Objectives

When you have studied this chapter, you should be able to:

• Understand the importance of using reward in a strategic role.

• Identify the elements that make up the employee reward package.

• Distinguish between the different types of job evaluation and how and when they should be used.

• Appreciate the difference between conventional pay systems and broad-banded pay systems.

• Evaluate the main methods of paying for performance in an individual and team setting.

Payment systems have changed out of all recognition over the last 20 years. In the 1970s, when trade unions were at their zenith, pay itself was regarded as an outcome of the industrial relations process where a compromise was reached between the conflicting demands of the two antagonists. Today, organisations, with varying degrees of success, attempt to harness the powerful forces of pay as a motivator to encourage employees to work in ways that lead to the achievement of organ- isational objectives. There are many more forms of incentive payments, many varieties of recognition awards and the number of employee benefits has greatly expanded. Pay is also a vital element in the recruitment process and we have seen in Chapter 8 that it is one of the major outcomes arising from the performance management (PM) process.

In recent years, the expression 'reward' has started to replace 'pay' in the human resources vocabulary. It indicates a much broader approach, including elements of non-cash awards and presupposes that employees need to actually achieve something to receive their wages or...