True Incentives, Reward Programs and Organization’s Strategy
AbstractIn the contemporary global and competitive workplace, successful organizations utilize diverse strategies in order to attract qualified candidates, maintain top talent, as well as maintain an exceedingly motivated workforce. Thus what might an organization as well as managers do to draw, maintain and inspire talented personnel? Successful organizations have various styles reward programs that identify and strengthen high-quality employee performance. This paper posits to investigate how true incentives, rather than just pay-for-performance reward programs are utilized in organizations in supporting the organization’s strategy and help fulfill its mission.The content of this paper is helpful for human resource professionals, managers, as well as organizational leaders in considering the execution of a variety of reward systems as well as pay programs.
Table of Contents
TOC o “1-3” h z u Abstract PAGEREF _Toc321138594 h 2True Incentives, Reward Programs and Organization’s Strategy PAGEREF _Toc321138595 h 3Introduction PAGEREF _Toc321138596 h 3Pay and Performance PAGEREF _Toc321138597 h 4Rewards Systems PAGEREF _Toc321138598 h 5Performance-Based Pay PAGEREF _Toc321138599 h 6Strategy-Based Pay PAGEREF _Toc321138600 h 6Recognition and Rewards PAGEREF _Toc321138601 h 7Conclusion PAGEREF _Toc321138602 h 8References PAGEREF _Toc321138603 h 9
True Incentives, Reward Programs and Organization’s StrategyIntroductionEffective, timely, appropriate, as well as market-driven rewards may be motivational for employees and managers alike. Research and experience in the science of achievement supports the concept that timely and effective feedback motivates morale as well as enhances productivity. Several studies demonstrate that a positive link between the resources accessible to human resources, fairness in compensation, amount of information flow between the workforce and management, workers’ degree of stress as well as exhaustion on the job. What organizations as well as managers obtain is usually commensurate to what they reward. In the event that an organization strongly values something, then the behavior of the employees’ will be motivated by these values.
Pay and PerformanceAccording to Tortorella, Helm, and Holladay (2007), performance management may be regarded as a complete system which entails an organization’s goal alignment, communication, continuous feedback, and education, that leads to the identification of top performers in an organization. This recognition is essential as an organization endeavors to retain its top talent and develop the performance of its entire workforce in an effort to optimistically influence the client’s experience. According to the authors, efficient performance management that involves an inclusive system of training, goal setting, communication, as well as continuing feedback is a practice through which research regularly has imperative implications. However, current research has largely focused on one factor of this subject, namely; the relationship between performance and pay. Tortorella., et.al (2007) makes the several points on the subject of pay and performance:
Pay-for-performance policies are in position in numerous organizations, but just a few organizations indicate the objectives of their performance management scheme, evaluate the realization of goals, or align these goals to the organization’s strategic plan.
Merit pay is a policy that determines conflicting reward amounts in the context of the workers’ performance level.
An increasingly huge number of organizations in diverse industries have scrutinized how rewards, particularly compensation, can be connected to performance. This leads to extensive and ever-increasing development of pay-for-performance factors in performance management programs.
This performance management program is a noteworthy step toward realizing the organization’s ultimate goal of becoming an employer of choice, whereby top performers are acknowledged, and for granting documented study that other organizations may learn from and employ in their performance management initiatives. As organizations experience the challenges of employee turnover, having a pay-for-performance program may attract high-quality potential candidates while nurturing the retention of top performers as well as talented employees (Tortorella., et.al, 2007).
Rewards SystemsThere is a rising demand on organizations to develop appropriate reward programs that motivate employees to work increasingly harder. These programs generally encourage and educate workers to become increasingly productive, valuable, and efficient individuals in the organization in regard to the bottom-line. However, owing to the pressures associated to incentives and performance or ineffective procedures of implementation, in a number of cases, these programs may promote unethical behaviors. Therefore to attract and retain committed and qualified individuals, organizations require having suitable pay systems that promote and reward workers to always continue being focused on the production of quality products in an proficient manner, as well as to constantly do the acceptable thing. In the mean time, managers ought to be moving toward better alignment between organization’s strategies and performance management, values, as well as quality measures.
