Reward Systems and Policies
Perhaps the most important aspect in any organization is the reward system in place. This is because employees are not providing their services for free and on the other hand, the organizations do not run a charity show. What this means is that the contractual obligations between employees and organizations are about how much work is to be done and how much pay is to be paid for the work done. Hence, the reward policies must reflect this aspect.
However, a significant aspect about the reward systems that is usually ignored is that employees have intrinsic needs other than monetary needs alone. This intrinsic need for recognition, better treatment, and rewarding of their good work forms the other pillar on which the reward system and the reward policies stand.
Monetary Reward Policies
The obvious and natural choice of any reward system is the provision of monetary incentives. This means that pay hikes, bonuses, and allowances that are monetary in nature play a key role in motivating employees. These extrinsic rewards cater to the basic needs of employees to sustain themselves and their families. An ideal reward system would provide for graded pay increases and bonuses that are in tune with industry best practices and are coordinated across the organization without discriminating against specific departments or divisions. Further, the monetary incentives should also not discriminate based on gender, ethnicity, or other aspects of identity. The reward policies must also take into account the fit between the employee and the role that he or she performs. There is no point in having a wrong person for the right job or a right person for the wrong job.
Non-Monetary Reward Policies
As discussed in the first section, a reward system that incentivizes the intrinsic needs of employees is an ideal system. This is not to say that extrinsic rewards like pay and bonuses are not important. Rather, the combination of external rewards and non-monetary rewards like recognition, awards, and publicity for the employee’s good work is the key to actualizing performance. In other words, the ideal reward system manages to reward good performance both with monetary and non-monetary incentives.
Some non-monetary rewards can also include benefits and benefits like memberships to exclusive clubs, company provided housing and transport, and advanced training and soft skill upgrading courses that motivate employees to self-actualize themselves. For instance, companies like Fidelity focus more on the package of benefits at senior levels, which includes a gamut of non-monetary rewards like the ones mentioned above. Further, periodical prizes and publicizing the efforts of top performers is done in many companies including IBM and Infosys.
It is not enough if employees are paid handsomely or they are recognized. The ideal reward system would incentivize the employees to perform to their potential by matching their intrinsic needs with the external rewards. Many companies have put in place rewards systems and reward policies that recognize this aspect of fit between the different needs and the alignment of an employee’s skills with that of the role that he or she is performing.
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