Reward Management: Impact of Internal and External Factors on Pay Structure and Performance Related Pay Scheme

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.
3

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.