ed., pp. 1-12). Grandville, USA: Simply Psychology.

MSG Experts,. (2017). Performance Management and Reward Practices. Managementstudyguide.com. Retrieved 10 January 2017, from http://www.managementstudyguide.com/performance-management-and-reward-practices.htm

Qikker,. (2008). The Missing Link: Improving your organisation, by linking reward to performance. Wayshrconsulting.com. Retrieved 10 January 2017, from http://www.wayshrconsulting.com/

Riolli-Saltzman, L. & Luthans, F. (2001). After the bubble burst: How small high-tech firms can keep in front of the wave. Academy Of Management Executive, 15(3), 114-124. http://dx.doi.org/10.5465/ame.2001.5229655

Ryan, N. (2013). Reward schemes for employees and management (1st ed.). SA Technical. Retrieved from http://www.accaglobal.com/content/dam/acca/global/PDF-students/2012s/sa_jan13_p5_reward_a.pdf

Introduction

Agenda

Behavioural Theories

“Reward refers to a package of monetary, non-monetary and psychological payments that an organization provides for its employees in exchange for a bundle of valued work-related behaviours”.

Rewards seek to reach organisational goals and fulfill physiological or psychological needs.

(Smith & Shields, 2013)

(Bratton and Gold 2007, 364)

Expectancy Theory

Victor H. Vroom

Employees’ productivity and outcomes at work is based on a number of factors.

personality ,

skills,

knowledge,

experience,

abilities

(Van Eerde & Thierry, 1996)

Behavioural Theories

Types of Rewards

Reward Systems Preferences

Negative Aspects of Reward Systems

Objectives of Reward Systems

Trends in Rewards

Survey: Reward Systems at Work

salary;

security;

supervision;

policies;

administration.

Motivation-Hygiene Theory

Frederick Herzberg

recognising achievements;

giving opportunities for advancement;

ability to feel engaged

in one’s work.

Hygiene factors (extrinsic factors):

help avoid dissatisfaction at work.

Motivation factors (intrinsic factors):

implemented to increase job satisfaction.

(Smith & Shields, 2013)

Performance Management is not a one sided affair!

Rewards

Performance and rewards aim to retain and enhance employee commitment to work.

Performance must be successful in order to receive the reward.

(Qikker, 2008)

(Shiyamala, 2012)

Performance

Division of Work

Maria Azzopardi

Deborah Borg

Kirsten Baldacchino

Romina Briffa

Gabie Calamatta

The introduction and conclusion were written as a group.

The section related to theory was compiled by Romina.

Kirsten and Gabie compiled the section related to types of rewards, objectives and trends.

The survey was created by Maria and Deborah and was then analysed by the entire group.

References were created by Deborah.

Maria was in charge of creating the prezi.

We were all involved in formulating the content concerned.

Hidden benefits that are taken forgranted (such as rebate tickets for airline employees, hotel discounts, favourable bank discounts for bank employees etc...) are a means of motivation leading to better performance and retention or not? What are your views?

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