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MGMT90016 Performance And Reward Management

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MGMT90016 Performance And Reward Management

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MGMT90016 Performance And Reward Management

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Course Code: MGMT90016
University: The University Of Melbourne is not sponsored or endorsed by this college or university

Country: Australia


Using your own organisation (or one with which you are familiar), investigate the reward environment and produce a written report in which you: 1. Assess the context of the reward environment and the key perspectives that inform reward decisions. In this section you should:Use an appropriate analysis tool to identify the internal and external factors. Analyse the particular impact of business drivers and related factors on reward decisions. Give examples of different ways of gathering and presenting reward intelligence. 2. Demonstrate your understanding of key reward principles and the implementation of reward policies and practices. In this section you should: Evaluate the principle of total rewards and its importance to reward strategy. Identify and explain the importance of equity, fairness, consistency and transparency in terms of how they should underpin reward policies and practices. You may illustrate your understanding of these key principles by referring to topical reward matters. Assess the contribution of both extrinsic and intrinsic rewards to improving employee contribution and sustained organisation performance. Refer to academic research and the literature in this area and illustrate with examples of good practice. Explain how reward policy initiatives and practices are implemented in your chosen organisation. 3. Demonstrate your understanding of the role of line managers in making reward decisions. In this section you should: Explain the various ways line managers contribute to reward decision-making.


