In today's world, companies must frequently invest in human resources. In the function of Human Resource Managers has to work closely with superiors to attract, hire, develop and retain talent. Yet the skills shortfall delivers both socio-economic and cultural challenges as talent crosses borders. Therefore, in view of employees trends such as shifting demographics, global supply chains, the aging workforce and increasing global mobility, forward-looking organizations must alter their approach to talent management to best harness talent. By doing so, they will be positively positioned to succeed in a highly competitive marketplace. In addition, organizational culture, employee commitment and leadership development have a significant impact on talent retention. Taking these factors into consideration, an integrated approach to talent management offers a way to sustaining outstanding business results.
To earn competitive advantage, the demand for human resources causes talent management. Talent management strategies concentrate on Four primary areas:
Attracting,
Developing
Managing / Retaining
Evaluating employees.
Although salary and benefits initially attract employees, top level leadership organizations focus on retaining and developing talent.
(Talent Management: Driver for Organizational Success 2006 SHRM® Research Quarterly)
1.1 To what extent does the approach to talent Management at Standard Chartered Bank display features of SHRM?
Features of Talent Management Strategy in SHRM
Key features of a talent management strategy include the following elements.
Alignment to corporate strategy
Ensuring that the talent strategy is closely aligned with the corporate strategy must be a priority. In developing a talent strategy, both internal and external factors should be taken into account, including those detailed in figure1 below. Strategic analysis from the business perspective should feed into an HR forecast which can help shape an organisation's tailored approach to talent management.
Figure 1: Demand, supply and context factors for talent management
Inclusive versus exclusive approaches
Some organisations adopt an inclusive approach to talent management creating a 'whole workforce' approach to engagement and talent development, while others develop a more exclusive focus segmenting talent according to need.
Regardless of which approach organisations adopt, fairness and consistency must be applied in all talent management processes. Diversity considerations must also be built-into talent management processes to ensure that organisations are able to draw from the widest pools of talent possible.
Involving the right people
Careful consideration needs to be paid to involving the right stakeholders in the talent management strategy. Clearly, HR specialists have an important role to play in providing support and guidance in the design and development of approaches to talent management that will fit the needs of the organisation.
Visible senior-level support is a must and a talent panel is a useful means of ensuring the involvement of Directors and senior management, especially when it has representation across the organisation. Additionally, line manager support is important at every stage of the process. Line managers must take responsibility for managing performance, identifying and developing talent in their own areas but also need to be encouraged to see talent as a corporate rather than a local resource - see our factsheet on the HR role of line managers.
(http://www.cipd.co.uk/subjects/recruitmen/general/talent-management.htm?IsSrchRes=1) accessed on 01st April 2010
In Standard Chartered Talent Management Strategies
The Bank's talent management programme backed up by detailed information about the worldwide workforce that can be analysed office by office, team by team, across continents or product areas or by type of employee, to show where help is needed or if resources are being used well.
Three other principles underpin the bank's talent programme are:
That a great business needs great managers;
That great managers build staff engagement; and
That people perform best when they play to their strengths.
This approach to talent management reflects a wider strategic emphasis on people that has seen HR issues ascend the corporate agenda.
The bank's approach has been to introduce certain global standards and tools, but to give managers some freedom to decide locally how best to use them.
So for example:
A six month-monthly performance appraisal, preferably with a face-to-face interview between employee and the manager.
Using performance appraisal tools such as 180 degree or 360 degree feedback.
360 degree feedback refers to a process that is intended to improve individual and work-unit performance and productivity by collecting feedback from a range of people (subordinates, peers, customers and clients, managers) and making that "performance" information available to the individual to be used to learn to be a better performer at work.
It's called 360 because there are 360 degrees in a circle, and the idea is that the feedback should come from distinctly different sources, because each source type may have different (and valuable) information about how to improve performance.
