Managing a Business/HR Development

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Question
What are the objectives, psychological bases, and important consideration in designing reward system of an organization? Critically evaluate these with an organizational example of reward system you are familiar with or known to you. Give brief and relevant details of the organization you are referring to.

Answer
The employment relationship is a legal notion widely used in countries around the world to refer to the relationship between a person called an "employee" (frequently referred to as "a worker") and an "employer", for whom the employee performs work under certain conditions in return for remuneration. It is through the employment relationship, however defined, that reciprocal rights and obligations are created between the employee and the employer.
The employment relationship has been, and continues to be, the main vehicle through which workers gain access to the rights and benefits associated with employment in the areas of labour law and social security. It is the key point of reference for determining the nature and extent of employers' rights and obligations towards their workers.
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A worker is more likely an employee and not an independent contractor if the worker:

1. Is required to comply with the employer’s instructions about the work.
2. Receives training from the employer.
3. Provides services that are integrated into the business.
4. Provides services that must be rendered personally.
5. Hires, supervises and pays assistants for the employer.
6. Has a continuing relationship with the employer.
7. Follows set hours of work.
8. Works full-time for the employer.
9. Works on the employer’s premises.
10. Does the work in a sequence set by the employer.
11. Submits regular reports to the employer.
12. Receives payments of regular amounts at set intervals.
13. Receives payments for business or traveling expenses.
14. Relies on the employer to furnish tools and materials.
15. Lacks a major investment in facilities used to perform the service.
16. Cannot make a profit or suffer a loss from the services.
17. Works for one employer at a time.
18. Does not offer services to the general public.
19. Can be fired.
20. Can quit at any time without liability.
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Duties and Obligations of Employees
* To work
Employees must be ready, willing and able to perform their job as specified in their employment agreements.
*To obey instructions
Employees must obey instructions so long as the instructions are lawful, are not dangerous, and are within the scope of their employment agreement.
*To take care
Under the Health and Safety in Employment Act  employees are also required to ensure a safe working environment. They must also take care not to damage the employers property and equipment.
*To show fidelity
There are many ways in which courts have held that employees have breached this duty.
Employees can not :
•   work for their employer's competitors in their own time.
•   use information gained at work for personal gain or disclose the employer's confidential information unless it is an act of whistleblowing.
•   fail to report misconduct by other employees.
•   do anything in their free time to damage the reputation of their employer. Many employees have been fired for committing crimes that were unrelated to their job.
•   try to take away an employer's customers for when they go into business for themselves.
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COMPENSATION  PACKAGE  FROM  THE  EMPLOYEES'  PERSPECTIVE

Compensation is typically among the first things potential employees consider when looking for employment. After all, for employees, compensation is the equivalent not to how they are paid but, ultimately, to how they are valued.
What is a compensation package?
It's easy to think "dollars per hour" when thinking about compensation. Successful compensation packages, however, are more like a total rewards system, containing non-monetary, direct and indirect elements.
Non-Monetary Compensation can include any benefit an employee receives from an employer or job that does not involve tangible value. This includes career and social rewards such as job security, flexible hours and opportunity for growth, praise and recognition, task enjoyment and friendships.
Direct compensation is an employee's base wage. It can be an annual salary, hourly wage or any performance—based pay that an employee receives, such as profit-sharing bonuses.
Indirect Compensation is far more varied, including everything from legally required public protection programs such as Social Security to health insurance, retirement programs, paid leave, child care or housing.
Employers have a wide variety of compensation elements from which to choose. By combining many of these compensation alternatives, progressive mangers can create compensation packages that are as individual as the employees who receive them.
The general consensus of recent studies is that pay should be tied to performance to be effective. However, with traditional BUSINESS operations, that is not easily done. Business performance can be affected by many factors over which employees have no influence, specifically—EXTERNAL  ENVIRONMENT . Successful managers must search for things employees influence and base performance objectives on these areas. Your operation may benefit from the following: tenure bonuses for long-time employees, equipment repair incentives to encourage good equipment maintenance, or bonuses for arriving to work on time.
The more production information data your business has, the easier this is to accomplish.
Direct Compensation Alternatives
•   Basic Pay: Cash wage paid to the employee. Because paying a wage is a standard practice, the competitive advantage can only come by paying a higher amount.
•   Incentive Pay: A bonus paid when specified performance objectives are met. May inspire employees to set and achieve a higher performance level and is an excellent motivator to accomplish BUSINESS goals.
•   Stock Options: A right to buy a piece of the business which may be given to an employee to reward excellent service. An employee who owns a share of the business, is far more likely to go the extra mile for the operation.
Bonuses: A gift given occasionally to reward exceptional performance or for special occasions. Bonuses can show an employer appreciates his/her employees and ensures that good performance or special events are rewarded.

