Reward Management

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Table of Contents


1.1.1 Analysis tool for reward management 3

Context of reward environment in Farah Company 5 1.1.2.

Particular impact of business drivers and related factors on reward decisions 6

1.2.1. Inflation 6

Pay setting 7 1.2.2.

Pay structure 7 1.2.3.

Examples of different ways of gathering and presenting reward intelligence. 7


2.1 Importance of equity, fairness, consistency and transparency in terms of how they should underpin reward policies and practices 10

Equality 11 2.1.1.

2.1.2. Fairness 11

Consistency 11 2.1.3.

Transparency 11 2.1.4.

Contribution of both extrinsic and intrinsic rewards to improving employee contribution and sustained organisation performance 12

Intrinsic reward 12 2.2.1.

Extrinsic rewards 13 2.2.2.

How reward policy initiatives and practices are implemented in your chosen organisation 13


3.1 Performance Management 14

Recommended variable pay programs 14


References 16



Reward management is an overall strategy taken up by companies and businesses to make its payment and reward system more effective and efficient. In this case the rewards apply for either monetary or non-monetary items. A proper reward system focuses on recruiting and retaining of talented employees.

    1. 1 Analysis tool for reward management

SWOT and PESTLE are the most reliable tools that can be used in analyzing the reward environment and context in an organisation such as Farah Company. There are varied context on the entertainment industry business environment this is evident due to the Contingency theory taken up in the entertainment industry where Farah Company falls in (Thorpe and Homan 2000).

  • The reward practice adopted by Farah is determined by the appropriate of issues in different circumstances. Thus, the company’s reward management is dependent on the ‘structural factors’ of the company.

  • Different organisation structures in this case influence the way the organisation reward system is carried out. This issue is backed up by Poole and Jenkins (1998) who embassies on the huge impact that structural factors have on an organisations reward system.

  • Farah company reward management system also embraces convergence consequently ensuring that the reward system works perfectly for the organisation despite it either being a private or public company.

  • Organization size is another crucial context in reward management; therefore, Farah being a relatively medium size company, its reward management system depends on convergence. Farah company reward management hence works perfectly whether the organisation is in the public or the private sector.

  • The organisations employee’s skills levels and competencies are the other major influencers of Farah on it taking up reward management.

      1. Context of reward environment in Farah Company

PESTLE and SWOT analysis of the Farah company can therefore be used in effect as an audit tool for the organization’s reward environment. These analyzing tools can be used to deduce information that is used strategically in the organisation’s strategic decision-making process.

  • With the assumption that if Farah can be able to audit its current environment and assess potential changes, it will be better placed than its competitors to respond to changes.

  • Farah embraces the internal and external factors in improving the company’s reward management. In this cased the company conducts internal company survey to come up with essential data and feedback especially on compensation, benefits, engagement activities.

  • On the other hand the company also has a bi-monthly strategy meeting which focuses on listening to the employee’s feedback and opinions. In this meeting the employees are given a chance to raise their concerns which are addressed in the second meeting in that month.

  • The other internal factor considered by the company in order to foster its reward management is carrying out of turnover repots and exit interviews.

  • These measures are taken up to point put at the reason behind their exit from the company and the reason why they have chosen to shift to another competitor company.

  • Farah has also used the external factors in fostering its reward management system. In this case the company frequently uses the services of external consultants such as Mercer and Hays in the collection of compensation and benefits data.

  • On the other hand the company bi-annually uses the services of another external party that is an expertise in collection of compensation and benefits data of competitors companies which are compared to Farah’s.

  • The evident context in Farah company’s reward management entails; regional variation, legislation, occupational classification and work-life balance.

    1. Particular impact of business drivers and related factors on reward decisions

1.2.1. Inflation

Inflation is one significant business driver that impacts the reward decision. Inflation therefore forces a company to take up required measure in order to avoid cost-price squeeze. On the other hand inflation in most cases dictates the reward systems to be implemented by a company in order to ensure that it is run smoothly and it also makes a profit.

  • In line with this inflation forces a company to take up reward decisions which focus on prices ahead of costs.

  • Inflation on the other hand dictates the rewards system of an organisation or company to be dependent on the logical cost rather that an individual output.

  • . (Tatenda and Moment 2014)This therefore means that the organisation decisions trend to value individuals output less and highly view the market rewarding standards which are set by logical cost

  • Due to the price uncertainties brought about by inflation organisation decision makers are forced to be more cautions with decision that relate to organisation cost. This has led to more organisations shying away from taking up reward systems due to the more expenses that the organisation would incur.

      1. Pay setting

Pay setting is the other business driver that impacts on the reward decision. For instance pay setting ensures that the company’s reward system is aligned with its cultures and policies (Scheuer 2013).

  • Pay setting also ensures that the organisation reward decisions are emphasized to ensure that the reward system is stable overtime.

  • Pay setting also ensures that the reward decision focus more on promoting the total reward approach which should cut across the entire organisation.

  • For instance Farah reward system ensures that it covers the front line colleagues to the level seven workers this helps the company stay on course with its reward system.

  • Farah Company engages its line managers to implement its reward system which is easier and effective.

