REWARD BASED
PERFORMANCE
MANAGEMENT
Presented by:
Palak Agarwal(pg09070)
Performance management is the systematic process by
which an organization involves its employees in
improving organizational effectiveness.
Rewarding means recognizing
employees for their performance
and acknowledging their
contributions to the agency's
mission.
REWARD MECHNISMS
1. Salary increase
2. Outstanding performance awards
3. Promotions
4. Change of responsibilities and status
5. Transfers
6. Placement decisions
7. Appreciation letters and certificates
8. Announcement in newsletters, journals
etc.
MAKING REWARDS EFFECTIVE:
The employee should know the aspects of his
performance that have been judged or
assessed as deserving of reward
The employee should know clearly the nature
of reward being given to him
The employee as well as his co-employees in
the organization should perceive the rewards
as a form of recognition and should attach
some value to them
PROBLEMS ENCOUNTERED IN
REWARD MANAGEMENT:
Quantification of performance
Comparison of performance with different
types of abilities and efforts to high
performance, and giving weightages to the
same
Demoralization among employees who are
not rewarded but who consider themselves
as high-performing employees
Isolating individual employees’ contributions
from group contributions
Subjectivity in performance assessment
FIVE MAJOR PRE-CONDITIONS TO THE INSTALLATION OF AN EFFECTIVE REWARD STRUCTURE
Measurement: “If you don’t measure it you won’t get it.” There are various
measurement systems of which Balanced Scorecard, which sets multiple objectives
and is used by Tesco, is perhaps the best known.
Monitoring: If the performance measures are not monitored properly or only
monitored in a review at the year end, it can give the manager signals that they
don’t really matter or, worse still, that failure is acceptable providing all the
managers fail together.
Control of the tools for the job: The organization must ensure that the individual
is not over dependent on factors outside his control to achieve the performance
measures set out (this is the ‘how’ part of the equation).
Consistency: Ensure that short term organizational factors don’t over-influence
managers or drive them from their real objective. The organization must also
ensure that its own design (be it bureaucratic or loose) is appropriate to what is
being asked of managers.
Reward and strategy in line: An organization’s achieving a clear strategy is not an
event that will take place in the future; it is a journey. A remuneration system can
be put into an organization even when it has a relatively muddled strategy
providing that organizational and management disputes are resolved by reference
to strategy and the “balanced scorecard”. Only then will there be pressure on the
organization to refine its strategy, structure and remuneration systems.
BASED ON THESE FIVE PRECONDITIONS, THERE IS A CHECKLIST OF TEN
FACTORS THAT THE EFFECTIVE REMUNERATION AND REWARD
STRUCTURE MUST ACHIEVE:
Support the business strategy
Encourage the desired behavior
Reward relevant performance
Be fair
Be substantial
Be tax efficient
Be timely (The reward must take place close to the
achievement)
Incorporate non-financial rewards (Recognition can be as
important as cash)
Be firm (A bonus lost through missing target should not be
recoverable whereas a salary increase should only be
delayed until target is reached)
Be crystal clear
CRITERIA FOR BUILDING EFFECTIVE
REWARD SYSTEMS I.E. THE SMART CRITERIA
Specific. A line of sight should be maintained
between rewards and actions.
Meaningful. The achievements rewarded should
provide an important return on investment to
both the performer and the organization.
Achievable. The employee's or group's goals
should be within the reach of the performers.
Reliable. The program should operate according
to its principles and purpose.
Timely. The recognition/rewards should be
provided frequently enough to make performers
feel valued for their efforts.
OBJECTIVES:
To attract new employees to the
organization to elicit good work performance
, and to maintain commitment to the
organization.
Motivate performance
Promote skill and knowledge development
Contribute to corporate culture
Determine pay costs.
A SNAPSHOT OF INNOVATIVE AND
UNIQUE TOTAL REWARD PRACTICES
3G: Providing an ATM centre, gaming arcades, multi-cuisine restaurants, even fitness and beauty
centers for employees to unwind within the office premises, offer higher education programmes with
tie-ups with premier institutions
Tesco: Maternity, paternity leave, also adoption leave. In house learning centre, employees can register
for a retail certification course from Indian Institute of Management
Infosys: Provide rigorous training programmes which involve several levels of certification, ensure that
the campus environment is collegial, control the ratio of managers to employees
Adobe:
Spot Bonuses, Recognition Bonuses in the form of cash
VIA (Values in Action) wherein they reward employees for demonstrating our key values
Each team has the autonomy to give ‘positive strokes’ to team members to bring about a feeling of
oneness!
iFlex Solutions:
Company-wide awards for excellence in individual and team work are given at the Annual Open
House.
Besides, there are mechanisms in place for ‘Spot Awards’ and ‘Peer Recognition’ which are non-
monetary in nature.
Total Rewards at Sun:
Compensation is an important component of Sun's employee lifecycle engagement
strategy. Total rewards play an important part in driving execution of business
strategy and aims to:
a. Drive performance
b. Attract and retain talent Recognition at Sun
c. Encourage teamwork
Recognition at Sun
it recognize the talent through both monetary and non-monetary initiatives.
They have spot bonuses where managers’ reward subordinates for their
contributions to specific initiatives. These could range from Rs. 5000 to Rs. 1 Lakh.
They have monthly and annual awards for contributions, which are more long
term. At their R&D center, nomination for these awards can also be through peers.
Their other interesting developmental and recognition programme recognizes
young thought leaders by nominating them to represent Sun at external forums
like technical conferences. Apart from this they have several recognition
programmes for employees on a global level. They also have a patent bonus
award, which provides monetary recognition each time an idea is accepted by the
Sun patent office. This reinforces structure the belief in encouraging innovation.
