Aviva Reward Management: Analyzing Internal & External Factors

This report provides a comprehensive analysis of reward management within an organizational context, focusing on Aviva Insurance as a case study. It explores the internal and external factors that influence performance-related pay and its impact on the reward management system, including labor market conditions, cost of living, job worth, and organizational policies. The report also examines the relationship between Human Capital theory and internal labor markets, evaluating pay structures considering labor market and equity constraints. Furthermore, it critically evaluates the ethical and professional considerations of performance-related pay schemes and analyzes their impact on employees, while also assessing the validity and reliability of market data for analyzing pay structures. The study concludes by highlighting the importance of effective reward systems in motivating employees and enhancing organizational performance.

REWARD MANAGEMENT

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
1. Demonstration of the reward system in an organization which affects both internal and
external factors.............................................................................................................................3
a). Performing the internal and external factors that influence the performance related pay and
its impact on reward management system...................................................................................4
b). The possible relationships between the assumptions of Human Capital theory and internal
labour markets..............................................................................................................................5
2. Explaining approach that critically evaluate pay structure considering labour market and
equity constraints:........................................................................................................................6
3. Critical evaluation of considering the performance regarding pay scheme are ethical and
professional..................................................................................................................................8
4. A) analysing the impact of performance related pay on employees......................................11
B) Critically assessing the factors which identifies the validity and reliability of market data
for analysing the pay structures.................................................................................................13
CONCLUSION..............................................................................................................................14
REFERENCES..............................................................................................................................16

INTRODUCTION
Reward is one of the most beneficial thing for both, employee as well as organization.
Reward are booster that push employee to be more productive in the workplace, almost every
business organization provide financial benefit to their employee allow them to build trust and
show case stability. It is very clear that reward are provided on the basis of performance which
means employee have to be productive enough to grab that reward. Managing reward is quite
challenging for business because monitoring performance of employee and providing reward
accordingly is not easy task.
This study is based on Aviva insurance, this financial company provide wide range of
financial service mainly life insurance. Aviva plc provide effective solution for insurance policy,
investment plans and other non financial service as well. This report will discuss internal and
external factors that impact reward system of the business organization and analyse approaches
that help in understanding labour market and equity constraints (Hoole and Hotz, 2016). Later
this report will evaluate performance pay scheme in ethical and professional manner and
understand executive and expatriate reward system. At last this report will discuss how reward
are different from pay process and analyse impact of performance related pay on the employee.
MAIN BODY
1. Demonstration of the reward system in an organization which affects both internal and
external factors.
Reward system is the process of making the employee feel motivated and courageous by
improving their payroll systems or other reward systems. A good reward system helps the
employee to contribute their best efforts in the company and can be able to lead the organization
at higher level. In research also, it has been studied that an effective reward system make the
company to grow and develop effectively and can be able to obtain the higher productivity. This
system can affect the organization internally and externally as well. The organization named
Aviva insurance who is a multinational insurance company located at London, United Kingdom
obtain the idea or feedback from their employee through the regular survey that they are required
to improve their reward system to motivate and benefit the company at maximum level (Becker,
and Chartoff, 2019). Through this kind of feedback the company is required and considered
enhancing the performance related pay. There are two types of factors which can impact the
reward management of the insurance company.
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a). Performing the internal and external factors that influence the performance related pay and its
impact on reward management system.
External Factors
Labour Market Condition: Nowadays, the labour market condition is required to be considered
by the mentioned organization in the decision-making of the reward system. There is no doubt
that human resource management is including in the employee payroll and reward management
and plays an important role. Employee who have rare skills and abilities but through expertise in
experience obtaining the higher wages and salary with their ordinary skills. The higher supply of
human resource management providing the skilled jobs to the labour market people who are
demanding the higher amount of wages which is not essentially able to provided by the company
because of the financial structure issues (Slemp, Kern, and et.al., 2018). The people who are
highly skilled is not ready to do an employment on low wages and people who are skilled are
ready to get employed by the human resource management due to decrease of employability
rates which directly affects the organizational reward management system.
