People are the most valuable asset of any business, but they are also unpredictable and difficult to manage. Since humans are complicated, managers or employers often feel that to set people to behave a particular way is beyond their control. First thing first, we need to know about:
What Employers are Paying for?
Employers are paying for 4Ps
“Pay for People, Position, Performance, Price of the Market”
- People (the employees themselves)
- Position (the accountability of the job itself)
- Performance (a person’s performance, skill, and competencies)
- Price of the market (pay according to the market of labor)
But we must note that all of those components are depend on company affordability.
How to Know The Reward that is Valuable According to People Perspective?
Money or basic salary is important, but it isn’t the only factor. Many factors that can affect or motivate people to perform better.
Total Rewards consists of:
- Tangible Rewards
Tangible rewards are rewards that have monetary value or easily measurable, such as basic salary, commission, annual bonus, etc.
Intangible Rewards
Intangible rewards are any rewards that have no financial value and relative less observable, such as recognition, work-life balance, career development, etc.
Reward Implementation is Important not Only for Employees but also All Levels in Your Organization
- C-Levels
To ensure reward strategy align with long-term business plan and ensure proper governance and process. - Senior Management
To attract and engage employees within its function. - Finance
To ensure Return on Investment (ROI). - Human Resources
To ensure governance compliance and maintaining internal and external competitiveness. - Employees
To know whether employees are being rewarded
fairly or not and to know whether employees feel more engaged to the company or not motivated enough with the given rewards.