| Category | CIPD Level 7 | Subject | Management |
|---|---|---|---|
| University | Chartered Institute of Personnel and Development (CIPD) | Module Title | 7HR03 Strategic Reward Management |
7HR03 Strategic reward management of level 7, will focus on explaining the role strategic reward plays in retaining, motivating, and attracting the people at work to direct behaviours and actions of employees in the organisation towards achieving the organisation. This unit will explain to you the different financial and non-financial benefits that will be applicable depending on the organisation's context the basic thing is that these rewards must be fair and relevant. 7HR03 contains elements that will be required during the designing, managing, introducing, and evaluating of the strategic reward, and how the other related practices and policies will be impacting people's practices.
In 7HR03 Strategic Reward Management, you will have the opportunity to learn the factors that influence design and reward policy. Understanding organisational strategy and variables is the key and you will critically justify the value of benchmarking and rewards strategy choices. Here in 7HR03, you will develop an in-depth understanding of the total approach of the rewards and their impact on base and incremental pay and benefits in performance appraisal and its links to pay for progression. You will even examine the ethical issues that may arise from rewards and how principles of transparency and equity are the cornerstone or responsible and effective approaches for reward.
Below is the 7HR03 strategic reward management assignment example. By going through the 7HR03 assignment example you will get answer to your questions such as, what type of writing you use, how CIPD level 7 assignment look like? You can even use this as a free sample for getting understanding of the format and structure of your assignment. But make sure that you not copy these answers as these are posted online and you will be caught under plagiarism.
CIPD 7HR03 Assignment Task 1: Understand effective reward strategies and policy frameworks.
1.1 Examine the key factors influencing the design of reward strategy and policy frameworks.
1.2. Discuss the importance of aligning the reward framework to the wider organisational context and strategy.
1.3. Critically justify the value of reward benchmarking exercises and the main methodologies organisations use to gather data.
1.4. Critically evaluate the impact of organisational reward strategies to attract, motivate, and retain talent.
CIPD 7HR03 Assignment Task 2: Understand the value of a ‘total rewards’ approach.
AC 2.1. Critically evaluate the significance of a total rewards approach, including monetary and non-monetary incentives.
AC 2.2. Analyse the role of base pay in attracting and motivating employees.
AC 2.3. Analyse a range of contingent pay schemes, including the advantages and disadvantages for organisations
AC 2.4. Evaluate different types of employee benefits and their suitability in different organisational contexts.
AC 2.5. Discuss the significance of non-financial rewards as part of a total rewards approach.
CIPD 7HR03 Assignment Task 3: Understand pay structures and approaches to establishing pay levels.
AC 3.1. Evaluate pay structures and their suitability in different organisational contexts.
3.2. Analyse the advantages and disadvantages of organisations using incremental pay scales.
3.3. Assess the benefits and challenges of using performance appraisal to guide pay progression decisions.
3.4. Examine the role of remuneration committees in determining and managing executive reward packages.
3.5. Examine a range of factors that impact international remuneration decisions.
7HR03 Assignment Task 4: Understand the importance of organisational approaches to compliant and ethical reward practice.
AC 4.1. Critically discuss the key legal requirements relating to pay and reward and the implications of non-compliance.
AC 4.2. Critically evaluate the role job evaluation plays in formulating reward decisions.
AC 4.3. Examine the potential ethical issues arising from the use of contingent forms of reward.
AC 4.4. Explain the merits and impact of transparency and fairness in approaches to reward.
Answer:
Reward strategy is a process that an organisation;’s follows to motivate its workforce to improve their excellence, which will eventually help the company grow. The Reward strategy is a basic principle component, which may contain incentives, benefits, and bonuses. Whenever a company is creative, it will come up with various ways to motivate its employees. The company’s business outcomes are likely to be enhanced by business-gained personnel. They execute work, tangible and intangible, in a collective concept called total rewards. When developing a reward strategy and policy framework, several key things should be done to ensure efficiency.
The first thing that you need to firmly establish, therefore, is the nature of the rewards you think will be introduced according to the behaviour of the employees. These rewards may work to varying degrees depending on corporate culture as well as the specifics of the job positions. Thus, assuming that the work environment is creative and encourages innovations, such non-revenue incentives as extra days off or flexible schedules would be most effective.