The reward systems ought to be associated with employee development, goal-setting, competency measures, as well as team performance. This approach decentralizes the decision-making process down the chain of command to give power to those executing various tasks. This translates into enhanced reward systems as well as enhanced morale amongst employees. To facilitate the creation of a competitive edge, a lot of organizations today are doing more with smaller numbers of employees. Therefore it is essential that workers are rewarded for employing ethical and effective decision making and problem-solving skills.
Performance-Based PayThis entails variable pay to encourage and reinforce performance improvements through sharing the benefits or profits of improved performance. The contemporary pay for performance approach can be an outstanding stratagem if it focuses on results, rather than merely on the means. This approach would works well with manufacturing and technical jobs. However, jobs that necessitate decisions of ethics and morality cannot be left to individual since they represent the organization and their opinions may not of necessity match that of the organization. Ethical and moral decisions ought to be a concern of all stakeholders including the corporate executives as well as management. Individuals ought to be provided with the necessary resources, training, as well as the means of realizing results within stipulated limitations.
Strategy-Based PayThis refers to the base pay which may reinforce new wide-ranging jobs, development of skills, and performance. The strategic base pay must be determined due to skill as well as the external market. All jobs must have a base salary compatible with the market or industry. Every job must be described and analyzed founded on its work behaviors as well as distinctiveness of the work environment. Every position ought to be slightly different from the preceding one and must include extra responsibility of new skill or knowledge. Therefore, the base pay ought to be different for every job and must represent the level of knowledge or skill. All employees ought to be presented with the opportunity to train in new knowledge and skills requisite for assuming increased responsibilities. Pay rises as well as promotions ought to be founded on a 360 degree evaluation whereby every individual, can evaluate as well as recommend their colleagues for promotions and pay increase. It is particularly important that individuals are trained in the process of evaluation and educated on the impact of their appraisal on the individual being evaluated. If performed appropriately peer evaluations usually are the most precise judgments of a worker’s behaviors.
Recognition and RewardsConventional methods of running organizations have transformed rapidly and will most likely continue at an even more rapid pace as the labor force changes. The transforming workforce needs new as well as flexible reward programs that can enhance as well as produce positive conditions in the work milieu. Recognition programs may be geared toward the two extroverts, namely; those who require incentives in order to be motivated, as well as introverts, namely; the workers who are motivated as a result of internal gratification of pride in responsibility and workmanship. Human resource professionals ought to devise recognition programs that serve introverts as well as extroverts in order to make the job increasingly fulfilling. Fulfilling and challenging jobs keep employees contented and motivated internally to perform their jobs with personal integrity and commitment.
Cash awards may be excellent; on the other hand, the marginal utility of every dollar diminishes as the award rises. Cash awards are provisional awards and the impact normally ends at some stage the next day or the next paycheck. Consequently cash awards generally are not very effectual in the long-term, and may not be equally popular either. The majority of employers concur that they would realize more mileage from various non-cash awards than would be the case with cash awards. The non-cash awards may be less expensive and they ought to be given directly, and increasingly often, to constantly strengthen positive behavior. Several studies show that every twelve cent in cash award costs merely four cents in recognition in comparison to non-cash awards. These rewards have a propensity to be approximately 38% a blend of non-cash and cash, 15% being cash, and 47% being non-cash for the majority of large organizations.
ConclusionManagers ought to think concerning building an efficient as well as a value-based organization, since it is essential for their immediate success, as well as the management’s future. If the mangers reward ethical conduct and pay workers a fair wage, consequently, their workers will perform ethically. In the event that organizations as well as managers reward quality improvement and, quality products, then workers will commonly consider quality in their work which would consequently lead to improved ways of performing the job. In the event that, organizations reward consumer satisfaction and intimacy, employees are prone to adjust and transform their behavior to create a good relationship with the clientele, in order to recognize and gratify the customers’ needs. Appropriate reward systems for employees, as part of an all-inclusive performance management program, helps in enhancing performance as well as productivity in the workplace.