Performance appraisal is a key part of talent management at Standard Chartered Bank. They have classified the employees into five categories. Placing from high-potential employees to underperformers. This system allows the bank to manage its talent by discovering the skills and potential inside its workforce and identify the gaps.
High-potentials: are people with significant headroom, who would be expected to go up at least further levels in the predictable future.
Critical Resources: people who have the potential to improve and whom the bank definitely wants to keep
Core Contributors: are valuable resources who are probably doing better and should be helped to do so.
Underperformers: who are in wrong job and should be moved into another role or managed out.
As bank loose lot of new recruits within 12 months the bank developed a global induction programme, called "Right Start", which covers every new arrival.
As for creating "Great Managers" the bank has tried a number of initiatives.
In the past four years all top managers have been profiled and been offered coaching by a team of five globetrotting "leadership facilitators"
Managers at all levels can tap into a growing range of self-help tools. For example: a product called conversations that matter helps them improve the skills needed for discussions such as "Appraisal Interviews".
A wider programme on how to be great manager is due to be rolled out this year. This will be delivered via a range of media, including podcasts, videos and workshops.
"Strengths based" philosophy underpins Standard Chartered bank's approach to both talent management and leadership development. It is especially valuable in an international environment because it transcends cultural differences.
1.2 Relevance of this approach in the light of recent banking crisis
The current uncertain economic climate makes the effective and strategic management of talent more not less important. It is likely that whatever the economic backdrop, organisations will continue to prioritise recruiting scarce talent and identifying, developing and managing talent throughout the business.
HR specialists have an important role to play in providing support and guidance in the design and development of approaches to talent management that will fit the needs of the organisation. They need to have a proper understanding of the challenges facing the organisation in attracting, recruiting, developing and retaining talented people to meet its immediate and future resourcing needs.
However with the bankruptcy of a number of major financial institutions and large falls in the stock market, employees have a lot of cares that may affect them on the job. Concern about the company's financial stability will be on everyone's mind, and productivity may turn down as stress levels increase.
Talent managers can increase the employee assistance program activity as stress-related illness may affect the employees' attendance and their health. As employers, now is the time to consider about how to support your employees best in this economic situation. Some issues to think are:
Job security and concern about the company's future.
Decline in company stock value may affect employee personal assets, stock purchase plan, stock options or restricted stock.
Risk of loss of deferred compensation.
Effect on raises and bonuses.
Employees may be less likely to leave, unless they get insecure about company prospects.
Employee Personal Issues
Now is the time to remind employees about the employee assistance program, or if the company doesn't have a program, consider adding one. It may be worthwhile to bring counselors for the program sessions to help employees understand the resources available and to make it clear that it is OK to use the program for stress, without having a specific mental health issue.
Acknowledge that the company knows employees have family members who may be directly affected, and that stress from any family situation is what the employee assistance program is intended to help employees deal with.
Company Issues
The most important step talent managers can take right now is to open up a discussion with employees about their concerns. While you obviously cannot forecast the future, it is important to tell employees how the company is doing to the extent possible. It is also important to remind employees that in a public company, there are things that cannot be communicated until the information is ready to be communicated publicly.
If your business had major customers that have merged or failed, employees will be concerned about how much business they represent. If the company has a banking or insurance relationship with an affected firm, employees will be concerned about how the failure of those firms may affect the company.
If the effect on the business is unknown, tell employees you will update them when you have information. If the company is doing some belt tightening, get the information on any actions out to employees as soon as possible. Unless the company is at risk of survival, reassure employees the failure of a few firms that had financial issues unique to their businesses does not directly affect the viability of your firm.
(http://www.cipd.co.uk/subjects/recruitmen/general/talent-management.htm?IsSrchRes=1) accessed on 01st April 2010
1.3
(a)Why is it important measuring the Impact of SHRM?
Talent management links human capital investment to financial performance. According to management gurus Huselid, Becker and Beatty, there are three critical challenges to successful workforce measurement and management.