Then comes finding answers to different questions, questions like, what format of these rewards will be implemented next? Will these rewards be distributed every month, or will they be paid out in bonuses and objectives? You need to find answers to all these questions, including will these rewards will be provided to all the students, or if there are chances that higher rewards will be provided to those who have achieved more than others.
Another key factor is does the rewards include taxation. For example, how are these reward bonuses going to be taxed? Can any of these rewards be considered as “benefits in kind” or will they impact the employees and company both in about taxation?
The reward strategy also needed to be integrated effectively with other policies and practices of the organisation regarding human resource management. For example, if the promotions are tied to performance, the rewards scheme should enhance this model of reward strategy.
Answer:
People are considered the most valuable asset within any company and hence must be motivated and committed. Incentive strategy is one of the essential tools in achieving the goals and strategy applied within the organisation. Saccaro also notes that this fosters the perception of a positive relationship between the efforts of the employee and the condition of the organisation, for it now awards the wider context.
This, in turn, can bring high commitment and motivation. High commitment and motivation result from this. Also, an adequate reward system enables the organisation to attract and maintain efficient employees in the organisation. Finding and keeping the best people in today’s environment is no easy task, but there is no choice: organisations must get it right. The rewards package discussed above will enable businesses to align with organisational strategy, hence enhancing better placement to attract and retain the best employees.
Answer:
For some, reward benchmarking is an exercise that is simply a waste of resources and time, whereas any organisation putting efforts into conducting these exercises will surely give valuable insights. This process will simply make organisation keep their human resource at their top performance by maintaining their fairness in compensation. Other than wages, organisations also focus on benchmarking their reward strategies against their peers in the industry to keep themselves relevant and competitive. This wide approach includes not only surveys but also interviews with the big industry experts so that they can get valuable insights regarding the comprehensive and effective rewards strategy. By doing this, companies will be able to align their offering with the standards of the market and maintain an engaged workforce.
However, reward benchmarking exercises might be seen by some individuals as time and money-consuming exercises, while in fact, those who undertake the benchmarking exercises stand to benefit in terms of getting an overall view of the organisation’s position within the market. To this extent, benchmarking of compensation practices by organisations reveals gaps where firms could be investing more or spending more than comparably sized firms.
Further, benchmarking data are useful concerning salary and bonus levels and other types of rewards. Consequently, reward benchmarking exercises can then come in handy in assisting organisations to remain relevant when it comes to rewarding their employees.
Some of the main approaches that may be adopted by organisations to obtain data to be used in reward benchmarking processes. It could be taken by administering questionnaires to employees in like organisations to establish their remuneration rates and other incentives.
Answer:
Compensation methods are important tools for attracting, inspiring, and maintaining high performers. Employees have needs that need to be met by their employers, and rewards must be clearly understood by employers as well to create a healthy employment scenario. The most rewarding strategies then need to be aligned to the specific context of the employing organisation as well as the workforce.
There exist several considerations necessary while developing the reward strategy, which include the corporate culture and values and organisational business goals. This is because the various forms of rewards include monetary and nonmonetary incentives that include salaries and bonuses, flexibility in working, and company cars, among others.
The general idea relies on the fact that rewards have to be matched to organisational and individual requirements. The idea is to make the program realistic and applicable to the workplace so that every stakeholder enjoys and is motivated to complete the task to the best of their abilities.
Answer:
The structural model of reward is another essential component of organisational administration since it keeps employees motivated to perform while targeting the achievement of organisational goals. An effective reward system should satisfy the organisational and individual self-actualisation needs of employees.
organisations typically offer two main types of rewards: monetary and non-monetary. Money incentives come in the form of wages or salary, bonuses, and commissions, and non-monetary incentives, including awards, privileges, and extra holidays.
Comprehensive consideration of the subject of motivation can be provided with the help of a total rewards approach. This strategy takes into account all the various types of rewards where the needs of the employees are met holistically, not just the monetary aspect of it. But by including all these aspects, organisations are better placed to get their employees more involved in their work, thus leading to better results.
Answer:
That is why base pay cannot be viewed as the only factor affecting employees’ attraction and motivation – but it is one of them. Indeed, some researchers have found that base pay is not the best parameter to work with when rewarding employees. Others, which play an important role as motivation factors, include job satisfaction, working environment, organisational culture, and rewards.
However, it has to be noted that base pay is not the last word in compensation strategies; however, base pay is an important tool. That is why the present paper shows that Frameworks is the Foundation on which bonuses and other incentive-based programs are built. It also allows for a certain degree of employee financial security which would again, make employees more motivated for their positions.
