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The NEED FOR Pay back System Business Essay

An essential area of the procedure for management is the fact that proper attention get to the reliable use of resources. SPECIFICALLY, human resources management is one of the main parts of management strategies because it plays a substantial role in organizations in enhancing organization performance. In the business area, there are numerous ways in which employers and managers have sought methods to influence and inspire their employees and it is true to state that in conditions of all techniques and methods available, the remuneration and proper praise repayment system, have been widely used in contemporary society.

Salaries and pay have been a main concern for each person plus they can dominate great part of a person's business life. As explained by Hegewisch (as cited in Breadwell and Holden, 1997): "The payment package deal is one of the very most obvious and obvious expressions of the occupation relationship. " this means that reward is the most effective way to encourage an employee's best behavior which is from the achievement of the organization's objectives. In this manner, employee drive is therefore essential to the success of an organization.

From the point of view of employees, they can feel how pretty they can be being treated by their company and their feeling is straight related to your time and effort they placed into their work. Corresponding to Bowey and Thorpe(1986): "Since employees came to work to earn money, they would work better if they were given more income for better work. " With this theory, money supplies the determination to work. That's the reason why an incentive system should be effectively and carefully integrated. This essay will first take a look at the methods and strategies of reward systems and then assess the value and implications of reward management.

- Aims of incentive management

Historically, the goals of rewards are to inspire and retain people. While basic total annual salaries play a role in attracting visitors to companies, rewards in the form of financial and non-financial payment keep them there. The goals of praise management can be divided into two distinctive parts; some may be "participation of corporation" and another is "performance in company" (Steers and Forter, 1991). First of all, the idea of "participation" means to make employees getting a sense of belonging and becoming a member of organization, by feeling of part of community, they will not only create a desire to stay for a long time as an associate of a business but also devote great effort with their work. Thus, rewards can entice people to join an organization and encourage behaviour that contributes to the achievement of the organization's goals. Therefore, one of seeks of the pay back management is to give employees a feeling of owed and encourage their attendance.

Secondly, the notion of "performance" means that reward systems are usually designed to fit for an employee's performance. To get basic, employers seek to use rewards to dominate an employee's behavior and increase productivity. Within this sense, employers have minimal expectations for every employee. Thus, when employees reach an expected degree of job performance, an organization will pay focus on them and present them proper incentive. Furthermore, if an incentive system is set up quite and equitably, most individuals in the business will make increased work for companies.

. Types of prize management

Rewards give a special payment for a special activities or results. That is distinct from the overall meaning of payment such as income or salary which fixed payment based on a regular basis. Alternatively, the word of 'pay back' is utilized to identify the excess repayment related to performance or job skill. This concept of pay back can be generally categorized as intrinsic and extrinsic according to the aspects. Intrinsic rewards are provided by oneself as a result of performing responsibilities (Beardwell and Holden, 1997). Types of such factors are a sense of fulfillment, increased responsibility and autonomy, a idea of individuals that they are a valuable person in team and so forth. However, extrinsic rewards are provided for folks by another person. These extrinsic rewards including financial and non-financial payment can be made up of some elements from those shown in Number 1. Many of these rewards are made to motivate employees to achieve a higher degree of performance.



Rewards for successful performance that happen to be related to the results obtained


Payments from the achievement of previously setting targets


A special form of incentive in which repayments to sales reps are made based on a share of the sales value they generated



An advancement of employee's rank or position in an organizational hierarchy system. Advertising may be an employee's prize once and for all performance


It includes autonomy in decision making and competency of authorize.

Figure 1. The components of extrinsic rewards

Source: Armstrong(2001), A handbook of real human source of information management practice

- Exemplory case of financial praise: Circumstance of AVIVA

Aviva is one of the leading insurance companies on the globe. Furthermore, they have a well outfitted reward system. Lately, Aviva start a new reward system which is called the "peer popularity scheme". In this technique, personnel can nominate colleagues for additional bonuses to reward their efforts. Relating to report, this system will be run through a website allowing the company's 22, 000 UK-based staff to send e-cards to fellow workers and put forward individuals and clubs for rewards. Nominations will then be posted to line professionals who may then decide what level of reward the employee deserves. They will then award a proper number of things to the employee, who can choose his / her own rewards. (Source : www. hrmagazine. co. uk, Woods. 2009)

- Importance of balance with two types of rewards

When action is intrinsically encouraged, an individual's identified locus of causality is thought to be interior; that is, individuals believe that task fulfillment is under their own control. when individuals receive extrinsic rewards for task behavior, they'll perceive their locus of causality to be exterior and will take part in those activities only when they believe that extrinsic rewards will be forthcoming

As is seen the says of Steers and Porter(1991), when individuals are motivated by interior factors, they can obtain self-satisfaction and the fact that they can complete the missions and jobs provides them self-confidence. However, this is insufficient to motivate employees because this kind of intrinsic satisfaction causes a switch from inside to external rewards.

Because, the results or benefits make employees believe in and this leads to reasonable rewards because of their performance. Thus, the total amount of rewards is vital in incentive management. This is why why companies or employers target mainly on extrinsic rewards. If these two intrinsic and extrinsic rewards are combined well, it can be useful tool in handling an individual's job performance.

