Benefit Packages & Reward Systems

Benefit Packages & Reward Systems

In this lesson, you’re expected to learn about:
– features of a reward system in HRM
– the basics of employee benefits
– how to attract, retain, and motivate employees

Recognition and reward programs aim at both acknowledging the work an employee has done and providing some sort of benefit, such as cash, merchandise, travel or gift certificates, in return for a job well done.

In the workplace, an effective recognition and reward program should help to attract, retain and motivate employees.

Recognition refers to acknowledging the fact that an employee has performed well. Acknowledgement may involve giving the employee a reward, such as a bonus, in exchange for doing a good job.

A recognition and rewards system can also reinforce strategies that will facilitate change or support desirable corporate values, such as a focus on the customer.

For example, an organization can offer employee awards in categories such as health, safety, the environment and community to recognize employees who demonstrate company values and go beyond their day-to-day job requirements to care for their fellow employees, the community and the environment.

[Optional] What is a Reward System in HRM?
Rewards can be monetary or non-monetary, and intrinsic or extrinsic. 

 Intrinsic rewards are those that the individual derives from the task itself, such as a sense of achievement.

 Extrinsic rewards are those given or provided outside the job. They may be monetary (e.g. incentive payments) or non-monetary (e.g. flexible work schedules).

Examples of Intrinsic Rewards

1) Job

 challenging work
• responsibility
• promotion
• autonomy in job
• sense of achievement

2) Environment 
• good policies and practices
• good relationships with coworkers
• safe and healthy work environment
• fair treatment
• social activities

Examples of Extrinsic Rewards

1) Direct (Cash)
• wages
• salary
• commissions
• incentive and performance: bonus plans, share plan, pay increase

2) Indirect (Fringe Benefits)
• insurance
• holidays
• child care
• medical costs
• flexible work schedule
• company car
Sometimes organizations use profit sharing to reward their employees. Employees may be offered shares, annual bonuses or performance payments based on output, sales, profits or other indicators.

Profit sharing or employee share plans are often used to promote a culture that values quality, customer service, participation or teamwork. Reward systems are also increasingly linked to performance management through enterprise bargaining and individual contracts.

[Optional] Fringe Benefits
Check out this article to understand what fringe benefits are:
http://www.investopedia.com/terms/f/fringe-benefits.asp
A reward system should aim to motivate staff and be equitable, clearly communicated, defensible, consistent, relevant, cost-effective and integrated with corporate strategy.

Managers can also link rewards with performance and skills recognized in the marketplace, using job evaluations (based on job descriptions, specifications and performance appraisals), comparison with other similar employers and analysis of statistics and surveys compiled by recruitment agencies.

Relating performance-based pay to teamwork may provide a clear focus for employees and reward high-performing employees for their efforts.

Some argue that businesses may use performance incentive systems as a substitute for more important motivation strategies, such as improved job design, employee participation and feedback to employees about their work.

Structuring a Competitive Benefits Package

Some employees are content with a competitive salary and care little about employee benefits. For others, a bare minimum will be a superior salary plus a comprehensive health insurance plan. And then there are some employees who’d only work for a company that provides a competitive benefits package.

To attract and retain exceptional employees, your company not only needs to provide challenging work and opportunities for advancement, it also needs to differentiate itself in terms of benefits.

Generally, you’ll have to offer more than what the market offers, including perks such as:

• Paid time off for vacations, sick days, and personal days
• Childcare assistance
• Wellness programs, health clinic memberships, and gym memberships
• Tuition assistance or reimbursement
• Training opportunities
• Retirement benefits
• Legal coverage
• Profit sharing
• Employee discounts

Factors to Consider When Building an Employee Benefits Package

It’s difficult to select the right mix of employee benefits. Offer more benefits and your company makes less profits. Offer fewer benefits and you risk not being able to hire or retain the best employees.

There’s no one-size-fits-all solution. To ensure that you’re not missing something, consider the following:

• What types of benefits should you offer?
• What are competitors offering?
• How satisfied are current employees with your offering?
• What level of employees are you trying to attract?
• What’s the makeup of your workforce?

[Optional] The Basics of Employee Benefits
Read this article to learn more:
https://www.entrepreneur.com/article/80158
Jim Rohn Sứ mệnh khởi nghiệp