First, there is "the perspective challenge": meaning, do all managers really understand how workforce behaviors and capabilities drive strategy execution?
Second, there is "the metrics challenge": that is, are the right measures of workforce success identified (e.g., workforce culture, mindset, leadership, competencies and behaviors)?
The third challenge is "the execution challenge": specifically, in order to monitor progress and communicate the strategic intent of talent management initiatives are managers motivated to use these data and do they have access and capability to do so?
Talent management measures are evolving. As organizations increasingly focus on talent management strategies, they seek ways to validate these initiatives and measure their business impact. Many firms are beginning to include talent management in their dashboards or scorecards. For example, HSBC, a banking and financial services institution, uses the Balanced Scorecardâ„¢, with talent management listed under learning and growth. Scorecards provide a clear "line of sight" to organizational strategic goals by linking talent management to objectives and performance appraisals.
Measures may include factors such as employee survey results, turnover (e.g., talent pools) and the number of employees on temporary assignments. Companies also create their own measurements to fit their organizational cultures. Pfizer, for example, developed three primary talent management objectives strength of leadership team and pipeline, robustness of talent management processes, and development of talent mindset and values with corresponding drivers and metrics.
One metric used to evaluate the robustness of talent management processes is the percentage of key position holders with individual development plans. Avon, a global cosmetics company, is an example of a company that transformed its talent management system by shifting how it looks at talent and consequently how it utilizes technology. This transformation was necessary to be able to answer four key questions:
1) Is there the necessary bench strength to staff the organization's growth and transformation initiatives?
2) Is world-class talent in key roles?
3) How can the talent "hit rate" be increased? and
4) When and where does the company make or buy talent?
The core of this transformation was the change from a "referral of talent" mode (e.g., a manager recommends an employee for a position) to a more objective and formal approach to talent management.
This shift resulted in talent being assessed objectively through a leadership model to better determine suitability for various roles. To be able to identify where talent in the organization is located, a database now houses employee profiles, which can be routinely updated. As a result, the organization can make more data-driven decisions regarding talent.
Increasingly, talent management technology to house and track talent management strategies is becoming available. Databases with all relevant data in one location can result in significant time savings for staffing, such as the ability to quickly identify talent for open positions.
Organizations are recommended, however, to carefully evaluate which talent management technology program best fits their current and future needs. Some vendors include talent management solutions in their HR suites. Strategic talent management software may help manage workforce skills and capabilities (hourly, salaried and contingent), demographics, career planning, employee retention initiatives, workforce and succession planning, and performance and learning management. Although few vendors offer all of these options in one package, it is important to know if the software can be integrated with other systems. Opinions vary, however, on the value of technology systems regarding talent management.
(Talent Management: Driver for Organizational Success 2006 SHRM® Research Quarterly)
(b) What might be included in an evaluation strategy to measure the impact of SHRM in an organisational strategic integration?
A successful approach is based on an agreed, organisation-wide definition of talent and talent management. Such definitions form the springboard from which both talent strategy and talent management processes can be launched.
In addition, a language for talent management activities that is understood by all the parties in the employment relationship is a strong requirement.
A proactive, strategic approach to talent management offers considerable organisational benefits in terms of developing a pool of talent as a resource to meet identified needs.
Support for talent management must flow from those at the very top of an organisation and cascade throughout.
Engaging line managers from an early stage is critical to ensure that they are committed to organisational approaches to talent management.
Talent management can be used to enhance an organisation's image and supports employer branding in the labour market as well as a providing a means of enhancing employee engagement to improve retention.
Talent management activities should be developed with other HR policies and practices for a joined-up approach. Developing talent may be based on a blend of informal and formal methods.
Processes must be developed to track the performance and progress of those identified as talent.
A final conclusion was that talent management was a dynamic process that has to be continuously reviewed to ensure that organisational requirements are still being met in the light of changing business priorities. Ultimately, organisational success is the most effective evaluation of talent management.
