Performance and Reward Management

Topics: Motivation, Management, Strategic planning Pages: 9 (2651 words) Published: May 7, 2012

1.1Performance and Reward Management Defined
In most literature, performance and reward management are defined separate of each other. The writer has combined the two to give the definition of what is performance and reward management using the definitions by Michael Armstrong. Performance and Reward Management are the strategies, policies and integrated processes that deliver sustained success to organizations by improving the performance of people and developing the capabilities of individual contribution and teams and recognizing these contributions and teams by both financial and non-financial rewards. The main objectives of performance and reward management are: 1.To minimize expenditure on wages and salary over the long run. 2.To attract and retain staff if the desired caliber.

3.To motivate the workforce so as to maximize organizational performance 4.To direct effort and enthusiasm in specific direction and encourage particular types of employee behavior. 5.To underpin and facilitate the management of organizational change It is the diversity of these objectives related to competition in both product and labor market that make reward management such a complex area of practice. 1.2 Reward Management, Performance Management and Their Guiding Principles 1.2.0 Reward Management

Reward management is not just about pay and employee benefits. It is equally concerned with non-financial rewards such as recognition, learning and development opportunities and increased job responsibility (Armstrong 2007, p3). Reward Management Guiding Principles

Guiding principles of reward management are a well articulated philosophy (Armstrong 2007, p 4) which underpin the concept of reward management. The philosophy recognizes that if human resource management is about investing in human capital from which reasonable persons are to be rewarded differently according to their contribution return is required, then it is proper to reward people differentially according to their contribution (Armstrong 2007, p4). Some of these guiding principles include fairness, equity, consistency and transparency: Fairness

Fairness means that the reward management processes should operate fairly in accordance with the principles of distributive and procedural justice. Distributive justice as defined by Leventhal (1980) refers to how rewards are distributed. Procedural justice refers to the way in which managerial decisions are made and HR procedures are put into practice. Equity

Equity is achieved when people are rewarded appropriately in relation to others within the organization. Consistency
A consistent approach to the provision of rewards means that decisions on pay should not vary arbitrarily and without due cause between different people or at different times. Transparency
Transparency means that people understand how reward processes operate and how they arre affected by them. The reasons for pay decisions should be explained to them at the time they are made. The Context of Reward Management

Reward management takes place in the context of both the internal (corporate) and external environment. Some internal environment influences include the corporate culture, technology, people, business strategy, and the employees’ point of view. The external environment are in the shape of globalization, increased competition employment trends, demographic trends, rates of pay in the market place, employment legislation, industrial relations, the government and NGOs.

1.2.1 Performance Management
Performance management is a means of getting better results from a whole organization, or teams and individuals within it, by understanding and managing performance within an agreed framework of planned goals, standards and competence requirements (Armstrong 2000, p6). Egan (1995) also outlines some guiding principles of performance management: 1. The performance management system should be a control system only by...

Bibliography: Armstrong, M., Murlis, H., Group, H., 2007. Reward Management : A handbook of renumeration strategy and practice. 5th ed. Kogan Page Pulishers
Armstrong, M
Armstrong, M. 2000. Performance Management: Key Strategies and Practical Guidelines 2nd ed. Kogan Page Publishers
Brattoon, J and Gold, J 1999
Shield, J. 2007. Managing Employee Performance and Reward : concepts, practices, strategies. Cambridge University Press.
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