Principles of Reward, Organizational Culture, and Performance Management
Reward principles are broad guidelines that specify how an organization should compensate its employees and recognize them for performance that is on-target or above-target. Fairness is one of the principles of rewards in a company. Fairness causes employees to feel better and have more positive attitudes, which leads to more behavioral alignment with corporate ideals (Shahi et al., 2020). In contrast, unfair treatment during rewarding can be destructive and can lead to disastrous effects on the organization, such as antagonism, mistrust, absenteeism, high turnover, and diminished willingness of employees to support one another in achieving the company’s basic goals.
Another principle that might improve an organization’s performance is flexibility. It suggests that incentives should be personalized to each employee’s unique requirements and preferences (Shahi et al., 2020). This might come in a variety of shapes, such as flexible work schedules, cash incentives, or more opportunity for training and growth. The lead is that the employee has the power to select the benefits that are most appropriate for their particular situation and to decide what is suitable for them. Additionally, each employee has a better chance of being able to meet their unique needs and gain more satisfaction from their rewards.
Organizational culture and performance management are essential in rewarding because they establish the parameters for how rewards are given out and viewed. A positive organizational tradition that promotes growth and creativity is prone to foster employee performance and preservation. Contrarily, an unfavourable organizational culture marked by bureaucracy, hierarchy, or a lack of openness can cause unhappiness, low motivation, and a high turnover rate (Rohim and Budhiasa, 2019). Through the development of a relationship between employees and the organization, performance management aids in fostering a culture of trust and support. Employee engagement is improved when they are aware that their efforts are valued and appreciated.
New Policy Initiatives in Rewards
Every organization has some policy objectives and procedures that each employee is required to abide by. The pay policy must be sufficiently competitive with the external labour market to retain the best personnel for the success and advancement of the organization. It is therefore essential to adopt policies and practices related to rewards in a firm (Anwar and Abdullah, 2021). Home International can incorporate new initiatives and policies regarding rewarding by adhering to a defined approach. They should adopt an approach of evaluating the present reward structure, pinpointing amendment areas, establishing practices and new policies, and clarifying these transformations to the workers. To find areas for improvement, the current reward system must first be evaluated. Employee surveys, focus groups, or interviews can be used to identify the gaps. The assessment’s findings can be used to pinpoint instances where the reward system is inconsistent or where rewards are not in line with company objectives.
New rules and practices can be created once areas for improvement have been determined. Fairness, justice, and consistency must be the guiding principles of reward schemes and policies in organizations. This can require a variety of actions, including the implementation of performance-based pay, flexible work schedules, or non-cash incentives like more training and development opportunities. Communication of the results and effects of the reward schemes is also necessary during implementation. This entails explaining the adjustments’ justification and how they will benefit the organization’s workers. The communication must be timely, open, and specifically targeted to the requirements of the various employee groups (Woodhams and Perkins, 2022). The rules of the incentive policy should be followed, and managers across the entire organization should make decisions consistently to improve execution.
People and Organization Performance on Reward Approach
The biggest asset of every organization is its people, who are responsible for achieving its goals and objectives. Home International’s approaches to rewards are influenced by the relationship between individual and organizational success. High levels of engagement, motivation, and productivity among employees can improve an organization’s success in terms of revenue growth, client happiness, and innovation (Hussain et al., 2019). Similarly, individuals play an essential role in an organization and can act as a competitive advantage in the corporate world. Reward structure can be improvised to lure and hold highly gifted people to the company. As a result, Home International may be able to provide more generous incentives, such as better pay, bonuses, or other benefits.
On the other hand, negative employee performance, such as low motivation, significant absenteeism, or inferior work quality, can have a detrimental effect on organizational performance. Reduced profitability, higher costs, and decreased competitiveness could also result from this. In these circumstances, Home International may need to reevaluate its compensation policy and take into account alternative measures, such as increased training and development, more supervision, or more frequent feedback. Similar to individual performance, organizational performance, including financial health, business expansion, and market share, can influence how awards are administered (Opoku and Duah, 2019). When the organization does well, Home International may be able to offer more generous awards, whereas poor performance may need a more conservative approach to rewards, in order to control costs and maintain financial stability.
Comparison of Benefits by Different Organizations
There are various workers’ benefits, such as profit sharing, bonus schemes, commission schemes, insurance cover, performance linked pay, and share ownership. The value of these benefits depends on the particular requirements and preferences of the employees as well as the culture and objectives of the firm (Nurlaila, 2022). The allowances offered to employees can be categorized into, reimbursements at work, paybacks for monetary stability, reimbursements for health, and lifestyle benefits. Rewards at work may include participation in employee clubs, the development of skills, flexible scheduling and leave, events and presents, as well as food and drink. They have a number of benefits, including raising staff morale, boosting productivity and engagement, and boosting employee dedication to the company.
For instance, Unilever company employs a performance-related pay system, with the amount of additional compensation altering according on the employee’s degree of performance. This system can result in greater productivity and job satisfaction by encouraging individuals to give their best effort. Besides, TESCO, which is a global retail corporation in England, provides its staff with a profit-sharing plan. Grounded on their level of contribution to the company’s performance, employees under this plan are given a portion of the earnings. This plan can enhance motivation and loyalty by helping to match employee interests with those of the organization (Kollmann et al., 2020). It also offers benefits for employees’ financial security, such as pension plans, insurances, bonuses, commissions, and the potential to buy stock within the company.
