Internal and External Factors Influencing Reward Policies at KMG

This report provides a comprehensive analysis of reward management strategies at KMG Kashagan B.V., an offshore oil and gas company in Kazakhstan. The report begins with an introduction to reward management, emphasizing its importance in aligning employee value with organizational goals. It then delves into Task 1, examining the internal and external factors influencing the company's reward policy, including SWOT and PESTEL analyses, and the impact of factors such as affordability, benchmarking, market position, and economic outlook. Task 2 focuses on different types of rewards, including intrinsic versus extrinsic, and performance versus membership-based rewards, along with various methods of gathering reward intelligence, such as surveys, consultants, recruitment agencies, and market analysis. Finally, Task 3 explores how line managers can contribute to reward decision-making. The report concludes by summarizing the key findings and emphasizing the importance of a well-structured reward management system for business success.

Reward Management

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
TASK1.............................................................................................................................................1
1.1 Internal and external factor of the company that impacts its reward policy.........................1
1.2 Various kind of Reward........................................................................................................1
TASK2.............................................................................................................................................1
2.1 Importance and principles of a total reward approach..........................................................1
2.2 Significance of fairness, equity, transparency and consistency affect reward policies.........1
3.2 Assessment of the contributions of extrinsic and intrinsic reward.......................................1
2.3 Reward policies and practices are implemented in organisation .........................................1
TASK3.............................................................................................................................................1
3.1 Different ways in which line managers can contribute to reward decision-making.............1
CONCLUSION ...............................................................................................................................1
REFERENCES................................................................................................................................3
.........................................................................................................................................................5

INTRODUCTION
Reward management is the best term that is concerned with the implementation and
formulation of policies and strategies, motive this management to reward people consistently,
equitably and fairly as per their value to the enterprise (Reward Management, 2018). Main aim
and objectives of reward management is to develop and efficiently activate a reward arrangement
for a business entity. In simple words, it is adaptation of plan and policies that recompense
workers on equitable, fair and consistency basis in relate with the value of organisation
(Armstrong and Taylor, 2014). It is an essential part of business development and success. It
comprises of different aspects such as challenging work, praise and avenue for progress and
development.
This report is based on KMG Kashagan B.V. which is an offshore oil and gas company in
Kazakhstan. This assignment has shown about SWOT or PESTEL analysis that affects the
business reward policy. Different types of rewards are also determined in this study. Principles
and significance of total reward approach are described here. Assessment of the contribution of
intrinsic and extrinsic rewards has also been analysed in this project. There are various ways in
which line manager of company can participate in the decision making process or reward
systematically.
TASK 1
1.1 Internal and external factor of the company that impacts its reward policy
KMG Kashagan B.V. is a private organisation with sufficient liability. It is one of the
biggest and most multifaceted offshore oil companies in all over the world. It was incorporated
and assimilated by the joint stock company in October 2005. Main interest and motive of KMG
is to monitor the Kazakhstan contributing awareness in the invention allocation contract in
regards of the North Caspian Sea (Arulrajah, Opatha and Nawaratne, 2015). This business
provides gas and oil production as well as exploration services to the audience. In company,
there are different number of employees that work together. Main aim of workers is to
accomplish the predetermined goals and objectives of organisation in limited time period. In
order to achieve hire growth and success in competitive marketplace, staff members are required
better policy of reward.
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There are two factors that affect the reward policy such as SWOT and PESTLE analysis.
These are determined as below:
SWOT Analysis: It is an important and essential tool for each and every organisation
because it analyses business strengths, weakness, threats and opportunities (Birasnav, 2014).
SWOT analysis of KMG Kashagan BV are given as below:
Strengths Weakness
 Main strength of company is strong
economic development and growth.
 Maximise the demand for gas and oil
 Higher consideration of portfolio
 Alternate options
 Scope of maintenance or conservation
 Import dependence of very high
 Late start in the procurement or
acquisition
 Geo-political uproar and disturbance
 Self-defeating plan and policy
Threats Opportunities
 Maximising competition
 Ever maximising demand
 Production stagnation
 Sufficient regional institutions
 Environment concerns
 Terrorism
 One of the main opportunities is supply
chain.
