Cipd Int Diploma Reward Management 5rwm
The key components to developing effective Reward Strategy is to ensure that there are clearly defined goals to meet business objectives, that the reward programme meets the needs of both the organisation and its employees, and to ensure that this is then supported by effective HR policies. In order to ensure these criteria are met there are a number of factors which influence how reward strategy is developed which include both internal factors within the organisation itself, as well as external factors outside the organisation.
1. The main External Factors are:
a. Political: the job market in the UK is split between Public sector ie Government and Private sector. Government policies have control of reward strategy within the Public sector, which influences pay increases and pension. Traditionally Public sector employees were paid slightly less, but benefitted from final salary pensions and higher job security. The government over the last few years has discouraged pay increases in the public sector, particularly as the pay rates are almost in line with the private sector now. It has also been urging the private sector to follow the same guidelines as regards pay increases..
b. Economic: If there is a surplus of skills in the market where there is demand for those skills , the ‘price’ for those skills becomes more competitive, so salaries decrease. However conversely , if there is a shortage of skills in the market and the demand for them is still high, the ‘price’ goes up, so salaries increase. There are several theories which demonstrate the effects on pay:
i) Classical Economic Theory : Where a surplus of product means the price will drop and a lack of skills means the price will rise. This can be demonstrated as follows: leading up to the year 2000, there were fears that computer systems would not cope with the change of century. IT consultants were in high demand and so their salaries increased enormously. ii) Wages Theory : this is where an
1. The main External Factors are:
a. Political: the job market in the UK is split between Public sector ie Government and Private sector. Government policies have control of reward strategy within the Public sector, which influences pay increases and pension. Traditionally Public sector employees were paid slightly less, but benefitted from final salary pensions and higher job security. The government over the last few years has discouraged pay increases in the public sector, particularly as the pay rates are almost in line with the private sector now. It has also been urging the private sector to follow the same guidelines as regards pay increases..
b. Economic: If there is a surplus of skills in the market where there is demand for those skills , the ‘price’ for those skills becomes more competitive, so salaries decrease. However conversely , if there is a shortage of skills in the market and the demand for them is still high, the ‘price’ goes up, so salaries increase. There are several theories which demonstrate the effects on pay:
i) Classical Economic Theory : Where a surplus of product means the price will drop and a lack of skills means the price will rise. This can be demonstrated as follows: leading up to the year 2000, there were fears that computer systems would not cope with the change of century. IT consultants were in high demand and so their salaries increased enormously. ii) Wages Theory : this is where an
References: CIPD - Managing People and Organisations (2012) CIPD (2012) Reward Management Information Page