Looking for the best ways to inspire and engage your employees? Then you need to let your employees feel valued and motivated. You need to incorporate practices that appreciate the hard work of your employees. Reward Management ensures this by incorporating practices that reward workers, employees, or staff in a fair, consistent, and equitable manner based upon their value in the organization.
An organization incorporates reward management strategies for
- Motivating employees
- Supporting the organization’s strategy
- Ensuring internal & external equity
- Recruiting & retaining
- Strengthening psychological contract
- Ensuring financial sustainability
- Complying with legislation
- Channelizing efficient and productive administration
There occurs a lot of confusion when we talk about reward management. We often consider it a complex concept hence ignore its role in the enhancement of our business.
Gone are those days when employees would only expect their salary from the employer. The preference of the workforce has changed. They expect rewards from employers – it could be anything; financial or non-financial.
All in all, to run a business successfully, the employer must do the reward management properly. So, we can define reward management as a strategy to reward everyone in the organization based on their work fairly and consistently.
Let’s dive deeper into this and try to understand what reward management is and how an organization can incorporate it to optimize employees’ performance and the organization’s productivity-
What is Reward Management?
The inclusion, implementation, and adaptation of different strategies and policies in an organization that is used to incentivize the employees as per their value in the organization can be the definition of reward management.
Reward management policies are also responsible for analyzing and managing compensation, remuneration, and other benefits of the employees. The reward structure in an organization may include-
- Pay policy and practices
- Executive pay and team reward
- Salary and payroll administration
- Minimum wage
- Total reward, etc.
Till now, you must have understood what reward management is, but there can be confusion in differentiating benefits, perks, and rewards. So, let us understand that-
Are benefits, perks, and rewards the same in Reward Management?
Often, we think of reward management; we are confused between – benefits, perks, and rewards, as all of them seem identical. Let’s clear our doubts and understand the thin line between them
Rewards are more about incentives to your employee’s work. It’s just to motivate them towards the work and promote productivity. To encourage more quality work, you offer them rewards.
Benefits are most often not built into one’s salary—for example – health insurance offered by the company.
Perks act as a kind of treat to the employees. It is offered to make their work-life more enjoyable and stable. This could be anything like – Chill Fridays, less-stressful Mondays, and so on. S
ome organizations also provide their employees with other perks like the subscription to the fitness center and so on.
So, these are the significant difference between perks, benefits, and rewards. It would be easier for you to distinguish between the three.
Different Types of Reward Programs in Reward Management
Reward programs are often provided on two different levels – individual and team level. Let’s understand the subsets of these two levels –
Offering good incentives to the employees for their efforts is indeed counted among the best steps to motivate employees. Several organizations follow this by offering their employees a lesser pay and providing them with an option of incentive.
It often increases the productivity of the employees by a good margin.
This is also among the most used type of reward programs where the organization offers a bonus to their employee on their accomplishment. Often bonus program is used in sales organizations to motivate the sales individual to generate higher profits.
Experts believe that this is a short-term motivation program.
In this type, the organizations share a percentage of their overall profit with the employees as per their salary and designation.
Indeed, it’s a great way to reward the employees for their contribution to the company’s success.
4. Stock options
Some organizations offer stocks to their employees at a fixed rate for some time. This is again a great way to motivate employees to stick with the organization in the long term.
5. Recognition programs
Most of the employees would prefer financial rewards for their efforts towards the company. However, some employees seek recognition for their hard work from the organization.
So, these are the significant types of reward programs that the majority of organizations follow.
These different types of rewards can further be categorized into two distinct categories, and they are- Extrinsic Rewards & Intrinsic Rewards.
Intrinsic Rewards in Reward Management
These are understood as the concrete rewards that workers or employees get. Some of the common intrinsic rewards are bonuses, salary raise, gifts, promotion, and other similar sorts of tangible rewards.
These rewards are effective in letting employees feel better in the organization.
Extrinsic Rewards in Reward Management
Such sorts of rewards are given to offer personal satisfaction to the employees. Some of the common extrinsic rewards include feedback, information, recognition, trust, and empowerment.