 Advanced technology
 New sources and growing market
 Interdependence nations
 Frontier markets
 Collaborations
PESTEL Analysis: It is also beneficial and the foremost tool for each and every
organisation. There are some points which are covered in this approach such as political,
economic, social, technological, environmental and legal (Brewster and et. al., 2016). All these
highly impact on reward policy of company in a direct and indirect way. PESTEL analysis of
KMG Kashagan BV are described as below:
PESTEL Analysis Description
Political It is a part of factors which show the control of
political unit on a venture of business. In this,
political decision or judgement have influence
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on various vital zones when it arise to gas and
oil companies like employees, infrastructure
quality like roads, rail and nation’s health.
Economical In this factor, higher rates of interest may
discourage financiers as cost of borrowing or
copying will maximise (Brown, 2014). A solid
currency will also create it expansive to
transfer more gas and oil through maximise in
values on the international market. Greater
income progress will increase the demand for
gas and oil products.
Social These factors show culture, demography
income migration, ideological view and
religion on a problem. In international, there is
no specific traditions or culture which are
alongside gas and oil products. Each and every
part of the globe understands KMG Kashagan
BV as the future to progress and enhance living
standard.
Technological This factor highly impacts or influence the
business activities and functions in an
enterprise (Cameron and Green, 2015).
Technologies provide gas and oil to the
referred firm in order to develop innovative
products and arise with good processes. Due to
technology, advertising and marketing cost has
decreased incredibly.
Environmental Entrepreneurs observing forward in order to
finance in gas and oil company have to be
informed with such force that impact all oil
creation or distribution actions. Geographical
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position, rock structure, climate, fauna, land
form and flora impact on the referred firm’s
activities.
Legal It is the last factor that highly affects business
operations and activities in an effective
manner. In this, norms, laws, regulations and
constitution of government, international
platform and local authorities that monitor
activities of KMG Kashagan B.V. are included.
Both internal and external factors impact on reward policy of company (De Gieter and
Hofmans, 2015). They should assess the effect of company’s drivers and many other factors
which are determined as below:
Affordability: Internal factors highly affect the employee’s affordability in an effective
and efficient manner. Worker who are not afford costly products, so it can reduced the
productivity of employees. So, in this, manager of company provides some incentives, rewards
and many others benefits to the workforce.
Benchmarking against other business: This is another factor that affects the business
reward policy in a direct way. It comprises of one’s business activities and presentation metrics
to business best practices and plans from other organisations. In reward management, it assists
delivering, selection and planning of projects sizes typically calculated are cost, time and quality.
Market positions: In this, external factors highly affect the market position of gas and oil
sector in an effective and efficient manner (Foss and Stea, 2014). Position of the KMG Kashagan
B.V. is good in marketplace which highly influence a large number of customers to purchase
business products.
Economic outlooks: External factors highly affect company’s reward policy because of its
inflation, forecast of growth, payment balance and fiscal balance.
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1.2 Various kinds of reward intelligence and the way they are gathered
Reward: It includes the basic wages and salary that the person in allowed for his
occupation; this covers overtime work, bonuses, premium based on employee’s performance. It
also includes protection events like perquisites, services and pay for period not work.
Types of reward intelligence: There are different types of reward intelligence which are
provided by the KMG Kashagan B.V to the employees. These are determined as below:
Intrinsic V/S extrinsic rewards: In this employee self-get satisfaction from their job
effectively. These gratifications are self-initiated such as having a better feeling of achievement,
pride in own work and take part of a group (Hambrick, Humphrey and Gupta, 2015). The tools
of job enrichment, job rotation, flex time period, shorter work duration, can provide intrinsic
reward by giving challenging and interesting job. Another is extrinsic reward consist fringe,
promotion and money benefits. These are external to the occupation and arise from an unknown
source.
Performance V/S membership based reward: It is another type of reward which is
essential for the development a growth of company. It is allotted by company as per the
performance of the employees. It is demonstrated by the usage of commission, incentive system,
piecework pay plan, group bonus and many others. Another is membership reward that is based
on profit sharing, living cost increasing, salary maximization and many other benefits.
There are different methods in order to gather such kind of rewards which are determined
as below:
Reward and salary survey: It is one of the best and essential methods which is applied by
KMG Kashagan B.V. in order to collect rewards systematically. In this, business entity classified
all their workers as per their work and performance (Hoch and Kozlowski, 2014). So, company
can understand regarding capable and less able employees and give salary or rewards
accordingly.
