management is the design, implementation, maintenance, communication and evolution
of reward processes, which helps organisations to achieve high performance. Other
scholars with American influence or ‘personnel management’ use the term ‘employee
compensation pay system’ (Gomez-Mejia et al. 2005; Dessler 2005).
Reward systems are put in place in order to improve an organisation’s performance.
The assumption is that reward packages motivate employees for total commitment to
the organisation’s effectiveness. Since the organisation’s high performance also depends
on significant improvement in all its aspects, there are also other specific objectives
when rewarding employees, which can be subdivided into the categories of the organi-
sation, individual, employees and teams and also employee representatives (Trade Un-
ions).
At the level of the organisation, reward management is expected to:
- Help the organisation recruit the required number and quality of staff.
- Employees have their needs and expectations from the employer with regards to
pay. This includes the demands of the job, market rates elsewhere, comparison to
other jobs, pay in the organisation and the cost of living. The employer rewards staff
in order to meet these expectations and hence make them feel that they are justly
rewarded. - Harmony in the work place cannot be ensured if there is a conflict between
employees through their trade unions and management when demanding better pay
and working conditions. Conflicts are counterproductive to performance. Better pay
also means better relationships with trade unions and less conflict.
Reward systems
Although many scholars use the phrase reward system to mean compensation packages
for the recognition of the job done and the way they are provided, Bratton & Gold
(2007) who are well supported by BPP Learning Media (2009) conceptualise reward
systems as a mixture of extrinsic and intrinsic rewards provided by the employer. It also
includes the integrated policies, processes, practices and administrative procedures for
implementing the system within the framework of the human resource strategy and the
total organisation’s system. This understanding of the reward system is critical in de-
signing effective human resource reward packages and in particular, the recognition that
the institutional framework that supports rewards is crucial in the employees’ perception
of the quality and quantity of the reward provided. Armstrong (1995) has provided a
detailed description of rewards, their purpose and how they are expected to encourage
employees’ commitment to the job and the overall organisation’s performance. The de-
scription covers both the financial and non-financial aspects of rewards.
Financial
- Wages and Salaries. Wages refer to total emolument paid to a worker for
contribution to the organisation. Wages are paid weekly or fortnightly. Deductions
are made for non-attendance while salary is paid monthly, and expressed as an
annual figure. It is unlikely to deduct for non-attendance in some days or hours
although deductions are becoming increasingly common in multinational companies
operating in Tanzania.