Reward direction has been described as a cardinal map in HRM systems in modern organisations, and it is frequently designed to pull, retain and actuate employees ( Milkovich and Newman, 2004 cited in Yu, Ying ying and Angeles, 2011, pp 2 ) . Because of the strategic nature of human resource in the attainment of corporate ends and organisational fight ( Wright and McMahan, 1992 ) , many writers have discussed the topic of wages direction from different positions. Some of these positions focus on spliting reward systems into two classs ; Extrinsic and intrinsic wagess. Extrinsic wages systems by and large focus on offering performance-linked salary additions, pecuniary wagess, long term inducement programs, team-based wagess, and security benefits to employees ( Laursen and Foss, 2003 ) . These writers argue in favor of the values of these types of wages in hiking the morale of employees and bettering their productiveness as the same clip.
The consequence of this to the organisation is better bottom line public presentation through increased gross and profitableness ( Yu, Ying Yang and Angeles, 2011 ) . Intrinsic wagess are non-monetary wagess and could come in signifier of enriching occupation duty and authorization ( Oldham and Cummings, 1996 ) , supplying preparation resources and comprehensive acquisition chances ( Hennessey and Amabile, 1998 ) , and keeping good interpersonal relationships among employees ( Ruppel and Harrington, 2000 ) . Yu, Ying and Angeles ( 2011 ) place two reward direction positions based on the above categorization and they call extrinsic wages systems, utilitarianism and intrinsic wages systems, romanticism. Harmonizing to these writers, these are the two extremely problematic theories of reward direction in the HRM field. One of the basic premises underlying the theories of reward direction is that the public presentation and motive of employees can be improved by set uping a nexus between attempts and wagess through formalised and specific single marks ( Fay and Thompson, 2001 ) .
Although many writers and authors have established that there are tremendous benefits for organisations in seting in a topographic point an effectual wages direction system, some writers still warn against over-reliance on wages systems because of its possible to make several organisational issues which focus on equity and diverseness ( Beer and Cannon, 2004 ) . Many other writers have critically examined the underlying doctrines of reward direction and the variables that make up a typical wages mix. Baeten ( 2008 cited in Jonathan and Clare, 2011, pp 2 ) provides a deeper penetration into this when they argue that there are 34 different possible theories underlying a wages direction system. Eisenhardt ( 1988 cited in Jonathan and Clare, 2011, pp 3 ) nevertheless limits reward direction theories to two viz. : The bureau theory and the institutional theory. Agency theories of wages direction fundamentally seek to aline organisation and single aims. The chief purpose is to utilize inducements to direct employees towards the involvements of the proprietors of the concern, and to plan the wages mix to reflect that. On the other manus institutional wages direction theory focuses on the formal and informal force per unit areas exerted on organisations by other organisations with which it is connected. Some of these force per unit areas could come in signifier of employment statute laws, legal demands, revenue enhancement policies, and a desire to follow the policies that others have adopted so as to derive the security that conformance is perceived to convey ( DiMaggio and Powell, 1991 ) . Finally other known theory of reward direction under the institutional categorization is normative force per unit area. This occurs when members of an organisation jointly come together to specify the conditions and methods of their plants.
4 The design of policy and set of processs
HP operates in a extremely competitory industry with a curious high staff turnover rates. Employees are frequently influenced by competitory wages policies that contribute to the attainment of their personal development ends and aims. Kerr ( 1999 ) argues that wagess should be the 3rd thing in an organisation ; measurings should be 2nd, and clear articulation of the coveted results should be the first. In planing a wages policy for HP the followers are the cardinal aims to be attained:
4.1 Policy statement
HP`s end is to pull and retain the most gifted work force which are strategically connected to the organization`s ability to run into its strategic ends and aims. With this in head we seek to offer a combination of the most competitory and flexible fiscal wagess in the US Mobile and computing machine industry to all cells of employees instantly they join us. We believe that this is of import to the care of our bing leading place in the industry and we seek to prosecute this policy every bit tenaciously as possible with all equity and equity.
4.1.1 Procedures
Purpose
The cardinal purpose of this policy is to enable enhance HP`s ability to enroll the most gifted experts in the US Mobile and computing machine engineering industry which we consider as strategic to the accomplishment of our corporate ends and aims.
Scope
This fiscal wages policy shall use to all regular full clip and regular portion clip employees of HP instantly they join the company.
Principles
The full wages policy of this company shall be built on a foundation of equality, committedness to diverseness, equity and a sense of good opinion
The full wages policy will be operated every bit transparently as possible and it will be made to follow with national regulative models for employee battle in the computing machine and nomadic engineering industry
All classs of employees that contribute more by step of productiveness shall be financially rewarded more. HP shall non take any excess part of any employee for granted. We believe that is important to carry throughing our committedness to equality and equity.
