REWARD MANAGEMENT

Reward management

During my recent discussion with the senior management   it has been observed that all employees were receiving the same annual increment despite their performance and contributions made to the organization. Performance evaluations are conducted to ensure that employees have aligned their objectives to the organizational vision and mission and to understand each employee’s contribution and rate them accordingly. It outlines the behavior  and skills expected in return from the employee (Armstrong, 2012, p. 322) for the extrinsic rewards given by the employer Motivation theory is one of the most important theories in Human Resource Management (HRM). It explains what organizations can do to encourage people to apply their efforts and abilities in ways that will further the achievement of the organization’s goals as well as satisfying their own needs (Armstrong, 2001, p. 155). There are a number of methods to motivate people such as rewards, punishments, actions to satisfy needs, psychological processes, etc. 

Reward management defined-    Reward management is concerned with the formulation and implementation of strategies and policies in order to reward people fairly, equitably and consistently in accordance with their value to the organization. It deals with the development of reward strategies and the design, implementation and maintenance of reward systems (reward processes, practices and procedures) which aim to meet the needs of both the organization and its stakeholders. Reward can be regarded as the fundamental expression of the employment relationship. Annual reviews provide managers what each employee has achieved and contributed to the overall organization’s performance. During such annual reviews, the organization may discover the outputs each employee may have contributed. Some may have contributed well and some may not have contributed at all. Hence it is necessary to ensure that organizations provide annual increment according to the performance grade or contributions made to achieve overall common objectives.  (Armstrong’s Hand Book 2017)

Literature – Equity Theory



When organizations fail to address pay equity for the value employees contribute to the performance, high performing employees will be demotivated and can feel they are being rewarded unfairly for the contributions they make. Which further can lead for high performing employees to perform similar as a low performing employee as annual increment despite the performance will be the same as people value fair treatment to be motivated (Yourcoach, n.d). Equity Theory in business introduces the concept of social comparison, whereby employer evaluate an employee’s input/output ratios based on their comparison with the input/outcome ratios of other employees in the same domain. As the Accorhotels organization has failed to address such, which could of lead to serious demotivation of the high performing employees. It was first developed in 1960 by J. Stacy Adams who asserted that employees seek equity the input and output to another employee (Wikipedia, 2004). Employees will always adjust the input to receive the similar output when socially compared (Management, n.d).

Purpose

The purpose of this concept is to ensure that annual increments are granted to each employee according to the contributions they have made. This outlines and motivates employees who perform better than other as the rewards are extrinsic. When organization does not pay according to the performances and continuous to pay each employee the same increment despite the contributions and performance grade achieved, this can lead to serious demotivation for the high performing employees as pay equity will be the same despite different contributions made by different employees. Equal increments should be rewarded to the equal values employees make to the orgazanisation. (Commsion, n.d).  1. Treat employees fairly and reward according to the performance grades achieved as per the final performance evaluation result.



Outcome



Implementing such policies and procedures where equity theory is applied, the high performing employees will continue to perform even better when their annual increment is better than compared with other employee who has a lesser input. 1. High performing employees will further exceed their performance. 2. Organization will have a motivated team. 3. Employees feel valued and recognized the efforts made and increase job satisfaction. 4. Employee will have justice and fairness for the amount of work done and compensation received. 5. Organization will minimize meaningless rewards. 6. Direct cost reduction on the organization expenses. 7. Employees will have higher satisfaction and increase retention. 8. Motivation for the low performing employees to perform better to achieve higher rewards. 9. Overall organization performance to be increased if effective policies and procedures are in place. 

As highlighted above, it will be necessary to implement annual increment as per the performance each employee has made. Organizations are required to ensure the rewards management has proper, effective and meaningful policies and procedures to achieve organization mission by placing effective business strategies which are beneficial for both employee and the employer.



Reference



 Armstrong, M. (2017). Armstrong's Handbook of Human Resource Management Practice (12th Edition ed.). London: Kogan Page Limited.

Commsion, P. E. (n.d). Pay Equity and Equal Pay: What is the Difference? Retrieved from PayEquity: http://www.payequity.gov.on.ca/en/AboutUs/Pages/the_difference.aspx

Management, E. P. (n.d). Equity Theory – Keeping Employees Motivated. Retrieved from

www.esportprogrammanagement.com: https://expertprogrammanagement.com/2017/06/equity-theory/

Wikipedia. (2004, 04 15). Equity theory. Retrieved from Wikipedia: https://en.wikipedia.org/wiki/Equity_theory

https://www.youtube.com/watch?v=hTh3b305Nv8

https://www.youtube.com/watch?v=2p_4C0Mzne4