(http://www.cipd.co.uk/subjects/recruitmen/general/talent-management.htm?IsSrchRes=1) accessed on 01st April 2010
Word Count: 2474
Section B
Question 4
Introduction
Performance Management system is an important HRM process that provides basis for developing and improving performance of individuals and teams. It is the means of getting better results by understanding and managing performance within an agreed framework of planned goals, As Weise and Hartle(1997) commented performance management is a process for establishing a shared understanding about what is to be achieved and how it's to be achieved and an approach to managing people that increases the probability of achieving success.
Main Features of Performance Management System
Armstrong and Baron define Performance Management is a "Strategic and integrated approach to delivering sustained success to organisations by improving the performance of the people who work in them and by developing the capabilities of team and individuals contributors".
Performance Management system concern mainly three factors, as follows
Aligning individual objective to organizational objective and encouraging individuals to uphold corporate values.
Enabling expectation to be defined and agree in terms of role responsibility and accountabilities (expected to do),skills (expected to have) and behaviours (expected to be)
Providing opportunities for individuals to identify their own goals and develop their skills and competencies
Above mentioned features runs through every activity of organizations, they set in the context of its human resource policies and organizational culture. Above this, features that make interaction with overall organizational strategy. However, this performance management system varies from one organization to other organizations.
(University of Sunderland , HRM 325 Strategic Management of Human Resources Text Book Version 3.0), (Michael Armstrong (2009) Armstrong's Handbook of Human Resource Management Practice 11th Edition. Kogan Page)
The ways can organizations ensure that such systems fulfil strategically useful outcomes
However, the performance management is (or should be) so all pervasive, it needs structures to support it. These should provide a framework to help people operate, and to help them to help others to operate. But it should not be a rigid system; there needs to be a reasonable degree of flexibility to allow people the freedom to operate.
Corporate strategic goals provide the starting point for business and departmental goals, followed by agreement on performance and development, leading to the drawing up of plans between individuals and managers, with continuous monitoring and feedback supported by formal reviews.
(http://www.cipd.co.uk/subjects/perfmangmt/general/perfman.htm) accessed on 26th March 2010
Performance management is a process, not an event. It operates as a continuous cycle. The Performance Management cycle is as follows:
Personal Development Planning
Performance Review
and Assessment
The Performance Agreement
Managing Performance throughout the Year
Figure 2: Performance Management Cycle
1. The Performance Agreement
Performance agreement, which defines expectations - what the individual has to achieve in the form of objectives, how performance will be measured and the competencies needed to deliver the required results. This could be described as the performance planning stage.
2. Personal Development Planning
Sets out the actions intend to take to develop themselves in order to extend their knowledge and skills, increase their levels of competence and to improve their performance in specified areas. This is the performance developing stage.
3. Managing performance throughout the year
Is the stage in which action is taken to implement the performance agreement and personal development plan as individuals carry on with their day-to-day work and their planned learning activities. It includes continuous process providing feedback on performance, conducting informal progress reviews, updated objectives and, dealing with performance problems and counselling where necessary.
4. Performance review and assessment
Which is the formal evaluation stage when a review of performance over a period take place, covering achievements, progress and problems as the basis for a revised performance agreement and personal development plan.
(University of Sunderland , HRM 325 Strategic Management of Human Resources Text Book , Version 3.0), (Michael Armstrong (2009) Armstrong's Handbook of Human Resource Management Practice 11th Edition. Kogan Page), (Michael Armstrong (2003) Handbook of Human Resource Management Practice 9th Edition. Kogan Page)
Tools of performance management system how useful for their organization
Performance development review/ appraisals:- This is the major part of the performance management system, this systems takes a variety of forms & can serve a number of purposes. Usually, appraisal take place annually, monthly, etc; between the manger and employee. However, this is the main opportunity for them to illustrate their individual performance. It's usually considered from there past performance and behaviours and how they could contribute towards the organization's objectives. There are few types' of appraisals as follows:
Top down appraisal: this is most traditional form of appraisal this emphasizes both subordinate feedback and the leads on objective setting coming from the top.
