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Lecture 15 - Reward Management (Part 1)
Lecture 15 - Reward Management (Part 1)
Reward management
Part 1 – Key definitions
1. What is Reward Management?
• Reward strategy provides the impetus for reward system design and
operation in order to achieve three major objectives: performance,
competitiveness and fairness
Important strategic questions
• Financial reward:
• Should it recognise performance? Long service? Level of responsibility?
• How are pay decisions made? Is there is a strict grading structure or more
individual approach?
• Non-financial rewards
• How can we design rewards to suit all of our staff?
• What are the individual and business benefits of investing in x, y and z?
Market Competitive Compensation
Lag-the-Market Strategy
• Used when the employer is experiencing financial difficulties and when an abundance of workers
is available
Lead-the-Market Strategy
• Aggressive approach that enables a company to attract and retain sufficient workers with the
required capabilities and be more selective when hiring
Match-the-Market Strategy
• Attempts to balance employer cost pressures and the need to attract and retain employees by
providing compensation levels that meet the market for the employer’s jobs
4. Reward system
4.1. Financial rewards
Competitive pay
Internally equitable pay
Supply
Demand
Supply
Compensation Fairness
and Equity