Question

After a workforce has been recruited and developed, managers and human resource management (HRM) professionals must maintain an effective workforce. In a short essay, explain the significance of an effective reward system to maintaining a workforce. Suppose you are the manager of a company. What kind of optional and mandatory benefits would you offer as part of your rewards package? What type of employee compensation system would you use? Why?

Answer 1

Solution -

Every organisation today has an aspiration to maintain an effective workforce. All organisations want to maintain the highest productivity levels from their human resources. This is achieved by maintaining a high level of motivation within the workforce. One way of maintaining such a level of motivation is through an effective reward and recognition system within the organisation.

A reward and recognition system that encourages productivity and fulfills the strategic objectives of the organisation is an effective system. The qualities of an efficient reward system are as follows -

• Transparency
• Prompt
• Comprehensive

The reward system keeps the employees engaged and provides the organisation with an option to scale-up without increasing costs on workforce.

As a manager I would like to extend a reward package that complements the strategic objectives of the organisation. For instance if the strategic objectives are sales and revenue growth then bonus and commission would be a major component but if quality is the objective then a major component of reward package will be in the form of bonus for lesser defects and first time right production. As a manager I would also extend such reward packages that are preferred by the workforce so that the reward system proves as a driving force. I would also have certain options in the reward system so that the worforce can have some autonomy and are able to exercise their preferences.

The employee compensation that I would deploy would be a mix of fixed and variable component such as salary and bonus/commission so that the compensation policy encourages productivity and also does not motivate the workforce to resort to unfair malfunctions to gain more variable component. A balanced compensation package would be the best option so that optimum performance and productivity is maintained.