Comprehensive Report on Reward Management Principles and Practices

This report provides a thorough overview of reward management, beginning with an introduction to the core concepts and aims of reward systems. It delves into the philosophy underpinning effective reward strategies, emphasizing the importance of equity, fairness, and transparency. The report outlines the structure of reward systems, including reward strategy, policies, and total remuneration. A key focus is the alignment of reward strategies with the business environment, with justification for the statement 'The reward strategy of the business should meet the environment in which the business operates'. The report highlights how aligning measurable goals, driving alignment, and facilitating target setting can lead to organizational success. Finally, the report concludes by summarizing the key takeaways and reinforcing the importance of a well-defined and strategically aligned reward management approach.

Reward Management

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Contents
Introduction......................................................................................................................................2
Reward management.......................................................................................................................2
Aims of reward management.......................................................................................................3
Philosophy.......................................................................................................................................4
Reward system.................................................................................................................................4
Reward strategy...............................................................................................................................5
"Reward strategy of the business should meet the environment in which the business operates". .6
Conclusion.......................................................................................................................................7
References........................................................................................................................................9
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Introduction
The report aims to provide a clear understanding of the term reward management. It will explain
its concept, philosophy and aim with other important facts. It will explain the reward system of
basic organization. Explaining the term reward strategy, the report will primarily justify the
statement "The reward strategy of the business should meet the environment in which the
business operates". With labeling the fact to be true it will explain the above statement to its best.
Reward management
It revolves around implementing and formulating the strategies and policies in order to reward
the staff fairly, equally as constantly according to the organization’s value. It is a helping hand
while dealing with the reward strategies of development. It also helps in designing,
implementing and maintaining the reward practices, processes, and procedures (Brown, 2014). It
comprises of controlling and analyzing staff remuneration, compensation, and many different
employee benefits. It also aims to build and operate the reward structure of the organization
efficiently. The structure of reward comprises of practices and pay policies, payroll and salary
administration, minimum wage, total reward, team reward, and executive pay. The modern
techniques of reward management aim to prevent employee exploitation at each step. It
incorporates structuring, executing, communicating as well as maintaining the rewarding process
within the company. It also enhances organizational performance and helps them in achieving
the objectives. The process is carried out on the basis of philosophies and strategies of reward. It
includes the structure in the form of policy, arrangement, practice which are developed and
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administrated for providing appropriate pay levels and types of rewards. (Armstrong, Brown&
Reilly, 2010)
It is a very popular topic in management. Its development was based upon the psychological
behavioral search. When in the early 1900s psychologists begin studying employee behavior,
Sigmund Freud was the first one to do that and his work was entitled as the Psychoanalytic
Theory. Later some other behavioral psychologists improved the theory and kept making
additions into it. With this improved version, psychologists begin analyzing people's reaction
towards rewards and their motivation for doing what they are doing to earn rewards. As a result,
the psychologists started drafting motivational theories, which is directly related to reward
management(Duckworth, 2017).
Aims of reward management
It basically aims to rewards people as what is their value in the organization and what are they
being paid. Employees are rewarded for the value they create. It also aims to convey correct
messages in terms of outcomes and behaviors. It also develops a performance culture. It
motivates employees and considers their engagement and commitment. It helps in attracting and
retaining employees of high quality. It also develops positive employment relationships. Some of
the other aims of reward management are:
 Apply equitably
 Operate fairly
 Operate transparently
 Function consistently
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Philosophy
Reward management is a well-segmented philosophy with a set of guiding principles and beliefs
that are constant with the organizational values and help in enacting them. It involves beliefs
needed for achieving equity, fairness, consistency, and transparency in its rewards system
operations. The philosophy of reward management explains that if HRM means to invest in
human capital out of which reasonable return is required, it is appropriate to reward each
individual differently totally as per their contribution which basically refers to the return on
investment generated by them (Workopolis, 2018). The philosophy identifies that an
organization has to strategic for addressing long-term issues as related to employee's value and
his achievements. Processes of reward strategies are implemented to have a flow from the
strategy of the business. It is affected by business and its human resource strategies. The
significance of reward management by top management is affected by the external environment
of its organization. External environment involves various levels of labor law and is helpful in
creating awareness of economic theories and analyzing how to summarize the levels (Sud, 2017).
Reward system
It comprises of various interrelated activities and processes that are structured together in order
to ensure effective carriage of reward management to benefit the organization and people
working there. These areas discussed below:
 Reward strategy: Reward strategy tends to identify what is the organization capable of
doing in the long term for the implementation and development of reward policies,
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processes, and practices which further helps in achieving business goals (Mayende,
2013).
 Reward policies: These policies aim to address some broad issues such as reward levels
