23 REWARD MANAGEMENT
1 Reward management defined
2 Aims of reward management
3 Reward management processes and activities
4 Reward strategy defined
5 The components of total reward
6 Total reward framework
7 Why have a reward strategy?
8 A structure for reward strategy
9 Reward gap analysis
10 Reward philosophy defined
11 Reward philosophy and principles at B&Q
12 Developing reward strategy
13 Integrated reward strategy in a retail company
REWARD MANAGEMENT DEFINED
Reward management is concerned with the formulation and implementation of
strategies and policies that aim to reward people fairly, equitably and consistently in
accordance with their value to the organization. It deals with the design,
implementation and maintenance of reward processes and practices that are geared
to the improvement of organizational, team and individual performance.
AIMS OF REWARD MANAGEMENT
• Create total reward processes that are based on beliefs about what the
organization values and wants to provide rewards for.
• Reward people for the value they create.
• Align reward practices with both business goals and employee values.
• Reward the right things to convey the right message about what is important in
terms of behaviours and outcomes.
• Facilitate the attraction and retention of the skilled and competent people the
organization needs, thus winning the war for talent.
• Help in the process of motivating people and gaining their commitment and
• Support the development of a performance culture.
• Develop a positive employment relationship and psychological contract.
REWARD MANAGEMENT PROCESSES AND ACTIVITIES
Business/ Reward pay Total Total Improved
HR strategy strategy structure remuneration reward performance
Performance Learning and
REWARD STRATEGY DEFINED
Reward strategy is a declaration of intent, which expresses what the organization
wants to do in the longer term to develop and implement reward policies, practices
and processes that will further the achievement of its business goals and meet the
needs of its stakeholders.
THE COMPONENTS OF TOTAL REWARD
Learning and development
rewards The work experience rewards
Recognition, achievement, growth
TOTAL REWARD FRAMEWORK
• Base pay • Pensions
• Contribution pay • Health care
• Shares/profit sharing • Perks
• Recognition • Flexible benefits
LEARNING AND DEVELOPMENT WORK ENVIRONMENT
• Workplace learning • Core values
• Training • Leadership
• Performance management • Employee voice
• Career development • Job/work design
Adapted from Duncan Brown and Michael RELATIONAL
Armstrong (1999) Paying for Contribution (INTANGIBLE)
WHY HAVE A REWARD STRATEGY?
• Must have some idea where you are going, or how do you know how to get
there, and how do you know when you have arrived (if you ever do)?
• Pay costs are almost always by far the largest item of expense, so doesn’t it
make sense to think about how they should be managed in the longer term?
• There is a positive relationship between rewards and performance, so shouldn’t
we think about how we can strengthen the link?
• Isn’t it a good idea to develop a strategic framework which links reward
processes with HR processes so that they are more coherent and mutually
A STRUCTURE FOR
• a statement of intentions
• a rationale
• a plan
• a definition of guiding principles.
REWARD GAP ANALYSIS
Assess against each of the following headings describing what
should happen, what is happening now and what needs to be done
1. A total reward approach is adopted.
2. Reward policies and practices developed on the basis of a well-articulated reward strategy.
3. An analytical non-discriminatory job evaluation scheme is used.
4. Equal pay issues are given serious attention.
5. Market rates are tracked and pay is competitive.
6. Grade and pay structures are appropriate and constructed logically.
7. Contingent pay schemes reward contribution fairly and operate effectively.
8. Performance management processes contribute to performance improvement.
9. Employee benefit schemes meet the needs of stakeholders and are cost-effective.
10. A flexible benefits scheme is in use.
11. Reward is managed effectively and value for money is obtained.
12. Appropriate use is made of IT to support reward management.
13. Reward management policies are transparent and communicated well.
14. Surveys are used to assess employee opinion about reward.
15. An appropriate amount of responsibility for reward is devolved to line managers.
16. Line managers are capable of carrying out their reward management duties.
17. Line managers are trained and provided with the support and guidance they need.
18. HR has the knowledge and skills required to develop and manage reward.
19. Affordability of reward initiatives and value for money are given constant attention.
20. Reward processes are evaluated to ensure they meet changing needs.
REWARD PHILOSOPHY DEFINED
The set of beliefs that underpin the reward strategy of the organization and govern
the reward policies that determine how reward policies operate.
REWARD PHILOSOPHY AND PRINCIPLES AT B&Q
Reward philosophy Principles
• We will provide an innovative reward
package that is valued by our staff and • Innovative and differentiated policies and
communicated brilliantly to reinforce the benefits.
benefits of working for B&Q plc.
• Basic salaries will be competitive.
• Total compensation will be upper quartile.
• Reward investment will be linked to company • We share the success of B&Q with all our
performance so that staff share in the employees.
success they create and, by going the extra • Increase variable pay as a percentage of
mile, receive above average reward overall to drive company performance.
compared to local competitors. • Pay for performance.
• Performance objectives must have line of
sight for individuals/team.
• Non-cash recognition is a powerful driver of
• All parts of the total reward investment will • Pay can grow without promotion.
add value to the business and reinforce our • Rewards are flexible around individual
core purpose, goals and values. aspirations.
• We will not discriminate on anything other
DEVELOPING REWARD STRATEGY
Analyse business strategy
Develop HR strategy
Analyse present Develop reward Assess needs of
arrangements strategy stakeholders
Consult and Guiding principles Consult,
involve senior involve and
management and Define, justify and communicate
line managers agree intentions: with employees
• total reward
• job evaluation
• grade/pay structure
• contribution pay
INTEGRATED REWARD IN A RETAIL COMPANY
‘Make the work worth it’
What should I be doing?
How should I be doing it?
• roles and accountabilities
• communications and clarification
What’s in it for me? How am I doing?
• base pay How can I grow?
• incentive pay values • learning and
• benefits development
• flexibility • performance
• recognition culture
Reward Performance management