Reward Systems Essay

at once of a managers most master(prenominal) tools is the ability to select rewards and cartridge holder the rewards properly. Even if managers ar not solely responsible for financial rewards, they preempt use a number of tools to add-on the authorization of their shaping. Reward frames provoke address several principal(prenominal) managerial objectives as they re deep to employee motivating. A squ ar reward system requires concerted attention in its development. The following sections give up a basis for a well-contructed reward system.Purposes of Reward SystemsReward systems serve several purposes in makeups. Effective reward systems helper an transcription be much competitive, retain key employees, and reduce turn everywhere. Reward systems alike can enhance employee motivation and reinforce the image of an organization among key stakeholders or future employees. People be the most important resource for organizational competitiveness, and keeping them on the j ob is a key task for any manager. rivalry to attract and keep the best employees is intense. For people flavor for a career opportunity, thats great news, barely as a manager of an organization claiming to keep the best and brightest, it is a challenge. It may be evening harder in the nonprofit and public sectors where flexibility in providing financial rewards may be much confine than in a commercial context. Retaining employees saves money on retraining costs, improves the consistency of services, and allows for relationships to develop mingled with invitees and the organization. In adjunct, proper rewards systems can reduce absences. Absences cause innumerable headaches for managers. Instructors who dont show up, too a few(prenominal) staff members at busy clocks, and the lack of a cleanup crew can all increase employment stress. Absences not only affect the manager only if also fellow employees who aim to rob up the slack and clients who feel the brunt of too f ew employees on site. As suggested earlier, understanding who, what, and when to reward can improve employees performance.However, the improper use of rewards can have a debilitating effect on employee performance. Managers need to understand their employees perceptions of the importance and fairness of the reward and then clearly communicate what inescapably to be do to receive the reward. Effective use of rewards can encourage employees to gain the skills that are necessary tohelp them and the organization grow. This can also increase their desire to strain being part of the organization. For example, an organization can have and provide era off for employees who want to take advanced courses in an area that is valuable for the organization. whatever organizations may even provide time off or support to help employees advance their testify personal goals or skill sets. Ideally, an organization wants employees who not only show up to give out plainly are excited ab tabu be ing there as well. This passion for formulate has been referred to as affectional commitment. Although research is whateverwhat preliminary, there is whatsoever indication that affective commitment can be strengthen by rewards that enhance employee perceptions of being supported and having control of the work situation. Finally, reward systems can also help with recruiting efforts. Just as able customers may be the best advertisement for a particular product, happy employees are oft a great tool for recruiting new employees and making the organization a workplace of weft. Think about the kind of job you want. Often you pull up stakes easily be able to delineate an organization that stands above the others as a great place to work. As a consequence of this, the organization can attract the best and brightest, creating a virtuous circle whereby it becomes an even more attractive workplace. hopefully you can see that establishing the right reward structure for an organization is critical to its success. The following sections delve into the lucubrate of various reward structures.Types of RewardsUnderstanding how each employee perceives and values different rewards is an essential part of management. Managers need to clutch an understanding of extrinsic and intrinsic rewards. Extrinsic rewards are external rewards tied to certain employee behaviors, skills, time, or roles in an organization. How employees perceive these rewards relevant to their performance and the rewards condition to others entrust ultimately determine the legalness of the rewards. Managers also need to understand how much value each employee places on specific extrinsic rewards. For example, a well-paid but overworked employee may value additional vacation time or a trim workload more than a few bare dollars. Money, p provide, awards, and incentive prizes much(prenominal) as tickets to a concert or a back are all examples of extrinsic motivators. Whatever motivator the manager chooses, the employee must seethe reward as a motivator for it to be effective. For example, if the extrinsic reward is tickets to the opera, an employee who hates the opera likely would not be move by the tickets. On the other hand, if the employee is a football fan and the extrinsic reward is tickets to a major game, the motivator might be more effective. It is simpler to explain what intrinsic rewards are by discussing what they are not. integral rewards do not have an obvious external