In a tight labor market, indirect compensation becomes increasingly important. Businesses that cannot compete with high cash wages can offer very individualized alternatives that meet the needs of the people you want to employ. Such creative compensation alternatives are the small business's competitive advantage.
Indirect Compensation Alternatives
•   flexible working schedules
•   elder care
•   retirement programs
•   moving expenses
•   insurance (health, dental, eye)
•   subsidized housing
•   paid leave (sick/holiday/personal days)
•   subsidized utilities
•   tickets to events (ball games, concerts)
•   magazine subscriptions
•   boots and clothing
•   laundry service
•   company parties
•   use of farm trucks, machinery
•   farm produce/foods/meals
•   cellular phones/pagers
•   child care
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An Employer   is more likely a person  if  the  person:

1. The individual  owns production process or service that is an integrated part of the employer’s business.
2. The individual owns/ leases  premises and equipment.
3. The individual performs  most  of  the  responsibilities of an  employer.
4. The  employer   had a steady and consistent working relationship with the employee.
5. The employer retains the right to control and/or in fact controls or supervises the work.
6. The employer absorbed losses for unsatisfactory merchandise.
7.The employer determines the pay rates or method of payments.
8. The employer has the right, directly or indirectly, to hire and fire the workers.
9.The employer prepares the payroll and pays the wages.
10. The employer invests more in the equipment and facilities than the worker.

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Duties and Obligations of Employers
*To pay the worker
*To ensure a safe workplace
*To permit employees to take paid leave
*Not to discriminate against employees
* To take responsibility for employees actions
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COMPENSATION  PACKAGE  FROM  THE  EMPLOYERS'  PERSPECTIVE
compensation package can help  to .
•   recruit new employees
•   motivate current employees
•   reward well-performing employees
•   minimize risk of violating federal laws
•   build employee loyalty
•   any combination of the above
TO  Determine your internal wage structure; either:
•   evaluate the jobs
•   evaluate the employees
•   create competency groupings
TO  Talk to your employees about their indirect compensation needs:
•   health insurance
•   paid vacation
•   housing
•   child care
•   retirement planning
TO  Structure your total rewards system, including:
•   indirect compensation based on your employee's needs and your compensation objectives
•   direct compensation based on labor market information and your compensation objectives
TO Implement your new system, remembering to:
•   communicate with your employees about their needs
•   review your compensation package regularly—make sure it is fair, equitable and competitive
•   be flexible and innovative to maintain a competitive advantage
•   maintain both internal and external equity
If you want employees to be innovative—reward them for new ideas.
If you want employees to stay for a long time instead of training new employees every season—offer bonuses or tie their wages to their tenure.
If you need employees that show up on time, work hard, and can be trusted with the most challenging of tasks—recruit those people; reward those people; promote those people.
The future of your business could depend on  THE  APPROPRIATE  COMPENSATION  PACKAGE.

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The  current  trend  is  one  of  integrated  reward   approach.
Reward system usually mean the financial reward on organization gives its employees in return for their labour. While the term reward system, not only includes material rewards, but also non-material rewards. The components of a reward system consist of financial rewards (basic and performance pay) and employee benefits, which together comprise total remuneration. They also include non-financial rewards (recognition, promotion, praise, achievement responsibility and personal growth) and in many case a system of performance management. Pay arrangements are central to the cultural initiative as they are the most tangible expression of the working relationship between employer and employee.
The  integrated reward  system  includes:
*Job evaluation and profiling
•Defining key performance indicators
•Analysis and modification of pay levels and structures to reflect both internal and market relativities
•Designing of performance evaluation processes
•Structuring of individual, team and corporate performance bonuses
*Social climate surveys with focus on remuneration
•Designing flexible benefits plans
•Implementation of new reward components in compensation package
•Implementation and assistance in change communications
•Training for internal specialists in reward structure planning and maintenance

Performance Based Reward is based on the definition of key performance indicators identified as part of job evaluation, and linking these indicators with reward components. A combination of performance measuring system and additional motivational components delivers an integrated performance-based reward system.
Flexible Benefit Schemes are a modern approach to the management of budgets for staff remuneration. Employee benefits constitute a considerable portion of staff costs, but they are often expended without the desired effect since employees do not perceive the full value of benefits. This system   increases  the   effectiveness and enable better control.
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Why reward system is required?
These components will be designed, developed and maintained on the basis of reward strategies and policies which will be created within the context of the organizations between strategies, culture and environment: they will be expected to fulfill the following broad aims;

1. Improve Organizational Effectiveness: Support the attainment of the organization's mission, strategies, and help to achieve sustainable, competitive advantage.

2. Support and change culture: Under pin and as necessary help to change the 'organizational culture' as expressed through its values for performance innovation, risks taking, quality, flexibility and team working.

3. Achieve Integration: Be an integrated part of the management process of the organization. This involves playing a key role in a mutually reinforcing and coherent range of personal policies and process.