Cost of living: It has been known that the entire world is growing and developing day by day
with the technology and also raising the cost of the living standard of the people. The cost of
goods and services are raising accordingly country to country and average changes in the daily
necessities took place such as food, clothing, fuel, medical services and such more. The
organization is required to understand and take the decision of the reward system by focusing on
these areas of living of cost.
Internal Factors
Worth of job: The organization is required to adopt the strategy from where they should give the
rewards to the employee by evaluating their worth and performance throughout the year. The
Aviva insurance company has to put focus and measure the employee performance from which
they have to decide their payroll system and reward management process. This internal factor
directly puts the impact on the reward management of the company and makes them to
implement some strategy and ideology for improving it (Mousa, and Othman, 2020). The Aviva
insurance company required to adopt this strategy where they focus on the worth of an employee
and their talent and deliver them effective payroll system which makes them to contribute their
best efforts for the company.

Policy of an organization: With the effective reward and payroll system, the company can be
able to attract the skilled employee in their company and can obtain the better outcome with the
help of their talent and knowledge. The company has a strategy where they had made a policy
where they recruit and retain the employee according to their talent and suitable job positions
and reward them according to their performance.
b). The possible relationships between the assumptions of Human Capital theory and internal
labour markets
The human capital theory is the process adopted by the human resource management of
the company where they put their efforts in training and development of the employee so that
they can be able to understand the process and task accurately. This process makes the employee
to be productive and can also supply the effectiveness in the organization (Jeon, Yoon, and et.al.,
2018). It helps the workers and labour to get productive and educated from which they can be
able to give the effectiveness in the company and also increases the cognitive thinking skill
which can contribute in appropriate manner. The mentioned theory has mainly three elements
which is required to be focused such a time, talent and energy from which the management can
grow and develop the company in faster manner. Their main and role and purpose is to increase
the skill, knowledge, abilities, growth and reduces the poverty.
It enforces the intrinsic talent of the labour market and foster them to deliver the
profitable outcome. Internal labour market is a government unit where the wages and salaries
allocation is set by the administrative by their decision-making. This theory has a possible
relationship with the internal labour market people who get the wages by the set of government
policies and laws. Labour market is the most important part for the company where they
influence the company growth and development by the help of human capital theory process.
The human capital process does not recruit the people of outside and train the internal labour
people who can provide the effectiveness in the company and can obtain the higher productivity
at the definite wages set by the administrative. With the help of good human capital theory
implementation, the mentioned organization also can be able to grow and understand the
effectiveness of the labour market people (Tarigan, Cahya, and et.al., 2022).
Thus, if the economic fluctuation takes place in a particular country then government
have right to modify and change the labour wages according to the economic structure and can
lead the organization to change heir management and payroll system drastically. In general, the
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human capital theory has been identified as important factor in any kind of business where it
helps the employee to get trained and skilled and can be able to provide the better outcome and
productivity in the company. With the help of human capital theory performed in the Aviva
company the labour market can be able to fulfil the gaps of the senior management position and
role where the human resource does not required to recruit the labour of outside environment and
market. These both areas are interconnected with each other where company can get the
profitable result and productivity which also enhances their reputation in the market. In the
previous research, it has been analysed that the combination of these two areas are quite effective
if it is implemented correctly and can lead the company at higher level (Marlina, Setyoningrum,
and et.al., 2021).
2. Explaining approach that critically evaluate pay structure considering labour market and
equity constraints:
Reward are performance enhancer that increase productivity of employee, it is very clear
that company provide reward to employee on the basis their performance. Reward management
is quite challenging because this may cost higher to company and often lead to loss and reduction
of surplus profit of the company. Aviva plc can introduce performance related pay that will allow
them to provide reward according to performance of employee, however this will increase cost
and often impact their budget (Martono, Khoiruddin and Wulansari, 2018). Aviva's need to
analyse labour market, this is one of the most important element that impact reward system of
the company this simply means if there are any changes in the market condition then this will
heavy impact budget as well as stability of the company. When look at labour market condition
of the UK, Aviva have to be careful because this market is growing rapidly and can impact
stability of the company.
