Employees have a strong sense of unfairness if they are asked to shoulder unacceptable levels of risk in an organization, they always want the management or their employers to get involved in the risk but never accept this for themselves. On the pay front this might involve being on a highly geared incentive or commission scheme where the fixed pay element was too close to their particular ‘bread line’.
Risk sharing means as the profits, the risks are also shared with all the stakeholders and employees of the organization. There is a great risk involved in the process of reward management. Employees who are the good performers are rewarded by the organizations. This encourages others also to perform well and earn rewards. Sometimes there are more employees who have not performed well during the particular point in time, this will have an impact on the performance of the others as well and ultimately rewards of the best performers will be impacted. So, this is considered as risk sharing in reward management when some employees who are good performers do not get their rewards due to the others who have not performed well in the organization.
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