Researchers have proved that there is a relationship between base pay and motivation levels. Thus, the higher the base pay of the employee, the more enthusiastic is he going to be, in general.
Answer:
There exist various types of contingent pay with each has some benefits and drawbacks for organisations. The popular forms of contingent pay systems include bonuses, commissions, and stock options, among other rewards.
It is a type of payment that is made once and for all, depending on the financial performance of the organisation. Bonus payment fruits can be effectively used to increase the financial performance of an organisation since they compel employees to work harder. The weakness of awarding bonuses is that, when implemented, it means that an employee will have to be paid a bonus even if the company’s results do not show an improvement.
Such payments are made at intervals, based on specific sales volume or value that is produced by the employee.
The main benefit of commission payments is that employees are encouraged to earn more sales for the company’s products or services. The drawback about them is that they foster rivalry among the employees, especially when it comes to incentives the result of which is bitterness among the employees.
Stock options are benefits that allow the holder to buy the company’s stock at a specified price. The main use of stock options is that they can motivate the workers to ensure that the stock of the company has value added to it. The weakness is that they may develop inequality amongst employees; some employees may stand to benefit more than others due to the difference in the effects created by the options.
Answer:
Benefits are an important aspect of total remuneration, and there are many categories of benefits that organisations offer to their employees.
Some examples include: medical and other expense coverage, employee savings and pension schemes, as well as leave entitlements. In the context of benefits organisations, organisations have to pay attention to their employees and organisational goals and aims.
For example, a newly established company may consider providing health insurance to employees to secure employees’ attention from the best talent, while another big firm might aim to provide all-around benefits to its employees. All in all, the employee benefits program is the one that is customizable depending on the requirements of the company and the nature of the recruited labour force.
Answer:
Ways of rewards in a total rewards approach for employee compensation include monetary and non-monetary. Financial means include wages, incentives, and other forms of remuneration, while non-financial means can involve things like Rewards, incentives, or appreciation of employees' work, achievements, or efforts.
There is a crucial importance of nonfinancial rewards because they can provide an equally effective reinforcement of the workers’ efforts in the form of an appraisal that doesn’t necessarily include money. At other times, they could be even more useful to the employees in the sense that they can be personalised.
For example, an appreciation in front of everyone during the corporate event may be much appreciated by that gregarious person who enjoys being cheered, while a word-of-mouth compliment from the employer may be valued a lot by the introverted person. With such a system of incentives, an employer can make sure that an employee gets the best kind of rewards in the best kind of way.
Answer: Pay structures are the basic foundation for determining employee compensation. Pay structures are dependent on various factors, which include geography, industry, and size. Every pay structure has its own merits and demerits, so selecting the right structure requires careful consideration.
Spot rate pay structure is the one that specifies pay rates for individual roles. This is perfect for highly specialised posts and big industries that have a shortage of skilled workforce. Also, this structure is completely inflexible and may not always work in the organisation's favour as many employees’ unique contributions can go unnoticed.
The graded pay structure puts every employee on different grades of the pay range. This Structure is most commonly used in big organisations; this can also be used to reflect the difference between the levels of skills and responsibilities for different roles. However, the demerits that this structure has are somewhat rigid, which sometimes overlooks the individual contribution of employees.
An ungraded pay structure can be understood by its name only, as there are grades in this; every employee is offered the same rewards irrespective of the responsibility level. This is the approach that is often seen in smaller organisations, which fosters a sense of equality among the employees. When we talk about demerits, this structure may fail to recognise the efforts and demands of different roles.
Pay band structure is another structure that places different employees in different groups with their pay range. These different groups are then graded similarly to the graded pay structure and are also used in large organisations is the reason the demerit is similar to the graded pay structure as well, which is why sometimes organisations may not fail to fully acknowledge individual performance.
Answer: Special Benefits Offered by Incremental Pay Scales
1. Motivation: Every employee gets motivated when they find a way in which they can earn more. Incremental pay scales become that way, which shows a path of growth for employees, this turns out to be a big motivation for employees who are striving to improve their skills and performance.
2. Promotes loyalty: When an employee realises that hard work and specialising in a certain area is well-rewarded in an office and they have been offered small upgrades in pay structure, employees tend to stick with the company longer anus decreasing the employment turnover.
