Reward Management

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

Objectives of Reward Management

Support the organisation’s strategy

Recruit & retain

Motivate employees

Internal & external equity

Strengthen psychological contract

Financially sustainable

Comply with legislation

Efficiently administered

Basic Types of Reward

  • Extrinsic rewards

–        satisfy basic needs: survival, security

–        Pay, conditions, treatment

  • Intrinsic rewards

–        satisfy higher needs: esteem,development

Rewards by Individual, Team, Organisation

  • Individual: base pay, incentives, benefits

–        rewards attendance, performance, competence

  • Team

–        team bonus, rewards group cooperation

  • Organisation

–        profit-sharing, shares, gain-sharing

Role of Compensation and Reward in Organization:

Compensation and Reward system plays vital role in a business organization. Since, among four Ms, i.e Men, Material, Machine and Money, Men has been most important factor, it is impossible to imagine a business process without Men.

Land, Labor, Capital and Organization are four major factors of production.

Every factor contributes to the process of production/business. It  expects return from the business process such as Rent is the return expected by the Landlord. similarly Capitalist expects Interest and Organizers i.e Entrepreneur expects profits. The labour expects wages from the process.

It is evident that other factors are in-human factors and as such labour plays vital role in bringing about the process of production/business in motion. The other factors being human, has expectations, emotions, ambitions and egos. Labour therefore expects to have fair share in the business/production process.

Advantages of Fair Compensation System:

Therefore a fair compensation system is a must for every business organization. The fair compensation system will help in the following:

If an ideal compensation system is designed, it will have positive impact on the efficiency and results produced by workmen.

Such system will encourage the normal worker to perform better and achieve the standards fixed.

this system will encourage the process of job evaluation. It will also help in setting up an ideal job evaluation, which will have transparency, and the standards fixing would be more realistic and achievable.

Such a system would be well defined and uniform. It will be apply to all the levels of the organization as a general system.

The system would be simple and flexible so that every worker/recipient would be able to compute his own compensation receivable.

Such system would be easy to implement, so that  it would not penalize the workers for the reasons beyond their control and would not result in exploitation of workers.

It will raise the morale, efficiency and cooperation among the workers. It, being just and fair would provide satisfaction to the workers.

Such system would help management in complying with the various labor acts.

Such system  would also bring about amicable settlement of disputes  between the workmen union and management.

The system would embody itself the principle of equal work equal wages. Encouragement for those who perform better and opportunities for those who wish to excel.

  1. Sanjay Deshpande
    May 16, 2014 at 10:59 am

    This site is contributing outstanding role in HRM of INDIA

  2. Ajiga Vincent
    September 22, 2014 at 1:02 pm


  3. Byron Ssemwanga
    October 10, 2014 at 5:46 pm

    I hope to get the best

  4. Anonymous
    January 14, 2021 at 3:46 pm

    with reward management employees feel motivated hence perform better thereby increasing productivity

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