How Managers Design A Reward Scheme Within An Organisation And Evaluate

753 words - 3 pages

Reward ManagementReward management is central to the employment relationship, then a question raised is how we design the reward scheme in the companies. There are many factors influence reward design and we can talk about that into two parts. Firstly, those external factors are political and economic factors, cultural values, labour market factors and trade union's influence. Let's take examples, the payment of doctors in UK is much higher than that in China because it is high value in UK whereas not in China. Generally speaking, there is a law called minimum wage almost published in every country, which is obviously influence the payment design. Then supply and demand in the labour market will also affect the payment system such that the demand for those workers with specific skills will be higher and their payment will also higher because of the shortage of those workers.Secondly, those internal factors are product market conditions and the employer's cost structure, the organization's reward strategy, location of the organisation, the job "size" individual characteristics such as experience, qualifications, skills, and performance. It is likely that those who have got several years' experience or strong relationship in some areas are worthy of high payment.The stand of living in every countries or cities will take into account the reward strategy for example it is more expensive to live in London rather than that in Nottingham, therefore the employees' salaries may higher than that in Nottingham in some sense.There are two key questions in reward management, one is that how much we should pay each person in our organization and another one is that how the payment package should be made up. First of all, to answer the first question, we should know the pay level of each job and pay structure for all jobs. Pay level refers to an organization's pay position relative to other product/service and labour market competitors. And the "market rate" can be identified informally or formally, usually employers will ask the employee how much they get last job when doing job interview. Broadly, firms can lead, lag, or match the market rate. There are different view on this issue. The neoclassical economic perspective argues that deviating from the "market" rate would negatively impact on firm profits. By contract...

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