Money may not be able to buy happiness, but you can make a substantial down payment on it Marx

HOBBY & ENERGY

WORK

A motive is a reason for doing something.Motivation is concerned with the factors that influence peoples behaviourDirection what?Effort how?Persistence how long?

Intrinsic Rewards Status/ Growth / Responsibility

Extrinsic RewardsNon-financial (office, staff, title, etc.) Financial (direct and indirect compensation)

Motivators/ SatisfiersAchievementRecognitionWork itselfResponsibilityAdvancementHygiene factors/ DissatisfiersCompany policy and administrationSupervisionSALARYInterpersonal relationsWorking conditions

The only way to do great work is to love what you do

Employee seeks toCompany seeks toCompetingOftenIncompatibleAims

Maximise paySelf gain

Role definitionSteady or guaranteed pay increasesMaximise autonomy

Maximise the utilisation of payTeam developmentMaximise flexiblilityPay for performanceEnsure managerial control

Employee objectivesPurchasing powerFelt fairRights (To share in companys profit)RelativesRecognitionComposition

Employer objectivesPrestigeCompetitionControlMotivation and productivityCost

Maximize ability to attract and retain qualified employees

Be within ability to pay

Allow organization to remain competitive

To attract sufficient and suitable candidatesTo retain employees who are satisfactoryTo reward employees for effort, loyalty, experience and achievementInfluencing factors to noteStay within agreed budgetState of the labour marketNature of employees relations

Legal obligations/ The minimum reasonGet sufficient share of relevant labour market/ The competitive reasonFair reward for those performing specified roles/ The equitable reasonProvide an incentive for employees/ The motivational reasonKeep pace with inflation/ The cost of living reason

Supply of Labor Demand for LaborCompany LocationEconomic StateCompetitionUnion InfluenceProduct/Service Demand

Organization SizeWillingness to PayAbility to Pay TraditionUnionizationJob Itself Employer PrestigeWork Force CharacterDesired Employee QualityRatio of Labor Costs to Total Costs

Maximize ability to attract and retain qualified employees

Be within ability to pay

Allow organization to remain competitive

pay for the job pay for the man pay for time spent pay related to output contribution

its physical difficulty the nature of the physical surroundings its intellectual difficulty, and thus the qualifications it demands (this is not the same as the qualifications the man doing the job happens to possess. Paying more for a job because it needs a graduate is pay-fot-the-job. Paying a man more because he has a degree is pay-for-the-man.) the value of the job to the firm

his age his experience his needs (number and kind of dependants, for instance) his qualiications (not those necessarily demanded by the job, but any others he may have) his rank (this is rare in Western industry, but it is central to military payment systems, and is a fairly important factor in Japan, though rank in Japan is fairly closely correlated with age and experience).

groupInd.Potential impact of pay components

ECONOMIC OBJECTIVESPAYCOMPONENTHUMAN OBJECTIVESFlexibilitySelfcorrectionStabilityPerformanceSecurityGroup identificationIndividual influence(short-term)Selfdevelop-ment(long-term)FIXEDPay for the jobPay for the manVARIABLEPay for timespent workingPay forcontribution to outputPay for company performance

Flexibility through the ease with which it allows peoples jobs to be changed. Self-correction through the way in which it stimulates (or fails to stimulate) workers and, indirectly, supervisors to take corrective action themselves. Stability through the way in which it increases or decreases tensions that may lead to disruption. Performance through its direct action to stimulate workers efforts.

Individual

Group

Company-wide

Executive

Piecework Payment/ Payment by result: Pay proportional to output / effortStandard Hour/ Time rate system: Pay related to hours, not to effort CommissionsBonusesSkills-based PayNon-financial Awards

Piece-rate Systems

Standard Hour Plans

Group Bonuses

Profit Sharing

Profit Sharing

GainsharingScanlon plan: a gainsharing program in which employees share in pre-established cost savings, based upon employee effort)

Rucker plan: a gainsharing program that returns cost savings to the employees, usually as a lump-sum bonus. It is a productivity measure, as opposed to profit-sharing which is a profitability measure.

Stock Ownership Plans (ESOP)

Salaries Stock Options Long-term Incentive Plan Payouts

Directors Fees

Perks (membership, familiy, school etc.)

Benefits in kind Fringe benefitsPerks

SecurityWorkStatusPensionLife assurancePrivate health careBridging loansLow cost mortgageCreche facilitiesProfit sharingShare optionsPre-retirement counsellingRedundancy counsellingSubsidised mealsCarsCar loans and allowancesCar mileageSabbaticalsPrizesPrestige carsEnhanced pension and life assuranceEntertainments allowancePaid telephone School feesCredit cardsLong and short termDay to day operational requirementsMore as rewards

A

BCPlaceworkPremiumsFixed wagesAverage productivity increase 10/15%Average prod. Drop 10/20%Average prod. Increase 30/40%ABC

Productive efficiencyDownUpOver 30%20/3010/200/100/1010/2020/30Over 30%271510210652257

Qualityworsesamebetter13051831141

AbsenteeismWSB233120116

Personnel turnoverWSB2322192151

What is the best practice?

It is important to establish a strategic Reward Management System which clearly articulates the aims of the various reward elements, integrates them in a coherent way and tells employees what they can expect to receive and why. The Reward strategy needs to be written, communicated and understood throughout the organization. The strategic Reward Management System is a key element of:HR StrategyBusiness Strategy Organization Culture

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WHY?Tool of standardization and control of benefits The amount and use of benefits are measurableTrace flexibly the different and changing needs of employeesFit to company's budget Cost-effectiveAttract and retain employeesBest market practice Suit their current needs Simple, clear and justified Sense of control and involvement by having a choice Additional amount over their regular salaries For EmployerFor Employees

*Tickets,VouchersInternetAllowancesHealth FundPension FundFrame amount

Management objectivesProblems in the existing schemeTypes of employee /size of unitPossible future change (need for flexibility)HistoryLupton and Gowler TechnologyLabour marketDisputes and disputes proceduresStructural dimensions

Union pressure/preferred methodsLegislative constraintsCurnow:Internal consistencyExternal competitivenessFlexibilityEasy to understand/administerContinual updating

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