3. Reflects growing values: When employees need promotion as a result of the experience of their work and get promotion and an increase in their scale of pay according to their added value, they get the feeling of empathy and a sense of fairness and recognition.
4. Retaining talent: This pay structure of giving regular incremental pay scales is useful in maintaining good employees of the organisation, though it also decreases the turnover rate.
Disadvantages of incremental pay scales:
1. Lack of Flexibility: Incremental pay structure can be rigid according to different times, which makes it difficult for organisations to adjust salaries when experiencing a financial loss, or when they have to make cuts.
2. Potential perception of unfairness: One will emerge where employees who joined the same posts but at two different times will realise that they are being paid equally, since this is likely to cause unfairness.
3. Misalignment with the actual value: The contribution skill level of an employee does not always correspond with the time he/ she has served the organisation. In such cases, incremental pay may not yield the true oath of the organisation effectively.
4. Encourages Job hopping: Sometimes, employees may have a plan of leaving the office, as they may be offered better packages by other companies, which in essence amounts to going around in circles searching for jobs that will pay them better.
Answer: Benefits of using performance appraisal for pay progression:
1. Fair and Valid Compensation: Simply by connecting performance appraisal with the pay progression of the employees, the company can make sure that employees are getting rewarded for their contributions.
2. Increase motivation: Whenever employee feel that their hard work is getting recognised and their pay is influenced by their achievements, they will simply get motivated to do more hard work and achieve more. Which will eventually benefit them in improving their performance and achieving their goal better and faster.
Challenges of using performance appraisal to guide pay progression decisions:
1. Biasness: Sometimes, recognising someone's performance appraisal can be influenced by personal biases, which will lead to decisions that are not entirely fair and valid.
2. Unfairness: Sometimes employees' positive review and their performance go unnoticed, which does not increase their pay, due to which employees may feel undervalued, which leads to dissatisfaction and thoughts that their efforts mean nothing to an organisation.
3. Limited negotiations: When pay increases are dependent on performance, this leads to or no very less negotiations on salary for an employee. In some cases, when an employee thinks that they are not getting paid enough for their work and are not able to negotiate for their pay, they feel frustrated and look to leave the company.
Answer: Role of the remuneration committee:
The remuneration committee is thus responsible for setting and monitoring the executive pay at the listed companies. Such committees must at least include three independent members, among whom two are not members of the company, as per the provisions of the Governance Code of the UK. Of course, their main role is in setting compensation for CEOs by ensuring that it is brought in line with the performance of a given company. Furthermore, the committee has also developed its standards of discretionary bonuses and another long-term incentive for senior executives.
Executive pay debate:
Many executive pay scandals have been depicted in large companies such as Barclays and HSBC. All these have demonstrated acts of corporate greed that have invited a backlash, especially shareholder resentment of excessive remuneration. In this regard, many changes have been implemented in the UK government, focused on preventing excessive executive compensation; one of these measures is the Companies’ obligation to disclose the ratio of CEO pay to the median employee salary. This has boosted these two factors of transparency and shareholder activity as key drivers of organisational change in the executive remuneration landscape.
Answer:
Several key factors influence International remuneration decisions:
Global economic conditions: International pay decisions have always been most influenced by the global economy. For example: This is especially sensible during times of high inflation, when many companies resolve to raise the wages of their employee to retain the better paid.
Cost of living: A fifth important factor that affects international remuneration decisions is the cost of living. Again, since the cost of living differs from one country to another and so does these differences also affect the salary being paid. Where those expenses are enormous, employees working in that particular country have to incur a higher expense, and vice versa.
Local labour market dynamics: These are other factors in international remuneration based on the availability of skilled workers. If skilled labour is scarce in a country, then the organisation has to compensate for the same and attract the employees when in other countries there are more pools of skilled employees available and organisations only need to negotiate the market price.
While deciding the international remuneration, it must go through all these factors to offer worthy and justified remuneration to all the employees based on competency and the current market rate.
Answer: Organisations should make sure that their remuneration practices are suitable and compliant with the existing employment laws. If the organisation fails in doing so, they have to face financial penalties and loss to their reputation and brand name.
Here are Key legal requirements that are related to rewards and bonuses:
1. National Minimum Wage Act 1998: This act states the minimum amount that organisation needs to pay per hour to their employees. This will define the pay on an hourly basis, which should be considered in a similar sense and not daily.
