Benefits and Challenges of Total Reward System for Employees and Employers

This article explores the benefits and challenges of implementing a total reward system for employees and employers. It discusses the importance of financial and non-financial rewards in motivating employees and examines the current trends in total reward systems. The article also delves into the equity theory of motivation and its role in shaping reward systems. Additionally, it highlights how total reward systems can help companies retain talented employees and build a strong brand identity. Finally, the article addresses the potential drawbacks and challenges of implementing a total reward system.

Total Reward is used by employers as a way to
motivate their employees

Table of Contents
INTRODUCTION 3
MAIN BODY 3
Discuss the benefits and challenges of this approach to financial and non financial reward for
both employees and employers...................................................................................................3
Current facts and figures in terms of the total reward system and current Trent........................4
Equity theory of motivation........................................................................................................4
Benefits of the total reward system for employees and employer..............................................5
CONCLUSION 7
REFERANCES 8

INTRODUCTION
A total reward system is a method used by companies to motivate their employees to
work towards the organization achieving its goals and objectives. There are five elements to the
total reward system which are benefits, recolonization, professional development, compensation
and work life balance.
This report will focus on Marks and Spencer for this case study. The report will define
total reward system and provide differentiation between financial and non-financial rewards. It
will analyze the reward system used by M&S and the current trends in the particular reward
system. This report will provide models and discuss benefits and challenges of the system. A
conclusion will be provided at the end.
MAIN BODY
Discuss the benefits and challenges of reward formulation to financial and non-financial reward
for both employees and employers
A total reward system comprised with all the efforts of an employer can aid in the
motivation of employees, recruitment, development and increase the performance of the workers
in the company so the company gains competitive advantages (Haider and et.al., 2015).
Employees are the core aspect of any organization to run their operations in line with their
objective. Without the support of employees, a company cannot be successful. The total reward
system is used by companies to motivate their employees, so they can help the organization
grow. This is one of the best ways to get outcome from the employees according to Abayomi
Adebisi et al. (2015). There are five elements to the total reward system as mentioned in the
introduction. These are benefits, recolonization, professional development, compensation and
work life balance.
The two types of the total reward system are financial and non-financial rewards. In the
financial reward system, companies give their employees money or bonus as a reward (Smith.,
2016). These financial rewards are a good ways to motivate employees, because it makes the
employee feel valued due to receiving this recognition. Therefor they are likely to keep

motivated. Employees get this reward if they complete their company target or help the company
to achieve success in the market. In the non- financial reward system, superiors of the company
do not give money or bonus. In the place of bonus or money, they give promotion to higher posts
or grant greater responsibility to deserving employees (Abayomi Adebisi and Oluwafunke
Oladipo., 2015.). With the higher posts generally also comes financial rewards in the form of a
salary increase, which is also a motivating factor for employees.
Recent figures $ facts in terms of total reward system and Recent Trend
M&S is one of the most famous retailer in the UK and has many schemes and
motivational reward systems to keep their employees motivated (Adam Cobb., 2016). M&S is
currently following a non-financial reward system in which they are giving cards to their
employees according to their performance and customers satisfaction. In this card system they
distribute cards in different criteria which are gold, silver, diamond and platinum. The cards can
be upgraded in accordance to points accumulated by employees. The cards can be used towards
purchasing products such as I-pad, T.V, mobile and many more (Schlechter, Thompson and
Bussin., 2015). This scheme motivates their employees and there are many employees who win
grand prizes. The company also displays their names and photos on their stores.
Benefits and rewards helps companies to retain talented employees and to build a
different brand identity from other competitors on the basis of skilled and efficient work force.
Personalized rewards show employees that the company care and value them and their efficiency
is respected within organisation. It is important for the company to ensure that their workers gain
suitable rewards for their hard work and contribution so that they can keep themselves motivated
and committed towards organisation (Barba-Sánchez and Atienza-Sahuquillo., 2017). There re
various benefits which are being associated with reward like or example it increases motivation
of employees. This supports company in increasing their operational efficiency and also their
ultimate goals and objectives are being increased. It also supports them in meeting out the aim
which is important to them. Reward also support firm in creating employees loyalty, in this
workers do not leave company and make sure that they remain loyal to firm. They also increase

out operational productivity which supports firm in enhancing their goodwill and increasing
their profitability. Reward are most important in organization.
M&S can also use the financial reward system because most of the employees need
money for their family, study of their child and basic needs (Bassous., 2015). Bonus is the
current trend and most organizations use this reward system for their employees, and they also
get some good result, and they achieve competitive advantages. M&S should use this, so they
can expand their business more.
Equity theory of motivation
This theory is supported by the idea that individual employees can be motivated with the
fairness, and equity is an important component to motivate any individual (Callan, Bauer and
Landers., 2015). This is totally settled on the idea in which workers are motivated by the
fairness and if employees identify inquinates in the output or input ratio of themselves and their
unit, employees will seek to their perceived equity, according to the author the higher an
employees' perception of equity (White., 2016), the more they will be and vice versa ; employees
will be demotivated if superiors of the marks and Spencer is unfair with the employees.
To understand this theory better company superiors have to understand the input and
outputs. Inputs can be defined as those that an individual worker does in order to receive an
output (Chinyio, Suresh and Salisu., 2018). This is the contributions the individual makes to the
company. This motivational theory describes the relationship between the worker's precept of
how fairly employees are being treated and how hard workers are motivated towards the work.
J. Stacy Adams developed equity theory.
This theory shows input which includes all diverse and rich terms which employees in
the company believes that they can put or give contribute in their job such as commitments,
efforts and experience. Outcomes- outcomes are the rewards employees get from the employer
and this includes direct pay and bonus, social rewards and fringe benefits (Eisenberger, Malone
and Presson., 2016). Over rewarded – if workers of the company fell over the rewarded concept
predicts then superiors will feel problem in their relation with their workers, and they desire to
reconstruct the proper balance. Equity- if workers get equity then they will be motivated to give