4. Supportive Managers: Support individual managers in the achievement of their goals.

5. Motivate Employees : Motivate employees to achieve high levels of quality performance.

6. Compete in the Labour Market: Attract and retain high quality people.

7. Increased Commitment: Enhance the commitment of employees to the organization that will a) want to remain members of it, b) develop a strong belief in and acceptance of the values and goals of the organization and c) be ready and willing to exert considerable effort on its behalf.

8. Fairness and Equity: Reward people fairly and consistently according to their contribution and values to the organization.

9. Improved Skills : Upgrade competence and encourage personal development.

10. Improved Quality: Help to achieve continuous improvement in levels of quality and customer service.

11. Develop team working : Improve co-operation and effective team working at all level.

12. Value for money: Pride value for the money for the organization.

13. Manageable: Be easily manageable so that undue administrative burdens are not imposed on managers and members of the personal department.

14. Controllable: Be easily controllable so that the policies can be implemented consistently and costs can be contained within the budget.
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The organisation  I   am   referring to.

Describe the organisation you are referring to

The  organization, I am  familiar  with  is  a
-a  large  manufacturer/ marketer of  safety products
-the products  are  used  as  [personal  protection safety] [ industrial  safety]
-the products  are  distributed through  the distributors as well as  sold directly
-the  products  are  sold  to various  industries like  mining/fireservices/defence/
as  well  as  to  various  manufacturing  companies.
-the  company employs  about  235  people.
-the  company  has  the following  functional   departments
*marketing
*manufacturing
*sales
*finance/ administration
*human resource
*customer  service
*distribution
*warehousing/  transportation
*TQM  
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THE  ORGANIZATION ,  I  ASSOCIATED  WITH  
HAVE  THE  FOLLOWING  SYSTEM

The  Reward systems focus on positive reinforcement. Positive reinforcement is the most effective tool for encouraging desired behavior because it stimulates people to take actions because they want to because they get something of value (internally or externally) for doing it. An effectively designed and managed reward program can drive an organization's change process by positively reinforcing desired behaviors.
The SMART criteria.
These criteria  used when designing and evaluating programs. Programs should be:
•   Specific. A line of sight should be maintained between rewards and actions.
•   Meaningful. The achievements rewarded should provide an important return on investment to both the performer and the organization.
•   Achievable. The employee's or group's goals should be within the reach of the performers.
•   Reliable. The program should operate according to its principles and purpose.
   *Timely. The recognition/rewards should be provided frequently enough to make performers feel valued for their efforts
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Performance Management.  
The process of performance management reflects how the work gets done and creates the environment in which people feel valued for their achievements. The performance management process includes four critical components:
•   Focus on what is important to change or be improved.
•   Measures to determine whether and how much progress is being achieved.
•   Feedback so that performers will know whether and how much progress is being achieved.
•   Reinforcement so that everyone celebrates achievements as they are unfolding.
Indicators of successful performance management include the following:
•   All measures are understood by the employees, who can describe the importance of their activities to the agency. Measures address results and behaviors/processes.
•   A tracking system is used to monitor performance in the areas identified.
•   The performance measures and progress are displayed in a public area.
•   Data on the performance charts is current.
•   The team leaders/managers are actively engaged in coaching staff members and providing assistance to improve performance.
•   Periodic celebrations mark achievements as they are realized. These celebrations are regarded positively by employees.
•   Data indicate performance is improving.

Recommend that organizations:
•   focus on variables critical to success;
•   create timely, chart-oriented feedback;
•   create celebrations that mean something to the performers;
•   use performance reviews as an opportunity to reflect "how we won" and "how we lost" make them as often as necessary to cement the learning;
•   anchor the memory of achievements achievement-oriented firms measure a lot, accomplish milestones frequently, and do much celebrating;
•   don't rely on annual performance appraisals as the sole source of feedback;
•   when designing programs, avoid copying programs used by other organizations; and
•   don't make the design process into the "let's make a form" game.
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The Do's and Don'ts of Effective Reward Programs. The Do's and Don'ts of Effective Reward Programs. The fundamental principles for designing reward programs that work:
•   Do it now! Putting off change only makes the situation worse.
•   Keep your eye on the needs of the customer. The customer should be at the center of all measures, goals, and objectives.
•   Take action, be proactive. Well-designed programs require management, which should focus on providing people with meaningful measures, realtime feedback, and ongoing reinforcement.
•   Personalize rewards to their recipients. Rewards should be valued by the performer. The performer needs to see that the reward opportunities are directly linked to the effort and results taken and that there is an appropriate benefit to the organization. By personalizing the reward, you can anchor the meaning of the achievement more deeply than if you simply treat the reward as a mechanical administrative task.
•   Make sure everyone can win. Reward programs built on the principles of competition or compliance are counterproductive, if not downright destructive.
•   Make sure that rewards are contingent. Reward programs become entitlement programs when they lose their contingency on performance. Each reward should be fully earned and people should understand exactly what they have done to achieve it.
•   Don't expect success all at once. The process of developing an effective program is one of change and continual improvement.
•   Remember that you are in competition with other consequences. Reward programs simultaneously compete with negative reinforcements that occur throughout the organization. So rewards must be meaningful to the performer to have an impact.
•   Do it from the heart. Rewards that are intended to be manipulative are not accepted by employees. The fundamental purpose of reward programs is to build a powerful partnership between the individual and the organization. Collaboration is an essential theme of success.
•   Have fun while you are doing it. If a job is worth doing, it is worth measuring progress and celebrating achievements.
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Reward and Recognition
Why bother with Reward and Recognition?
Reward and Recognition plays a part in at least these areas
-         Employee Satisfaction – influencing retention and motivation
-         Performance Management – creating a workplace environment that provides positive reinforcement of behaviours necessary to achieve results and business goals
What’s the difference between reward and recognition?
Recognition = reinforcing behaviours
Reward = rewarding results
What’s the difference between formal and informal rewards?
Formal = part of a predetermined program
Informal = spontaneous
What can a  Manager do?
Potential strategy:
•   discover and implement some quick hits to gain immediate improvement (most likely informal rewards)
•   develop and implement longer-term improvements (informal and formal rewards)
What are the success criteria of reward systems?
As part of Employee Satisfaction, here are criteria for successful reward systems:
1.      match the reward to the person
2.      match the reward to the achievement
3.      be timely and specific

