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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.
Rewards Systems
Survey
Rewards Systems Survey
Results
Conclusion
Employees would not do a better job just because there are incentives.
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.)
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
“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”.
(Smith & Shields, 2013)
(Bratton and Gold 2007, 364)
(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
(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?