CASE 5; Compensation of employee

CASE5; Compensation of employee

We have an employee, who is working exemplarily. What do we do? Do we reward him for his hard work, or do we just tap him on the shoulders and say “good job”.  When working in company, reward is one of the hottest topic. What kind of reward is suitable for employee, is it monetary or non-monetary reward and which reward will motivate employees further to put their maximum effort on the work they are doing.

Occasionally there is news article about CEOs of the big companies with huge rewards for their excellent job and revenue they have done for the company. As everyone knows, is it really CEO of the company who deserves the reward or regular employees? That is hot question that have been pondering over reward system for as long as there has been internet around.

As mentioned before, rewards can be put into two reward categories, monetary and non-monetary reward. Both categories can then be divided into three segments which are; Foundational rewards, Performance based rewards and Career and Environmental rewards.

To become valuable employer, company need to take comprehensive review of their Total Rewards, which company should offer not only foundational rewards, but performance-based and career and environmental rewards. Unfortunately, often companies apply Total rewards inadequately offering only foundational rewards leaving out other segments.

Foundational rewards can be following;

-       - Base pay

-       - Perquisites

-       - Allowances

-       - Retirement

-       - Health care

-       - Life and disability

-       - Other welfare benefits

-       - Wellness initiatives

-       - EAP (employee assistance program)

-       - Voluntary benefits

-       - Discounts / affinity programs

-       - Time off

Performance-based rewards can be following;

-       - Base pay increase (Merit, promotion)

-       - Short-term incentives

-       - Long-term incentives

-       - Recognition

-       - Profit sharing plans

Career and Environmental Rewards can be following;

-       - Training / Development

-       - Mentor program

-       - Career management programs

-       - Talent mobility programs

-       - Discretionary technology

-       - Flexible work programs

-       - Work/life programs

-       - Corporate Social responsibility programs

-       - Well-being programs

Overall best way to approach Total Reward program is for companies to combine all segments. Each employee should get foundational rewards, following by each successful employee with high performance to be rewarded by performance based reward and finally offering those employees who are in need for training / development rewards from career and environmental reward segment. Reward system is great way to keep employees motivational.

Sources;

WillisTower Watson 2016, A Guide to a total rewards strategy.
URL:  https://www.towerswatson.com/en/Insights/IC-Types/Reprints/2016/A-Guide-to-a-Total-Rewards-Strategy accessed; 01.05.2017

TED 2009, Dan Pink: The Puzzle of motivation.
URL: https://www.ted.com/talks/dan_pink_on_motivation?language=en accessed; 01.05.2017

Gomez, Balkin & Cardy, 2016. Managing Human Resources, 8th edition, Pearson, chapter 10 & 11.

AON 2013, Employee Benefits in a total rewards framework.
URL: http://www.aon.com/attachments/human-capital-consulting/2013_Benefits_Quarterly_Employee_Benefits_Total_Rewards_Framework.pdf accessed; 01.05.2017

Picture Total Rewards,  https://s-media-cache-ak0.pinimg.com/originals/f9/f0/0e/f9f00e017707d78e3afe7016da73ca5e.jpg accessed; 01.05.2017