incentive that is, people are not performing to get a tangible reward, be it time off or money. Instead, they act because it feels good or provides some form of internal satisfaction. Intrinsic rewards are often more highly valued and more effective over time, yet using them is a difficult managerial task. Intrinsic rewards derive from employees timbre good about the job they have done, the effort they have put forward, or the role they play in a team project. Intrinsic rewards in the workplace come from the job itself, so to provide intrinsic reinforcement, a manager should enrich the job. Job enrichment involves improving work processes and environments so they are more satisfying for employees, such as eliminating dysfunctional elements or enlarging jobs (increasing the duties and responsibilities of a job). Developing an effective reward system can be a difficult task. The following sections provide some guidance on the bedrock of an effective reward system. These sections focus almost exclusively on extrinsic rewards, but intrinsic rewards should also be considered when developing each employees job.Monetary Versus Nonmonetary RewardsMonetary rewards are most commonly given in the form of remuneration increases, bonuses, or increases in benefits, such as pension or wellness care premiums. Such rewards can be divided into two categories direct and indirect compensation (table 11.1). both contribute to the financial betterment of an employee. Direct compensation is r elatively straightforward and consists of increases in hourly hire, increases in hours (for nonsalaried employees), increases in salary, merit pay found on performance, seniority pay based on time with an organization, and bonuses based on the achievement of individual, group, or organizational objectives.Indirect monetary compensation includes increases to benefits or the additionof benefits such as a dental plan. It can also include paid leave in the form of vacation days, days off for training, or longer time off such as a sabbatical, as well as paid leave for illness, feel for for a child, or caring for an elderly parent. Additionally, some organizations may offer services as part of an indirect compensation package, such as on-site child care, an elder care program, an on-site cafeteria, a games room or gym, and hugger-mugger counseling services for employees and their families. Again, indirect compensation should be valuable to employees and ideally should offer choices fr om a localize of services. Nonmonetary rewards cost the organization but do not directly improve the employees financial military position (table 11.1). Supplying employees with the best tools possible to do their job is an example, such as providing a new high-end laptop or having an excellent training facility for coaches at a university. A good office location, choice of furnishings, or special parking place can all be nonmonetary rewards. Employees may not sock the full details of pay and other monetary benefits of coworkers, but nonmonetary rewards are often visible and can create perceptions of inequity in an organization. In some cases, this may be the intent of managers who want employees to contact to achieve the stereotypical corner office, but often it may also unintentionally encourage feelings of inequity. That inequity may have positive implications for an organization if employees strive to increase performance, or it can result in turnover and reduced performanc e. As with any reward, nonmonetary rewards need to be carefully thought out out front being implemented.Performance-Based Versus Membership-Based RewardsOne of the most difficult challenges for managers is to decide what to base rewards on. A common distinction is performance-based versus membership-based rewards. As the name implies, performance-based rewards are tied to the ability of an individual, team, group, or organization to meet some previously agreed-upon normal of performance. Performance rewards are based on an evaluation of contribution and awards are allocated based on that evaluation. Membership-based rewards are allocated solely for being part of a group within an organization. These rewards commonly include annual cost-of-living increases to a base salary or support for an equity policy. For example, if a park and recreation department was realiseing toencourage staff to have masters degrees or obtain certification, they might offer pay incentives for having eith er or both. Membership-based rewards are also often tied to length of time with an organization. For instance, after a certain length of service with an organization, employees may receive a certain percentage increase to their pay or be eligible for additional benefits. In a unionized environment, many of these rewards are spelled out in a labor agreement. To illustrate the difference between the two structures, lets look at annual raises. A performance-based structure means that each employees performance is evaluated and raises are based on performance, with the highest performers getting the most money. A membership-based structure means that all employees receive the same raise regardless(prenominal) of performance. Membership structures can be demotivating to high performers because they get the same rewards despite working harder. non handed-down RewardsAs more and more managers understand the importance of individualizing reward systems, the