2. Self appraisal: these are independent form of appraisal. It encourages greater ownership and participation in the appraisal scheme through self reflection and helps ensure full preparation for the appraisal discussion.
3. Upward appraisal: it has been increasingly used to reflect the growing trend for organizations to recognize that they have a duty to provide effective working systems for employees. It is also predicated on a number of things. For example 'customer' relationship and a shift in the hierarchical shape of organizations to more collegiate arrangements.
4. Peer appraisal: this appraisal involves members of teams evaluating each other.
5. Multi directional appraisal: it also called as '360-degree appraisal' there are key similarities here with peer appraisal. However, the key difference is that multi directional appraisal deliberately sets out to collect data from outside the immediate team and often from external customer feedback.
Learning and development: this strategy represents the approach an organization adopts to ensure that now and in the future, achievement of it's developing the skills and capacities of individuals and teams. For examples: - manager have to give necessary knowledge and techniques to their staff to carry out there job task.
Coaching: This function is most important role in learning and development, performance development process. Coaching is developing person's skill's and knowledge so that their job performance improves, leading achievement organization objective. However, coaching is increasingly recognized as a significant responsibility of line managers.
Objective and performance standard: objectives; some organizations is used as goals. Objectives describe something to be achieved by individuals, departments and organizations over a period of time. They can be expressed as targets to be met (such as sales) and tasks to be completed by a specified date. It can be work related, referring to the results to be attained, or personal, taking the form of developmental objectives for individuals. Objectives need to be defined and agreed. They will relate to the overall purpose of the job and define performance areas that all the aspects of the job that contribute to achieving its overall purpose. Targets then need to be set for each performance area, For example, increase 'sales by 12% per cent', 'reduce wastage by 3% per cent'
Competences: Competences are describes what people need to be able to perform a job well. Competencies describe the dimensions of behaviours that lie behind competent performance. However, it's framework provide the individually.
Measurements :- To improve performance, you need to know what current performance is. Measurement provides the basis for providing and generating feedback, and thus can build the platform for further success or identify where things are going less well so that corrective action can be taken. For example, a senior manager would be mainly measured by meeting objectives, but a production worker mainly by achieving outputs.
Pay: However, performance-related pay (PRP), although by no means all organisations claiming to use performance management have PRP. Nevertheless, PRP is an important element in many performance management schemes because it is believed to motivate; it is said to deliver the message that performance and competence are important, and it is thought to be fair to reward people according to their performance, contribution or competence. PRP in motivation; that it is usually based on subjective assessments of performance,
Teams: Team working has become an important part of life in many organisations, and where teams are permanent or for longstanding projects, measures can be based on team performance. They will mainly be concerned with output, activity levels (eg speed of servicing), customer service and satisfaction, and financial results. Indeed, team measures are not very different from those for individuals, and of course team members need to agree their objectives and receive feedback in the same way as if they were not part of a team. Other team members can contribute towards this, in a process of peer review.
http://www.cipd.co.uk/subjects/perfmangmt/general/perfman.htm) accessed on 26th March 2010
(University of Sunderland , Strategic Management of Human Resources Text Book , HRM 325), (Michael Armstrong (2009) Armstrong's Handbook of Human Resource Management Practice 11th Edition. Kogan Page)
Performance management is not easy to put into action. The system varies from one organization to another, thus for PMS to be effective organisations need to consider several factors:
The history of the organization
It's management style,
Idustrial relations traditions,
It's size, formality and market sensitivity.
