SECTION IV

REWARD MANAGEMENT AND THE MANAGEMENT OF PERFORMANCE

Introduction

High all-round performance is the goal. This will only be delivered by staff who are positively motivated and have a high level of commitment to what they are doing. Effective human resource management aims to bring about high levels of commitment, by means of policies and practices which motivate, and the intelligent management of rewards.

The terms which have been used in the past to describe and execute this process have possessed a negative connotation. In Britain the terms ‘wages’ and ‘salaries’ have been, and still frequently are, used to describe reward processes, and are a hangover from the days of class discrimination when blue collar manual workers earned wages, whereas white collar office workers earned salaries. American companies still use the term ‘compensation’, implying that work is a negative experience for which employees have to be ‘compensated’ for turning up! Another negative attitude to reward management which dies hard is the cost accountant’s approach, which sees wages merely as a cost. Cost it certainly is, but that is an argument for using the money wisely, not for pushing for cost-cutting exercises that lower morale and motivation and hence productivity, a policy which sooner or later will impact negatively on the bottom line, quality of service, and market share. Satisfying and well-tailored rewards and high productivity lead to a lower total wage bill, than a low wage, low productivity approach.

Economic conditions have in recent years forced organisations to become leaner, fitter and more customer-oriented. This has been reflected in their pay structures. In the past, pay policy was often exemplified by bureaucracy, inflexibility and adherence to the status quo. Today, pay policy in the more successful organisations is fully integrated with corporate strategy and with an emphasis on rewarding individual and group contributions to corporate goals.

The three chapters in this section progress from a consideration of motivation theories and their practical implementation to ways of ensuring that the pay policies and practices are up-to-date and contributing to strategic goals, and conclude by outlining and examining recent developments in the quest to link performance with rewards.