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My Introspective

by Laurus Nobilis
My BrainCast

Human Resources

Employee Rewards System (E) 

 

Employee Rewards


How to reward in a way that motivate toward better results? How the employee rewards system should be built? What is the Employee Rewards System Matrix?

 

Posted: Nov 2007


What motivates the people mostly in their job? There are many surveys conducted among employees, anonymous of course, the results are different, but the common under all of them is that among top ten motivators, the Salary is almost at the bottom! Heh! But again you can see very frequently that the people change the job, because better position, which also include a bigger paycheck. Improper rewarding is a common reason for employee turnover.

So are these researches really honestly filled by employees? Or are they scarred by Big Brother, so they do not want to stress importance of income, but rather put upfront the social motivators, like teamwork or support from immediate supervisor. Or did someone who organized ( or ordered ) the research liked that money do not appear too high on the ladder of priorities?

Nevertheless, money makes the world go around! It is the fuel of all economic activities. It is the catalyst of all value generation process. It is the moral boost. It is fulfillment of dreams. It is dignity and integrity. It is independence. Therefore, Employee Rewards System will motivate employees, if it is adjusted properly. The Maslow's Hierarchy of Needs explains the employee needs according their priority. The rward and reckognition is one of them.

To make a long story short. The rewarded individual can bring result. The underpaid cannot. In the former socialist countries there was a saying among workers: "They can not pay me that little, as much as I can work a little". Simply money can turn the wheel in a right or wrong direction, depends how smart you invest into your people. Employee rewards system is the strong lever that may help the wheel to be turned in the right direction.

But how to invest in your people without wasting the money? That is a tricky question. You should also not throw away the money all around, since that is not productive either.

The Employee Rewards System should be smart. It should direct employees to be more productive, effective, efficient, conscious of mutual interest, responsible.

The employee rewards should be in accordance to result, conditionally speaking, because it cannot be done in linear manner.

The Employee Rewards System palette can bee different, but always should be balanced. Not that bigger position should be that better paid, like double than the level below, but it should be adjusted in accordance to responsibility of position, competence and experience of individual, competitors bonus package and overall supply and demand of human resources in labor market.

The Employee Rewards System in the company can bee like in the matrix below:

Employee Rewards System

The numbers in the Employee Rewards System Matrix represents coefficients of difference in salary, bonus, vehicle class, etc. Example, Salesman as a benefit of his position have a vehicle ( which is given for use in a field, but can be used also 24/7 ) of value 1, while his boss – Sales manager also have vehicle, but coefficient 1,5, meaning 50% higher in value and class. Blank field in matrix means that position in that column is not entitled for such benefit.

The Employee Rewards System palette can bee different, but always should be balanced. Not that bigger position should be that better paid, like double than the level below, but it should be adjusted in accordance to responsibility of position, competence and experience of individual, competitors bonus package and overall supply and demand of human resources in labor market.



The Employee Rewards System matrix is adjustable for different business structures and needs. Matrix has to be clever in a term of motivation and gradually increasing by cascading benefits bottom-up. All benefits should be defined by Compensation Policy and contract for each position.

Situation with Monthly and Annual bonuses in the Employee Rewards System Matrix is specific and requires further explanation. Firstly, some positions can have monthly bonuses; some other can have annual bonuses, while it is also possible for specific situations to have both. Coefficient represent ratio of total maximum sum on annual level, regardless is it one time payment ( annual ), quarterly, or monthly. Maximum means that actual payout depend of RESULTS. This is key word that drives performance. Results are measured versus objective goals. Targets can be set annually ( Appraisal – explained in the article ), or monthly through KBI setting ( explained in Performance Management System ).

There is a clear benefit from Employee Rewards System, since employees are clearly focused on their area of responsibility. This is what this system brings too. Additional rewarding, outside official Employee Rewards System matrix can be conducted ad hoc or periodical, like rewarding for innovation, initiative in specific area, extraordinary results, etc.

 

 

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