Effective Reward System: Designing and Implementation

This article discusses the importance of an effective reward system for motivating employees and encouraging them to work harder. It covers the types of rewards, pay structure, and factors to consider in designing and implementing a reward system for Cheesy Pizza Company. The article also highlights the benefits of a good reward system, such as employee retention and avoiding discrimination.

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ective Reward SystemE
Designing and implementation of reward system
Students ameN
1/1/2018

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Contents
Introduction................................................................................................................................2
To motivate the employees there are various types of reward system which includes:............3
Reasons to pay attention to the reward system..........................................................................4
Pay structure...............................................................................................................................5
Types of pay structure................................................................................................................6
Factors in designing the reward system.....................................................................................7
Factors in the implementation of the reward system.................................................................9
Conclusion................................................................................................................................12

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Introduction
Cheesy Pizza Company started with the idea to deliver good food with the use of simple
ingredients. It includes the sauces of all the households and the daily made dough and
mozzarella. The mission of the company is to lead the food chain in every country and
deliver a valuable experience to its customers. The current mission of the company is to open
10 chains in Hong Kong and Singapore by the year 2018. The company delivers a wide range
of cheesy pizza keeping the traditional taste as a priority. It delivers pastries, Choco lava
cakes to enhance the customer experience and make it a memorable one. The organization
has a mere focus on delivering values of giving best in less and creating a working
environment in which all the employees are coordinated towards achieving the mission of the
company. In order to achieve the current vision, the company must establish an appropriate
compensation strategy that will help in motivating and encouraging the workforce towards
the goal of the organization (Armstrong, 2012).
Reward system refers to the allocation of compensation and benefits to the employees that
follow the standards, rules and the procedures established. The establishment of a proper
reward system helps in motivating the employees and encourages them to work harder. The
employees are motivated by rewarding them the financial and non-financial incentives. The
aim of providing the reward system to employees is to motivate them for higher performance
by providing appreciation, which leads to an increase in the productivity of the firm. It is also
used to improve the behavior of the employees towards the organization and leads to
coordination of efforts towards the accomplishment of organizational objectives (Armstrong,
Brown and Reilly, 2010).
The objective of developing an appropriate compensation plan is to retain and recruit the
qualified personnel, which will help in increasing the return on investment and develop a

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competitive advantage in the competitive environment. Development of an appropriate
compensation plan helps to motivate and encourage the employees as they feel satisfied and
are more committed towards the achievement of organizational goals. Effective
compensation plan depicts that the organization value the worth of the employees and are
involved in the development of personal growth of the employees (Pepper, 2016).
To motivate the employees there are various types of reward system which
includes:
 Intrinsic and extrinsic reward
Intrinsic rewards are those, which are felt by the employee itself and cannot be seen or
touch. It includes the development of challenging job for the employees and providing
them with the opportunity of career development. It includes creating of a flexible
working environment and job rotation and job enrichment while extrinsic rewards are
the one, which is provided by the organization in the form of salary, wage, bonus,
recognition, praise, promotion, and certificate of appreciation (HRMP, 2018).
 Financial and non-financial rewards
Cheesy Pizza Company should provide the financial reward in the form of salary,
wages, paid leave, gratuity, pension, accommodation, and transport allowance. It must
also provide the non-financial benefits in the form of creation of a working
environment, which provides rest and lunchtime to the employees, Involvement of
sports activities for the employees, attractive position, and responsibility of choice,
personal assistance and sufficient leave to keep the employees motivated and develop
the zeal to provide higher performance (Small business. Chron, 2018).
 Performance-based reward and membership-based reward

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The company must provide a reward based on the performance of the employees.
Higher rewards must be given to the employees who provide higher productivity this
will help in further motivating and leading the performance of the organization in a
positive direction. The company must also provide the membership-based rewards
such as equal growth rate in salary and allowance, equal distribution of bonus and
profit, the opportunity of promotion, grade provision based on the seniority and praise
and recognition to the team or group (Workable, 2018).
Involvement of such types of reward will help the company in motivating and
retaining the employees. Effective performance of employees will, however, leads to
the achievement of the organization goals efficiently and effectively (Workable,
2018).
Reasons to pay attention to the reward system
 Recruitment of the best employees
The organization must update the employee compensation strategy to recruit the best
employees for the company because if the plan will not be according to the expectations of
the employees they will reject the job offer because the employees believe that an appropriate
compensation strategy personifies the value the organization provides to its employees
(Mathis, Jackson and Valentine, 2014).
 Retention of the employees
The employee compensation strategy plays a significant role in the retention of the
employees. Retention of employees is considered as the major threat for the firm because the
cost of training and recruiting the employees is very high. However, to retain and attract the
employees it is important to have a favorable compensation strategy, which would help in

