Reward Practices for Improved Organizational Performance

Reward Practices for Improved Organizational Performance

Human resource came up with the idea of reward practice to make sure that employees are kept motivated and productive. Reward practices are linked to improved supposed organizational performance (Richard & Marilyn, 2001). Today, organizations indicate increased attention to strengthening of reward practices that align with human resource practices and the goals of the company. Reward practices managed by human resource can be in the form of financial, social or developmental and are meant to improve organizational performance.

Reward practices in financial form is the most popular in organizations. On the good side, financial reward practices the annual bonuses and premiums are something that employees always look forward to at the end of the financial year or month (Gian, Delfino, & Ponta, 2019). Financial reward practices mean that the employee is at liberty to do whatever they want with the money they get. On the downside, these bonuses and premiums tend to be paid based on merit or according to positions held in the company. This system means that there is a high chance of a disgruntled or underappreciated employee existing.

Developmental and social reward practices are more comprehensive and complex in management for the human resource department. Developmental and social reward practices mean that employees are given chances at developing their careers and professions as a means to keep them productive. On the good side, such rewards mean that the organization stands to benefit through capacity building of employees in career development (Sergio, Luiz, & Karren, 2016). However, on the downside, developmental reward practices might be expensive and time consuming for the organization. The company has to devote resources to making sure that its employees receive capacity building through on job trainings.

In organizations, reward systems are structured to get rid of some of the problems that come with employee management (Leonard, 2019). The most basic problem that reward systems get rid of is productivity stagnation. At times, employees get to a point when they no longer register growth in terms of professional knowledge, practice and work output. With a reward system in place, employees are pushed to always outdo their previous performance. Another problem overcome with an efficiently designed reward system is employee turnover. With financial, social and developmental incentives in place, employees are less likely to leave the company before their contract is over. These two are just examples of some of the problems solved by an efficiently designed reward system.

The responsibility of management of a reward system is assumed by an organization’s human resource department. The HR is tasked with the creation and enactment of approaches and polices that are supposed to reward employees impartially and justifiably with regards to their worth to the organization. It is up to the HR of the organization to determine which employees get reward in what ways. HR founds this reward system based on the performance of employees and their contribution to the running of the organization.

Organizations use the pay mix policy to try and make sure that employees get fairly and equitably compensated. Pay mix policies denote a blend of essential compensation and employee benefits constituents that encompass an employee’s over-all compensation bundle (Dr. Pankaj, 2015). In an organization, there are different levels of employees; line employees, managers, administrators and executives. These different levels of employees receive different types of core compensation and benefits components. As such, it is hard to find a manager getting the same overall compensation bundle as a line employee.

To sum up, Reward practices managed by human resource can be in the form of financial, social or developmental and are meant to improve organizational performance. Financial reward practices are the most popular in organizations. Reward systems are structured to get rid of some of the complications that come with employee management. The responsibility of management of a reward system is assumed by an organization’s human resource department. The HR uses the pay mix policy to try and make sure that employees get fairly and equitably compensated.