Performance management and total rewards system



Businesses, whether large or small, need to succeed. For this success to be realized, the management should ensure that it has the best talents aboard for effective performance. This personnel has to be maintained and retained in the organization (Management & Resources). Attracting and retaining talents requires management to consider compensation for the employees. Several forms of employees compensation and reward systems can be applied in performance management. A comprehensive performance management and total reward system for any organization is concerned with employees motivation. An effective system has advantages of ensuring that the best are not only retained but also appreciated. This appreciation is what makes a talented worker choose to remain in the organization. Further, when used comprehensively and uniformly, there are healthy work relationships among employees and they engage in positive performance competition. It not only increases the overall organization position, but also the individual worker performance. Besides, the organization with proper rewards structure will avoid unnecessary expenses of unregulated compensations (Lin & Lee, 2011). A comprehensive reward system is therefore necessary so that such a system can look into issues of reward and compensations reading from the same script and implementing uniformity in structures. This kind of a system not only looks into rewards as in monetary gains and incentives, but also should consider issues related to the work-life balance and employee development. This paper aims at developing a comprehensive performance and total reward system that can be used to meet these organizational requirements. The structure described is compiled from various literatures to become coherent (Stereip & Indance, 2006).

Keywords: compensation, motivation, comprehensive performance, reward system

Comprehensive performance management and total reward system

In todays economic environment, attracting, motivating and retaining top talents is a challenge for many organizations. It is because the competitive business environment demands a structure that allows total and uniform coverage of motivational requirements of workers while still maintaining control on expenses. This kind of structure requires a performance and rewards committee that will have the responsibility to determine what to reward, document the performance standards, and establish and control the merit budget for the organization. Getting the correct task force is a management function and calls for serious and comprehensive selections (Berkeley, 2007).

Levels of the taskforce

The structure should include the top of executive or senior organization staff. These have the mandate to foresee creation of the committee, scrutinize and approve their projects and budgets and provide policy related guidelines to the committee. However, the top management should not influence the reward system. The choice of what performance to be rewarded should be retained by the committee.

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The second level should be the performance-reward task force. It should comprise of experienced human resource personnel of the organization (Berkeley, 2007). These are the main people who can tell what type of performance can be regarded as requiring reward. They document the process of reward and performance standards and establish a merit budget. This task force should be in communication with the top management in order to get the policy directions and with consultants outside the organization. These consultants should be selected from among renowned individuals with good performance record in human resources and have implemented a similar project elsewhere. They should be from outside the organization. Their function is to oversee transparency and provide technical guidance to the task force (Ho, Lai, & Tai, 2010).

The third level of the committee includes members selected from different departments in the organization. These members are grouped into subcommittees that focus on specific issues of performance. The subcommittees include that on baseline pay, performance pay, overtime pay, geographical differentiation pay, bonus pay, work-life balance, and career development subcommittee.

The baseline pay subcommittee should ensure that normal remunerations in the organization are above the legally accepted minimum. It has to consider the kind of performance being paid and the skills involved. The pay for performance subcommittee focuses on the extra pay that a worker should get above the basic to reward exemplary performance (Lin, & Lee, 2011). It requires them to use the guidelines provided by the task force. The overtime pay subcommittee should focus on what the organization regards as overtime work and provide guidelines on how that should be rewarded. The geographical differentiation subcommittee focuses on the differences in allowances that workers performing in different localities should get. The bonus subcommittee determines what kind of bonuses the workers should get and how much it should be.

The other two subcommittees are not directly related to salaries, but are of equal importance. The work-life subcommittee focuses on the issues related to the leaves, working hours, apologies insurances and benefits. The career development subcommittee focuses on improving the workforce skills, tuition assistance, technology training seminars and workshops for the employees (Lin & Lee, 2011).

Functions of the committee

The overall functions of the performance and rewards committee take the form of a stepwise approach. The first step is assessment (Fakhri, et al.). The project team should evaluate the companys current system and generate ideas on how the system can be improved. It should have a series of tasks including conducting focus group surveys, industry benchmark surveys, examining the current employees attitude towards the existing system and reviewing rewards related literature in order to write a report of the assessment.

After conducting an assessment, the committee has to design the reward system. It will need them to identify the organizational and individual employees attribute to reward and determine the types of compensations that the system should consider. According to Paul & Christopher (2009), compensation should comprise three major components: the pay level, the pay increase and the incentives. The pay level compensation refers to the normal salary (basic) that an employee should get. The pay increase level refers to the expected rates of basic pay increase in an organization, while the incentives refer to any bonuses that an employee can get in form of cash (Paul & Christopher, 2009).

The second determination to consider should be benefits, due to the cost implications of insurances and other benefits. It should be a serious consideration to make in order to control expenses while still maintaining motivation within the organization. The committee should, however, ensure that the employees are fully involved in the process through communication. The other consideration should be the employees personal and professional development (Stereip & Indance, 2006). These can constitute worthwhile rewards for employees. However, the cost and timelines should be put into consideration so that the companys activities are not affected.

The other step should be the execution phase of the structure. All the subcommittees should work independently to fully focus on their area. Consultations within the execution are necessary and the overall process can be evaluated periodically (Jacobs & Sena, 2008).


The competitiveness of the business world today requires every organization to have and retain the best of the professionals (Lin & Lee, 2011). As it is not as simple as it sounds, many companies utilize rewards systems that sometimes add to the economic burden of the organization or fail to motivate the employees as required. The results of this demotivation is the loss of the workforce and money. To achieve staff retention, development and motivation, a system of performance rewards should be carefully put in place to manage these issues effectively and efficiently.

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