Monday, July 16, 2012

methods of rewards and benefits management

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Human Resource Management (HRM) concerns the human side of the management of enterprises and employees¡¯ relations with their firms. HRM is resource-centered and directed mainly at management needs for human resources (not necessarily employees) to be provided and deployed. Demand rather than supply is the focus of the activity. There is greater emphasis on planning, monitoring, and control and rather than mediation (Letherbarrow, 00).

The design and operation of payment systems in many organizations have often been institutionalized by custom and practice, tradition and collective bargaining mechanisms. Nevertheless, trends show that the movement towards HRM has corresponded with the introduction of supposedly new forms and strategies of reward management. Contemporary developments in pay and reward concentrate on individual performance-reward contingencies in a unitarist framework. Employees will be highly committed, and thus motivated and productive, if the reward strategies of an organization match the corporate and the human resource strategy and are carefully implemented. The reward strategy is hoped to support other management techniques to blur the distinction between workers and management.

This assignment is to discuss and critically evaluate alternative methods of rewards and benefits management to get a realistic picture of the advantages and disadvantages of the methods currently in use and the impact on individual and the organizational performance. The assignment will follow the next aspects to make analysis Job evaluation, Motivational theory, Payment systems, and Performance management.1. Job evaluation

In the internal organization, there are strong competitions among all the employees at the similar position because most of them have the desire to get the chance of promotion. Even though they are not at the same position, the competitions still exist. Sometimes for a better position, there are maybe several people to apply for at the same time. Every employee hopes to make good performance in the working process, which can let him/her more distinct in the employees. In the competition, those with distinct advantages can get promotion or increases in the salary or bonus at the end of year.

For the organization, it has to invest more money in bringing up new employees than in the retention of its old employees. And old employees are rich in business experience, so their competence is another kind of assets for the organization. But for new comers, the organization must spend more time and energy in the period besides money. Furthermore old employees have strong relationship with the external business so that losing these old employees means losing profits and the advantages. In order to keep these employees stay in the company, organization will think about increasing their salary or giving more business¡¯s welfare or allowance.

Employees can be encouraged by motivation rules to make better performance in the organization. If employees work all the time without some incentive elements, they will be bored with the work and cannot make a good performance in the work. It is not a good condition for the organization¡¯s operation. Organization use the method of motivation can let the employees more positive in performing the work and get a satisfactory result. The organization can give them intangible or tangible thing to motivate them in the process of working.

Every employee working well has the chance of getting promotion or rewards, and everyone making mistakes must accept the punishment. In the organization, the fairness and equity are suitable to every employee. If all the employees perform well, everyone can get rewards and nobody can be cancelled to lose the chance.

. Motivational theory

There are three well-known need theories that are Maslow¡¯s hierarchy of needs, Herzberg¡¯s two-factor theory of motivation and Porter and Lawler¡¯s expectancy model of motivation. They provide an indication of the different needs that individuals bring to the working environment.

Maslow¡¯s hierarchy proposed that everyone is motivated to satisfy a series of instinctual needs that are Physiological needs, Safety and security needs, Social and belonging needs, Ego and esteem needs and Self-actualization needs. Maslow¡¯s assumption is that once one level of needs has been satisfied they no longer motivate the individual and other needs will become prominent (Beardwell and Holden, 001507). The individuals have the ability to climb the hierarchy if the organization provides factors to improve their level of motivation. However if the individuals are fortunate to achieve the highest level of motivation, they don¡¯t stay there for long, as de-motivational aspects come along and have the effect of reducing their standing on the hierarchy.

Herzberg¡¯s two-factor theory makes the distinction between hygiene factors and motivators in the work environment. Hygiene factors are thought to be environmental, which are related to the conditions of work rather than to work itself. But hygiene factors don¡¯t actually increase a worker¡¯s job satisfaction. Motivation factors include such elements as sense of achievement on completing work, recognition from others within the organization, responsibility assumed, varied work and prospect for promotion. An organization must be concerned with ensuring that both the hygiene factors and the motivators are to an adequate standard (Beardwell and Holden, 001508).

