What Is Your Understanding of the Concept of Total Reward Management? Discuss Its Merits and Demerits as a Useful Tool for Managing Rewards to Achieve Organizational Goals and Objectives.

Topics: Employment, Reward system, Motivation Pages: 5 (1557 words) Published: August 14, 2013
The paper below will start by explaining the notion the discussion will look in detail at the four elements that are deliberately intergrated in creating the total reward concept which are namely compensation, benefits, learning and development and work environment. The benefits of using the Total Rewards concept that will be discussed are that there will be improvement in the employment relationship, is there is more flexibility to meet individual employee needs, there will be more expense containment and also it assists in creating a good company reputation. The discussion will also look at the demerits of using the total rewards such as it only works in flexible and contemporary organisations, it requires buy in from all managerial staff and it is not easy to customize it to suit a specific organisation will be explained in detail.


Total reward concept is an approach to reward management which combines financial and non financial rewards into one concept. There is no reliance placed on one mechanism operating separately but on the two that is the financial and non financial operating as one. Armstrong (2010:275) highlights that Total Rewards encompasses not only traditional, quantifiable elements like salary, variable pay and benefits, but also more intangible non-cash elements such as scope to achieve, learning and development, the intrinsic motivation provided by the work itself and the quality of working life provided by the organization.

The financial and non financial rewards are combined to create the Total Reward Concept. Williams, (2001) explains that total rewards strategy is the art of combining the four elements into tailored packages designed to achieve optimal motivation. The financial rewards which are tangible in nature are namely compensation and benefits whilst the non financial rewards which are intangible are namely learning and development and work environment all of which will be discussed below.

This is simply payment provided by an employer to an employee for services rendered. Pay comes in a number of forms such as fixed pay, variable pay, short incentive pay and long term incentive pay. Fixed pay does not vary and is usually determined by the companies pay structure. Variable pay includes bonuses or commissions earned during established performance periods. Short term pay incentives give employees opportunities to earn extra income for achieving certain goals over a period of one year or less. Long term pay incentives reward high performance over a longer period of time in cash or even stock options.

Benefits are the cash compensation that employees receive to supplement the cash compensation that employees receive. Gish (2005) highlights that, these are designed to protect the employee and his family from financial risks. These include Medical Aid, Life Insurance, vacation leave with or without pay.

Learning and Development
To keep employees challenged and learning the Total rewards System includes learning and development. Employers support these opportunities by providing employees with tuition assistance, training, on the job learning and sabbaticals. Stoner (2001), highlights that employers can provide younger employees with mentors and job coaches.

Work Environment
A commitment to improving the work experience is what makes total rewards system stands out from traditional pay. In that it recognises that employees are not motivated by pay only but also by some non monetary factors such as quality of working life, the work itself, work–life balance and non financial recognition all of which fall under work environment.

There are a number of merits from using the total rewards tool for managing rewards to achieve organisational goals. The merits are that there will be enhances the employment relationship, is there is more flexibility to meet individual employee needs, there will...
Continue Reading

Please join StudyMode to read the full document

You May Also Find These Documents Helpful

  • Reward Management Essay
  • Total Rewards Essay
  • Total Rewards Essay
  • Total Rewards Essay
  • Total Reward Essay
  • Total Rewards Essay
  • Total Rewards Essay
  • Reward Management Essay

Become a StudyMode Member

Sign Up - It's Free