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.
• 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).
• challenging work
• autonomy in job
• sense of achievement
• good policies and practices
• good relationships with coworkers
• safe and healthy work environment
• fair treatment
• social activities
1) Direct (Cash)
• incentive and performance: bonus plans, share plan, pay increase
2) Indirect (Fringe Benefits)
• child care
• medical costs
• flexible work schedule
• company car
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.
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.
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.
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.
• 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
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.
• 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?