Porter and Lawler¡¯s model of motivation can be stated that employees must value the rewards, put in more effort if they believe that good performance will lead to the achievement of the desired rewards, and engage in good performance. Managers must communicate their expectation and objectives clearly to ensure employees understand the requirement, make sure that rewards are clearly and visibly linked to performance, and recognize the important role played by comparisons in determining employee satisfaction, and therefore the consequent levels of effort they will put into a task.

. Payment systems

The payment systems have the three types Payment by results, Performance related pay and Competence-based pay.

In Payment by results (PBR), the motivational impact of the linking of a financial reward to quantity and quality of employee outputs is recognized by many motivational theories. Paying employees for results sets up a relationship between the outcomes of performance and financial reward. And the relationship will lead the individual to try to continue or increase the level of performance in order to receive more financial rewards. But there are some problems of this system. The main problem is that workers¡¯ tendency to manipulate working procedures and falsify records of output. Performance standards become slack as employees receive pay for performance that is lower than originally envisaged, hence inflating unit labour costs. Workers are often directly or indirectly able to assert control over the process of work allocation to install their own notion of equity rather than directed by management¡¯s ideas of efficiency. Management may deliberately relax standards and make it easier for workers to obtain bonuses. Workers may be reluctant to accept management¡¯s request for changes in working practices if their present job or task provides a high income and the change threatens their perceived ability to achieve high bonuses and receipt of other benefits (Beardwell and Holden, 001, pp.516-50).

Performance Related Pay (PRP) can be defined as a system in which an individual¡¯s increase in salary is solely or mainly dependent on the appraisal or merit rating (Swabe, 1817). This system could increase the motivation of employees, encourage certain behaviors; help in recruitment and retention; facilitate change in organizational culture; encourage the internalization of performance norms and weaken trade union power. But there exits some following problems expectancy theory of motivation, displacement of objectives, undermining esprit de corps, reinforcement of status, control and power differences, difficulties with the assessment of individual performance, financial constraints, and crowding our intrinsic motivation (Beardwell and Holden, 001, pp.5-58).

Competence-based pay this system reflects an intention by the organization to reward the use or development of job-related competences. Competences are already in place for development purposes. Its importance includes the following aspects. There is a move away from job-based pay to person-based pay. There are needs to stimulate and reward horizontal career moves; to develop and encourage flexibility and empowerment; to acknowledge and reward more intangible aspects of working; to acknowledge and reward the way in which objectives have been reached, not just the achievement of the objective; to ensure that organizations have the right competences and people with those competences for the future. Such schemes are less judgmental and more flexible than traditional PRP. They communicate the message that ¡®change is happening, and you are expected to change with it, but we will help and reward you¡¯. But care must be taken to ensure that the competence identified and rewarded are relevant to the content and scope of employees¡¯ roles, as there is a clear danger that organizations will significantly increase their overall salary bill without any improvements in organizational performance (Beardwell and Holden, 0015).

After making comparison among the three systems, Performance related pay is more advanced than the others. And more and more international companies make use of this payment system. Though there are some problems in the payment systems, its strengths are more profitable to the organizations in the process of operation.

4. Performance management

Performance is defined as the outcomes of work because they provide the strongest linkage to the strategic goals of the organization, customer satisfaction, and economic contribution. And performance management is a strategic tool in the sense that it is concerned with the broader issues facing the business if it is to function effectively in its environment, and in the general direction in which it intends to achieve longer term goals. It is not simply the appraisal of individual performance. It is an integrated and continuous process that develops, communicates and enables the future direction, core competences and values of the organization, and helps to create a horizon of understanding (Beardwell and Holden, 00158).