      1. Pay structure

Pay structure is the other business driver that impacts on the reward decision. The metrics which an organisation is run on are the foundations of an effective payment system. Some of these metrics which creates effective pay systems includes pay increase, actual salary, behavioral competency, performance rating and budget allocation.

    1. Examples of different ways of gathering and presenting reward intelligence.

The main challenge in generating an effective and sustaining reward system is the ability to combine information from multiple sources then combining these sources into a meaningful context.

  • The first step of identifying a source for a reward system is to identify the solid source of this reward system the second step entails retrieving of data from this source followed by displaying of this data.

  • The first way of data gathering in presenting reward intelligence is survey. This is an accurate method of data gathering where data is looked at in a more comprehensive manner.

  • Survey as a data gathering tool entails; telephone interviews, in-person interviews and mail or online questionnaires. Surveys in this case can collect both quantitative and qualitative data. This data gathering method is not feasible since an individual can collect data on the characteristics of the participants and their response to questions.

  • On the other hand some aspects of probability can be employed since survey as a method of gathering data is relatively inaccurate since it can either be carried out on random participants or selected ones.

  • In line with this Farah conducts bi-annual employee engagement surveys. This survey is essential for the company since it enables the company to get feedback on the company’s compensation and benefits.

  • The feedback collected in these two surveys conducted in the company is reviewed in the strategic meeting carried out annually.

  • The other method used by Farah Company in gathering and presenting reward intelligence is using external consultants in data collection. In this case the company outsources the data collection services where external consultancy companies such as Mercer and Hays are contracted to carryout data collection concerning compensation and benefits and the employees though concerning the current rates on the same.

  • This gives the company vital information on what the employees think concerning their compensation and benefits rat6es and whether they should review them or not.


. (Li, Yin and Xi 2011)For over a decade total reward system has been a crucial metrics in Human Resource managements of both companies and businesses. However for the past decade many organisations have focused more on discussing total reward principle rather than implementing it in the organisation operations. However with the current global shortage in talented workforce and workers with critical skill more organisations have been forced to adopt the total reward principle

  • Total reward has been a growing Human Resource trend especially in the Latin America and Asia continent.

  • . (Kerr and Slocum 2005)Workforce programs have been developed to embrace total reward principles due to the current surge in interest of retaining skillful and talented employees in organisations. Organisations have discovered that acquiring talented and savvy employers will require some aspects of compelling

  • This can be perfectly carried out through coming up with incentive payment systems where these individuals feel important and appreciated therefore in the long end the end up remaining in a particular organisation.

  • The organisations Human Resource departments are therefore critical on the employee’s value propositions.

  • Total reward is a strategic reward system that is based on the implementation of long-term reward policies and practices.

  • These reward policies focus on organisations objectives and goals and the organisation employees aligning aspiration with those of the organisation.

  • The total reward principle encompasses employee’s development of opportunities and learning. In this case Farah has invested a lot in cutting edge training programs and also implementing better pay and benefits package (Kerr and Rifkin 2009).

  • This ensures that Farah is that it retains and engages their talented staffs best placed are met to ensure that the company’s business objective is achieved.

  • Farah company reward management is built on solid policies which fosters the company’s ability to retain its most important employees.

  • The policies which Farah Company’s reward system is built on entail fixed pay, variable pay, benefits, work-life environment and personal growth and development.

2.1 Importance of equity, fairness, consistency and transparency in terms of how they should underpin reward policies and practices

Organisation reward policies are quite sensitive therefore an organisation should strive to balance betweenequality, fairness, consistency and transparency. The organisation Human resource departments therefore are tasked with ensuring that an organisations reward systems incorporates these aspects.

      1. Equality

This is a policy that is required to be implemented in organisations reward policies. This particular policy focuses on equal opportunities to be provided to the organisation employees. The organisations Human resource department therefore ought to treat all the employees equally despite their race, ethnic group, sexual orientation, gender or disability. Therefore the organisation employees have a right for equal pay, same or broadly similar work (Fujita et al. 2011).

2.1.2. Fairness

Fairness in treating employees is critical since it defines how employees feel about the organisation and their willingness to perform effectively on their allocated tasks. The organisation Human Resource management is therefore pushed to embrace fairness during the creation of the reward policies. Fairness in this case boosts the employee’s satisfaction in the company they are working for as it also boost their working attitude, commitment and behavior such as absenteeism and individual performance.

      1. Consistency

In order to ensure that the organisations retain its talented employees it has to embrace consistency (Ferner and Almond 2012). An organisation reward management system has to be founded on the basis of consistency in order for it to be effective. Consistency in this case ensures that the policies and practices set for the reward system are followed.

      1. Transparency

Organisations have to embrace an aspect of transparency in order to build trust from its employees. Transparency in this case ensures that the employees can confidently forward their concerns and challenges to the organisation management with hope that these challenges will be addressed.

    1. Contribution of both extrinsic and intrinsic rewards to improving employee contribution and sustained organisation performance

Rewards can be defined as benefits provided by the employers these rewards can either be usually promotion and benefits or money. On the other hand these two forms of reward can be categorized as intrinsic or extrinsic rewards.

