Drawing upon specific examples, discuss how the components of a reward strategy can vertically align with the organisation’s strategy and horizontally align with other people practices within an organisation

Drawing upon specific examples, discuss how the components of a reward strategy can vertically align with the organisation’s strategy and horizontally align with other people practices within an organisation.  (AC 1.2)

The reward strategy is important for motivating employees, developing behaviors, and attaining business objectives. We’ll address vertical and horizontal alignment by looking at two of the more prominent components: compensation and recognition.

1. Vertical Align:

Compensation:

Compensation refers to the financial rewards employees receive, including base salary, bonuses, and benefits. The process for aligning compensation with the organisation’s strategy consists of a number of steps:

• Market Positioning: It shows where your institution stands in terms of compensation with respect to industry benchmarks. This simply means a company that wants to be a market leader should pay its employees competitively.
• Pay-for-Performance: Compensation is directly related to individual and team performance. If your organisation puts a premium on high performance, explore the option of performance-based bonuses or merit increases.
• Strategic Objectives: Relate compensation with strategic objectives. For example, if the focus is on innovation, provide stock options or profit-sharing plans to motivate people for a long-term commitment.

Recognition:

Recognition Programs reinforce behavior and, in turn, align with organisational values. Examples include:

• Employee of the Month: Public recognition of good performance motivates others to excel.
• Spot Awards: Immediate recognition for extraordinary efforts cements conformance to organisational objectives.
• Long Service Awards: Recognition for loyalty and dedication supports retention goals.
• Alignment Example: If your organisation is promoting innovation, as an alignment example, give recognition for creative problem-solving or successful project outcomes.

2. Horizontal Alignment:

Recruitment and Selection:

Ensure that the recruitment practice is aligned with the reward strategy. For example:

• If your organisation is actually committed to diversity, consider referral bonuses for employees who bring in a candidate from an underrepresented background.
• If innovation is a key driver, underscore the requirement to be creative when interviewing and rewarding hiring managers for the effective acquisition of innovative talent.

Training and Development:

Align training initiatives with the reward strategy :

• If career growth is a focus, then invest in skill development programs; link promotions to skill acquisition.
• Consider Tuition Reimbursement for relevant certifications or degrees an employee may be working towards.

Performance Management:

Tie performance evaluations to reward outcomes:

• If your organisation values teamwork, then include collaboration skills in performance appraisals and reward those employees who are effective team players.
• Determine bonus allocations or salary increases using performance ratings.

Succession Planning:

Succession planning that aligns with reward strategy:

• Identify high-potential employees and offer them opportunities for development.
• Reward managers who actively participate in the succession planning.
• Alignment Example: Say employee development is one of the emphases or focus areas your organisation has. One can tie training completion to salary increases, recognizing managers who actively mentor potential successors.

Internal Factors Influencing Designs of Reward Strategy

A reward strategy is designed on the basis of various internal factors, such as organisational size, sector, culture, structure, location, workforce characteristic, profitability, trade union recognition, and the HR capacity to maintain reward systems. Compared to a local small business enterprise, a multinational business I Uncategorized will have a more complex reward strategy due to reasons such as global talent management and local labour laws.

Vertical and horizontal alignment of the different components of the reward strategy—parts of the organisational strategy and people practices—is critical to having a coherent approach to managing employee rewards. Having thought through specific internal factors that may influence how a reward strategy is designed will help ensure an organisation finds an approach that supports strategic objectives, creates experiences for employees, and drives better outcomes.