Reward management is related with the formulation and strategies and policies for the purpose of reward the employees on the fair and equal basis. The reward management system also aims to reward the employees in an effective manner which can support the organization to achieve its goals and objectives. The overall reward management concept is related to the designing, implementing and maintenance of reward practices, processes, and procedures which aims to fulfill the needs of both, the stakeholders and the organization. The reward can be described as the special payments for the employees and workers on the basis of their performance. Reward includes tangible services, financial returns, and benefits received by the employees as a part of their employment contract (Armstrong, brown and Reillly, 2011).
This report describes the concept of reward management along with the principles of reward management, factors that affect the reward management decisions and importance and role of managers related to the reward management practices in an organization. For understanding the concept in the most effective manner, the reward management of Coca-Cola, a well-known organization in the beverage industry, has taken into consideration.
Factors affect Reward decision and management
Internal factors
Ability to pay
The big or prosperous company, Coca-Cola can afford to pay higher reward and compensation as compared to the smaller organizations who can only maintain the pay scale as per the required norms and standards of the industry.
Business Strategy
If the company wants to attract the highly skilled and educated employees of other organizations, it will offer more reward benefits as compared to others. On the other hand, if the company wants to carry on its practices with the available employees then it will offer a little amount of reward or less rise in compensation schemes to maintain the employment level of the organization. In Coca-Cola, the management offers high incentives and rewards as it always keen to hire the most talented employees as its workforce (Karami et al, 2013).
The worker or an employee influences the reward system on the basis of the performance, experience, potential, and willingness to work. For example, an employee who has been working from many years in the same organization would expect high reward and rise in salary and the management will decide the same on the basis of his performance and potential to work in long run with the organization (Korir, Dolatabadii and Rajaeepour, 2013).
External factors
Labour Market Price
If an organization is working on a leading position in the industry as Coca-cola, then the pay level tends to be high in comparison to other competitors. As per the efficiency wage hypothesis, there are some reasons because of which high rewards may improve the satisfaction level and performance of the employees. Such reasons include a willingness to continue employment with the leading company of the market, improving the skills and performance and to get the higher wages in comparison to the market (David et al, 2015).
Supply and Demand of labor market
The equilibrium of the labor market is also a major factor that affects the reward and incentives offered by an organization. As per the classical wage theory, supply and demand of labor tend to be fixed in the short run hence organizations should concentrate on the reward policies to attract the workers which can make difference among the organizations from the point of view of higher salaries.
The rules and regulations of the government related to the payment of minimum and maximum wages also affect the reward policies of an organization. This is because employers are the main contributors to the economic growth of the country. By introducing successive reward policies, the government has encouraged a reward system for the public as well as for the private sector employers and organizations (Mehmood, Ramzan, and  Akbar, 2013).
Principle of Total Reward
Total Reward Principle can be described as a reward strategy bringing together all the investments of the company in its workforce along with the values of employees such as career opportunities and flexible working. This strategy goes beyond the base pay by considering the range of benefits with the employment package which reinforces the objectives and culture of an organization. It helps in promoting and encouraging employee engagement, which ultimately affects the overall performance of an organization. The main of total reward strategy is to give choice and voice to all employees on the total reward offerings and to enhance the mental contract between employee and employer (Nazir, Shah, and Zaman, 2012).
A total reward is a long-term approach to nature which is not required to be complex in a theoretical manner. It depends upon incremental instead of radical change and does not need to include all monetary means of the employment package. It can be introduced in an expensive and relatively gradual manner by understanding the reward preferences of the employees and communicating the about what has already been introduced.
Total reward defines a range of non-monetary and monetary rewards, which can help councils in enhancing and promoting their reputation as a great place to work. Councils already have some great deals to offer and total reward helps to ensure the full values of employees in relation to the employment package (Hoole and Hotz, 2016).
Benefits of Total Reward Strategy
Employee Retention
When an organization hires an employee under the total reward system, the company can retain the employees on the basis of bonuses, increased vacation or paid sick leaves, pay raises and increased benefits which are available immediately after joining. This type of transparency can also foster a healthy employer-employee relationship and working environment by putting the employee and managers on equal footing.
Employee Performance
It provides a direct incentive for the performance of employees. These programs show ostensive career routes on the meeting of certain standards by employees. This approach includes aspects like training and performance management, professional development which allows employees to develop special and new skills through training and education to perform the job in a better way. Total reward system also contains methods of monitoring the performance of employees which may lead to the extensive level of understanding and professional respect (Mat and Barrett, 2015).
Controllable Expenses
The complete and long-term scope of total rewards system allows the organization to create estimation related to the investment made on every employee during the course of years. Thus, the company can find the expenses which are not required to be done and are not contributing to the growth of employee’s performance and organizational growth.
Program Administration
This program helps the organization by a centralized administration in relation to all concerns of employees. It enables the organization to control all aspects after analyzing the impact on the overall productivity of the employees (Bos-Nehles, Reimsdijk, and Looise, 2013)
Importance of Equity, Fairness, Consistency, and Transparency
The equity theory suggests that an individual is required to be treated on the equal basis in order to increase the level of performance. This theory helps the company to provide a base to the management that how and why they should treat the employees on the equal basis. This also helps the management to create the healthy employer-employee relationship by treating all the employee in an equal manner.
