Reward management in a business organisation is basically the way in which that particular business forms and implements strategies and policies to reward the employees to a fair standard and in accordance with how the organisation values them. Reward management in a business organisation usually consists of the business analyzing and controlling the employee’s remuneration and all of the other benefits for the employees.
The main aim of reward management in a business organisation is to reward the employees fairly for the work that they have completed. The main reason reward management exists in business organisations is to motivate the employees in that particular organisation to work hard and try their best to achieve the goals which are set out by the business. Reward management in business organisations not only consist of financial rewards such as pay but they also consist of non-financial rewards such as employee recognition, employee training/development and increased job responsibility.
Reward management in a business organisation deals with the design, implementation and maintenance of reward practices that are geared towards the improvement of the business organisations performance.
The Importance of Reward Management
The elements of reward management within a business organisation are all the things that they use to attract potential employees into their business which includes salary, bonuses, incentive pay, benefits and employee growth opportunities such as professional development and training opportunities. Having a reward management system in place provides the business with many advantages, especially in small to medium size organisations where the managers must have a good relationship with the employees. Reward programmes have proved to be very successful in motivating employees and in turn increase the performance of the organisation as a whole.
Below are some of the reasons why a reward system is important:
- Mutually beneficial – A reward system is beneficial not only to the employee but also to the organisation. The employee will feel more motivated to work harder by having a reward system in place the employee will feel more committed to their work and their productivity will increase. An increase in productivity will then benefit the organisation. Therefore a reward system is mutually beneficial to the employee and the organisation.
- Motivation – A reward system will motivate employees by reaching targets and organisational goals in exchange for rewards. A reward system is great at motivating employees but they will also be motivated to prove themselves to the organisation.
- Absenteeism – A reward system will reduce absenteeism in the organisation. Employees like being rewarded for a job well done and if there is a reward system in place, employees will be less likely to be ringing in sick and not showing up for work. Also by having a reward system in place the employees will be clearer about the targets and goals of the organisation as they will be rewarded when reach certain targets. So by having a reward system as an incentive they will be less likely to be absent from work.
- Loyalty – A reward system will increase the employee’s loyalty to the organisation. By a reward system being in place the employee feels valued by the organisation and knows that their opinion matters. If an employee is happy with the reward system, they are more likely to appreciate work place and remain loyal to the organisation
- Morale – Having a reward system in place providing employees with incentives and recognition will boost their morale. By encouraging employees to meet goals and targets it gives them clear focus and purpose which will their morale. By the employees morale being boosted this will increase the morale of the entire organisation. This is all down to a reward system in the organisation.
- Teamwork – The reward system will increase the teamwork spirit in the organisation. The reward system will promote teamwork to the employees. The employees will work together as part of a team to achieve their targets in return for rewards. Teamwork within the organisation will help increase efficiency and create a happier workplace. This is another reason why reward systems are important in business organisations.