Consultants: Role of the manager is to provide accurate guidelines and directions to all
their employees in an accurate manner. With regard to achieve proper advices, entire workforce
work with an aim of accomplishing predetermined goals and objectives of company.
Recruitment agencies: It is another best and significant tool which is used by the referred
firm to collect rewards essentially. In this, role of human resource manager is to provide accurate
training and development to employees. Workers can attend these sections and increase their
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basic knowledge and skills on a particular matter. In order to gather necessary information, they
use different tools and techniques which can help them to improve their goodwill in marketplace.
Job advertisement: In this method, business entity tries to provide different
advertisements on T.V. radio, internet and many other social media sides. It is one of the
valuable approaches to gather information about rewards. In the KMG Kashagan B.V., there is
high requirement of talented candidates and so, they can give job advertisement to public in an
effective and efficient manner.
Reward journals: In this approach, manager of company records all information and data
in its journals which can help them to easily collect all rewards in an accurate manner. It is one
of the most beneficial factors to save their location, cost and time.
Market intelligence: It is a term that describes information and data relevant to a business
markets, collected and evaluated mainly for the motive of confident and accurate decision
making in identifying strategy or policy in field such as market chance, development and
penetration strategy. Company uses this aspect in order to enhance their performance and
productivity easily.
Sector analysis: It is identified as an assessment of the financial and economic prospects
as well as situation of a particular sector (Ismail and et. al., 2015). Sector evaluation serve to give
a financer with a decision regarding how well business in this area are anticipated to perform. So,
it is important for the organisation to collect different types of rewards in an essential and
effective manner.
Presented: It is last phase, in this business entity select particular reward. So above all
are important ad valuable approach to gathered rewards. In this process referred firm present best
method of reward.
2.1 Importance and principles of a total reward approach
Total reward approach: It is the term that selected to determine a reward scheme taking
organised entire investments an enterprise creates in its employees e.g. development, learning,
pensions, pay and many other ways. It is a long term method to how a business’s reward
practices and policies can assist its objectives and goals (Jayarathna, 2014). It includes whole
features of work that staff member value, both impalpable and touchable and many other aspect
of an entire reward strategy.
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Principles of total reward approach: It is important and valuable for the organisation and
individual to achieve their personal and professional goals. There are some principles which are
determined as below:
 It develops a natural and positive reward experience.
 Align reward and many other benefits with company’s goals to implement a win-win
partnership.
 Extend large number of person line of sight.
 Total reward principles integrate rewards.
 Reward separate ongoing worth with base salary. Reward outputs with variable wage.
Importance of total reward approach: Total reward system is very important and essential for
the employees and organisation in order to increase their growth and success effectively
(Marchington and et. al., 2016). There is some importance which are determined as below:
 This approach gives direct and fair incentives or bonus for employee’s performance.
 It maximised worker engagement.
 Increased retention.
 Promote employees’ families.
 Total reward increase productivity and profitability of the company in limited time
period.
As per the case for the advantage of encompassing cutting edge training: cutting edge is a
best term that apply to determine the newest and one of the important version of a services and
products. It is very essential and important method of total reward system. With the assist of this
approach referred firm easily enhance productivity and performance of the employees in a
systematic manner (Riasi and Asadzadeh, 2015). One of the main advantage and benefits of
cutting edge training is to increase basic skills and knowledge of employees on particular matter.
Flexible working along with the traditional method of benefits and pay within a total reward
system: It is also significant part of the total reward approach which assist the workers in order to
accomplish predetermined goals and objectives of the company in limited time period. KMG
Kashagan B.V. provide flexible working where:
 Variable hours
 Dual role
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 Part time working Job share
 Staggered start and end time
 Flexible advantage (selling and buying holiday time)
So it is essential for the organisation to motivate and encourage their all staff members within a
total reward system. It is also beneficial for the enterprise to improve their image and goodwill in
marketplace as well as achieve comparatives advantage systematically.
2.2 Significance of fairness, equity, transparency and consistency that affect reward policies and
practices
Impotence of fairness: Fairness it very important and essential for the employees in
order to enhance profitability and productivity. It’s also significant to know that worker reward
fairness worries are mainly link to a comparison and benchmark. It may be comparative to
employee’s performance, capabilities and skills.
