Reward and Compensation Management: Linkage with Strategy

The report provides an insight into reward and compensation management from the point of a consultant. The report focuses on the link between the reward management and strategy and the objectives and principles of reward management.

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Human Resource Management
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Introduction:
The report provides an insight into reward and compensation management from the
point of a consultant. The report focuses on the link between the reward management and
strategy and the objectives and principles of reward management.
Discussion:
How Does Reward Management Link with Strategy
The linkage between the reward management and strategy can be described by the
identification of quantifiable business goals. Here linkage is drawn by dividing the vision of
the company into measurable goals. In this step the goals for the upcoming years are not only
identified but measures adopted in achieving the goals (Shields et al., 2015). Here the levers
to be pulled are also identified thereby creating a value for the company. In driving the
alignment across all organizational level the alignment takes place by involving employee
population towards the goals of the company. It is however necessary for the employees to
understand what they need to do differently. Here it is also necessary to innovate and create
value from same resources at the disposal. While determining the level of equity in target
setting the linkage is drawn by determining the acceptable performance levels with the
identification of the goals. This can be done through incorporation of structured system based
on data that helps in setting the targets at all the levels thereby establishing equity in the
target setting. The equity of targets acts as a crucial factors in maintaining optimum degree of
the stretch across organization while maintaining the focus of everyone towards the goals.
To draw the linkage it is also necessary to not underestimating the intangibles. Here
the link is drawn by paying attention towards the intangible part or the emotional part of the
reward management. The intangible part is much heavier compared to the tangible part or the
monetary part. Thus, it is important to view reward as total reward that not only includes the

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allowances and the basic salary but also the bonuses, benefits, retirals and the stock options.
The robust nature of the supporting process and environment depends on certain factors
responsible for creating a linkage lies in the process that helps and supports in delivering
reward strategy. These factors include, the performance management system, the
organizational structures, the roles played by the employees and their behaviour. There is also
the involvement of the top management where the link between the reward management and
strategy also depends on the level of involvement of the top management. The top
management can ensure an involvement through communication. This implies reinforcing the
business goals of the company through on going public communication. This would make the
employees aware about the company’s future direction (Wheelen et al., 2017). Leaders must
act as the role models and possess the desired behaviour necessary for the success of the
business. They should ensure demonstrating the values of the company on day to day basis. It
is also vital for the top management for driving the process and this involves aligning the
reward management with business strategy with support from the HR. The top management
should also ensure that they must visibly and appropriately address deviations or any
exceptions towards the process by being gatekeepers to the process. .
Types of Rewards
In Intrinsic and extrinsic rewards, the intrinsic rewards refer to the satisfaction that the
individuals obtain from job. They refer to the self actualization and needs of employees
(Gerhart & Fang, 2015). The satisfaction refers to the self-initiated reward fulfilled internally
by employees. These rewards refer to the feeling of accomplishment or being part of the
team. Extrinsic rewards refer to the external benefits. These are rewards in terms of fringe
benefits and money (Gupta & Shaw, 2014). They help in fulfilling the safety and
psychological needs of employees.

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Then there is, non-financial and financial rewards where the non-financial rewards
refer to the employee benefits that do not enhance the financial well being of the employee
(Schlechter, Thompson & Bussin, 2015). These rewards includes, preferred furnishing an
lunch, parking space allotment, business cards, personal secretary and the desired
assignments for work. While the financial rewards refers to the indirect and direct payment
that enhances the well being of the employees (Hofmans, De Gieter & Pepermans, 2013).
These includes, commissions, wages, salary, bonus, allowance, incentive, medical insurance,
pensions, paid sick leaves, discounts and purchasers.
On the other hand, in membership based and performance based reward membership
based rewards refers to the ones paid based on being the member of the organization
(Costanza & Finkelstein, 2015). Here the basis of allocation of rewards depends on the
organizational membership. This is a reward that is meant for all employees irrespective of
the performance. The performance based rewards on the other hand are the benefits provided
based on the performance ability of the employee job (Presslee, Vance & Webb, 2013). Here
the rewards get exemplified through incentive systems, commissions, group bonus and pay
plans based on merit.
Conclusion:
On a concluding note, one can say that linkage of the reward management to the
strategy determines business success. The report also showcases various types of rewards for
enhancing employee motivation.

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References:
Costanza, D. P., & Finkelstein, L. M. (2015). Generationally based differences in the
workplace: Is there a there there?. Industrial and Organizational Psychology, 8(3), 308-
323.
Gerhart, B., & Fang, M. (2015). Pay, intrinsic motivation, extrinsic motivation, performance,
and creativity in the workplace: Revisiting long-held beliefs.
Gupta, N., & Shaw, J. D. (2014). Employee compensation: The neglected area of HRM
research. Human Resource Management Review, 24(1), 1-4.
Hofmans, J., De Gieter, S., & Pepermans, R. (2013). Individual differences in the relationship
between satisfaction with job rewards and job satisfaction. Journal of vocational
behavior, 82(1), 1-9.
Presslee, A., Vance, T. W., & Webb, R. A. (2013). The effects of reward type on employee
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1831.
Schlechter, A., Thompson, N. C., & Bussin, M. (2015). Attractiveness of non-financial
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