As Performance Management, here are some suggested criteria for successful reward systems:
• Reward systems need to have a positive impact on behaviour
1.      contingent on achieving desired performance levels rather than on merely doing certain tasks
2.      meaningful and valuable to the individual
3.      based on objective and attainable goals
4.      open to all, and not based on a competitive struggle within the workplace (everyone can win)
5.      balanced between conditions in the workplace (extrinsic) and fulfilment of individual needs and wants (intrinsic)
•    Reward systems need to focus efforts on serving the customer (internal or external)
•    Reward systems need to enhance collaboration within the workplace
A popular slogan for managing and evaluating success criteria is
SMART – Specific, Meaningful, Achievable, Reliable, Timely.

What type of reward is most effective?
One study suggests that informal rewards are the most effective.  Further, these motivating techniques were ranked as the top five:
1.   The manager personally congratulates employees who do a good job
2.   The manager writes personal notes about good performance
3.   The organization uses performance as the basis for promotion
4.   The manager publicly recognizes employees for good performance
5.   The manager holds morale-building meetings to celebrate successes
Tactics for implementing an Informal reward system include
•   Linking to organizational goals
•   Defining parameters and mechanics
•   Obtain commitment and support
•   Monitor effectiveness, and change when the rewards are no longer special
•   Link to formal rewards programs

Reward systems are not exclusively the realm of managers
Systems can include structures that allow for peers to recognize each other.  For many people, peer recognition is more important than recognition by managers or customers.