On the other hand, (Millman, Gallagher, and et.al., 2020) stated when look at the equity
constraints, Aviva might face conflict in the workplace because dividing equity equally in the
company is challenging. Employee and their performance decide reward they will be getting and
equity that they are up to. Aviva can adopt this system which will allow them to become more
stable, this company can analyse performance of other company or competitor and can craft
policies accordingly. Through analysing competitive strategy to manage reward, this company
can analyse and understand how they lack behind in the process (Mehmood, Ramzan and Akbar,
2016). It is very clear that understanding competitive movement is important when introducing

new system in the business, Aviva need to analyse competitors equity constraint scheme and
policy and need to under how this policy can become beneficial for the company. Both labour
market and equity constraint is one of the most important and major factor that bring down
effectiveness of performance related pay scheme. This reward system will become beneficial for
Aviva plc only if they have ability to craft effective reward system in the process.
The organization named Aviva plc is required to focus on these payroll system areas and
can contribute their best efforts to make their insurance company more profitable. The
organization can be able to evaluate the pay structure of the employee or labour market by
following and implement many ways in accordance. Implementing the performance related pay
is increasing the costing of the reward management which a company has to focus and have to
decrease them as possible. The Aviva plc company is required to adopt the different approaches
of the reward management as the performance management pay is difficult to manage and takes
time to complete the quantitative goals of the company. Thus, the different approach named as
competence related pay in which an organization rewards the employee by focusing on their
knowledge and skills and how they are carrying the effectiveness for the company. The correct
quantified by the management through the employee interview and job analysis can be
performed actively.
The labour market is not much skilled and expertise in their job roles where a company is
taking their advantage and can modify their motivational activity of the payroll system by
implementation of the competence pay management. Another approach is team based pay which
gives the payroll and rewards by the team based working and contribution of the team
performance. The team based pay is considered as an individual person and reward them
accordingly. This approach can be adopted by the company but can create some conflicts
between the employee for the disarrangement of the reward management. Due to this reward
system the company will not be able to make a proper engagement with the employee and create
a little disturbance which obtains the feeling of unsatisfactory. Many companies adopt this
approach but according to the conflicts and disarrangement between the employee the Aviva plc
company not has to required to consider this approach in their organization.
The last approach of reward based pay is contribution related pay which is new concept
(Al Mamun and Fazal, 2018). It is quite complex to manage this contribution reward system as it
is possible that an individual person who is putting their efforts a lot for any project but got a
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minimum amount of reward which will be disappointed for them. An individual person requires
to have and achieve their reward by any areas and a management also can go through some
difficulties in the decision-making process of contributing the reward to the every particular
person as every person has put their efforts and contribution in working. Evaluating the other
three approaches in detailed manner has ensured that competence related pay is beneficial for the
mentioned organization in every area where the employee will be able to get their rewards
accordingly.
This approach encourages the employee in effective manner where they can be able to
enhance their knowledge, skills and expertise. Even, adopting this approach by the company can
be able to motivate the employee in effective manner and an individual employee will also be
able to get feel they deserve what they deliver and can supply the loyalty towards the company
(Baroni, Dooly, and et.al., 2019). This approach is easy and helpful for the employee to be got
pushed and can stay in the comfort zone as they can build a good reputation in company as well.
According to this discussion and research of different approaches the insurance company is
required to implement this ideology and way in the company where it will be beneficial for the
company and employee as well. Also, it helps the organization in creating beneficial pay roll
system for the labour market.
