Reward Systems and Compensation

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The response addresses the queries posted in 1565 words with references.

//In any organization rewards system and compensation plays a vital role as these determines the effectiveness of the management system. To know more about Reward Systems and Compensation, it is necessary to understand the components required for effective administration of reward systems. Below are some of components://

Reward Systems and Compensation

Answer 1

The payments made in return for the services rendered by the employees are termed as the rewards. Generally, rewards are given to the employees in financial terms. Rewards are also given to motivate the employees and to stimulate them to work effectively and efficiently. The term rewards include both the material as well as non-material rewards. Rewards are given to the people working in the organization to assure them that their actions are related to the skills and ability to achieve the important long-run goals (Mamoria & Gankar, 2002).

Components required for the effective administration of the reward system are-

* Financial rewards or the direct compensation: These include the basic salary or the wage that an individual is entitled to for his job, overtime work and holiday premium, bonuses based on the performance, profit sharing and opportunities to purchase stock options, etc.

* Non-financial rewards or indirect compensation: These include protection programs (insurance plans, pensions), pay for time not worked, services and perquisites (Human Resources, 2008).

* Intrinsic rewards: These rewards are those that an individual receives for himself. They are generally a result of the job that the worker does. The techniques of job enrichment, shorter work weeks, flexible work hours, project structures and job rotation can offer intrinsic rewards through providing interesting and challenging jobs and allowing the worker greater freedom.

* Extrinsic rewards: These rewards refer to the direct compensation, indirect compensation and non-financial rewards (Mamoria & Gankar, 2002).

The definition of key performance indicators that are identified as a part of job evaluation and relating these indicators with the reward components serves as the basis of performance-based rewards. A performance-based reward system given to employees is the combination of performance measuring system and additional motivational components (Human Resources, 2008).

// Above I discussed about the rewards system. Analysis of rewards system must include methods that used for effectively administering the total rewards systems. In this concern I am providing the description of the methods//

Answer 2 ...