Extrinsic and Intrinsic Rewards
Extrinsic bonuses comprise of concrete, external incentives, including bonuses, promotions, or pay rises. Contrarily, intrinsic incentives are the immaterial, internal benefits that originate from the person themselves, such as a sense of achievement, personal development, or job satisfaction. Extrinsic rewards and employee motivation and satisfaction are significantly correlated (Malek, Sarin and Haon, 2020). Additionally, when an employee’s basic financial needs are met, their motivation tends to rise, which improves work output. However, employees who believe they are being paid unfairly may get demotivated by money, which may lower their commitment to the success of the organization. Correspondingly, if an employee’s compensation isn’t boosted further after it has climbed for a year; it is more probable that the employee won’t be motivated. This suggests that they might not result in a long-term improvement in organizational performance. However, extrinsic rewards do not create a norm; they only help behaviors align with cultural values.
On the other hand, intrinsic rewards, such as praise and recognition are effective in improving employees’ motivation to work hard. Employees are encouraged to contribute to the success of the business if the organization appreciate their success in completing duties, being recognized for overcoming a problem, and receiving kind and thoughtful treatment (Nurlaila, 2022). The intrinsic incentive model can only be achieved after giving employees the fundamental compensation and benefits they need to excel in their jobs. It is also essential to allow them to concentrate on following their own development paths and contribute positively to the company. The drawback is that since intrinsic motivation is intangible, it is impossible to predict how much motivation an employee will need.
Approaches to Performance Management
Performance management is a procedure that is focused on establishing a high-performance culture and encouraging employee growth and development. It is a crucial part of the reward strategy because it serves as the foundation for incentive decisions (Armstrong, 2021). Performance control can be done in many different ways, including conventional performance review and more creative methods, such as 360-degree feedback or continuous feedback. Conventional operation assessment programs include a formal, yearly or biannual review of an employee’s performance. Clear goals and expectations can be established using this method, and comments on areas that need improvement can be given. However, it might not offer timely or pertinent feedback, and it can be time-consuming and bureaucratic.
The 360 feedback approach entails getting opinions from a variety of people, such as colleagues, bosses, and clients. This strategy can promote a culture of collabouration and feedback while offering a more thorough and objective evaluation of an employee’s performance (Fleenor, 2019). However, it can be difficult to administer and subject to bias or personal motivations. On the other hand, continuous feedback approach comprises of giving staffs regular, ongoing response and mentoring them. This strategy may help to fix problems quickly while encouraging an environment of innovation and growth. It may not offer a clear framework for setting goals and expectations and may be resource-intensive. The organization’s unique requirements and objectives, as well as the preferences and circumstances of certain employees, will determine the performance management strategy that is most effective.
Role of People Practices Professionals
The people practice specialists at Home International can play a crucial part in assisting line managers to make reliable and appropriate renumeration decisions. This could entail giving advice and instruction on incentive policies and procedures, creating structures for performance management, or researching the most effective reward management techniques. Transparency, consistency, fairness, and equity, are the main roles of people practice professionals in ensuring appropriate reward decisions (“CIPD,” 2021). To ensure fairness and equity, all workers should have equal opportunities to rewards grounded on their contribution, rather than discriminative elements such as ethnicity, age, or gender. People practices can aid in employing fair performance management programs that are transparent within the firm.
Furthermore, people practices can promote consistency and steadiness in reward decisions across the company by establishing clear policies and protocols on how renumerations are assessed and issued to workers. Therefore, they can be essential to line managers by offering guidance on how to make transparent and consistent reward judgements. Another critical role of people practices includes promoting reward transparency during reward review. Clarity can be achieved through issuing of befitting communication on the performance management standards, protocols and criteria (Hussain et al., 2019). To make sure the organization has the right people in the right roles at the right time, succession planning processes may be established, talent evaluations may be conducted, opportunities for training and development may be offered, or other measures may be taken.
How Line Managers can make Reward Judgements
Managing employee remuneration presents many difficulties for employers in various organizations. Line managers can formulate incentive decisions based on the organization’s approach to reward by adhering to a concise and honest structure for performance administration and reward decisions (Woodhams and Perkins, 2022). In addition, to support the organization’s strategic goals and adhere to its culture, it is essential that these decisions are made in accordance with the organization’s values and purpose. Creating clear and open performance management procedures is one method line managers may guarantee that incentive decisions reflect the organization’s values and purpose. This entails establishing clear objectives and goals for staff members, giving frequent feedback and coaching, and gauging performance using unbiased standards.
Another crucial consideration by line managers during reward assessment is the necessity to clearly and transparently inform employees of incentive selections. Line Managers should provide employees with the chance to voice their opinions and should explain the thinking behind the decision-making process for rewards. This can promote transparency and trust inside the company and give employees a sense of worth and respect. It is essential to establish a connection between the organization’s values and mission and the various methods and procedures managers will use to determine compensation (Woodhams and Perkins, 2022). For instance, if the company promotes teamwork and innovation, management may decide to reward workers who exhibit these traits in their work.
Reference List
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