THE REWARD MANAGEMENT

RUNNING HEAD: REWARD MANAGEMENT
Reward Management
Name of Student:
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1REWARD MANAGEMNT
Introduction:
Reward management is an essential and one of the most crucial function to be performed
by the HR. The total process is related with the formulation as well as the implementations of
policies of rewarding the employees of an organization fairly and equitably (SHAHID, H.,
Usman, Mahmood and Siddiqui 2015.). The total process is about the analysis and controlling of
the compensations and remunerations of the employees in accordance to their values in the
organization. This is an area that seeks to retain the talents of the companies by means of various
ways of regarding.
The remuneration or the salary is one of the most important part of this reward
management strategy. This forms the basis of the reward management system and then comes
the other benefits and recognitions. Often in various cases, however it is found that the pay
structure are not same even if the employees are doing the same job. There is a sense that arises
out of this that the organization is having discrepancy regarding the pay structure.
The present report deals with the Norwegian company where old employees receive the
same standard salary according to our salary grade and new employees receive way more as they
come from other companies that pay a higher salary, therefore there are discrepancies and salary
is not based on what the level of experience or education but it flows according to individual ́s
current condition in other companies. The report will analyse the basic theories of the Reward
management system and will thus in turn shed light in the situation of the company discussed.
Reward Management:
The policies regarding awarding an employee on a fair and equitable basis, depending on
their consistency aligning with the organisational principles forms the idea behind Reward

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Management. Challenging works, praise and options for growth and development are example of
employee rewards. When management allocates challenging work to an employee, it showcases
belief of the company on that employee, which acts as a morale booster and thus is a form of
reward. Rewards can also consist of promoting or sending employees for higher level training for
the hard work done by the employee.
Rewards can be classified into two categories:
Extrinsic Rewards:
The awards which satisfy the basic needs of recognition fall in this category. These rewards work
as hygiene factor for the fundamental need for feeling rewarded. Some examples include
satisfactory job security, monetary incentive based on performance.
Intrinsic Rewards:
Non-monetary rewards which acts and form the soft form of motivation falls in this category.
These rewards involve paying personal and close attention for development, recognition of the
hard and good work.
Relationship between reward management environment and strategy:
Reward management strategy:
Anderson (2016) stated that according to him reward management strategy is basically the
implementation and formulation of policies and strategies for rewarding employees equitably,
fairly and consistently aligning with their work and values toward the organisation thereby
helping the organisation achieve its goals. The purpose of this strategy is to implement, maintain
and design reward systems, that is the practices and the procedures which in the long run is in

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accordance with the organisation and the stakeholders. Reward management is the process of
analysing and maintaining employee remuneration as well as other forms of benefits for the
employees. The aim is to form and effectively operate a structure of rewarding for the
organisation. Armstrong (2017) further stated that non-monetary rewards are as important as the
monetary ones. According to him rewards which are non-financial like learning opportunities,
increased job security and recognition are very important part of the reward structure.
Pay Structure:
Pay structure is basically the framework which fixes the employee remuneration based on the job
or group of jobs that the employee undertakes. The main use of pay structure is in determining
the pay rate for jobs, based in the content, nature and requirements of the job. According to Blau
and Kahn (2003), Milkovich and Newman (2008) the range of rates of payment that an
organisation provides for various performances and jobs forms a pay structure. There are three
main characteristics of policies concerning pay structure, namely, the number of levels, criteria
and differentials (Lazear & Rosen, 1981; Milkovich & Newman, 2008). Pay structure policies
have many tiers, levels and huge pay differentials in hierarchical pay distribution (Lazera &
Rosen, 1981; Milkovich & Newman, 2008).
Employee Benefits:
The compensations or remunerations that are given by the firms, in excess to the regular salary
or wages and are paid in part or fully by the employer is called employee benefits. Christoph
(1996) stated that for the development of industrial correlation one of the most important factors
is employee benefits. Examples of employee benefits are vacation, paid holidays, social security,
retirement plans, hospitalisation and medical care, child and elder cares, unemployment
insurance, worker compensation. The economic security of staffs receives a boost due to