The emphasis on reward and performance links
Performance versus development orientation/culture
(University of Sunderland , HRM 325 Strategic Management of Human Resources Text Book , Version 3.0)
In conclusion (to ensure the that performance management system fulfil strategically useful outcomes) we have to identify the advantages and disadvantages of performance management system
Advantage of PMS
Systematic process of performance control
Clear articulation of performance strategy
Integration of performance throughout the organisation
Focus on results and people competence
Encourage learning and development
Enhance objectivity and value added to related policy areas such as reward and development
Promotion vision and an organisational response
Disadvantage of PMS
The problems of clear measures and equitable objectives.
The time and effort in operating the scheme.
Emphasis on control at the expense of development
They can be more systems rather than people based
The ability to track and effectively measure aggregate performance enhancement
The effect of pay and reward levels can be divisive and a defence
Table 1: Advantages and Disadvantages of Performance Management System
(University of Sunderland , HRM 325 Strategic Management of Human Resources Text Book , Version 3.0)
From the above points performance management system fulfil strategically useful outcomes to achieve company's objectives and goals through SHRM.
Question 5:
Why Reward Management System critical to SHRM?
Reward management is concerned with the formulation and implementation of strategies and policies that aim to reward people fairly, equitably and consistently in accordance with their value to the organization. It deals with the design, implementation and maintenance of reward processes and practices that are geared to the improvement of organizational, team and individual performance.
(Michael Armstrong and Helen Murlis (2007) Reward Management A Handbook of Remuneration Strategy and Practice Revised 5th edition. Kogan Page)
The strategic aim of reward management is to develop and implement the reward policies, processes and practices required to support the achievement of the organization's business goals. The specific aims are to:
Create total reward processes that are based on beliefs about what the organization values and wants to achieve;
Reward people for the value they create;
Align reward practices with both business goals and employee values; as Duncan Brown1 emphasizes, the 'alignment of your reward practices with employee values and needs is every bit as important as alignment with business goals, and critical to the realization of the latter';
Reward the right things to convey the right message about what is important in terms of expected behaviours and outcomes;
Facilitate the attraction and retention of the skilled and competent people the organization needs, thus 'winning the war for talent';
Help in the process of motivating people and gaining their commitment and engagement;
Support the development of a performance culture;
Develop a positive employment relationship and psychological contract.
(Michael Armstrong and Helen Murlis (2007) Reward Management A Handbook of Remuneration Strategy and Practice Revised 5th edition. Kogan Page)
How can organizations develop reward systems strategically?
To achieve these aims, reward management must be strategic in the sense that it addresses longer-term issues relating to how people should be valued for what they do and what they achieve. Reward strategies and the processes that are required to implement them have to flow from the business strategy. They have to be integrated with other human resource management (HRM) strategies, especially those concerning human resource development - reward management is an integral part of an HRM approach to managing people.
Effective reward management is based on a well-articulated philosophy a set of beliefs and guiding principles that are consistent with the values of the organization and help to enact them. It recognizes that if HRM is about investing in human capital from which a reasonable return is required, then it is proper to reward people differentially according to their contribution (ie the return on investment they generate).
Importantly, reward management adopts a 'total reward' approach, which emphasizes the importance of considering all aspects of reward as a coherent whole that is integrated with other HR initiatives designed to achieve the motivation, commitment and engagement of employees.
Strategic pay
Lawler emphasized that when developing reward policies it is necessary to think and act strategically about reward. Reward policies should take account of the organization's goals, value and culture and of the challenges of a more competitive global economy. New pay helps to develop the individual and organizational behaviour that a company needs if its business goals are to be met. Pay policies and practices must flow from the overall strategy and they can help to emphasize important objectives such as customer satisfaction and retention and product or service quality.
In Treat People Right3 Ed Lawler stresses the importance of creating a 'virtuous spiral' in which both employers and employees win. He identifies a number of principles for achieving this, which look at the whole HRM agenda from creating the right value proposition on recruitment, through to quality of leadership. He states that: 'It is entirely possible to design a reward system that motivates people to work and satisfies them while at the same time contributing to organizational.
