Human Resource Management: Rewards and Compensation

Rewards Management

• A system that supports the organization's goals by attracting, motivating, and retaining employees through various rewards.

Objectives of Rewards Management

• To attract and retain talented employees
• To motivate employees to achieve organizational goals
• To create a sense of fairness and equity among employees
• To align employee behavior with organizational objectives

Effective Rewards Strategy

• A strategy that aligns with the organization's overall goals and culture
• A strategy that takes into account the organization's financial situation and industry standards
• A strategy that is fair, transparent, and communicated effectively to employees

Content of Rewards Strategy

• Philosophy and goals of the rewards system
• Reward components and their respective weights
• Performance measures and evaluation criteria
• Communication and feedback mechanisms

Compensation Defined

• The total amount of monetary and non-monetary benefits paid to employees for their work

Historical Events of Compensation

• Early 20th century: Industrial Revolution and the introduction of wage systems
• Post-WWII: Introduction of benefits and perks
• 1980s: Shift towards performance-based compensation
• 1990s: Increase in variable pay and stock options

Components of Total Compensation

• Core compensation (base salary and bonuses)
• Employee benefits (health, retirement, etc.)
• Work-life benefits (flexible scheduling, etc.)
• Recognition and rewards (non-monetary)

Elements of Core Compensation

• Base salary
• Performance-based bonuses
• Incentives and commissions

Employee Benefits

• Health insurance
• Retirement plans
• Life insurance
• Disability insurance
• Paid time off and holidays