Question: Strategic Reward Reward strategy concerns the design and implementation of reward policies...

Strategic Reward

Reward strategy concerns the design and implementation of reward policies and practices that support and advance its objectives. All organizations have choices about how to reward employees. Some choose to provide stable basic salaries with predictable annual increases to increase retention and commitment. In contrast, others prefer to vary pay according to the individual or team performance to motivate employees to behave or perform in desirable ways. Some organizations think about reward in a much broader sense — a Total Reward approach that encompasses pay, benefits, development opportunities, and the working environment. Others aim to create a compelling Employee Value Proposition (EVP), a “deal” that underpins the employment relationship by balancing a total reward offering with employee performance. All of these approaches could be described as a strategic reward.

Whether deliberately planned or an emergent response to environmental changes, reward strategies can have profound consequences for employee satisfaction, behavior, and performance. In recognizing that reward can be a powerful lever for change in organizations, managers need to think carefully about the reward choices they make and clearly set out the aims of their reward policies and practices. By being strategic in adopting reward practices that motivate employees to perform in specific ways, organizations can realize their objectives and improve organizational performance.

An organization’s pay and reward structure has often evolved without any overall goal, sometimes allowing bias and unequal pay issues to creep in. However, applying a strategy to your pay and reward can deliver real benefits for the organization, workforce, and business.

We all want to work in an environment where we feel we are truly making a difference, one that encourages us and makes us feel appreciated.

We also want to work with a leader who takes the time to develop and inspire us – recognizing our efforts.

The right reward strategy can help you achieve this for your employees, using benefits, bonuses, and pay to encourage employee loyalty. Motivated staff will go that extra mile to contribute towards the organizational success and better results. A thriving environment will inevitably attract new talent, make existing employees feel rewarded, and help retain your key people.

A reward strategy that reflects your organization’s culture will enable you to achieve your organizational strategy and objectives. Extensive research in the industry has shown that having a defined reward strategy will help organizations attain better financial results than those who choose not to have one.

A good reward strategy will consider more than just pay, so it is important to do more than scour the local press to determine what the market is paying.

Organizations can get just as much, if not more, out of non-financial rewards as from financial ones.

A total reward approach looks at what your organization is trying to achieve, what your people want, what is affordable, and the structures needed to accomplish this.

Some of the basic arguments for having a reward strategy are as follows:

1. Provide a sense of purpose and direction;
2. Integrate reward and HR policies and processes
3. Support the business strategy;
4. Provide guidance for reward system design and implementation; and
5. Align reward processes to business needs.

Question

To what extent do you think an organization can best achieve the listed arguments above and position itself better than its rivals on the market?

Note: You must make a reaction separately on each of the arguments as listed above and NOT as a single essay.