Human resource management practice I also available by michael armstrong

FIgure 

26.2

 

The elements of total rewards

The work itself (job design)

The work experience

Non-financial recognition

Achievement and growth

Total rewards

Relational

rewards

Base pay

Contingent pay

Employee benefits

Transactional

rewards

Non-financial/

intrinsic rewards

Total

remuneration

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Part 

6

  Performance and Reward

366

FIgure 

26.3

 

Model of total rewards: Towers Perrin

Communal

Individual

Pay 

•  base pay

•  contingent pay

•  cash bonuses

•  long-term incentives

•  shares

•  profit sharing 

Benefits 

•  pensions

•  holidays

•  health care

•  other perks

•  flexibility 

Learning and development 

•  training

•  on-the-job learning

•  performance

     management

•  career development

•  succession planning 

Work environment 

•  organizational culture

•  leadership

•  communications

•  involvement

•  work–life balance

•  non-financial recognition 

Relational

(intangible)

Transactional

(tangible) 

The Towers Perrin model shown in Figure 26.3 is 

frequently  used  as  the  basis  for  planning  a  total 

rewards approach. It consists of a matrix with four 

quadrants. The upper two quadrants – pay and bene-

fits  –  represent  transactional  or  tangible  rewards. 

These  are  financial  in  nature  and  are  essential  to 

recruit and retain staff but can be easily copied by 

competitors. By contrast, the relational or intangible 

non-financial  rewards  represented  in  the  lower 

two  quadrants  cannot  be  imitated  so  readily  and 

therefore  create  both  human  capital  and  human 

process advantage. They are essential to enhancing 

the value of the upper two quadrants. The real power 

comes when organizations combine relational and 

transactional rewards. The model also makes a use-

ful  distinction  between  individual  and  communal 

rewards, particularly, in the latter case, those provided 

by the work environment.