Such rewards focus on improving the performance of employees so they can attain a certain level.
Till now, you must be clear about the concept of reward management in any organization. Let us understand different ways through which an organization can incorporate reward management policies-
How to Plan a Reward Management System
When a manager in an organization thinks of incorporating a reward management program, he or she needs to finalize if they want to reward an employee, a team, or the whole organization.
Let us have a look at the rewards that you can plan while managing rewards at different levels-
1. Reward Management at an individual level
Planning rewards for individuals revolve around policies related to-
- Base pay
- Rewards attendance
- Rewards performance
- Rewards competence
2. Reward Management at the team level
For rewarding teams, managers need to plan for
- Team bonus
- Rewards group cooperation
3. Reward Management at the organizational level
For reward management of the whole organization, managers need to plan for-
After understanding all the key peculiarities of the reward management system, let us have a look upon different benefits that an organization gets after incorporating reward policies-
9 Benefits of Reward Management
Let’s understand the prime benefits associated with reward management that every organization should focus upon
1. Attracting and Retaining Top Talents
To recruit and retain the top talents in any industry, it is mandatory to provide them with what they deserve. Reward management is indeed among the best methods to attract and retain top talents.
The employees will leave the organization if they don’t feel appreciated.
2. Improves EVP
The employee value proposition is another crucial aspect that the organization should focus on to stay ahead of its competitors.
Reward management helps in boosting EVP and eventually helps the organization retain top talents.
3. Better Company Cultures
Reward management is an excellent way for the betterment of company cultures. Every organization aims for positive recognition in the market, and reward management is going to help them.
The company gains a positive reputation in the market through proper reward management.
4. Employee’s Well-being
To ensure the well-being of your employees, you need to acknowledge their efforts. Employees start feeling distressed when they are neglected even after their hard work.
Their well-being is indeed essential for the company’s well-being.
5. Motivation and Productivity
Reward management helps in motivating the employees in the best possible ways. Better reward management increases the competition within the organization, which indeed motivates the employees to work harder and improve their productivity.
This eventually impacts the overall organization’s productivity in a positive sense.
Organizations don’t emphasize this metric a lot, but this is something that can make or break the overall business. Through proper reward management, organizations can ensure their employees are more loyal to the business.
It eventually improves the way they promote the business in the outside world. Indeed, this will fetch better returns to the organization.
7. Better Relations with the Employees
Every organization aims at improving the employer-employee relationship. This not only enhances the work culture of the organization but improves the efficiency of the employees and eventually increases the productivity of the organization.
Proper reward management ensures that there is a strong bond between the employee and the employer.
It also plays a pivotal role in ensuring a long-term outlook from the employees that promotes consistent good work over a longer duration of time.
8. Optimization of Performance Management System
Reward management is one of the key factors in optimizing the performance management system. With the right inclusion of reward strategies, an organization can consistently improve and grow the productivity of their workforce or employees.
The performance of employees would not be just limited to accomplishing their individual goals; instead, they will work hard to empower the organization in the best possible manner, so their efforts will be considered for the reward structure in the organization.
9. Better Market Reputation
A company that has a reward structure in its organization also appreciates a better market reputation, which plays a pivotal role in different aspects of the company.
It positively influences clients and customer base, as a satisfied workforce or employees to their best in serving the clients and customers. Employees that are not satisfied with the organization would not try harder to convince clients and audiences to trust the company.
Giving rewards to the employees fairly and consistently works as an impetus, which ensures a positive and productive reputation in the market.
So, these are the prime benefits of reward management. It helps the organization in the long run.
The employees feel attached to the organization, and hence the efficiency keeps improving.
So, this was all about reward management and how it can help the organization get the maximum out of their employees.
Not just that, it can help the organization in generating more business as well. Hence, every organization should aim towards it.
How effective do you find a reward management system for an organization?
Do you think an organization with a proper reward structure enjoys better performance from their workers?