      1. Intrinsic reward

An intrinsic reward can be defined as an intangible award of recognition. This is a award that holds a conscious satisfaction or a sense of achievement. For instance it fosters the sense of knowledge that a person has done something right. Intrinsic rewards therefore are intangible and often rise from within a person.

  • Intrinsic reward in this case, entails a sense of achievement and taking pride of a job (Došenović 2016). Intrinsic rewards are essential for an organisation since they help it in reducing the labour cost. In this case intrinsically motivated employees save the organisation time that would have been spent in intrinsically motivating its employees.

  • On the other hand an intrinsically motivated employee ensures that a company does not have to employ more managers in its operation therefore saving on the labor cost.

  • Intrinsically motivated employees are also self-driven and are also self motivated to solve problems on their own with minimal supervision. Intrinsically motivated employees are also motivated to face challenges which post their productivity.

      1. Extrinsic rewards

Extrinsic rewards on the other hand are defined physical awards which are derived from external sources. However extrinsic rewards could be Extrinsic rewards at times. Extrinsic awards are therefore relatable to job performance.

  • . (Dorin, n.d.)Extrinsic motivation allows greater degree of control over organisations operational processes. Therefore the organisations employee will need close supervision in order to maintain their high performance

  • This therefore calls for close supervision which ensures that the organisation is run effectively with its operation practices closely supervised.

      1. How reward policy initiatives and practices are implemented in your chosen organisation

Farah Company took up new organisation strategies which were in line with the company’s goal to improve its entertainment services in U.A.E. The company therefore decided to take up non-monetary reward systems and a flexible work schedule.

  • Farah therefore implements a incentive plan that was based on the corporate performance. This incentive plan included; job promotion, tokens, bonuses and pay rise which were later added in the company’s reward system.

  • Farah also recently introduced skill based pay where it has blended both monetary and non-monetary reward systems. This has fostered the employee’s loyalty, improved performance and workforce morale (Cavazos-Cadena, Montes-De-Oca and Sladký 2015). The company’s reward policy also ensures that they align with the employee’s interest in the company’s goals.


Line managers have constantly been overlooking in the course of creating organisation reward programs. It is now a common trend that most reward systems developed by organisations are falling flat due to poor implementation strategies. Line managers in this case serve as the organisations face and channel which these organisation execute their reward systems through. Line managers contribute to an organisation’s decision –making through;

3.1 Performance Management

The role of Line manager’s in an organisation decision making is through performance management. However this role is substantial. Line managers are the center of an organisation performance management and are tasked with coordinating the organisation performance. Line managers in this case ensure that the organisations employees are allocated their tasks and what need to be done for the organisation to succeed.

    1. Recommended variable pay programs

The other way in which line-managers contribute towards an organisation reward policy is through recommendation of variable pay programs for the organisation (Armstrong and Stephens 2005).Line manager in this case determine the reward system that an organisation will take up since their recommendation are highly prioritized.


As evidently seen an organisation reward system defines the organisations employees output. An organisations reward system is therefore a critical issue in any organisation and it should be chosen carefully due to the sensitivity it carries. On the other hand an organisations reward system is dictated by some drivers and factors which impact on a business. In line with this reward intelligence should be embraces while choosing an organisations reward system in order to ensure that it is fitting and self-sustaining for the organisation.The organisation reward system should be founded on key policies and practices which should also align with the organisations goals.


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Dinç, E. organisation2015organisation. Perceived Organisational Support as a Mediator of the Relationship between Effort-Reward Fairness, Affective Commitment, and Intention to Leave. IBR, 8organisation4organisation.

Došenović, D. organisation2016organisation. Employee Reward Systems in Organisations. ECONOMICS, 4organisation1organisation.

Ferner, A. and Almond, P. organisation2012organisation. Performance and reward practices in foreign multinationals in the UK. Human Resource Management Journal, 23organisation3organisation, pp.241-261.

Fujita, K., Nishino, N., Sato, Y., Ueda, K. and Asama, H. organisation2011organisation. Analysis of Reward Programs in Membership Services Using Agent-based Simulation. Transactions of the Japanese Society for Artificial Intelligence, 26, pp.190-198.

Kerr, J. and Slocum, J. organisation2005organisation. Managing corporate culture through reward systems. Academy of Management Executive, 19organisation4organisation, pp.130-138.

Kerr, S. and Rifkin, G. organisation2009organisation. Reward systems. Boston, Mass.: Harvard Business School Press.

Li, Y., Yin, B. and Xi, H. (2011). Finding optimal memoryless policies of POMDPs under the expected average reward criterion. European Journal of Operational Research, 211(3), pp.556-567.

Scheuer, S. (2013). The Equity-Equality Conflict—Dilemmas in the Management of Reward Systems. Journal of Management and Sustainability, 3(3).

Tatenda, N. and Moment, B. (2014). Factors Impacting on Reward Systems: A Comparative Study between Public and Private Universities in Zimbabwe. JSD, 7(5).

Thorpe, R. and Homan, G. (2000). Strategic reward systems. Harlow, England: Financial Times/Prentice Hall.