The new pay
Lawler's concept of the new pay was developed by Schuster and Zingheim who described its fundamental principles as follows:
Total compensation programmes should be designed to reward results and behaviour consistent with the key goals of the organization.
Pay can be a positive force for organizational change.
The major thrust of new pay is in introducing variable (at risk) pay.
The new pay emphasis is on team as well as individual rewards, with employees sharing financially in the organization's success.
Pay is an employee relations issue - employees have the right to determine whether the values, culture and reward systems of the organization match their own.
But Lawler later emphasized that the 'new pay' ideology should be regarded as a conceptual approach to payment rather than a set of prescriptions: 'The new pay is not a set of compensation practices at all, but rather a way of thinking about reward systems in a complex organisation. The new pay does not necessarily mean implementing new reward practices or abandoning traditional ones; it means identifying pay practices that enhance the organization's strategic effectiveness.'
Dynamic pay
Flannery, Hofrichter and Platten expounded the concept of 'dynamic pay' and suggested that the nine principles that support a successful pay strategy are:
1. Align compensation with the organization's culture, values and strategic business goals.
2. Link compensation to the other changes.
3. Time the compensation programme to best support other change initiatives.
4. Integrate pay with other people processes.
5. Democratize the pay process.
6. Demystify compensation.
7. Measure results.
8. Refine. Refine again. Refine some more.
9. Be selective. Don't take to heart everything you hear or read about pay.
The reward strategy. This determines the direction in which reward management innovations and developments should go to support the business strategy, how they should be integrated, the priority that should be given to initiatives and the pace at which they should be implemented.
Grade and pay structure policy. This deals with the policy on the shape of the grade structure and the elements of pay within that structure, ie:
- Base pay: the fixed rate of pay that represents the rate for the job into which pay related to performance, competence, contribution or service may be consolidated. Policies on base pay levels will be affected by the factors discussed at the end of this chapter but, importantly, they will express the intentions of the organization on the degree to which it wants pay levels to be competitive and therefore the relationship between those pay levels and market rates (its 'market stance').
- Contingent pay: pay for individuals that is related to performance, competence, contribution or service.
- Variable pay: pay in the form of bonuses or cash payments that will be contingent on individual, team or company performance.
Market analysis. The process of identifying rates of pay in the labour market to inform decisions on levels of pay within the organization, which will be influenced by its market stance.
Job evaluation. The systematic process of establishing the relative size of jobs and roles within the organization.
Grade structure. The sequence or hierarchy of grades, bands or levels, which may be divided into job or career families and into which, on the basis of job evaluation, groups of jobs or roles that are broadly comparable in size are placed.
Pay structure. The ranges of base pay that are attached to grades or levels in job or career families and the scope for pay progression related to performance, competence, contribution or service. Base pay levels will be influenced by equity and market rate considerations.
Employee benefits. The provision for employees of pensions, sick pay, various kinds of perks such as company cars and entitlement to holidays and other leave.
Non-financial rewards. Rewards that do not involve any direct pay ments and often arise from the work itself, for example achievement, autonomy, recognition, scope to use and develop skills, training, career development opportunities and high-quality leadership.
Performance management. Processes involving managers, individuals and teams based on shared understanding, which define performance and contribution expectations, assess performance against those expectations, provide for regular constructive feedback and inform agreed plans for performance improvement, learning and personal development. Performance management will also inform contingent pay decisions.
Total remuneration. The sum of base pay, contingent pay and the value of employee benefits.
Total reward. The sum of total remuneration and non-financial rewards.
Building capability. Building the capability of both the reward function and line management to understand, work with and communicate the elements of reward policy and practice and changes as they occur.
(Michael Armstrong and Helen Murlis (2007) Reward Management A Handbook of Remuneration Strategy and Practice Revised 5th edition. Kogan Page)
