A reward system expresses what an organisation value and is prepared to pay for it. It is governed by the need to reward the right thing in order to convey the right message about what is important in term of expected behaviour and outcomes.
Purpose of Reward systems:
The purpose of reward system is:
1. To motivate employees to perform effectively.
2. To motivate employee to join the organization.
3. To motivate employee to come to work, and
4. To motivate individuals by indicating their position in the organization structure.
Types of reward systems:
Variable Pay: This is a type of reward in which a portion of a person 's pay is considered "at risk." Variable pay can be dependent on the performance of the company. It can be in the form of bonus programs, stock options, and one-time awards for complete successfulness. Some companies choose to pay their employees less than competitors but attempt to motivate and reward them using a variable pay program instead of more pay. Good incentive pay packages provide a favourable challenge which stretches employees but remains in reach. If too much is required to reach the goal, the program will be ignored.
Bonuses: Bounces are short-term motivators. By rewarding an employee 's performance for the previous year, they encourage a short-term perspective rather than future-oriented achievement. In addition, these programs need to be carefully structured to ensure they are rewarding achievements above and beyond an individual or group 's basic functions. Otherwise, they run the risk of being perceived of as entitlements or regular merit pay, rather than a reward for outstanding work. Proponents, however, contend that bonuses are a
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