Friday, 2 December, 2022
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Reward Management for Retaining Human Resources

Professor Dr. Md. Abu Taher

Reward Management for Retaining Human Resources
Professor Dr. Md. Abu Taher

Reward management is concerned with the formulation and implementation of strategies and policies in order to reward employee fairly, equitably and consistently in accordance with their value to the organisation. It deals with several inter-related aspects linking to employee performance.

There are two types of rewards.

1.            Financial Rewards: Financial rewards are very significant for all employees in an organisation and also have economic, psychic and social implications. It provides a feeling of personal worth and self-esteem and also determines a pecking order and a role, and legitimacy in peer groups. Salary, allowances, fringe benefits, sales commission, equity (stock options) etc are the best example of financial rewards. Some important factors like labour market conditions, economic and socio-political environment, employees’ characteristics, industry characteristics, profitability and ability to pay, job characteristics, employee behaviour characteristics etc. should be considered to determine the financial rewards of an employee.

2.            Non-Financial Rewards:  Non-financial rewards include symbols of status (office space, job title), human resources (HR) policies, benefits (health care, education), concierge services (assisting guests by arranging transportation, car services etc.) and involvement in visible and important task forces access to power and influence and other benefits. When these non-financial rewards vary based on the extent to which an employee reaches standards, they have more impact than if they are randomly or uniformly applied. 

A total reward management approach is holistic; reliance is not placed on one or two reward mechanisms operating in isolation, and an account is taken of every manner in which employee can be rewarded and obtain satisfaction through their work. The aim is to maximise the combined impact of a wide range of reward initiatives on motivation, commitment, job engagement and involvement. The following figure can be depicted the various aspects of total reward management for retaining the human resources/employee in an organisation.

From the figure, it shows that the upper two quadrants - pay and benefits – represent transactional rewards. These are financial in nature, and are essential to recruit and retain staff, but can be easily copied by competitors. By contrast, the relational (non-financial) rewards produced by the lower two quadrants are essential to enhancing the value of the upper two quadrants. The real impact comes when organisations combine relational and transactional rewards.

To sum up, “what gets rewarded gets done” has been a golden rule in management. So, reward management essentially deals with development, implementation, maintenance, communication and the evaluation of reward process in right way that would eventually helps to lead better employee performance and thereby, organisational goals and excellence should be achieved easily.

 

The writer is a Professor, HR Expert and Member,

University Grants Commission of Bangladesh, Dhaka