This is the process through which strategies on how to reward employees in a fair and equitable manner are formulated and implemented.
Rewards can be classified as intrinsic or extrinsic:
Intrinsic rewards are tangible and may include; Bonuses, salary increment, promotion and gifts.
Extrinsic rewards are those that give self-satisfaction to an individual. May include; recognition, empowerment and feedback.
Importance of reward management
- High employee retention since they are happy hence loyal.
- High attraction of new employees since the organization gains a good reputation
- Minimizes the cost incurred in hiring and training new employees.
- It creates a healthy working environment.
- Honesty is enhanced among the employees.
- There is a high degree of professionalism among the individuals.
- It helps in meeting the set laws and regulations.
- Assist in creation of a desired culture.
- Through awarding of right actions, desired behaviors are communicated to the employees.
A good and sustainable reward management system is established through creating reward processes that are in line with the company’s values, mission and vision, rewarding people fairly in line with the value they bring in the company, communicating the organization’s expectations by rewarding the right behavior, attracting and retaining the competent and skilled employees, ensuring employee commitment by motivating them, establishing a culture and developing a good employer employee relationship.
To achieve this, the system has to be strategic and sustainable, has to be in line with the strategy of the business and human resource management and abide to the organizations culture and beliefs.