Fairness states that there should be fairness in transactions and functions related to the benefits and compensations received by employees. As when employees find that they are being treated on an unfair basis, they do not prefer to perform in their best possible way which directly affects the overall productivity of the company (Alfes et al, 2013).
Consistency approach states that there should be consistency in providing rewards and compensations to the employees so they may feel motivated on a regular basis. Any gap in providing rewards may lead to the disappointment of employees. It also enables the management to measure the employee’s performance of a regular basis and to find out the unnecessary expenses.
Transparency helps the organization to gain the trust of employees. It also makes the managerial functions smooth as they do not have to hide anything from employees (Khan, Waqas and Muneer, 2017)
At Coca-Cola, the management deals with all these principles and approaches in a very effective manner due to which it is capable to handle a large workforce of employees and workers around the world.
Impact of Extrinsic Rewards
Individuals are said to be relatively more concerned about the extrinsic rewards such as pay and bonuses. They tend to feel more motivated by pay in comparison to any other reward. This is because money is very important for satisfying an individual’s multiple needs. Extrinsic motivations can be linked to the organizational goals to increase the employees’ performance. However, the employees who attain goals for monetary rewards are less happy and are less likely to pursue their goals because they feel that goals are not meaningful to them. They also feel stressed which may lead to the dissatisfaction among employees (Ozutku, 2012)
Impact of Intrinsic Rewards
Intrinsic rewards have an impact on both organizational and individual performance. These type of rewards enhance and encourage both employees and employer to be able to accomplish tasks and challenge themselves and to work in an environment of harmony. By having a high level of intrinsic rewards, employees tend to become more informal marketers and recruiters for the company. This helps the organization to get new and potential employees an also impacts on the sales of the organization (Ajmal et al., 2015)
Application of Reward Policy at Coca-Cola
Coca-Cola uses Maslow’s Hierarchy of motivation to build its rewards policies which include various intrinsic and extrinsic rewards.
Extrinsic reward policies implemented by the company includes basic pay, bonuses, individual and group incentives, stock options, profit sharing, commissions, EAP, childcare, gym, superannuation, pensions, car, and leaves.  These all are directly related to the monetary and physically comfort of employees. The company also provides cost-of-living and house allowances to increase the satisfaction level of employees.
On the other hand, intrinsic reward includes receipt of valued things and first choice. These all are related to the Maslow’s hierarchy theory which states that an employee can only feel motivated if he/she is being valued and recognized by his/her management and organization.
Apart from this, the performance of employees is being evaluated on the regular basis which helps the company as well as employees to take corrective actions. The annual recognition programs for the employees performing on an extraordinary basis are also being run by the organization to encourage employees (Shi, 2013).
Role of Line Managers
Managers play an important role in the proper functioning of the reward management system. The line managers can provide accurate information about the formal and informal behavior of employees to the senior level management. They also tend to motivate the employees time to time by examining their performance regular basis. Line manager works as a mediator between the employees and the management.
Line managers are the only part of management which spends time with the employees and thus they are also able to identify the problems faced by the employees in performing their day to day job responsibilities.
The line managers are essential to communicate the orders of the level management to the employees and the grievances and expectations of the employees to the top level management (Nisar, Riasat and Aslam, 2016).
On the basis of the above study, it can be concluded that reward management is the process which includes a number of factors in it. These are required to be applied and implemented to increase the employee’s performance as well the organizational productivity. The concepts that are discussed in this report shows a brief description related to the topic which can provide the sense and importance of reward management.
Ajmal, A., Bashir, M., Abrar, M., Khan, M.M. and Saqib, S., (2015) The effects of intrinsic and extrinsic rewards on employee attitudes; the mediating role of perceived organizational support. Journal of Service Science and Management, 8(04), p.461.
Alfes, K., Truss, C., Soane, E.C., Rees, C. and Gatenby, M., (2013) The relationship between line manager behavior, perceived HRM practices, and individual performance: Examining the mediating role of engagement. Human resource management, 52(6), pp.839-859.
Armstrong, M., Brown, D., and Reilly, P., (2011) Increasing the effectiveness of reward management: an evidence-based approach. Employee Relations, 33(2), pp.106-120.
Bos?Nehles, A.C., Van Riemsdijk, M.J. and Kees Looise, J., (2013) Employee perceptions of line management performance: applying the AMO theory to explain the effectiveness of line managers’ HRM implementation. Human resource management, 52(6), pp.861-877.
David, S., Rajput, S., Khan, J. and Raghuwanshi, V.S., (2015) Reward Management System. International Journal Of Core Engineering & Management (IJCEM), 2(2), pp.2-15.
Hoole, C. and Hotz, G., (2016) The impact of a total reward system of work engagement. SA Journal of Industrial Psychology, 42(1), pp.1-14.
Karami, A., Dolatabadi, H.R. and Rajaeepour, S., (2013) Analyzing the effectiveness of reward management system on employee performance through the mediating role of employee motivation case study: Isfahan Regional Electric Company. International Journal of Academic Research in Business and Social Sciences, 3(9), p.327.
Khan, N., Waqas, H. and Muneer, R., (2017) Impact of Rewards (Intrinsic and extrinsic) on Employee Performance With Special Reference to Courier Companies of City Faisalabad, Pakistan. International Journal of Management Excellence, 8(2), pp.937-945.
Korir, I. and Kepkebut, D., (2016) The Effect of Reward Management on Employees Commitment in the Universities in Nakuru County-Kenya. Journal of Human Resource Management, 4(4), p.37.
Mat, N.H.N. and Barrett, R., (2015) Understanding the line managers’ HRM role expectations: Does size matter?. Asian Social Science, 11(16), p.118.
Mehmood, S., Ramzan, M. and Akbar, M., (2013) Managing performance through the reward system. Journal of Education & Research for Sustainable Development (JERS), 1.
Nazir, T., Shah, S.F.H. and Zaman, K., (2012) Literature review on total rewards: An international perspective. African Journal of Business Management, 6(8), pp.3046-3058.
Nisar, Q.A., Riasat, F. and Aslam, S., (2016) Do Intrinsic and Extrinsic Rewards influence the Job satisfaction and Job performance? Mediating Role of Reward System. Journal of Management Info, 11(1), pp.16-34.
Özutku, H., (2012) The Influence of Intrinsic and Extrinsic Rewards on Employee Results: An Empirical Analysis in the Turkish Manufacturing Industry. Business & Economics Research Journal, 3(3).
Shi, X. (2013). Coca-cola’s International Rewards/Compensation Management. Retrieved October 5, 2018, from

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