use of nontraditional rewards wil l continue to grow. Time is often a key constraint, and for many people work is a major time commitment. Ways in which employees can individualize their work schedule are becoming more and more important rewards. Four methods of individualization are reduced workweeks, staggered daily schedules, flextime, and working from residence.Reduced WorkweekA reduced workweek often sees employees working a 4-day week instead of 5 days. In return for that extra day, employees work longer on their 4 days in the office. For example, in a 40-hour workweek from Monday by Friday, employees would work 8-hour days, but the reduced workweek would see hours increase to 10 hours a day for 4 days. The benefits to the employees are longer blocks of time to take care of their personal lives, less frequent and often less busy diversifys, and ultimately more useful time for themselves. The organization has no additional expenses and evidence suggests that absenteeism and time lost for personal reasons d ecreases. However, there are also downsides for both employees and the organization. Parents, for example, may follow it difficult to find child care that is open late or early enough to accommodate the longer work schedule. The longerwork day may also be a constraint to people who are involved in weekly evening activities, be it coaching a team or tending an art class. Some jobs may also not lend themselves to longer days. A lifeguard or sport instructor may be considerably less effective in those last 2 hours, which can lead to decreased performance and in some cases safety risks. Also, the hours and timing of work may affect service to clients. Even if an organization maintains its regular schedule, clients expecting to reach a particular person during traditional business hours may find the new schedule frustrating. Finally, reduced workweeks seem to be most effective when employees themselves are involved in creating the schedule. Understand that employees participating in r educed workweeks need to be plan so that the entire organization is not gone on FridayStaggered Daily ScheduleAn alternative to a reduced workweek may be a staggered daily schedule. Employees still work their designated weekly hours but can allocate those hours in different ways. For example, one employee may want to come in late and leave later to accommodate dropping off children. Someone else may prefer being in the office an hour earlier and leaving an hour earlier. These schedules may even be adapted weekly or monthly to accommodate changing employee needs. This idea meets employees individual needs but can often be difficult to manage. Again, a staggered daily schedule may not be appropriate in all settings and must consider not only employee needs but also organizational requirements and client desires.FlextimeFlextime allows some employee freedom while still meeting client and organizational needs. Employees are expected to be in the office during a certain time frame, usua lly ranging from 4 to 6 hours, such as 930 a.m. to 330 p.m. Flextime emphasizes productivity and allows the employee some leeway in that flexibility partition (before 930 a.m. and after 330 p.m.). For example, take Pat, an aquatics programmer. Pat has two school-aged children and requires some flexibility to drop them off and pick them up at school. Pat has worked with the employer and agreed that he will be at the pool between the hours of 930 and 330 but will complete the rest of his work elsewhere. This ensures that Pats coworkers and clients can reach him at predictable times while still allowing him the personal flexibility herequires at this point in his life. This type of location has been effective for many organizations and employees, although obviously it wont work in all situations. Flextime also allows a staff person more control over their hours. For example, a special events coordinator works 5 hours over the weekend. The following week, the coordinator comes in an hour later than usual each day.Working From HomeAs engineering has advanced, the option of working at home for some or all of the workday is becoming increasingly possible. A high-speed Internet connection and a laptop computer connected to the workplace earnings provide many people with everything they need to do their job. Obviously this arrangement is more desirable to some positions than others. A job developing programs for a municipal recreation department would be more suited to a work-at-home plan as opposed to the job of instructing the programs. Working for some or all of the workweek at home can offer fewer workplace distractions, allow employees time to concentrate on projects that are important to the organization, and make more effective use of the day by eliminating the need to commute as well as the usual time killers present in most offices. However, working from home is not for everyone. The distractions of the home require discipline, and for those who consisten tly work at home the blurred distinction between home and office can be unsettling. Additionally, monitoring employees at home is nearly impossible. Evaluation needs to be performance based and work-at-home schemes do not work for organizations that want to monitor how employees spend their time. Allowing employees to work at home part of the time, however, may be an excellent compromise for both employees and the organization.