Basics for Effective Rewards and Recognition
•   Use the person’s name
•   Strive to be timely
•   The compliment is the only topic discussed
•    Make it specific so the person knows why they are getting the recognition
•    Describe how what they did helps the organization; how it will be used
•   Follow-up a verbal compliment with a note
•    Make it public if appropriate, especially if the performer could serve as a resource to others
20 Tips for No-Money Reward and Recognition
1.      Post a thank-you note on the employee's or team member’s office door.
2.      Have your director    call an employee or team member to thank him or her for a job well done, or have the same person visit the employee at his or her workplace.
3.      Greet employees and colleagues by name when you pass their desks or pass them in the hall.
4.      When discussing an employee's or a group's ideas with other people, peers, or higher management, make sure you give credit.
5.      Acknowledge individual achievements by using people’s names when preparing status reports.
6.      Name a continuing recognition award after an outstanding employee.
7.      Ask five people in your department or company to go up to the person sometime during the day and say "{Your name} asked me to thank you for [the task or achievement]. Good job!"
8.      Write five or more Post-it notes thanking the person for a job well done and hide them among the work on his or her desk.
9.      Have lunch or coffee with an employee or a group of employees you don't normally see.
10. Make a thank you card by hand.
11. Lunch outings for the entire group as an everyone-pays-his-own-way event. The value is in the going, so encourage but don't force anyone who isn't comfortable going with the group.
12. A personal letter of thanks to the employee or team member from the CEO/senior manager for a significant contribution (you might need to get the information to this person before the letter can be written).
13. Let the person you are recognizing know what you are doing or requesting on his or her behalf (i.e., send the person a copy of your requesting memo). Even if upper management doesn't approve the request, the person will know you were trying.
14. Clippings of special articles on a topic you know is meaningful to the individual. Attach a note to relate the articles to something that is special to the person.
15. Share verbal accolades. Don't forget to forward voice mail messages that compliment a team member’s work.
16. Ask a person to teach or share his accomplishment with others as a way of recognizing the person's ability and role.
17. Ask a person for advice or her opinion; this demonstrates respect.
18. Recognize an individual's accomplishments in front of peers -- yours or theirs.
19. Practice positive nonverbal behaviours that demonstrate appreciation.
20. Make a large calendar that can be posted. Call it the "celebration calendar" and use Post-Its and written notes of recognition tacked onto specific dates to honour contributions made by team members.
20 Tips for Low-Cost Rewards and Recognition
(Please note:  The University of Queensland staff performance evaluation and management system does not support the payment of any of the rewards below. Managers however could opt to pay such rewards out of their own pocket)
1.      Movie Tickets.
2.      See’s Candy gift certificates.
3.      Book of Stamps.
4.      A framed memento/letter/certificate.
5.      Inscribe a favourite book as a gift.
6.      Balloons decorated with appropriate messages.
7.      Purchase a plant or flower arrangement with appropriate message.
8.      Buy the person something to use in his or her hobby.
9.      Candy bar awards within a team or department. Choose something meaningful and make it tradition: examples include "Mr. Goodbar" award for the ABAZABA team award.
10. Lunch-on-me coupons.
11. Take the person to lunch as a form of thanks or to mark a special event.
12. Doughnuts, bagels, or rolls as an early morning starter.
13. A "funny" trophy that is passed among team members based on "inside" criteria.
14. Submit the person's name for a Wall of Fame award.  This will result in a one-time increase on their pay.
15. Gift Certificates or vouchers that can be used at local department stores, specialty shops, or local merchants; especially appropriate for ones that can be easily assessed during the workday.
16. Something engraved with the person’s name, such as a pen set, business card holder, plaque, or portfolio.
17. Paid subscription to a professional magazine or newsletter.
18. A small contribution to their favourite charity in the person's name.
19. Authorize a non-standard stationary item; set a maximum limit.
20. Authorize time-off; full day or half-day.
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COMPENSATION   system usually mean the financial reward on organization gives its employees in return for their labour. While the term COMPENSATION  system, not only includes material rewards, but also non-material rewards. The components of a  COMPENSATION  system consist of financial rewards (basic and performance pay) and employee benefits, which together comprise total remuneration. They also include non-financial rewards (recognition, promotion, praise, achievement responsibility and personal growth) and in many case a system of performance management. Pay arrangements are central to the cultural initiative as they are the most tangible expression of the working relationship between employer and employee.
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Compensation philosophy is the set of values and beliefs that an organization has in regards to compensation
decision-making. This often is combined with a set of guiding principles that further assist in compensation administration.
The collection of decisions that the firm has
made over a period of time constitutes a compensation set of beliefs and values — a compensation philosophy —
regardless of whether or not the firm has actually committed those ideas to a formal document. Compensation strategy is
used to guide the design of specific compensation decisions.

Differences in compensation philosophies are widespread. Thus, some organizations believe in the widespread use of
incentive compensation, while others only apply incentive compensation to a very narrow group of employees who are
believed to affect the bottom line.  Another  illustration may be found in the examination of the behavior of firms who seek to apply compensation levels “at the  midpoint.” These firms differ philosophically from those firms that seek to pay at the top of the market, thus enabling them to attract the highest caliber employees that they can find. Business settings often explain these differences. Some
firms are proportionally more generous to certain levels of exempt employees, while others believe in principles of
achieving widespread equity across all employees. The openness with which compensation decisions are made, and the
degree of stakeholder involvement in those decisions, is yet another example of philosophical differences that may exist
between organization.

Needless to say, compensation is a key issue for the high performance organization, as the employee and management
systems utilized by the organization must be reinforced through the rewards structure. Again, our experience is
telling in avoiding making compensation unduly controversial, thus adversely affecting the very heart of the high
performance system.

Compensation administration includes a collection of activities required to sustain the effectiveness of a compensation
strategy. Thus issues ranging from labor market surveying to performance management to skill certification and peer
review come under this umbrella. Involving stakeholders in compensation administration can reinforce the values and
beliefs underlying the compensation philosophy and strategy.

AS  PART  OF  THE  ALIGNING  PROCESS, THE  FOLLOWING
FACTORS  ARE  TAKEN  INTO  CONSIDERATION.