Duties
Function
Accountability
Wagess squad
Guaranting that fiscal policy wages activities are steadfastly in topographic point and monitoring that the implicit in rules of the wages are upheld
HR Director and HR leading squad
Supplying control enterprises in state of affairss where the rules of the policy are non upheld
Senior direction group
Guaranting the proper alliance of HP`s corporate scheme and the wages policy
4.2 Correspondence to relevant national statute law
The US section of labor has established ordinances sing employees & A ; acirc ; ˆ™ wages and rewards in topographic point. One of such ordinances is the just labour criterion Act of 1938 which is administered by the rewards and hr division. This Act establishes criterions for minimal rewards, overtime, wage and record maintaining. These criterions affect over 130 million full clip and portion clip employees at both private and public sectors of the US economic system. This act promotes fairness, justness and equity and empowers employees to originate a jurisprudence suit against any employer who violates any of the rules and policies of the Act. This new policy thoroughly complies with the criterions set out in the US section of labour Act of 1938 in all equity and equity. The policy is besides crystalline plenty to give employees the liberty to establish jurisprudence suits against HP if the companys policy is perceived to be contradictory to national statute laws.
4.3 International deductions
The ILO ( International Labour Organization ) is the organic structure in charge of administrating labour criterions and the organisation soon comprises of 183 states all around the universe. The ILO has adopted 188 conventions which are pacts making international labor jurisprudence criterions. The US has merely adhered to two of these labour jurisprudence criterions which are the convention on the abolishment of forced labor and the convention on the worst signifier of child labor. The US has resisted the acceptance of the other parts of the convention including those that regulate wage and wagess to employees from an international position. Compensation and wagess at both executive and employee degree have non been exhaustively developed in line with ILO criterions. The US claims that its policies have been developed internally and competitively and make non necessitate to be adjusted to reflect international criterions. Equally competitory as the bing wages policy in HP is, it is still of import to follow an international position in its execution.
Beginning: hypertext transfer protocol: //www.iclg.co.uk/khadmin/Publications/pdf/4390.pdf-accessed on 30-04-2011
5 Evaluation of policy and processs
5.1 Reward rating matrix
Armstrong, Brown and Reilly ( 2009 ) prescribe six prosodies for measuring the success of any reward direction policy. In position of this the processs for measuring the effectivity of HP`s wages policy are set out below.
Reward Aspect
Measured By
Reward scheme
Clear wages scheme and one-year program in support of concern scheme and program
Productivity and wages costs
Net income, value added or gross revenues per employee
Entire wage and wages costs compared with competition in the US computing machine industry
Financial wages
Fiscal acknowledgment for behaviors in line with scheme and values
Appropriate signifiers of honoring public presentation and part in topographic point
Proportion of staffs covered by methods of honoring public presentation and part
Risk appraisal of fillip program design
Clear presentation of return on costs of fillip
Employment
Ratio of occupation offers to credences
Staff nonvoluntary turnover to surrender rates and keeping of high public presentation to identify skill staff
Staff turnover and absence degrees
Reward direction general
Actual market place compared to want
Equal wage reappraisals carried out and acted upon
Measure, quality and frequence of wages communicating
Battle and satisfaction with wagess
Surveyed overall employee battle degrees
Employee overall satisfaction with wage and wagess
Employee sentiments that wagess are competitory
Employee sentiment that public presentation is rewarded and managed efficaciously
Employee sentiment on degree of apprehension of wages
Directors feel reward agreements are flexible and run into their demands.
6 Decision
Reward direction is an built-in portion of the step of the fight of an organisation. As a cardinal constituent of the overall human resource scheme, reward direction is cardinal to the productiveness of employees which is besides linked to the overall profitableness of an organisation, every bit good as its long term endurance. It is no longer plausible to believe that a good crafted scheme can present an organization`s nucleus values without affecting the component of employee wages direction. Available and bing research in this country suggests a strong nexus between the effectivity of schemes with the engagement of an appropriate wages system ( Richard and Ralph, 2001 ) . Reward direction is progressively going a beginning of sustained competitory advantage for many organisations. The old wage construction which is based on occupation analyses, descriptions and specifications is no longer back uping the attainment of long term organisational ends and aims ( Gomez-Mejia and Balkin, 1992 ) .
This study has established a clear nexus between reward direction and the sustainable attainment of organisation ends and aims through the part of extrinsically and per se motivated employees. Through an illustration of a universe category organisation the function of a wages policy and its rating standard has been discussed with a position to set uping a nexus between attempts and wagess through formalised and specified marks ( Kessler and Purcell, 1992, cited in Giovanni and Tommasso, 2011, pp 2 ) . In set uping the wages policy for an organisation, the organization`s corporate aims are of import inputs to the full procedure, and an alliance between these purpose and aims and the wages policy is strategically of import to the effectivity of the wages policy
