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Motivating and Compensating Employees

1. Identify what information is needed in order to create an appropriate rewards system in an organization.

2. Provide a critical analysis of the way managers communicate their own needs for rewards rather than their employees' needs.

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Interesting questions! Let's take a closer look through discussion, illustrative examples, and links for further research.

1. Identify what information is needed in order to create an appropriate rewards system in an organization.

Human Resources (HR) is normally the function, which helps other parts of the organization create measurement and performance management systems for their operations. All rewards systems are aligned with the organizational goals. Reward systems are like fire, says Rodger Stotz, a management consultant with Maritz Performance Improvement Co. "They can burn you or keep you warm." To keep from getting singed, you need a reward system that is well-designed and that can be measured for effectiveness. Organizations that rise to the challenge of developing and maintaining effective reward management policies have a source of sustained competitive advantage, as key employees are effectively locked into their careers and employment costs are minimized. Thus, a successful reward system should link performance and employee competence with structured packages of compensation and benefits. http://www.pwc.com/cz/eng/about/svcs/hrs/remuneration.html

So, what information do we need?

· Information of current external market total compensation (e.g. develop a system for accessing and maintaining a current understanding of external market total compensation).

· Information on wages, salaries, bonuses and incentives as they relate to various industries, functions and levels of your organization e.g. accomplished through setting and reaching realistic compensation goals, creating realistic and comprehensive job descriptions and effective job evaluations.

· Information on the legal requirements of employee compensation.

· Information on intrinsic reward systems from industry and employee assessments (e.g., encouragement and praise, etc.) (See http://humanresources.about.com/od/leadership/a/leader_reward.htm and http://www.hr.com/servlets/sfs;jsessionid=E4E35A93615FC39C173D8FC80905DE37?s=6YOKkTMAVw39O1vL3b&&t=/Default/gateway&i=1116423256281&b=1116423256281&application=menu&l=0&active=no&ParentID=1119278040705&intro=1&xref=http%3A//www.google.ca/search%3Fq%3Dcompensation+and+reward+system+HR%26hl%3Den%26start%3D30%26sa%3DN)

Rewards must be contingent on performance in order to be powerful. If employees feel their increased performance will not yield the reward or that marginal performance receives the same reward as good performance, they will generally be uninfluenced by the reward. This "line-of-sight" issue is critical to creating a powerful reward plan.

1. BUILD ASSESSMENT INTO SYSTEM DESIGN

Assessment works best when it is part of the original reward-system design, Stotz says. "It has to be incorporated, not an add-on or an afterthought. Generally, in the haste or excitement of a new design, the concept of assessment gets sidelined. It doesn't seem important in the rush of getting things done. However, failure to incorporate it during the design process creates major problems downstream." Any time you're developing a significant new reward initiative, he says, "it requires the design team or project manager to say 'How would we know if this is successful or not?' You set yourself up for failure by not doing an assessment, because you can't justify your reward system and you don't have the database to improve it. Whether it's compensation or non-cash rewards, an assessment is critical." And have the reward and assessment plan in writing. "HR needs to protect itself and the company. One or two years downstream if a new manager or new staff member questions the plan, you have documentation of how you bad agreed on reviewing it. You can ...

Solution Summary

This solution identified information and examples of how to create an appropriate rewards system in an organization. It is also provided a critical analysis of the way managers communicate their own needs for rewards rather than their employees' needs.

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