1.Employee Inputs and Preferences
• Perceptions of external pay equity
• Perceptions of internal pay equity
• Pay delivery beliefs
— Form (cash, gainsharing, benefits)
— Method (individual, small group, large group)
• Risk tolerance
• Trust in management

2.Business and Operating Inputs
• Operations and Manufacturing strategy
• Sales development strategy
• Percentage of compensation costs to total product/
service costs
• Percentage of compensation costs to controllable
product/service cost
• Existing markets/products
• Potential markets/products
• Anticipated volume
• Reinforce/enhance work design
• Maintain cultural change processes
• Other operating issues

3.Industry and Labor Market Practices
and Trends
• Availability and quality of work force
• Industry practices
• Retention of work force
• Retention of key contributors
• Wage/salary levels and movement
• Wage/salary delivery charges

4.Compensation Philosophy and Objectives
• How much emphasis should be placed on rewards to
drive organization
• What issues are to be driven by compensation as
opposed to management practices
• Market definition (exempt and non-exempt)
• Method of delivery
• Targeted position in labor market
• Targeted position in product market
• Relationship within total company
• Relationship to selection and retention
• Portion of pay guaranteed and at risk
• Percentage of workforce bonus eligible

5.Base Pay Delivery
• Method of delivery — Job-based vs. individual-based
• Number of levels
• Structure of levels
• Pricing strategies
• Adjustment method
• Weighting of individual performance

6.Organization Performance or Variable Pay
• Role in total compensation strategy
• Structure
• Measures
• Targets
• Tolerance for pay at risk
• Risk - reward ratios
• Use of other monetary rewards
• Use of non-monetary rewards
• Individual performance recognition

7.Fringe Benefits
• Usually determined at corporate level; limited scope at
other levels
• Tie to business and human resource objectives
• Coverage
• Cost
• Communications (Purpose - Coverage - Value)

8.Compensation Administration
• Stakeholder role in compensation administration
• Performance management & evaluation
• Overtime policy (exempt & non-exempt)
• Shift differentials
• Attendance policynce
• Role of seniority

Compensation decisions should be fully integrated into the organization’s business and operations strategy, through
its compensation philosophy. The design of compensation systems should be subsequent to, and not precede, this key
analysis and decision point. For the high performance firm, an appropriate level of employee involvement can further
reinforce the organization’s general beliefs and values.
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The  integrated  COMPENSATION   system  includes:
Job evaluation and profiling
•   Defining key performance indicators
•   Analysis and modification of pay levels and structures to reflect both internal and market relativities
•   Designing of performance evaluation processes
•   Structuring of individual, team and corporate performance bonuses
Social climate surveys with focus on remuneration
•   Designing flexible benefits plans
•   Implementation of new reward components in compensation package
•   Implementation and assistance in change communications
•   Training for internal specialists in reward structure planning and maintenance

Performance Based  COMPENSATION   is based on the definition of key performance indicators identified as part of job evaluation, and linking these indicators with reward components. A combination of performance measuring system and additional motivational components delivers an integrated performance-based   COMPENSATION  system.
Flexible Benefit Schemes are a modern approach to the management of budgets for staff remuneration. Employee benefits constitute a considerable portion of staff costs, but they are often expended without the desired effect since employees do not perceive the full value of benefits. This system   increases  the   effectiveness and enable better control.
Why  COMPENSATION  system is required?
These components will be designed, developed and maintained on the basis of  strategies and policies which will be created within the context of the organizations between strategies, culture and environment: they will be expected to fulfill the following broad aims;

1. Improve Organizational Effectiveness: Support the attainment of the organization's mission, strategies, and help to achieve sustainable, competitive advantage.

2. Support and change culture: Under pin and as necessary help to change the 'organizational culture' as expressed through its values for performance innovation, risks taking, quality, flexibility and team working.

3. Achieve Integration: Be an integrated part of the management process of the organization. This involves playing a key role in a mutually reinforcing and coherent range of personal policies and process.

4. Supportive Managers: Support individual managers in the achievement of their goals.

5. Motivate Employees : Motivate employees to achieve high levels of quality performance.

6. Compete in the Labour Market: Attract and retain high quality people.

7. Increased Commitment: Enhance the commitment of employees to the organization that will a) want to remain members of it, b) develop a strong belief in and acceptance of the values and goals of the organization and c) be ready and willing to exert considerable effort on its behalf.

8. Fairness and Equity: Reward people fairly and consistently according to their contribution and values to the organization.

9. Improved Skills : Upgrade competence and encourage personal development.

10. Improved Quality: Help to achieve continuous improvement in levels of quality and customer service.

11. Develop team working : Improve co-operation and effective team working at all level.

12. Value for money: Pride value for the money for the organization.

13. Manageable: Be easily manageable so that undue administrative burdens are not imposed on managers and members of the personal department.