. Creating the praise systems and strategies

- Repayment by results

This is immediately related to performance which is the second aim of reward. This strategy commences with the simple concept that all rewards are based on individual's performance results. Beardwell and Holden(1994) state that the system of payment by result is based on the concept of scientific management and duties which could be assessed by standard analysis. With this same context, employees likewise have a idea that if they produce an average rate of benefits they will expect to acquire their normal repayment while if their outcomes are above the common level they believe that they will get a benefit or other kinds of rewards. Because they produce more final result than other acquaintances or an employer's prospects. Relating to Steers and Porter(1991), a person's motivation to act in a certain way is greatest when he or she thinks that their behavior will lead to certain rewards. In this way, the technique of payment by final result is the most fast and reliable way to encourage employees.

- Concentrate on enhancing employees job skills

This strategy related on intrinsic desire. Rewards systems can be used as tools to employees not only only to encourage them to attain for better results but also in order to develop their job skills. Thus, this could be another significant strategy in setting up a rewards system. Reward systems tend to be designed so that pay higher at challenging jobs than normal tasks. On this sense, individuals make appreciable efforts to attain more add-ons. Torrington and Hall(1987) claim that, "Employees who start to see the incentive system as an possibility to wrest control of their personal activities which provide little intrinsic satisfaction. " These days, many companies have designed praise system focuses on for an employee's skill-development. However, this reward system may not always bring positive effects in organizations for example, when employees pursue only their own interests the organization's targets would be a low priority for the coffee lover.

- Importance of consultation in compensation system

Lawler and Bullock 1978 (as cited in Steers and Porte, 1991) pursuing research into remuneration systems in america remarked that

'Most approaches to changing pay systems are top-down; they believe that individuals above those on the pay scheme should make the decision. What about letting the people who'll be afflicted by the program be a important area of the decision?'

When creating a reward system or changing the design of praise system, the very first thing to consider is co-operation between employer and employees. Historically, praise system has functioned as with an employer's behaviour management part, but actually this is for employees. Vroom and Yetton (as cited in Breadwell and Holden, 1997) advised that contribution and assistance in the design of repayment systems brings about a greater understanding of their workings and the necessity for their intro. There are some considerations when coming up with the compensation system.

- Collateral and Comparability

Employees want to be financially rewarded for producing a certain outcome plus they desire to be fairly treated. Furthermore, they want to get proper rewards for their inputs which include work, job skills etc. If they do not acquire ideal treatments or rewards, the average person will take actions for instance they could ask for campaign or try to reduce their effort for their duties. Beardwell and Holden(1994) make a distinction in conditions of collateral. They split it as two types of standards.

Internal criteria is the assessment of pay in a organization which relies on the relationship between acquaintances or employee-employer

External standards is the diagnosis of pay in comparison with the earnings of outside of the business's individuals or other organizations

Therefore, there are many choices which can make issues in the reward system and these conflicts can be immediately related to results and an organization's productivity. Thus it's important to look at a careful strategy whenever evaluating job performance.

. Exemplory case of reward strategy

- Circumstance of SAMSUNG

The two theory factors of management system in SAMSUNG are 'competitiveness' and 'prize'. SAMSUNG used a result-based incentive system, which has differences in advertising and other benefits for their employees according to performance results. However, nearly all employees in SAMSUNG do not have any problems about distinctions which are created by the result from a person's effort on responsibilities. Because, they believe that these distinctions can energize job performance such as a wish to achieve a task, encourage of challenging and business lead to improve of productivity. Additionally, clear goals and the opportunities to accomplish these goals are given to employees. These features together with reasonable praise system raise a company's competitiveness on earth market.

- Composition of pay back system

The essential total annual salary in SAMSUNG accounts for about 50 to 60 percents of total gross annual salary

A big range of bonuses and other rewards symbolize important part of an individual's total wage.

- Features of rewards

Annual salary: This is decided by the present year's consequence of assessment regardless of the previous year's salary

PI (Effective incentive): This is given when departments or individuals achieve their goals, up to 300% of the regular wage;

PS (Income writing): Redistribution of surplus revenue, this is given when departments or individuals exceed their goals, up to 50% of total salary;

Non- Financial incentive: Advertising and other profit programmes

(source: Ga, J. S. (2007), The regular Rodong bubryul)

. Conclusion

This article has evaluated the incentive systems and outlined the importance of pay back management. As discussed above, payment including pay back and other benefits will not indicate simply encourage nominal expectation of employees. This is basic in company to appeal to and keep people. Effective compensation management will not only be applied to dominate a person's behaviour but also improve an organization's productivity.

Although only few sorts of strategies have been evaluated in this work, other significant role of incentive strategies have also been existed available area. There is no perfect system of prize. However, well-designed strategies and appropriate management skill can work in bettering the organization's competitiveness.

. Bibliography

Armstrong, M. (2001). A handbook of human being source of information management practice. Kogan Web page.

Bowey, A. M. & Thorpe, R. (1986). Payment system & productivity. The Macmillan press.

Beardwell, I. & Holden, L. (1997). Individual resource management : A contemporary perspective.


Ga, J. S. (2007). The reward and incentive system of SAMSUNG. The regular Rodong bubryul,

194(14). Seoul. [online]. Available from : http://www. elabor. co. kr/worklaw/MList. asp

Steers, R. M. & Porter, L. W. (1991). Desire and work tendencies. Fifth edition.

Torrington, D. & Hall, L. (1995). Individual resource management. Prentice Hall European countries.

Wood, D. (2009). Aviva's new prize scheme allows personnel to nominate co-workers for additional

perks. Retrieved August 19, 2010, from www. hrmagazine. co. uk, David Woods.

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