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You cannot separate employee rewards and incentives, organisational management, satisfaction with working conditions, motivation levels and employee retention. If the first four are not in sync, the fifth – motivation – will fail and the sixth will be hard to achieve. An unmotivated employee is either quitting on the job or about to quit for real.

According to John C Maxwell, if you get employees motivated then, “People will work eight hours a day for pay, 10 hours a day for a good boss, and 24 hours a day for a good cause.”[1] Happy employees will stay with you and, more importantly, deliver work of a high standard and contribute actively to both the workplace culture and the organisation’s intellectual capital. The worst thing that can happen to an organisation is employees who stay just for their monthly pay cheque and monetary benefits but have disengaged psychologically from all other activities.

Remuneration has to do with direct pay, rewards, benefits and incentives, all of which can be related to a monetary sum or a cost to the employer. The planning of the total package must be done with great care, and employees must know and understand the total monetary value of the pay and benefits they receive from the company – concepts known as Total Package or Total Cost of Employment (TCOE).

To contribute to motivation and therefore performance, rewards and incentives must be managed well – if everyone on your staff expects to get an annual bonus then that bonus cannot be seen as an incentive.

Rewards and incentives can create several problems which must be taken into account. In the first place, they create a power relationship between the giver and receiver which can be exploited. Secondly, they can create an unhealthy competitiveness among employees which can undermine collaboration and sharing of knowledge. Lastly, a fear of jeopardising the reward or incentive can lead to stagnation, with lower levels of innovation and risk taking. Employees would rather play it safe and toe the line.

The major part of an employee’s reward generally comes in the form of salary, wages and/or commission. The determination of these is obviously extremely important (one approach is discussed in the following section) and structuring commission, in particular, allows for a variety of approaches. But there is also much room for creativity in the rest of the package. Common benefits include medical aid and pension schemes, training opportunities and car allowances. More individually specific rewards or incentives can include a company car, access to luxury cars for specific time periods, specific performance-related bonuses, holidays, flexible working arrangements, share schemes, access to corporate recreational facilities, overseas trips, sabbaticals and tangible rewards such as computers, sports equipment etc. Care should be taken to relate the choice of these both to the position and the individual’s own wants and needs.

Tips and Tools

  • Do proper benchmarking before working out your remuneration system.
  • Link job analysis with remuneration.
  • Use remuneration specialists to assist you.
  • Link pay and performance.
  • Conduct regular salary surveys.
  • Combine financial and non-financial rewards.

A final, crucial point: additional rewards, be they increases or access to additional benefits, should be given to employees when they deliver results – no sooner and no later. Do not waste rewards on people who fail to meet the stated goals or deadlines. Do not leave an achiever wondering when the company’s going to notice.

The art and science of remuneration is best left to a specialist. In South Africa, the South African Reward Association provides specialist training in this challenging field and there are numerous consultants to help you ensure that your TCOE brings a commensurate reward for the company.