3. Critical evaluation of considering the performance regarding pay scheme are ethical and
professional
Performance related pay scheme(PRP) is the standard approach of remuneration which gives the
individual with financial rewards, as most of the organisation increases the pay of the employee
because of their better performance in achieving the desired objectives. PRP usually concern
with the incentives that drives changes for the employee work, it motivates the employee to work
in a efficient manner. It also promotes the employee relation with the corporate (Nyberg and et.al
2018). As for the Aviva it is seen that company is proceeding to make changes as to introduce
the rewarding system, so that it can eliminate the chances for the employee turnover. Otherwise
company have to face the vulnerable situation where they will be at the verge for losing their
potential employees.
For ensuring ethical factors for PRP such consideration can be taken out are as follows:
Ethical behaviour:

PRP is the beneficial approach implemented by the businesses, they use it for acquiring
good position in the market by increasing work productivity. Business ethics refer as the moral
values that usually govern the organise of individual. As for the ethical PRP it is important for
the firm to underwent surveys such as to analyse the behaviour of the employee, to know
whether the employee has good interaction with others or not, or to know the behaviour of
employee is aggressive or calm (Chen, 2018). As for the Aviva for the fair PRP it is essential for
them to analyse workers everyday conduct. It will help in processing with the fair and trustful
rewarding system that can be accepted by every individual in firm otherwise might encounter the
problematic situation which creates the negative work place environment.
Individual element:
There are some individual factors that impacts their work behaviour which are
knowledge, goals, values and skills or personality. If the management team are much aware of
this, then it will lead them in making ethical decision.
Values: These are the person’s judgement and their worth behaviour, it also influences the
individual ethical behaviour. For an instance some person is usually act in an improper way
which they conclude as fine and part of their work. Thus in such the business productivity
suffers. Therefore, Aviva insurance company can proceed to know what values are their
employees giving to their business, it will help in recognising the real efforts of the employee so
that they can be compensated with fair bonuses.
Knowledge: It is the main factor that ensures the fair pay related system, every organisation hires
or recruit the talent who gives maximum compliment to their work, it is essential for the firms to
reserve their knowledgeable employees connected with their firm for long time. Thus in such it is
important to make the employee feel that they are valuable asset for the firm in contradict with
this will give the high turnover result. Aviva company can also begin to review the team
performance and to consider the goals of every individual, as whether goals are achieved or not.
It will give the complete information so that suitable candidate can come out from the team, in
order to reward them.
Personality: Personality also plays an crucial role for identifying the ethical behaviour,
management team can begin to analyse that employees have the behaviour to take the risk, such
risky behaviours comes under the unethical behaviour, which can cause the vulnerable situations
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for the business (Kavas and et.al 2022). Therefore, Aviva company also need to check out the
employee personality so that to implement the fair performance pay for the employees.
Thus these are the factors that helps in ensuring the ethical PRP. Thus it is also required
process for the organisations, it boost the morale of the employee and also allow them to develop
the sense of responsibility towards their work. In such if the ethical PRP is not implemented
accordingly then company might have to face the vulnerable situations which affects their whole
productivity.
Professional approach for an international executive and expatriate reward system
Rewarding and bonuses are the motivation driver which impacts the employee
performance, it develops the good sense in work. As international executives are those who look
over the organisational functions across the borders, they create the opportunities for the
businesses and implement the strategy, plans in order to generate the revenues for business. They
often go to different countries for promoting the company’s business. Thus in such it is important
for the firm to consider their effort and compensate them with extra pay (Emerton and Jones,
2019). As international reward strategy has becoming a main pillar for cooperating the
operational objectives and goals. Similarly, for the expatriate rewarding system, it is important
for the firm to analyse how efficient their operations perform in the international market. it will
boost the morale of expatriate as insufficiency in this will lead international business in negative
direction. Some professional approaches are as follows:
Increase compensation and advantage packages:
It is the phrase for the human resource team a reference to organizational key policies on
unintended pay and other rewards, it is often misinterpreted with the salaries but it can actually
refer to more. Overtime rates and, private pension approaches and other insurance factors are
consider as the compensation blocks. It offers the competitive advantage to the firm whether they
are recruiting the candidate from the international market. When all these rewards are arranged
in a structural manner in company's culture in such it will develop the compelling perceptions in
the organizational businesses. Thus Aviva company can also begin to use this approach in order
to compensate the international executive and expatriate in order to increase their work
productivity. Or if they are not perceiving with this will give negative impact as business loss,
high turnover.