2. Working Time Regulations 1998: This is the act that defines proper time management of employees in an organisation. This act will define their holidays, rest periods, working hours per week, and paid time off.
3. Equality Act 2010: This law makes sure that every employee is considered the same in the workplace. This act saves employees from any kind of discrimination, whether it be based on age, gender, race, caste, nationality, disability, or sexual orientation.
4. Employment Rights Act 1996: This act focuses on providing employees with statutory employment protection. This includes providing employees with a written statement of the company's terms and conditions, their right to flexible working hours, and their right to get paid without any false deduction and complete payment even after the termination process.
These are some of the legal requirements that are the most important legal requirements, as if any organisation is found not following these legal requirements, they may have to pay financial fines and lose their reputation in the industry. If organisations are found not to follow these rules after many reminders, this can even result in unrest or the closure of the company.
Answer:
Methods of Job Evaluation:
Job evaluation is an important step in comprehending the worth of positions in an organisation, and there are several ways to do that.
1. Ranking Method: Essentially, this type of AHP method involves establishing jobs in descending order of their organisational importance.
2. Job Classification: This method covers the matching of jobs in clusters according to tasks and duties, or responsibilities required by the jobs. Afterwards, each group is assessed as a whole, which makes the comparison between the jobs all the more convenient within the organisation.
3. Point-Factor Analysis: A more elaborate point system, point-factor analysis hooks distinctive points against several factors of jobs, including skill, importance, and conditions. These points give the job an overall worth in that the total points dictate the job’s value.
Key Considerations:
As stated above, irrespective of the type of evaluation method, the evaluation practice and or process must be unbiased. There must be a continuum for all the exercises and sexual parts of life, like gender and race should not dictate the result. It is important to get to a state where all jobs are rewarded fairly and proportionate to the inputs they bring to an organisation.
Thus, the facts have shown that contingent kinds of reward, that is, the reward for the target achievement, can be encouraged by the workers. Nevertheless, there are several ethical questions that one might experience while using such instruments. For instance, identifying incentives tied to targets that are not achievable may compel the employees to engage in unethical behaviours in their attempt to meet the targets and get the incentive.
Also, interest might only be oriented towards the reward, with no regard for the activity that the employees are expected to accomplish. Also, concern should be given to the question, Are the rewards appropriate? It can be frustrating for employees if only some of them constantly get rewarded while others do not. When contingent forms of reward are used, it is therefore important to be aware of the above, so that one is not caught up in the process of motivating the other person.
Answer:
Today, organisations bear increased pressure to act both ethically and legally for award practices, particularly as scandals in recent years have made some corporations more visible.
First, people get what they deserve, and thus there is merit in utilising transparency and fairness in chains of reward. To begin with, it helps in the promotion of a good and strong relationship between employees and the organisation, hence boosting the morale of workers. As a rule, employee morale and engagement become higher as soon as they expect fair treatment from employers. Also, free and transparent procedures in assigning incentives will help serve the public interest, hence gaining the public esteem of employees and the public.
However, the attainment of transparency, let alone fairness, is not without certain impediments. Each organisation has its large workforce, and managing such people can be a daunting task to accomplish; nonetheless, the development of such systems is time-consuming and requires ample resources. Another weakness is that aims may lack can result in exploitation by the employees if they see it as biased.
Still, the advantages of transparent and equitable reward practices cannot be questioned. Apart from enhancing the relationship between employees and the organisation, through trust, they assist in enhancing the public image of the organisation
1. Perkins, S, & Jones, S (2020): Reward Management: Alternatives, Consequences and Contexts. Fourth edition. London, CIPD / Kogan Page.
2. Cookson, G. (2022). HR for Hybrid working. Kogan Page. Chapter 6 pp115- 138; Chapter 6 pp115-138.
3. Armstrong M & Brown D (2019) Armstrong's Handbook of Reward Management Practice: Improving Performance Through Reward. Sixth edition. London, Kogan Page.
4. Marchington, M. and Wilkinson, A. (2020) Human Resource Management at Work: People Management and Development. Seventh Edition. Chartered Institute of Personnel and Development.
5. Rose, M (2022) Reward Management: A Practical Introduction. Third edition. London, Kogan Page.
6. Torrington, D., Taylor, S., Hall, L. and Atkinson, C. (2020) Human Resource Management. Eleventh Edition. Pearson.
7. Wilton, N. (2022) An Introduction to Human Resource Management. Fifth Edition. Sage.
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