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motivating and encouraging the employees to work efficiently (Mathis, Jackson and
Valentine, 2014).
 Helps in avoiding compensation bias and discrimination
It is observed that the company pays compensation according to gender, race, and age
to avoid such discrimination it is essential to pay attention to the employee
compensation strategy so that all the employees receive fair compensation and does
not lead to dissatisfaction or discouragement among the employees. It ensures that all
the employees receive according to their performance and avoids biases and
discrimination in decision-making (Ji, 2015).
 It helps in reducing absentees
With the help of an effective compensation strategy, the organization can reduce
absentees in the organization, which in turn helps the organization in increasing its
productivity and achieving the objectives of the organization in an efficient manner
(Bradley, 2017).
 Continuously update the compensation strategy plan
The organization must continuously update the compensation strategy plan because it
helps the firm to retain its competitive workforce for the top management and the
organization is able to maintain its competitive advantage over the other firms (HR
Soft, 2018).
Pay structure
Pay structure is also known as salary structure. It is defined as the compensation given to the
employees. It divides the salary into various components based upon the professional
experience or employees, or grades or bands the employees are categorized under. The salary
structures are decided based upon the relative internal value of the employee, which is

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analyzed by job evaluation, the external relatives, via market rate surveys. The main
characteristics of pay structure are that they provide the rate of pay for different jobs; it
depicts the scope for the pay progression via performance, competence, contribution, skill or
service (Ashworthblack, 2018).
Types of pay structure
Traditional pay structure
In this type of structure, there are many narrow salary ranges and multiple grades with
separate structures for each employee of the organization. The structures are based upon the
job functions and the occupations. For each job, structure there may be 10 job grades or 10
salaries ranges. Such type of structures is flexible and has controls. This type of structure
works well in the stable organization and does not provide more power to the managers to
give pay rise (The Hartford, 2018).
Broad banding salaries
In this type of structure, the employees are grouped by the type of job they perform for
example administrative, management, and executive rather than being break down into
multiple ranges within the job type. This structure offers flexibility and has lesser controls
(The Hartford, 2018).
Stepping up
This type of structure is used when internal equity is important and it is difficult to analyze
the difference in job performance. These structures are very rigid and give very little
discretion power to the managers (White and Druker, 2009).

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Market-based salary structures
In this type of structure, the salary is decided based on the analysis of the job market for a
similar type of job. The structure has a range for each distinct type of job. The pay ranges in
this structure are typically narrow to keep them in line with the external job market
(Azcentral, 2018).
Establishment of pay structure in an organization is essential because it provides the
organization with the external market ranges for distinct types of job and allows the
organization to readjust its pay scale according to the external market conditions and helps in
remaining competitive. Due to the online access of the external market, pay scales for
different jobs the employees can analyze the prevailing market ranges and can demand the
same. However, it is important for the organization to update its pay structure according to
the prevailing market conditions and ensures that the employees receive fair pay to motivate
and retain them in the organization (Azcentral, 2018).
Factors in designing the reward system
The cheesy pizza company must develop an effective reward system to motivate and recruit
the quality personnel for the organization who delivers maximum productivity to the
company. In order to set up its business in Singapore and Hong Kong the company has to
consider the following factors so as to retain competent personnel in the organization and
able to develop its market share (Financial Management, 2016).
Individual Factors
In designing the appropriate reward system the company must focus on the individual factors
such as age, race, gender, education because it depends upon the personality of the person
that which type of motivation attracts the person. Some employees get motivated from the

