Financial Rewards & Performance management Financial Rewards & Performance management Chapter 7 (p ) Pinnington & Edwards. Introduction to Human Resource Management Ateyyah Al Zafiri B202A

Rewards Systems: The reward strategy= 3 basic components: 1-Financial Rewards. 2-Performance Management. 3-Non-financial rewards= ( processes are designed to motivate employees through recognition, responsibility, achievement, development, and growth.) Ateyyah Al Zafiri Financial Rewards

Armstrong subdivides financial rewards processes into: Base Pay=determined through job evaluation studies and pay surveys that inform the pay structure. Employee Benefits= Company pensions and healthcare schemes. Variable Pay= Profit sharing and bonus payments. Ateyyah Al Zafiri

Financial Rewards >>> Total remuneration received by the individual = (Employee benefits + Variable pay +Base Pay) (Employee benefits + Variable pay) = determined according to minimum standards set by Government Ateyyah Al Zafiri

Pay structures and systems -The pay = essential reward employees receive for their work (regardless of job satisfaction and other intrinsic rewards) -Different structures for determining the pay for individuals and groups of employees. -Pay systems = the processes of paying employees within a given structure

Pay Structures Graded Graded = consists of a sequence of job grades into which jobs of equivalent value are fitted. Each grade has a pay range or band, offering the employee scope for progression within his or her grade. Broad-banded Broad-banded= It aims towards reducing the number of grades and increasing the discretionary range (the range of the amount of pay or bonus an employer can award ) within grades

Pay Structures Individual Pay Range Individual Pay Range=a separate pay range for each job within categories such as senior management, middle management, and team leaders. The structure tends to be aligned with market rates, enabling the organization to compete effectively with rates of pay in comparable organizations. Job families Job families=consist of separate pay structures for job families( i.e. groups of jobs evaluated as being equivalent). Each job family has its own structure that may be graded in terms of skills, competence, or responsibilities

Pay Structures Pay Curves Pay Curves : called also maturity or progression curves, provide different pay progression tracks according to skill, competence, responsibility, and performance. Spot Rate Spot Rate: =used separate for particular jobs. used by organization that emphasize the management's prerogative to pay whatever they wish and are useful for attracting employees with valuable skills.

Pay Structures Pay spines Pay spines = common in the public sector and in voluntary organizations. The various grades are organized along a single pay spine. Individual are paid according to their grade and their point on the spine. Integrated pay = Integrated pay =introduced to facilitate flexible working by reducing the barriers created by occupational and hierarchical pay structure.

Pay Structures Rate for age = Rate for age = link pay to the age of employees and have become relatively uncommon

Payment system: 1- Time rate system.( a unit of attendance at work an hour, day, week, month or year) 2- Rewards for individual or Group Performance ( Individual piecework, Work- measured schemes, Measured day work, Group or team incentives, Individual and group bonuses, Performance-related pay, Skill-based and competence based pay, Cafeteria or flexible benefit system) 3- Reward for Organizational Performance (Gain sharing, Profit sharing, Save-as-you-earn)

Performance Management Performance Management: approach used by organization to try to achieve strategic goals consistently through better formal and informal motivation, monitoring, evaluating and rewarding of performance.

Performance Management Performance Management: Components ofPerformance Management Components of Performance Management 1- Reviewing and appraising performance. 2- Managing performance standards 3- Determining performance expectation. 4- Supporting performance.

Performance Appraisal Performance Appraisal: The main formal method of setting, measuring and achieving performance expectations. It involves: The systematic review of the performance of staff on a written basis at regular time intervals. Holding of appraisal interviews at which staff have the opportunity to discuss performance issues, past, present and future, on a one-to –one basis, with their immediate line manager

Performance Appraisal Performance Appraisal: Performance management requires the following activities: 1-The manager must appraise and review the past. 2- Conduct the performance appraisal interview. 3-plan the future and agree performance targets and development plans. 4- follow up the interview with future action.

Performance Appraisal Performance Appraisal: Essential elements of performance management : 1. Setting individual objectives which support achieving the business strategy 2. Performance Appraisal 3. Review of pay and rewards including performance related pay 4. Review of organizational capability– the performance management system must influence the business strategy.

17 Kaplan and Norton’s Balanced Scorecard Kaplan and Norton’s Balanced Scorecard HRM chapter 7 p165 One recent innovation in performance management is the balanced scorecard. The scorecard presents four different perspectives on performance measurement: 1- Customers. 2- Internal business 3-financial 4- Innovation and learning

18 Kaplan and Norton’s Balanced Scorecard The balanced scorecard is a management process involving 4 main steps. 1. Deciding the vision of the future 2. Determining how this vision can become a competitive advantage for the organization as seen from 4 perspectives: shareholders, customers, internal management processes, and ability to innovate and grow.

19 Kaplan and Norton’s Balanced Scorecard 3. Determining from these 4 perspectives the critical success factors. 4. Identifying the critical measurements for ascertaining how far along the organization is on the path to success.

20 HRM Practices & outcomes Empirical research by Guest on the link between HRM and performance, comes to the conclusion that; 1- higher performance outcomes are where HR practices link to business strategy and external environment.

21 HRM Practices & outcomes 2- The link between high performance HRM practices and better organizational performance as indicated by productivity, lab our turnover, or financial indicators. 3- There is some evidence for superior performance where coherent groups of practices are deliberately applied.