Significance of equity: It is also important for the company to give equal pay, salary and
many other as per the capability and performance of employees. The equity and growth potential
in an organisation are essential in safeguarding an equity financer. In order to building equity for
organisational and personal development is significant to decreasing business dept.
Important of transparency: In an enterprise transparency is implies perceptibility into
the activities and functions of the business entity for its investors (Rosemann and vom Brocke,
2015). Action of the company impacts the business stakeholders such as suppliers, customers,
employees and shareholders. It is one of the main and important that an enterprise practices and
enunciates due to its well determined process.
Significant of consistency: It is also important for an organisation to measure changes
which are arise in the company. It helps them in order to develop accountability and builds
reputation in marketplace as well as customer’s mind. With the assist of this, oil and gas industry
easily maintain all records and data about customer’s choice.
Above all these are highly effects on business reward policy in a direct and indirect way.
There are some points which are determined how fairness, equity, transparency and consistency
impacted of reward practices and policies are as below:
Meritocratic applications: In order to making effective reward practices and policy
meritocratic application highly effected (Shields and et. al., 2015). It crates pure intellect in an
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organisation and capitalist society. It is present as a way of incentives, bonuses and benefits
which is provided by the company to their employees.
Regulation pertaining to anti-decimation act 1964: Under this act, employees are
discriminate on the basis of sex, colour, race and ethnic origin. This act effects the business
profitability and productivity in a direct way.
Understanding of key principles to topical reward is living wage and gender wage gap:
In order to make effective reward practices and policies, gender and living gap highly effected.
In this company should try to provide different motivation and leadership approach to the
workers so they can work with full efforts and accomplish predetermined goals of the company.
3.2 Assessment of the contribution of extrinsic and intrinsic rewards to improve employee
contribution and sustain organisational performance
Intrinsic and extrinsic are part of the reward which is essential for the employees in order
to increase their motivation and performance level. These are well-planed reward approach that
motivate workers and assist in making positive emotional reaction in the direction of the job.
Contribution of extrinsic: In nature it is physical that is come from an outsider source
like employers. It is also emotionally devoted with the staff members (Ulle and Kumar, 2014). It
is mainly related with employee’s job performance but essential that workers attain award each
and every period they achieve the task. There are some examples of such reward which are
provide by KMG Kashagan B.V. to their workers like pay, commission, bonus, fringe benefits,
enhanced working condition, promotion, profit sharing and many others.
Contribution of intrinsic: These types of benefits are known as non-physical rewards. It
cannot be touched and seen but are expressively related with the workers. It is directly
concentrated to job routine as a successful project repeatedly produce it. In the organisation,
contribution of this reward is highly important for the business development and success. There
are few examples of this reward such as recognition, sense of achievement and many others.
With the use of both types of rewards, company can enhancing employee’s contribution
and sustain organisation performance in an effective manner (Umoh, Amah and Wokocha,
2014). Intrinsic reward is an essential and significant part of the long term achievement and
personal or organisational success. Both assist in sustaining the business performance as
compared to other companies and its competitors.
Relationship between concepts and variables
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Basis Concepts Variables
Meaning These are mental perception
or image and then their sense
varies remarkable from person
to person.
These are calculable concepts
and approaches with varying
accuracy degree.
Nature In nature, it is bundle of
characteristics or meaning
associated with few events,
conditions, situations, objects
and the like.
In nature, it is variable which
is important in order to
measure all situations in an
essential and a systematic
manner.
2.3 Reward policies and practices are implemented in organisation
In each and every organisation, reward practices and policies very essential and main part
of the business success and development. In order to implement reward practices and policies,
KMG Kashagan B.V uses seven model which are determined as below:
Step 1 - What are business trying to attain: It is first step, in this business entity trying to
implement reward practices and policies systematically.
Step 2 - What are business values and what do they need to reward: In this phase, business
value is more important for creating effective reward policy.
Step 3 – Communication: In this process, company provides all necessary information and data
to the employees regarding implementation of effective reward practices and policies (Wilton,
2016).
Step 4 – The nuts and bolts: Under this, workforce planning is an important part in order to
implement and created effective or beneficial reward policy and practices.
Step 5 -– Who are business staff and where ensure they come from: In this, company is trying
to understand the capable employees and the place where they come from.
Step 6 - Staying legal: In this, different kinds of legislation such as equal pay and local
legislation play an important role in applying reward policies and practices in a systematic
manner.
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