Reward Management Processes and Activities

The business/ HR strategyThis is the starting-point; all the reward policies, processes and practices flow from here to achieve the overarching business goal of improved performance, visible and useful to the organization.

The reward strategyThis determines the direction in which the innovations and developments should go to support the business strategy, how they should be integrated, the priority that should be given to initiatives and the pace at which they should be implemented. Grade and pay structure policy this deals with the shape of the grade structure and the elements of pay within that structure, i.e.:

• Base pay: the fixed rate of pay that represents the rate for the job into which pay related to performance, competence, contribution or service may be consolidated.
• Contingent pay: pay for an individual that is related to performance, competence, contribution or service.
• Variable pay: pay in the form of bonuses or cash payments that will be contingent on individual, team or company performance.

Market analysis The process of identifying rates of pay in the labor market to inform decisions which will be influenced by its market stance.

Job evaluation The systematic process of establishing the relative size of jobs and roles within the organization.

Grade structure The sequence of grades, bands or levels, which may be divided into job or career families that are broadly comparable in size are placed.

Pay structure The ranges of base pay that are attached to grades or levels in job or career families and the scope for pay progression related to performance criteria defined competence, contribution or service. Base pay levels will be influenced by equity and market rate considerations.

Employee benefits The provision for employees of pensions, sick pay, various kinds of perks such as company cars and entitlement to holidays and other leave.

Non-financial rewards Rewards that do not involve any direct payments and often arise from the work itself, for example achievement, autonomy, recognition, scope to use and develop skills, training, career development opportunities and high-quality leadership which will result into motivation.

Performance management Processes involving managers, individuals and teams based on shared understanding, which define performance and contribution expectations, assess performance against those expectations.

Total remuneration The sum of base pay, contingent pay and the value of employee benefits.

Total reward The sum of total remuneration and non-financial rewards.

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