Human Resource Management
Course Code:
Dr. Imran Shafique
Lecture Outline
Organizational Reward System
1.Selection of Rewards
2.Job Satisfaction and Rewards
3.Job Satisfaction and Rewards
A.Determinants of Job Satisfaction/Dissatisfaction
4.Employee Compensation
1.Compensation Policies
2.Pay Secrecy
3.Govt. & Union Influence
4.Pay Equity
Organizational Reward System
A system related to selecting the rewards types to be
used by the organization
Organizational Rewards
Consequences of employment with the
organization; comprises all rewards types,
intrinsic and extrinsic
Types of Rewards
1. Intrinsic Rewards
Rewards internal to the individual and normally
derived from involvement in certain activities/tasks
2. Extrinsic Rewards
Rewards that are controlled and distributed directly
by the organization and are of a tangible nature
Intrinsic Vs Extrinsic
Selection of Rewards
1. Management must recognize what employees perceive as
meaningful rewards
I. Pay is usually the first, and sometimes the only, reward
most people think about
II. However, rewards should be viewed in the larger
perspective as anything employees value
III. May include things such as
A. Office location
B. Allocation of certain pieces of equipment
C. Assignment of preferred work tasks
D. Informal recognition
Rewards & Performance
• Rewards should depend on performance
• Performance–reward relationship is desirable at
– Organizational and Individual level
• Motivation will lead to desired rewards
– Formal rewards are not related to performance
– Determined by organizational membership/seniority; include
• Paid vacations
• Insurance plans
• Paid holidays
Rewards & Performance
1. Trust in management
1. If employees are skeptical of management, it is difficult to
make a pay-for-performance program work
2. Absence of performance constraints
1. Jobs must be structured so that an employee’s performance
is not hampered by factors beyond his or her control
3. Trained supervisors and managers
1. Supervisors and managers must be trained in setting and
measuring performance standards
4. Good measurement systems
1. Performance should be based on criteria that are job specific
and focus on results achieved
Job Satisfaction & Rewards
1. An employee’s general attitude toward the job
I. Organizational reward system often has a significant impact
on level of employee job satisfaction
II. Manner in which extrinsic rewards are dispersed can affect
intrinsic rewards (and satisfaction) of recipients
2. There are five major components of job satisfaction:
I. Attitude toward the work group
II. General working conditions
III. Attitude toward the company
IV. Monetary benefits
V. Attitude toward management
Job Satisfaction & Rewards
1. Other components include
I. Employee’s state of mind about the work itself
II. Life in general
III. Health, age
IV. Level of aspiration, social status, and political and social
activities
Determinants of Job Satisfaction/Dissatisfaction
Employee Compensation
All the extrinsic rewards which an employee receive in
exchange for his/her work:
1. Base Wage/Salary
2. Any incentive/bonus
3. Any other benefit
Employee Compensation
1. Pay
Actual Money an employee receive against his/her work
2. Base Wage/Salary
Hourly, Weekly, Monthly, pay that employee receive for their work
3. Incentives
Rewards offered in addition to the base wage/salary and usually
directly related to performance
1. Benefits
Rewards employees receive as a result of their
employment/position with the organization (Paid
vacations, health insurance, & retirement plans)
Employee Compensation
Compensation Policies
1. Compensation policies must deal with following issues:
I. Min. & max. pay levels – Take into consideration
A. Worth of job to organization
B. Organization’s ability to pay
C. Government regulations
D. Union influences
E. Market pressures
II. Nexus among pay levels (e.g., b/w senior & operating
management, operative employees & supervisors)
III. Division of total compensation money (i.e., what portion
goes into base pay, incentive programs, and benefits)
Pay Secrecy
1. To NOT disclose pay-related information
a) Pay system and individual pay
2. Justification
a) To avoid any discontent
b) Many employees – nobody else’s business
3. Drawbacks
a) Difficult for employees to determine whether pay is
related to performance and does not eliminate pay
comparisons
b) May cause employees to overestimate pay of their peers
and underestimate pay of their supervisors
c) Can create feelings of dissatisfaction
d) Employees may become suspicious
Govt. and Unions Influence
1. Government’s Rules & Regulations
2. Union Agreements/Influence
Pay Equity
1. Pay Equity
Employees believe they are being fairly paid
1. Dimensions of Pay Equity
1. Internal Equity
2. External Equity
3. Individual Equity
4. Organizational Equity
