Eco-Insulate UK: Reward Strategy, Pay & Job Evaluation

Scenario

Eco-Insulate UK is a medium sized private sector organisation that manufactures eco-friendly thermal insulation in the UK. The Managing Director (MD), who started the company in the mid-1970s has set up a meeting with you to discuss concerns regarding increased turnover of skilled and non-skilled employees.

During the meeting you are made aware that there is no incentive scheme in operation and there is an expected level of performance broadly related to the notion of measured day work. Standard times exist and are maintained by the Finance and Administration Department.

Most employees receive 28 days paid holidays per year. All employees are included in the non-contributory pension scheme however, it’s generally known that special schemes operate for senior staff only.

The MD is aware that the overall culture and performance of the company is quite negative and that it’s time to look at offering forms of reward incentives, benefits and recognition to stimulate positive change.

In your capacity as a reward specialist practitioner, he asks you to put together a report for the senior management team that will give them knowledge and understanding of the principles and components of reward and pay, including how these might influence organisational, psychological and cultural factors. In addition, he would also like them to gain an understanding of job evaluation and market rates.

Report

To complete the report, you should include written responses to each of the 10 points below, making appropriate use of academic literature, legislation, surveys, data intelligence, research and good practical examples to substantiate your response and illustrate key points.  Please ensure that you use reputable sources as indicated on the unit reading list and that all cited sources are correctly acknowledged and presented in full in a bibliography at the end of your report.

With reference to the above scenario:

• Explain the principles of reward and its importance to organisational culture and performance management. (AC 1.1)
• Assess the contribution of extrinsic and intrinsic rewards to improving employee contribution and sustained organisational performance. (AC 1.2)
• Explain the differences between types of grade and pay structures. (AC 2.1)
• Explain how contingent rewards can impact individual, team and organisational performance. (AC 2.2)
• Explain the merits of different types of benefits offered by organisations. (AC 2.3)
• Explain the merits of different types of recognition schemes offered by organisations. (AC 2.4)
• Assess the business context of the reward environment. (AC 3.1)
• Evaluate the most appropriate ways in which benchmarking data can be gathered and measured to develop insight. (AC 3.2)
• Explain approaches to job evaluation. (AC 3.3)
• Explain the legislative requirements that impact reward practice. (AC 3.4)

Expert Answers on Above HRM Questions

Principles of reward and its importance

Reward management is highly essential in an organisation as it helps in attracting, motivating and retaining employees through fair pay, recognition and benefits. Reward management is highly crucial as it allows for proper alignment between employee performance and organisational goals, thereby helping in developing a positive culture and reinforces desired behaviour.

Extrinsic and intrinsic rewards

The extrinsic rewards include pay, bonuses and benefits that are given for the satisfaction of financial and security needs. Intrinsic rewards are in the form of recognition, autonomy and meaningful work that helps in boosting long term engagement and creativity. A balance of intrinsic and extrinsic rewards at Eco-Insulate can help it in achieving retention of its employees and thereby its morale. The greedy structures are hierarchical

Types of grade and pay structures

The graded structures are hierarchical with defined pay ranges per grade. The broadbanding grade has wide pay bands that supports flexibility and skills based pay. The individual spot rates are specific to a person and useful for unique skill sets.

Contingent rewards and performance

In case of contingent rewards, the payments are linked to performance which reinforces accountability and goal alignment. Such kind of performance based rewards can help Eco-insulate in improving output, reducing turnover and supporting a result driven culture.

Merits of different benefits

Different types of benefits offered to employees in the form of Health Insurance, flexible work conditions and paid leave leads to improvement in employee wellbeing and retention. With flexible benefits, Eco-insulate can achieve reduction in high turnover by addressing diverse needs of employees and enhancing inclusivity and loyalty.

Merits of recognition schemes

The recognition programmed in the form of employee of the month, peer recognition, best performer of the year all contributes towards improving the morale of employees and reinforcing positive behaviour. The non-financial recognition in the form of career development can also be highly effective in sustaining motivation within employees.

Business context of the rewards environment

The rewards design must reflect market conditions, financial capacity and competition for talent. In the case of Eco-insulate, a reward system that is based on fairness and transparency is crucial in addressing the issues of skills shortages and sustainability.

Benchmarking and data measurement

Benchmarking takes into consideration the industry data, pay surveys and government statistics to compare the compensation levels. Tools such as the CIPD reward management survey are quite effective in guiding eco-insulate reward positioning.

Approaches to job evaluation

The job evaluation can be performed using analytical and non analytical methods. Dynalithical methods include point factor or factor comparison methods, whereas the non analytical methods include job ranking or classification on the basis of overall value of the job.

Legislative requirements

The revolved practices must comply with important legal laws and applications including Equality Act 2010, National Minimum Wage Act 1998, Working Time Regulations 1998 and Employment Rights Act 1996. 

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