Performance and Reward Management

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Questions and Answers

What is the main focus of performance-related pay?

Acquisition of new skills

Quality of work

Time spent in the job

Output and achievement of objectives (correct)

What type of pay relates to the level of competence of an employee?

Competence-related pay (correct)

Contribution-related pay

Service-related pay

Skilled-based pay

Which pay system is primarily linked to time spent in the job rather than performance?

Skilled-based pay

Contribution-related pay

Performance-related pay

Service-related pay (correct)

What is a key drawback of competence-related pay?

It can be challenging to measure levels of competence accurately. Signup and view all the answers

Which method of non-financial reward increases variety in tasks but does not increase job challenge?

Job rotation Signup and view all the answers

What is a potential issue with skilled-based pay?

It can be costly if skills are not applied in the job. Signup and view all the answers

Which non-financial reward is designed to meet workers' social needs?

Team working Signup and view all the answers

In a contingent pay scheme, what does the 'contingent' refer to?

Rewards tied to specific performance measures Signup and view all the answers

What is a primary aim of reward management?

To reward people according to their contributions Signup and view all the answers

Which guiding principle is NOT associated with effective reward management?

Distributing rewards equally among all employees Signup and view all the answers

What is a potential disadvantage of financial rewards?

They may demotivate those who do not receive them Signup and view all the answers

Which of the following is a characteristic of financial incentives?

They focus on specific targets and objectives Signup and view all the answers

How does reward management contribute to a high-performance culture?

By aligning rewards with business and employee goals Signup and view all the answers

What is a benefit of maintaining competitive rates of pay?

It helps attract and retain high-quality employees Signup and view all the answers

According to the philosophy of reward management, when should people be rewarded differently?

According to their contribution to the organizational goals Signup and view all the answers

Which of the following best summarizes an argument against financial rewards?

They can create competition rather than collaboration Signup and view all the answers

Study Notes

Performance Management

Performance management is a cyclical process involving valuing, paying, developing, and involving people.
The diagram visually represents these four aspects:
- Valuing people: Focuses on recognizing and appreciating employees' contributions.
- Paying people: Covers financial compensations.
- Developing people: Involves training and skill enhancements.
- Involving people: Emphasizes employee participation and collaboration.

Reward Management

Reward management focuses on strategies, policies, and processes to acknowledge and reward employees' contributions to organizational, departmental, and team goals.
It's all about ensuring the value of people is recognized and rewarded.

Aims of Reward Management

Align rewards with business goals and employee values to motivate.
Reward the right behaviors and outcomes, clearly communicating important actions.
Attract and retain top talent matching the organization's needs.
Engage and commit employees to foster a high-performance culture.
Reward individuals according to the value they create.

Philosophy of Reward Management

Reward management is rooted in a clearly defined philosophy aligning with organizational values.
This philosophy underscores human resource management as investing in human capital for reasonable returns.
Differential reward based on contributions is considered appropriate.

Guiding Principles

The reward system should operate fairly and equitably.
Develop reward policies and principles supporting business goals.
Recognize and reward contributions.
Provide and maintain competitive pay rates.
Give line managers greater decision-making responsibility for rewards.

Financial Rewards

Base pay.
Performance-based pay/bonuses.
Pay related to the amount of service provided.
Financial recognition schemes.
Benefits like pensions, sick pay, and health insurance.

Arguments Against Financial Rewards

Financial rewards are unlikely to consistently motivate employees.
Money's motivational effect varies from person to person.
Employees who don't receive rewards may become demotivated, negatively impacting quality and teamwork.

Financial Rewards and Incentives

Financial incentives motivate achievement, skill enhancements, and improved performance through targeted objectives and targets.
Financial rewards provide recognition and can serve as indirect motivators.

Contingent Pay Schemes

Contingent pay is supplemental compensation linked to performance, competencies, contributions, skills, or service metrics.

Performance-related pay and bonuses are tied to performance assessments.
Links rewards to preset objectives.
Focus is on output.
Works well for individuals motivated by monetary incentives.

Pay increases or bonuses are linked to employee competencies and encourage competence development.
There's a risk of paying for competencies unused.
May be suitable when measuring outputs is complex or challenging.

Pay and bonuses are linked to both inputs and outputs to recognize the 'how' alongside the 'what.'
Difficult to accurately measure contribution.

Skilled-Based Pay

Pay and rewards are tied to acquired skills.
Encourages skill development.
Can lead to high costs if employees are rewarded for unused skills.

Pay is linked to overall time spent in a role, rather than performance.
Simple to enact.
Does not reward significant contributors.

Non-Financial Rewards

Job Enrichment

Offering more engaging, challenging tasks to employees to increase satisfaction and utilize full potential.
More motivating than job enlargement or rotation.

Job Enlargement

Adds more tasks to an existing role, but tasks are similar.
Reduces monotony.
Does not enhance achievement or satisfaction.

Job Rotation

Creates varied tasks in existing roles without boosting task complexity.
Doesn't usually increase the challenge of the job.

Team working

Team work fulfils employees' social needs and increases productivity flexibility.

Empowerment

Delegating authority to employees. Managers maintain responsibility for work delivered, even with delegated authority.

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Description

This quiz covers the essential concepts of performance and reward management. You will explore the cyclical process of valuing, paying, developing, and involving employees, as well as effective strategies in reward management to enhance organizational success. Test your knowledge on how to align rewards with business goals and motivate employees.