“A reward system consists of financial rewards and employee benefits, which together comprise total remuneration”
Martin et al, 2010
There are two types of reward systems Financial Rewards and Non-Financial Rewards. The differences between the two are simple. The Financial Rewards involve:
· Basic pay rates
· Bonuses· Incentives
· Performance related pay
· Overtime payments
These are also known as ‘Tangible’ or ‘Extrinsic’. The Non-Financial Rewards are based on:
· Recognition
· Career opportunities
· Opportunity to develop skills
· Work life balance
· Flexible working time
These are known as ‘Intangible’, ‘Intrinsic’ or ‘Difficult to value’.
The brand ‘New Look’ is a high street shop aimed at girls and women all looking for the latest fashion. The shop aims to offer each person who works for them a large staff discount in order to thank them for the hard work they put in creating and selling the outfits the shop offers. They also offer competitive bonuses, incentives and a company pension scheme. Each person who works for the shop is offered the chance to train and develop themselves, this is to ‘Teach, enrich and stretch people to be the best they can be’. New Look state that they ‘At every level in the business, we value and encourage continual learning. From E-Learning to workshops and secondments, we’ve the resources in place to grow our own future managers and leaders’.
The New Look brand ensures that each employee is given the same rewards and incentives and they all have the same opportunity to better themselves within their careers. The brand differs itself from other brands and shops by giving their employees the chance to create their own working uniform created by the clothes in the shop. This gives the employee freedom to express themselves but still feel controlled by their manager.
The purpose of a reward system is to ensure several things such as :
· To motivate employees to perform to their maximum
· Comply with legal obligations
· Strengthen the psychological contract
· Support the corporate strategy
· Recruit qualified employees
· Retain capable employees
· Maintain equity
· Be sustainable within financial resources
· To motivate employees to perform to their maximum
· Comply with legal obligations
· Strengthen the psychological contract
· Support the corporate strategy
· Recruit qualified employees
· Retain capable employees
· Maintain equity
· Be sustainable within financial resources
There is a big debate as to whether the chief executives of large businesses should receive rewards in the form of a bonus if it comes to light that their companies have underperformed.
The Royal Bank Of Scotland banking group made a loss of more than £1bn last year It was revealed last month that Mr Hester Chief of RBS banking group was given an additional £4.5million potential shares on top of his £2m annual bonus and £1.2m salary for 2010.
Some people may believe that this is not right and that the people who get the company into debt and underperform within their business should not be rewarded for the things they do. They believe that the customer satisfaction levels of the Business were not met to the correct standards and therefore the people in charge should not be given praise for their poor skills in their jobs. However, on the other hand, there is an argument to suggest that people believe in being fair and allowing the people who misjudged their business to be rewarded for the work they did and hope for an improvement within the next financial year. Royal Bank Of Scotland Chairman said “We need talented and motivated people and we need to be able to pay them fairly”. It is my personal belief that the bonuses given to the people of the board who have achieved a huge bonus after under achieving within the Business is not acceptable. I feel like this is not a fair thing to happen and other processes should be under taken in order to reward the person but a bonus that large should not be given.
Referencing:
Martin et al, 2010
L. J. Mullins. Management & Organisational Behaviour (2010) 9th Edition.
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