The Issues and Benefits of the Reward System in Organization

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Table of contents

  1. Legal Issues
  2. Effects of Workforce Diversity
  3. Pay-for-Performance Strategy

Most employers and top employees devote a lot of time looking for techniques of creating a motivational setting for optimum working of the employees and achieving the organization’s objectives. Employee motivation is becoming a challenge for any organization. Monetary incentives can be enough for some companies to accomplish their objectives while the non-monetary can be effective for others. The influence these rewards have on employee’s performance may be challenging to measure.

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Legal Issues

While developing an incentive or a reward program, employers should consider a number of legal and critical issues such as discrimination, remuneration and working hours as well as taxes. All the employees should get rewarded despite being protected or not and all the reward systems should be monitoring any indicators of discrimination. The systematic weekly bonuses rate may be affected by hourly fixed bonuses. In such circumstances, weekly overtime wage is recalculated and the fixed pay rate is inclusive of the bonuses. For monetary and non-monetary rewards are both subjected to taxes.

Effects of Workforce Diversity

Employees have different preferences when it comes to benefits. Diverse lifetime experiences have designed certain attitudes and anticipations concerning those rewards. An effective benefits system is founded on understanding the different needs of the different group of employees. Organizations may offer flexible rewards plans for the accommodation of all the employee needs. This will allow the workforce to select plans that are best suited to them and prevent of benefits with not motivational value on them.

Pay-for-Performance Strategy

I would recommend pay-for-performance strategy. With this system, pay increase is dependent on the worker’s accomplishments of scheduled quantifiable productivity as well as other goals. It can measure performance of the company, individuals as well as a team while using various kinds of systems together (Cho, 2003). The biggest risk to this strategy is the use of incorrect metrics. The misunderstanding of the company policies and objectives by the managers who assume to know the measurements used to achieve the strategies. Other risks may include poor communication between the managers and the compensation team and setting of goals poorly. Competing for human capital is a major challenge for successful companies as they will develop novel policies which allow them to identify and react to shifting circumstances. For an effective implementation of pay-for-performance strategy, it should be linked to the overall company strategy. For instance, for a growing organization with an objective of increasing shares in the market, it should compensate employees for referring in new clients and customers. If the reward system does not connect directly to the company objectives as well as goals, workers will work towards any direction and the company will not live to its expectations.

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