14. Controllable: Be easily controllable so that the policies can be implemented consistently and costs can be contained within the budget.
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Describe the organisation you are referring to

The  organization, I am  familiar  with  is  a
-a  large  manufacturer/ marketer of  safety products
-the products  are  used  as  [personal  protection safety] [ industrial  safety]
-the products  are  distributed through  the distributors as well as  sold directly
-the  products  are  sold  to various  industries like  mining/fireservices/defence/
as  well  as  to  various  manufacturing  companies.
-the  company employs  about  235  people.
-the  company  has  the following  functional   departments
*marketing
*manufacturing
*sales
*finance/ administration
*human resource
*customer  service
*distribution
*warehousing/  transportation
*TQM  
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THE  ORGANIZATION ,  I  ASSOCIATED  WITH  
HAVE  THE  FOLLOWING  SYSTEM

The  Reward systems focus on positive reinforcement. Positive reinforcement is the most effective tool for encouraging desired behavior because it stimulates people to take actions because they want to because they get something of value (internally or externally) for doing it. An effectively designed and managed reward program can drive an organization's change process by positively reinforcing desired behaviors.
The SMART criteria.
These criteria  used when designing and evaluating programs. Programs should be:
•   Specific. A line of sight should be maintained between rewards and actions.
•   Meaningful. The achievements rewarded should provide an important return on investment to both the performer and the organization.
•   Achievable. The employee's or group's goals should be within the reach of the performers.
•   Reliable. The program should operate according to its principles and purpose.
   *Timely. The recognition/rewards should be provided frequently enough to make performers feel valued for their efforts
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Performance Management.  
The process of performance management reflects how the work gets done and creates the environment in which people feel valued for their achievements. The performance management process includes four critical components:
•   Focus on what is important to change or be improved.
•   Measures to determine whether and how much progress is being achieved.
•   Feedback so that performers will know whether and how much progress is being achieved.
•   Reinforcement so that everyone celebrates achievements as they are unfolding.
Indicators of successful performance management include the following:
•   All measures are understood by the employees, who can describe the importance of their activities to the agency. Measures address results and behaviors/processes.
•   A tracking system is used to monitor performance in the areas identified.
•   The performance measures and progress are displayed in a public area.
•   Data on the performance charts is current.
•   The team leaders/managers are actively engaged in coaching staff members and providing assistance to improve performance.
•   Periodic celebrations mark achievements as they are realized. These celebrations are regarded positively by employees.
•   Data indicate performance is improving.

Recommend that organizations:
•   focus on variables critical to success;
•   create timely, chart-oriented feedback;
•   create celebrations that mean something to the performers;
•   use performance reviews as an opportunity to reflect "how we won" and "how we lost" make them as often as necessary to cement the learning;
•   anchor the memory of achievements achievement-oriented firms measure a lot, accomplish milestones frequently, and do much celebrating;
•   don't rely on annual performance appraisals as the sole source of feedback;
•   when designing programs, avoid copying programs used by other organizations; and
•   don't make the design process into the "let's make a form" game.
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THE  REWARD   SYSTEM  IS  TWO-FOLD
1.RECOGNITION  FOR  PERFORMANCE.

2.PAYMENT. WHICH   INCLUDES
-base pay
-cost  of  living  rise
-merit INCREASE , which  is based  on
*performance  against  the KEY  PERFORMANCE  INDICATORS.
*bonus  for  exceptional  performance  with  the  scope of the  job  position
Reward and Recognition
"People will forget what you said,
People will forget what you did,
But people will never forget
how you made them feel."

REMEMBER  THIS  WHILE  DEVELOPING  THE REWARDS  SYSTEM.

Why bother with Reward and Recognition?
Reward and Recognition plays a part in at least these areas
-         Employee Satisfaction – influencing retention and motivation
-         Performance Management – creating a workplace environment that provides positive reinforcement of behaviours necessary to achieve results and business goals
What’s the difference between reward and recognition?
Recognition = reinforcing behaviours
Reward = rewarding results
What’s the difference between formal and informal rewards?
Formal = part of a predetermined program
Informal = spontaneous
What can a  Manager do?
Potential strategy:
•   discover and implement some quick hits to gain immediate improvement (most likely informal rewards)
•   develop and implement longer-term improvements (informal and formal rewards)
What are the success criteria of reward systems?
As part of Employee Satisfaction, here are criteria for successful reward systems:
1.      match the reward to the person
2.      match the reward to the achievement
3.      be timely and specific

As Performance Management, here are some suggested criteria for successful reward systems:
• Reward systems need to have a positive impact on behaviour
1.      contingent on achieving desired performance levels rather than on merely doing certain tasks
2.      meaningful and valuable to the individual
3.      based on objective and attainable goals
4.      open to all, and not based on a competitive struggle within the workplace (everyone can win)
5.      balanced between conditions in the workplace (extrinsic) and fulfilment of individual needs and wants (intrinsic)
•    Reward systems need to focus efforts on serving the customer (internal or external)
•    Reward systems need to enhance collaboration within the workplace
A popular slogan for managing and evaluating success criteria is
SMART – Specific, Meaningful, Achievable, Reliable, Timely.

What type of reward is most effective?
One study suggests that informal rewards are the most effective.  Further, these motivating techniques were ranked as the top five:
1.   The manager personally congratulates employees who do a good job
2.   The manager writes personal notes about good performance
3.   The organization uses performance as the basis for promotion
4.   The manager publicly recognizes employees for good performance
5.   The manager holds morale-building meetings to celebrate successes
Tactics for implementing an Informal reward system include
•   Linking to organizational goals
•   Defining parameters and mechanics
•   Obtain commitment and support
•   Monitor effectiveness, and change when the rewards are no longer special
•   Link to formal rewards programs

Reward systems are not exclusively the realm of managers
Systems can include structures that allow for peers to recognize each other.  For many people, peer recognition is more important than recognition by managers or customers.

