Line managers are charged with making reward judgements based on organizational approaches to reward. To do this successfully, reward strategies must conform to psychological incentive theories such as expectancy, process-based, or reinforcement theory. In creating motivation policies, line managers factor principles like valence, fairness, and financial / non-financial company goals in the framework.
Many employers know an actionable approach is one that rigorously engages the employees. This ensures the variety of chosen rewards is valuable, drives performance, and meets the workers’ diverse needs to foster workplace satisfaction.
How Line Managers Make Reward Judgements Based on Organizational Approaches to Reward
Reward approaches are majorly informed by the company’s strategy, its organizational culture, and to a great extent the external labor market. Line managers comply with company approaches to reward by including practices aimed at attracting, motivating, and retaining talent. The following are seven best philosophies on compensation:
1. Budgetary considerations
Line managers must balance the need to reward employees with the available financial budget at the moment of making a reward decision. The organization must afford every reward it proposes without unnecessarily straining the votehead.
2. Market competitiveness
Competitive rewards attract and retain talent, so be aware of the external labor market. Benchmark with competitors and the general market rates. Line managers should strive to either match or outdo business rivals in rewarding their team.
3. Fairness and consistency
Apply the reward criteria consistently and fairly across the team. Avoid biases (be objective) that lead to unfair award perceptions among employees.
4. Performance evaluation
As a line manager, assess employee performance against a constant, predefined, and known criteria – often conjoined with an organization’s productivity objectives.
5.Legal and ethical regulations
Rewards must not only be legally compliant, but also morally justifiable. Companies make reward judgements in strict adherence to existing statutory legislation, for example laws on equal pay.
6. Strategic alignment
All reward decisions must support the strategic goals of an organization. If, for example, innovation is the strategic aim, a business can fashion rewards for creative ideas or the most efficient problem-solving strategy.
7. Non-Financial rewards
Line managers have discretion over non-financial rewards including learning and development opportunities, added leave days, recognition programs, and flexible working arrangements.
Summary
For a reward system to effectively motivate employees and match with the company’s strategic objectives, line managers should consider:
- Perceptions of fairness beyond reproach in both the reward and the determining process.
- The valence of such rewards.
- How well positive productivity ties to the reward.
Further Reading
- Line Managers’ Role in Supporting the People Profession (CIPD).
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