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monetary benefits while such gets encourage from recognition or appraisal in position. The
company must apply the appropriate motivational theory to judge what motivates the
employees more and must consider them (Bizfluent, 2017).
Team size
As it is a forming stage for the cheesy pizza company, the company must consider the size of
the team and must provide the incentives to encourage them and be comfortable with the
working environment of the company (Bizfluent, 2017).
Organizational structure
The organization structure, culture, industry, market majorly affects the organization. In
order to develop its market share in two new countries, the organization must focus on the
culture of Singapore and Hong Kong their preferences, tastes and the expectations of the
customer should be analyzed so the organization can develop its product and can able to
create its brand. The structure of the company helps in attracting the employees for the
organization and must design the favorable reward system for the employees (HR soft, 2017).
Environmental Factors
The economic conditions, regulations imposed by the government and the competitive factors
majorly influence the reward system of the organization. These characteristics help in
governing the reward to be allowed for the team members. The organization must analyze the
retention rate of both the countries and must prepare their reward system accordingly. Such
factors will help in analyzing how to reward the team, the type of incentives to be included
and other motivation factors that will help in encouraging the employee (White and Druker,
2009).
Be specific and consistent

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The company must provide the reward on the specific individual accomplishments. The
company must reward to the employees who have to achieve the grade instead of conducting
the sales contest and then declaring the winner. Such activities create discouragement among
those who are not able to achieve the goal (Bizfluent, 2017).
Reward Behaviours
The company must reward the tangible results to motivate the top performers and must
provide the rewards for maintaining discipline, timely completion of the task. Such rewards
will motivate them to be more committed towards the organization. The company must
provide the reward to the teams who are able to achieve the target and accomplish the goals
of the organization (Bratton and Gold, 2017).
The organization must ensure that their structure of reward system will motivate the
employees of the organization and will include intrinsic and extrinsic motivation factors to
provide recognition and encourage them to be more dedicated towards the goal of the
organization (Bratton and Gold, 2017).
Factors in the implementation of the reward system
For the successful implementation of the reward system in Singapore and Hong Kong, the
company must consider the factors that help in the successful implementation of the reward
system.
Effective communication of the reward system
The company must effectively communicate with all its employees to make them understand
the new reward system and benefits provided to the employees to build the desire among the
employees to work efficiently, must be a good listener to understand the reaction of the

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employees, and can ascertain the demands of the employees (Human Resource Management,
2014).
Approval from the senior manager
It is required to get the approval of the senior manager on the new reward system so that it
can be successfully implemented in the organization and the necessary deviations can be
done at that particular time. Such actions are necessary because the development of reward
requires a large number of resources and time and to avoid the wastage of resources prior
approval is necessary (Greene, 2011).
Training to the line managers
An adequate amount of training should be given the line managers and the human resource
manager to develop the understanding of the benefits to the employees and ensure the
satisfaction of the employees. The line managers will provide the required information to the
employees and will make them understand the benefits of the program (Dragana, 2016).
Monitor and evaluate the feedback
It is important to analyze and monitor the reaction of the employees towards the adoption of
the reward system. The company must collect the feedback of the employees, stakeholders
towards the implementation of the new reward system and must continuously monitor that
there is a proper application of the new reward system (Study.com, 2018).
Involvement of trade union
The company must involve the trade union in the process of implementation of the new
reward system because their support will help the company to incorporate the change and
manage the behavior of the employees towards the new reward system (Dragana, 2016).

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However, the company must ensure that there is a successful implementation of the new
reward system. It must be favorable for all the employees as well as the organization (Greene,
2011).

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Conclusion
From the above discussion, it is concluded that an effective reward system helps in achieving
the organization goals effectively and efficiently. It motivates and encourages the employees
to work efficiently and achieve the large market share. Cheesy Pizza Company focuses on
expanding its market share by developing its market in Singapore and Hong Kong. To attain
its objective the company aims to develop a proper reward system, which will help in
motivating and encouraging the employees and integrating their efforts towards the
organization goals.
It is observed that an effective reward system helps in retaining the employees of the
organization and motivating them to achieve the objectives of the organization. The
organization must carefully design the reward system so that the organization can control the
behavior of the employees and make them understand the change in the reward system. The
reward structure must be designed in such a way that it maximizes the benefits provided to
the employees. In designing appropriate reward system the company must consider the team
size, pay rate among the competitive firms so as to retain the employees and able to recruit
talented employees.
The effective reward system depicts the worth of the employees to the organization. It helps
to recruit the best employees and retain the existing employees who will focus on achieving
maximum efficiency. The organization must ensure that the new reward system is effectively
communicated to all the members of the organization to understand their behavior towards
the change in the reward system.

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