Reward Management-Simply put

Rewards are of two types-

1. Financial eg. a pay increase
2. Non-Financial eg. praise from a manager

Terms such as ‘Reward’ , ‘Remuneration’ and ‘Compensation’ are often interchangeably used to denote financial reward.

‘Total Reward’ refers to financial + non financial reward.

Reward Management refers to the strategies, policies and processes to develop and maintain an organization’s financial reward systems. It is an integral part of the HR management in alignment with organizational goals.

For eg. In a call centre if the Business Strategy is to improve customer service then the HR Strategy would be to improve the skills of employees in dealing with customers. Accordingly a Reward Strategy would be to reward  competency & skill acquisition while a Reward Policy would be skills & competence based pay.

Not that tough! If attention is paid

The Reward Strategy of an organization could be influenced by numerous factors like-

• Intense competition
• Flexi-employment
• Performance based Culture
• Government funding
• Manufacturing to Service industries
• High demand for certain skills
• Job mobility
• Breaking up of big Public organizations

A CIPD Reward Survey (2005) identified 6 most important goals while formulating a Reward Strategy as-

1. Supporting Organizational goals
2. Rewarding high performers
3. Controlling Costs
4. Recruitment & Retention
5. Maintaining market competitiveness
6. Ensuring internal equity

While supporting business goals & rewarding high achievers remained the highest in priority in both the Public sector & private sector, other goals differed in the order mentioned above.