their best for the company. Unrewarded – unrewarded people are the employees who do not get
reward from their superiors and it seeks to reduce their feeling for the injustice through the same
types of the strategies but the same of the this specific action is now reverse (Scheiber., 2017).
Benefits of the total reward system for employees and employer
Total reward system can be helpful for M&S as a company because it could create good
relationships between the employees and employer (Greene,., 2018.). This is important for them
because this can help the company to achieve their objectives, and they can gain competitive
advantages in their market. The element of this system includes all the business related things
which M&S can use to attract employees, including incentives, bonus salary and employees
opportunities like additional training and professional development (Gubler, Larkin, I. and
Pierce., 2016). This system provides a number of benefits and advantages to M&S, this system
works in a cyclical manner.
Total reward helps to create a relation with the employees when M&S recruit workers
on a total rewards program, their business can show their employee the points at which
incentive, pay rises, they can increase paid sick time and increased benefits or vacation occur
during the workers career flight (Kiruja and Mukuru., 2018). Such a plans provides direct
incentive for workers retention by giving them a series of long-term goals and projections. This
type of transparencies also helps Foster a healthy and working relationship for the small
businesses by putting employees and leaders on equal footing when it comes to knowledge
regarding career related trajectories.
If employees of the M&S system will get bonus and incentive then it will motivate them
to work more better and they will give their best to achieve the objectives of the company. It
will also increase their performance because they will give their best outcome to achieve bonus
and incentive (Kvaløy, Nieken and Schöttner., 2015). Company should use these strategies to
take competitive advantages, and they can get better and skilful workforce so that organisation
can also increase its goodwill in the market (McKay., 2017). Reward and talent management
strategies also includes some aspects like professional development, performance management

and training which allow workers to develop new and special skills through training and quality
education, there by increasing an workers knowledge of and quality to execute their professional
tasks with more efficiency.
Negative drawbacks or challenges of the Total reward system
Many of the employees in the company appreciate the recognition they receive in terms
of total reward system. This reward programs come with the advantages but there are some
disadvantages (Nazir and et.al., 2016). It is important for the M&S to careful about the
disadvantages and try to solve those problems, so they can implement this program properly and
it can motivate their employees.
Demotivate- Reward system can be demotivation for the employees who does not get reward.
This can decrease their moral, and their performance can even get worse (Pregnolato, Bussin
and Schlechter., 2017). It is important for the company to give minimum rewards to all
employees, so they can also be motivated, and they can also give their best to get more rewards.
It can create chaos in organization if one employee is being rewarded and the other worker is not
being rewarded then it can create feeling of jealousy in between employees. This can reduce the
operational efficiency of workers. This can also hinder the growth of firm
Side effects- The greed of rewards can also force employees to choose unethical ways which can
be even harmful for the firm or other team members (Russell and Brannan., 2016). For instance
if the sales volume is considered as criteria for giving rewards then salespeople may offer
customers huge discount or deals to clients for gaining rewards without taking into account the
profit margin of organisation. Similarly, if the factory output is the measure of reward or
appraisal then employees on the shop floors may prioritize speed and let quality slide just for
achieving reward which is not good for the organisation. Also if unethical ways are being used
by employees then this can hinder growth of firm and also enterprise. Also employees will stay
unmotivated in an environment in which employees are not satisfied with each other. This can
reduce operational efficiency of organization. It can also affect profitability of firm which can
hinder organization growth.
CONCLUSION

As per the above report it has been analysed that ` total reward system can helpful for the
company to increase the performance of the employees. Organisation can choose to give
rewards to the employees which can be financial and non-financial benefit. Both have their own
advantages and it can helpful for the company to increase the employee's performance, and they
can develop more better skills in the employees. This system keep motivated employees so that
they give their best to achieve those rewards and can also help company to achieve competitive
advantages. The system is also helpful to make better working environment in the workplace
and also create good relationships between employer and employees. There are some challenges
in this system such as demotivation for the employees. Some employees can be demotivated if
they will fail to get rewards, and they can loss their performance and it can affect on the
company's profitability so it is important for the company to make strategies to overcome from
this situation. Thus it is recommended that companies should use this total reward system in the
company, so they can be successful in their business, and they can achieve high business growth.

REFERENCES
Books and journal