As a HR manager, he/she should usually observe the performance of employees from different departments and evaluate their performance from different aspects whether is very good or good or normal or bad or very bad. For those employees¡¯ performances are good, the organization should give them a reward to encourage their future. But for those performances are not good or even bad, the organization should give them criticism and some punishments to push them perform well in the job.

The rewards given to those people perform well can be divided into intrinsic and extrinsic thing. The intrinsic thing is a tangible reward, which can include money, company cars, casual dress and so on. The extrinsic thing is an intangible reward, which could be private health care, promotion and so on. For example the reward from Porter and Lawler¡¯s model is an intangible one. The values of different rewards are different. According to their different levels of performance, employees should receive different rewards that could be intrinsic or extrinsic thing.

Some organization requires all the employees perform the work completely following the procedure formulated by the organization. Some employees maybe cannot get a good performance. These people have an open and creative mind and make some innovation in the job when solving problem met in the work. The innovation can let them work well and get a good solution. For these employees, organization couldn¡¯t neglect the benefits brought from their innovation and should encourage them bring forth new ideas in the job.

In Storey¡¯s key levers, Managing Culture is more important than managing procedures and systems. Integrated action is essential on Selection, Communication, Training, Reward and development. Restructuring and job design allow devolved responsibility and empowerment. Based on those above elements, organizations should make use of integrated action in the reward management. Organizations could use hygiene factors and motivators motivate the employees and let them satisfy with the environmental and self matters. They also should reward employees both intrinsic and extrinsic thing to encourage employees¡¯ performance.

After performing the assignment of the topic about the methods of rewards and benefits management and their impact on individual and organizational performance. The assignment through the following aspect Job evaluation, Motivational theory, Payment systems and Performance management to evaluate this topic. The rewards and benefits management plays an important role in the Human Resource Management.

A detailed description of performance and performance management has been outlined in the assignment. The reward and benefit management is linked to the performance management. Thus the performance management is also very important in this topic.

Through this assignment, the reader could know that the three well-known need theories that are Maslow¡¯s hierarchy of needs, Herzberg¡¯s two-factor theory of motivation and Porter and Lawler¡¯s expectancy model of motivation. We have learnt the two former theories in the last semester, but more knowledge about them can be obtained from this module. The latter theory is a new theory for the learning. After studying the lecture about this theory, the Porter and Lawler¡¯s model emphasizes the importance of performance from the employees and the reward linked to the good performance of the employees.

The payment systems have the three types Payment by results, Performance related pay and Competence-based pay. Each of them has its own strengths and problems itself. The three payment systems have their own basement, so the payment is implemented from different elements. And compared the three types, the results reflect that Payment by results is more acceptable by the organization.

The rewards and benefits management makes great impacts during the period of operation in the organization. It could encourage individual to make better performance in the job and influence the organization to more focus on the performance of the employees in the organization. Thus organizations should realize its importance and concentrate on the implementation of the rewards and benefits management in the internal operations. The HR manager should take on the responsibility of this management.

1. Armstrong, M. (001), A Handbook of Human Resource Management Practice (8th edn), London, Kogan Page

. Beardwell, I. and Holden, L. (001), Human Resource Management A Contemporary Approach (rd edn), Essex, Financial Times Pearson Education

. Curtis, S. and Wright, D. (001) ¡®Retaining Employees ¨C The Fast Track to Commitment¡¯, Management Research News, Vol. 4 No. 81, 001, pp.56-60

4. Graham, H. T. and Bennett, R. (18), Human Resources Management (th edn), Essex, Financial Times Pearson Education

5. Leatherbarrow, C. (00), Lecture Notes for MPO, Britain, Staffordshire University

6. Swabe, A.I.R. (18) ¡®Performance-related pay a case study¡¯, Employee Relations, Vol.11, No., pp.17-

7. West, M. and Patterson, M. (18), ¡®Profitable Personnel¡¯, People Management, 8th Jan, 18, pp.8-1

8. Zhang, W. (001), ¡®Culture Development on Human Resource¡¯, China Marketing, March 001, pp.4-4

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