Developing an organization’s reward package needs strategic approaches based on key internal drivers and external labor market insights. These key indicators signal that a company needs to implement a rewards system:
- A decline in productivity and employee morale.
- High employee turnover.
- Post-project slumps in momentum.
- Strategic business changes such as mergers, acquisitions, or a shift in business focus.
- Evidence from scheduled review.
When formulating a rewards system, consider the following external factors:
- Politics and government.
- The prevailing economic situation.
- What the competition in your sector is offering.
- Trends in the labor market.
Developing a Rewards System
The answers to the questions below help HR to highlight major considerations during design, implementation, and evaluation of a rewards system.
Question: What are the most effective types of rewards for the organization?
Answer: Total rewards are the best.
Question: How often should you reward employees?
Answer: Be consistent enough to keep the motivation, but not so frequent that rewards lose significance. Spontaneous, unexpected and non-routine rewards for exceptional performance are very motivating.
Question: How can HR ensure fairness in rewarding?
Answer: Clearly define the criteria for earning rewards. Communicate the standards to all employees. Use measurable performance indicators and to maintain objectivity.
Question: How can central management measure the impact of a reward system?
Answer: Track key performance indicators (KPIs). Gather data from job satisfaction surveys, employee turnover, and quality of work to evaluate employee productivity. Adjust the reward system to optimize worker effectiveness.
A Step-by-step Approach to Formulate a Rewards System
First, review the existing rewards system (salaries, bonuses, benefits and the intangibles).
Secondly, define the rewards using the company objectives. Determine what you hope to achieve with the reward system, such as promoting specific behaviors that match certain company values.
Third, engage the employees to know the most beneficial rewards. Establish a reward criteria by choosing the behavior and performance level that qualify for a reward.
After selecting the best mix of monetary and non-financial rewards, choose among the employees a respected, motivated team member to communicate the program.
You can now roll out the live program, but in phases. You may consider piloting the system, then gather feedback, adjust accordingly, then implement it for success.
Remember to monitor, regularly review, adapt, and update the program to make it more engaging and fresh.
Examples of Reward Systems for Employees
Below are examples of creative reward systems:
i) Monetary rewards, including performance bonuses, profit sharing plans, or stock options.
ii) Recognition rewards such as “success sandwiches” during general staff meetings. Employers can leverage digital technology by using recognition softwares such as Bucketlist Rewards.
iii) Offering professional development platforms. These include: fully sponsored educational scholarships and professional conference sponsorships.
iv) Quality of life enticements such as flexible working hours or enrollment in wellness programs.
v) Experiential rewards and team building activities. Organize annual company retreats and gala nights.
Conclusion
Employers must ensure that their rewards system is creative and unique to their workforce. A well-structured program significantly promotes productivity and a positive workplace culture. Always remember any successful rewards system responds to employee needs, is clearly known, and ensures fairness in implementation.
With careful planning and execution, rewards are powerful tools to increase employee morale, improve retention rates, and to drive an organization towards success through efficient productivity.
References
Strategic & Total Reward Factsheets – CIPD
Factors Impacting on Reward Systems: A Comparative Study between Public and Private Universities in Zimbabwe (Publication).
Reward Schemes for Employees and Management
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