Strategic Human Resource Management: A Guide to Action

(Rick Simeone) #1

EFFECTIVE REWARD STRATEGIES


Components of an effective reward strategy


Duncan Brown (2001) has suggested that effective reward strategies have
three components:



  1. They have to have clearly defined goals and a well-defined link to
    business objectives.

  2. There have to be well-designed pay and reward programmes, tailored to
    the needs of the organization and its people, and consistent and inte-
    grated with one another.

  3. Perhaps most important and most neglected, there need to be effective
    and supportive HR and reward processes in place.


Criteria for effectiveness


The questions to be answered when assessing the effectiveness of a reward
strategy as posed by Armstrong and Brown (2007) are:



  1. Is it aligned with the organization’s business strategy (vertical alignment
    or integration) and its HR strategies (horizontal alignment or inte-
    gration)?

  2. Will it support the achievement of business goals and reinforce organiza-
    tional values and, if so, how?

  3. Are the objectives of the reward strategy clearly defined, including a
    convincing statement of how the business needs of the organization will
    be met and how the needs of employees and other stakeholders will be
    catered for?

  4. Is it based on a thorough analysis and diagnosis of the internal and
    external environment of the organization and the reward issues that
    need to be addressed?

  5. Has a realistic assessment been made of the resources required to
    implement the strategy and the costs involved?

  6. Is it affordable in the sense that the benefits will exceed any costs?

  7. Have steps been taken to ensure that supporting processes such as
    performance management, communication and training are in place?

  8. Is the programme for implementation realistic?

  9. Have steps been taken to ensure that it is supported and understood by
    line managers and staff?

  10. Will HR and line managers be capable of implementing and managing
    the strategy in practice?


Reward strategy l 191

Free download pdf