Basics for Effective Rewards and Recognition
•   Use the person’s name
•   Strive to be timely
•   The compliment is the only topic discussed
•    Make it specific so the person knows why they are getting the recognition
•    Describe how what they did helps the organization; how it will be used
•   Follow-up a verbal compliment with a note
•    Make it public if appropriate, especially if the performer could serve as a resource to others
20 Tips for No-Money Reward and Recognition
1.      Post a thank-you note on the employee's or team member’s office door.
2.      Have your director    call an employee or team member to thank him or her for a job well done, or have the same person visit the employee at his or her workplace.
3.      Greet employees and colleagues by name when you pass their desks or pass them in the hall.
4.      When discussing an employee's or a group's ideas with other people, peers, or higher management, make sure you give credit.
5.      Acknowledge individual achievements by using people’s names when preparing status reports.
6.      Name a continuing recognition award after an outstanding employee.
7.      Ask five people in your department or company to go up to the person sometime during the day and say "{Your name} asked me to thank you for [the task or achievement]. Good job!"
8.      Write five or more Post-it notes thanking the person for a job well done and hide them among the work on his or her desk.
9.      Have lunch or coffee with an employee or a group of employees you don't normally see.
10. Make a thank you card by hand.
11. Lunch outings for the entire group as an everyone-pays-his-own-way event. The value is in the going, so encourage but don't force anyone who isn't comfortable going with the group.
12. A personal letter of thanks to the employee or team member from the CEO/senior manager for a significant contribution (you might need to get the information to this person before the letter can be written).
13. Let the person you are recognizing know what you are doing or requesting on his or her behalf (i.e., send the person a copy of your requesting memo). Even if upper management doesn't approve the request, the person will know you were trying.
14. Clippings of special articles on a topic you know is meaningful to the individual. Attach a note to relate the articles to something that is special to the person.
15. Share verbal accolades. Don't forget to forward voice mail messages that compliment a team member’s work.
16. Ask a person to teach or share his accomplishment with others as a way of recognizing the person's ability and role.
17. Ask a person for advice or her opinion; this demonstrates respect.
18. Recognize an individual's accomplishments in front of peers -- yours or theirs.
19. Practice positive nonverbal behaviours that demonstrate appreciation.
20. Make a large calendar that can be posted. Call it the "celebration calendar" and use Post-Its and written notes of recognition tacked onto specific dates to honour contributions made by team members.
20 Tips for Low-Cost Rewards and Recognition
(Please note:  The University of Queensland staff performance evaluation and management system does not support the payment of any of the rewards below. Managers however could opt to pay such rewards out of their own pocket)
1.      Movie Tickets.
2.      See’s Candy gift certificates.
3.      Book of Stamps.
4.      A framed memento/letter/certificate.
5.      Inscribe a favourite book as a gift.
6.      Balloons decorated with appropriate messages.
7.      Purchase a plant or flower arrangement with appropriate message.
8.      Buy the person something to use in his or her hobby.
9.      Candy bar awards within a team or department. Choose something meaningful and make it tradition: examples include "Mr. Goodbar" award for the ABAZABA team award.
10. Lunch-on-me coupons.
11. Take the person to lunch as a form of thanks or to mark a special event.
12. Doughnuts, bagels, or rolls as an early morning starter.
13. A "funny" trophy that is passed among team members based on "inside" criteria.
14. Submit the person's name for a Wall of Fame award.  This will result in a one-time increase on their pay.
15. Gift Certificates or vouchers that can be used at local department stores, specialty shops, or local merchants; especially appropriate for ones that can be easily assessed during the workday.
16. Something engraved with the person’s name, such as a pen set, business card holder, plaque, or portfolio.
17. Paid subscription to a professional magazine or newsletter.
18. A small contribution to their favourite charity in the person's name.
19. Authorize a non-standard stationary item; set a maximum limit.
20. Authorize time-off; full day or half-day.

REMEMBER,

for  efficient  and  effective  REWARD  SYSTEM, it  must  reflect.

To do the thing you enjoy doing
Recognition – in all its various forms
Money – only becomes a prime motivator if there is no sufficient of it coming in to meet one's immediate daily requirements.
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Managing a Business

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Leo Lingham

Expertise

In Managing a business, I can cover all aspects of running a business--business planning, business development, business auditing, business communication, operation management, human resources management , training, etc.

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18 years of working management experience covering such areas
as business planning, business development, strategic planning,
marketing, management services, personnel administration.

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24 years of management consulting which includes business planning, strategic planning, marketing, product management, training, business coaching etc.

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