Westminster International University in Tashkent
Human Resources Management 2012 - 2013
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Human Resources Management
Introduction “Employees will be hired and promoted because of their abilities - without outside interference.” Jane Byrne Nowadays managers recognize the importance of reward programs to achieve business goals in case of allowance organizations to deliver the exactly amount of rewards, to the right employees, for the right reason. Head of HR departments creates unique reward strategy that supports interest of own unique human capital strategy. This paper concentrates on the critical analysis of the importance of Performance Related Pay reward system in organization. I will try to identify advantages and disadvantages of PRP.
‘Reward strategies provide a road-map from where the organization presently to where it wants to be in the future’ Schuster and Zingheim (1992) It is common practice in multinational companies to reward employees to motivate staff to work efficient and experience make filling importance of each employee into company’s culture. The reward system divided into two types’ financial reward (fixed and variable pay) and non-financial reward (recognition, praise, achievement and professional development). Financial reward
Financial reward subdivided into three categories. First one is Base pay. Where employee's initial rate of wages which does not include additional lump sum compensation or increases in the rate of pay. An employee's base salary can be expressed as a base hourly basis or annual salary of pay. Second well know type is Contingent payment, this type of reward related to performance, competence, contribution, skill and/or experience. It also well known as ‘variable pay’ or ‘pay at risk’. Contingent pay divided in to several subtotals; Individual performance–related pay – increase base pay or cash bonuses determined by performance assessment and rating (merit pay). Bonuses- paid cash for successful performance.
Incentives- payment for achieving seated targets that motivate people to achieve higher level of performance. Commission- significant form of incentive in which several percentage of sale paid to the person. Service-related pay- increases by fixed increments on a scale or pay spine depending on service in the job. Competence-related pay- paid in case of achieving competence by individual Contribution related pay- paid for both outputs (performance) and inputs (competence) Skill based pay- pays into individual according to performance and skill owned. Career development pay – paid to individuals who takes additional responsibilities as their career develops The third type is Employee benefits that also known as indirect pay including pensions, sick pay, insurance cover and company cars. Non-financial rewards
Non-financial rewards include any rewards which focus on the employees need such as Achievement Recognition, Responsibility, Influence and Personal Growth. Achievement- when managers sets special scope of goals for individual and if this scope fulfilled. High achievements comes is unexpected situation like taking control of situation, decision making process and also making things happen. Recognition – this is one of the most powerful motivation factors in any company. Recognition theory mostly linked with Maslow’s (1954) theory about the hierarchy of needs and motivation factors. Recognition can be provided by such factors like positive feedback and also financial reward according to...
Bibliography: Armstrong. M, (1996). Employee Reward.1st ed. Great Britain: Short Run Press.
Armstrong,M. and Murlis, H., (2007).Reward management: a handbook of remuneration strategy and practice.5th ed. London: Kogan Page.
Gomez-Mejia, L & Blkin, D (1992) Compensation, Organizational Strategy and Firm performance
Podmoroff, D., (2005). 365 Ways to motivate and reward your employees every day- with little or no money. Florida, Ocala: Atlantic Publishing Group Inc.
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