Rewarding employees

Financial reward – employers pay employees to work – is the critical core employment transaction, but many other factors are involved in the relationship between employers and employees, including the psychological contract.

Studies of human motivation have long established that work satisfies other needs: for example identity, status, ambition, personal fulfilment, meaningful activity, a sense of purpose and being with others. According to Armstrong’s Handbook of Human Resource Management Practice, reward management aims to:

• support the achievement of business goals

• attract and retain high quality people

• promote high-performance

• support and develop the organisation’s culture

• define the right behaviours and outcomes

• reward people according to the value they create

• align reward practice.

Enlightened employers do as much as they can to ensure employees are rewarded for their work in ways that embrace these factors, mindful that “the purpose of reward management is to add value to people rather than attaching value to them” according to management gurus Christopher Bartlett and Sumantra Ghoshal. The formal arrangements for compensating employees for their time and work are built around specific financial and other benefits; the strength and appeal of total reward packages help employers attract and retain competent people.