Human resource management practice I also available by michael armstrong

Chapter 

26

  Reward Management – Strategy and Systems

359

Reward strategy

Reward  strategy  provides  the  impetus  for  reward 

system design and operation in order to achieve three 

major objectives: performance, competitiveness and 

fairness.  It  aims  to  provide  answers  to  two  basic 

questions: 1) what do we need to do about our reward 

practices to ensure that they are fit for purpose? and 

2) how do we intend to do it? It is a declaration of 

intent that defines what the organization wants to 

do in the future to develop and implement reward 

policies, practices and processes that will further the 

achievement of its business goals and meet the needs 

of its stakeholders. The aim is to provide a sense of 

purpose  and  direction  and  a  basis  for  developing 

 

– Employers/employees need to develop a full 

understanding and appreciation of the value  

of the total reward package.

5 

Manage all cash:

 

– Total cash comprises base pay and variable pay.

 

– Base pay reflects job challenge and individuals’ 

competence in the job.

 

– Variable pay reflects performance delivered 

against agreed objectives.

6 

Face the market:

 

– Reward levels, generally and for specific skills, 

aligned with agreed market positioning to 

attract, motivate and retain the right talent.

 

– Reward competitiveness covers each element  

of total reward (eg base pay, pensions, leave)  

and the overall deal.

7 

Support equal pay:

 

– Eliminate direct and indirect reward  

discrimination and reduce any unjustified  

gender pay gaps.

 

– Operate reward systems that are perceived  

by staff to be reasonable and transparent.

 

– Reward systems and structures evaluated and  

kept up to date to ensure that they continue to  

meet the requirements of legislation.

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