Training and development for successful career:

When company makes the decision to improve their business performance they often
introduce the reward strategies, training and development is the effective tool that assures the
efficient employee retention, it also encourages the expatriate value which they can contribute in
their business. Training and development is the most prominent ups killing method that enhance
the employee current skills. It is the most favourable compensation for the businesses so that it
helps in increasing the revenues for the organisation (Resc and Sestili, 2019). Thus for the Aviva
they can proceed to conduct the trainings and development program for their international
executive and for the expatriate it helps them in sharping their skills and knowledge, that will
guide them in their successful career. Otherwise their employee will lack in skills that cause
hindrance in laying out the operation internationally.
Ongoing support:
It is Important for the firm to regularly takes updates of expatriate even if they ae fully
settled in their new home. As for the Aviva company, they can proceed to develop contact with
expatriate and solve their any issues which they might have facing in other time zone. And also
quality healthcare is another professional approach that is beneficial, as healthcare not only
concern with managing the good health but also to maintain the wellbeing of worker as well as
for their families. International health care plan provides the protection which the employees
must need when they are working away from the native country. It is essential for the Aviva
company to provide the assistance programme to their expat employee as it will help them in
relieving the mental health issues, as it is seen that workers who works oversea often face mental
problem due to the cultural shocks and from other factors. In such it is the responsibility of the
firm to provide better compensation to expatriate employees, which helps them in settle down in
new culture.
Other factors can also be considered by the firm to provide the incentives to expatriate
employee and to give home allowance and living cost to the employee and to provide the better
resource access to their family members all these factor motivates the employees to perform
better whether they are in different region or in other country.
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4. A) analysing the impact of performance related pay on employees
Performance related pay provides the better monitory rewards for the good performance of
worker. Studies have been exclaimed that there is a good relationship found between the PRP
and employee productivity. Moreover, organisation also focus on organising the training and
development programs for the employees. It has been identified that PRP has good concern with
the employee motivation their retention with company and also their job satisfaction. It also
motivates the employees to develop good relation with others and to completely indulge in
company’s resources (Clark, 2019). Thus for the Aviva company it is mandatory to implement
such a fair PRP system that promotes the employee growth, otherwise they might have to face
the situation when they are not able to compete in market due to inferior work structure.
Encourage employee productivity: Associating pay with performance often rise employee
motivation, this incentive scheme act as a screening mechanism which motivates only productive
staff to apply. PRP system enhance the macroeconomic performance as well as employment
resilience. This system is more widely spread scheme which have been undertaken by the
organisation in order to increase the productivity. Thus such system will help the employee to
stay connected with the firm. Employees are key asset for the firm, thus it is the corporate
responsibility to provide them secure workplace environment that enhance their productivity. For
the Aviva company it is mandatory for them to organise training and development programs for
workers to increase their knowledge (Bussin and Christos, 2018). Also to implement the fair
incentive scheme, all will enable the employee to work in efficient manner, to increase their
interaction with company’s resources. When the employees are motivated towards work then it
assures that they are likely to behave in a responsible manner towards their work, thus it also
increases company’s productivity.
Reduces employee turnover: Employee turnover is the most negative factor for the firm, it
decreases the work place efficiency, organisation also faces the situation in which they might
have to shut their business door forever. It is mainly done when employee is not satisfied with
their salary against their good work, also if their work is not appreciated then they prefer to move
out from the firm (Clohessy and Acton, 2019). Thus fair performance pays help in overcoming
this problem, it impacts the employee performance. It is obvious when there is extra pay for the
work employee mostly do such work with maximum efficiency, such system is better as well to
implement the healthy work place environment which is must needed for the business