considering market stance and achieving equal pay, total reward approach, the role of
managers, scope of using the contingent reward as per the performance.
 Total reward: It is a combination of non-financial and financial rewards employees can
access.
 Total remuneration: It is the total value of total earning or all cash payments and benefits
that employees receive (Wijeratne, 2014).
Reward strategy
Reward strategy is defined as a declaration of intent that explains the organization's motive for
long term to implement and develop practices, reward policies, and processes which contribute
in achieving the business goals and meeting the stakeholder's needs. It provides the organization
with direction and purpose and a framework for the development of reward policies, processes,
and practices. It is related to the development of the values of the business. It explains how the
employees should be rewarded with the help of guiding principles that ensure that values are
well enacted (San, Theen, & Heng, 2012). The strategy is generally underpinned by the
philosophy of rewarding the organizational beliefs based upon the employee value and reward.
Reward strategies answer a few basic queries:
 Where is the reward practices expected to be in the coming years?
 What are plans for getting there?
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That is why reward strategies are studied from both sides. As a conclusion, they explain the
vision of looking at reward processes in the few coming years (Perkins, White & Jones, 2016)
"Reward strategy of the business should meet the environment in which the business
operates"
The above statement is totally true. The reward is considered as an essential element and plays a
key role in demonstrating the values of an organization, their commitment towards the
employees and its performance values. It is a critical aspect that organizations overlook to align
the business environment and reward strategy. The reward programs work well when they work
in accordance with their environment. It is essential to have a connection between both to ensure
achievement of company goals. There are a few reasons that provide justification for the given
statement as reward strategy when aligned with the business environment:
 Identify measurable goals: The first thing that it brings is the vision for the company
towards measurable goals. It provides a clear picture of future plans that can be measured
easily. When an organization is clear about the fact that there needs to be alignment in the
business and the environment it is working in, it can help they identifying measurable
goals for the organization (Brown, 2015).
 Drives alignment at all levels of operations: Once the organization is sure about the
alignment in basic two factors it can easily drive alignment at all further level in their
operations. It provides compatibility at all steps of their fixed practices, processes, and
executions. When each operation is performed in an aligned way it makes for the
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organization to step further and move ahead towards the goal that has been initially set by
the organization.
 Ease in setting the target: After making the business strategy clear the next step is to set
the target. While following the above statement the business has more chances to ease the
process of setting the organizational target. It eliminates the unnecessary disturbances
that may come in the way and exaggerate the whole process.
 Reboots and supports the process: It obvious that when there are no irrelevant things
taking place the business will surely flourish. The whole process will be rebooted and
supported with necessary elements (SHRM, 2012).
It is not optional but necessary for an organization to follow this rule. If the reward management
is not as per the environment it will keep giving rise to irrelevant activities and processes. It may
also cause an opposite impact than the one expected. It will make difficult for the organization to
deal with the reward management and its key areas. While when keeping the business and
environment aligned it could lead the organization to exceptionally brilliant results. It could work
beyond its actual expectations (Oztoprak & Lundmark , 2017).
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Conclusion
The report has explained reward management as an individual term with its aim. It has also
discussed the reward system generally followed by the organizations. Before discussing the
mentioned statement, it has explained what actually reward strategy is. It provides the
organization with direction and purpose and a framework for the development of reward policies,
processes, and practices. It is related to the development of the values of the business. It explains
how the employees should be rewarded with the help of guiding principles that ensure that
values are well enacted. Coming to the statement the report concludes that it is totally true and
can be justified. It has been done with the help of a few justification statements as applied.
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References
Armstrong, M., Brown, D. and Reilly, P. (2010) Evidence-based reward management, Available
at: https://www.cipd.co.uk/knowledge/journals
Brown, D.(2014) The Future of Reward Management: From Total Reward Strategies to Smart
Rewards. Compensation & Benefits Review, 46(3), Available at:
https://journals.sagepub.com/doi/abs/10.1177/0886368714549303
Brown, S.(2015) The Future of Reward Management: From Total Reward Strategies to Smart
Rewards, Available at: https://www.employment-studies.co.uk/resource/future-reward-
management
Duckworth, S.(2017) The future of reward and recognition, Available at:
https://www.employeebenefits.co.uk/the-future-of-reward-and-recognition/
Mayende, T.(2013) Reward Management and Organisational Performance. 2(8), Available at:
https://www.academia.edu/4652567/Reward_Management_and_Organisational_Performance
Oztoprak, T. & Lundmark , R.(2017)Reward & Recognition Strategies - A case study of GE
Healthcare in Umeå, Available at:
http://www.diva-portal.org/smash/get/diva2:140244/fulltext01
Perkins, S. J., White, G. and Jones, S. (2016) Reward management: alternatives, consequences
and contexts
San, O., Theen, Y. & Heng, T.(2012) The Reward Strategy and Performance Measurement
(Evidence from Malaysian Insurance Companies). International Journal ofBusiness, Humanities
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and Technology, 2(1), pp. 1-13, Available at:
https://www.ijbhtnet.com/journals/Vol_2_No_1_January_2012/24.pdf
SHRM(2012) Total Rewards: What are total rewards strategies? Can you give me some idea on
how to develop a total rewards strategy?, Available at:
https://www.shrm.org/resourcesandtools/tools-and-samples/hr-qa/pages/
totalrewardsstrategies.aspx
Sud, B.(2017) How to align your rewards and business strategy, Available at:
https://www.peoplematters.in/article/redefining-rewards/how-align-your-rewards-and-business-
strategy-13221
Wijeratne, N. (2014) Reward Management, Available at:
https://www.researchgate.net/publication/305705895_Reward_Management
Workopolis.(2018) What you can do to improve performance measurement and rewards,
Available at: https://hiring.workopolis.com/article/can-improve-performance-measurement-
rewards/
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