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Free «Critical Information About Employee Rewards» Essay Sample

This paper presents critical information about employee rewards and development while focusing on the Total Reward Model and the way it improves performance and productivity of an organization. This model is successful when proper strategies are employed to ensure its effectiveness. Employers in most organizations have been aiming at attracting the best workforce. To achieve this various mechanisms have been used to make sure that the best employees with the necessary expertise and qualifications are recruited and retained with a help of an effective motivation mechanism (Harrison 2009, p. 12). Total Reward Model has been a useful tool used by employers for attracting, motivating as well as retaining employees in their organizations through human resource management. The success of this tool is caused by its inclusion of everything that most employees perceive as beneficial and valuable for creation of positive relationship among employees. The end result is usually increased productivity as employees are motivated to perform well.



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The Towers Perrin Model of Total Reward.

The Total Reward Model is based on five key elements in an organization which are related to employees. These elements are:

  • Compensation;
  • Benefits;
  • Work experience;
  • Performance and recognition;
  • Career Development and opportunities.

These elements are made up of dimensions, elements, practices, and programs that are used to implement the strategy of an organization which includes attraction, motivation, and retention of employees. By embracing the Total Reward Model value is created for both employees and employers as it elicits satisfaction, engagement, and high productivity of employees hence improving business performance (Robinson 2006, p. 23). The Total Reward Model is summarised in the table below.

The Towers Perrin Model of Total Reward




  • Base pay;
  • Contingent pay;
  • Cash bonuses;
  • Long-term incentives;
  • Shares;
  • Profit sharing.


  • Pension;
  • Holidays;
  • Health care;
  • Other perks;
  • Flexibility.


Learning and development:

  • Workplace learning and development;
  • Training;
  • Performance management;
  • Career development.

Work environment:

  • Core values of the organization;
  • Leadership;
  • Employee voice;
  • Recognition;
  • Achievement;
  • Job design and role development;
  • Quality of working life;
  • Work-life balance;
  • Talent management.



(Adopted from Brown 2001, p.25)

The Total Reward Model operates in a well defined context comprising of business strategy, human resource strategy, and organization culture. In addition, certain external factors that pose influence on the operation of the business must be considered too. These include regulatory issues, competition in global market, and cultural practices. Exchange relationship that exists between the employer and employee is a crucial dimension of the Total Reward Model. Successful organizations have realized that the tangible and intangible benefits that enrich lives of employees make them in turn create value for their organization. In a nut shell, the use of Total Reward Model results to leveraging five elements for attracting, motivating, and retaining employees. Moreover, when the employer offers employees rewards which are valued by them, the end result will be that employees will commit their time, effort, and talent to delivery of results. Watson (2002, p. 9) claims that by investing in total rewards, companies have excelled in many new ways, especially in performance.

The Total Reward Model aims at delivering optimal motivation. It makes employees perceive both monetary and non-monetary rewards as valuable. Compensation should be provided in respect to the effort, time, skills, and services offered to the organization. Benefits are to be designed in a way to protect employees and their families from financial risks either through social insurance, group insurance, or pay for time not worked. As argued by Currie (2006, p. 67) Total Rewards Model calls for an integration strategy that will ensure that the organization embraces the model. In integration strategy certain aspects must be considered. These include culture, environment, attraction, retention, and motivation of employees. The organization should be capable of attracting the best talent in order to survive and achieve organizational success. A strategy should be implemented to ensure that the appropriate quantity of high-quality employees is attracted through the business strategy built within the Total Reward Model.

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Culture of an organization is influenced by internal and external factors that define performance standards, expectations, and behavioural norms to which an organization is accustomed. According to Schein (1990, p. 4) the Total Reward Model defines how culture can be used to motivate employees in an organization. The environment, both internal and external influences attitudes of employees as it is observable and easily manipulated. In line with these is the context of retention. Here employers keep employees who contribute greatly to the success of the organization through an effective Total Reward Model.

The last aspect is motivation. Employers should encourage employees to achieve the highest performance level. Employees can be encouraged intrinsically or extrinsically. An effective motivation will lead to satisfaction, commitment, and later engagement of employees in an organization. In conclusion, as part of a strategic approach of rewarding employees Total Reward Model can be used to recruit, motivate, and retain high quality staff members who will help achieve company’s objectives. The end result is efficient making of decisions, improved performance as well as effective solving of present or potential problems relating to compensation and rewards. Jiang (2009, p.178) argues that Total Reward Model of HR management boosts the advancement of social economic environment while accelerating development of the enterprise.

  1. Analysis of the ‘Risk-Taking Bonus Culture’ Associated with the Banking Crisis of 2008.

The banking crisis of 2008, which was caused by the risk-taking bonus culture, enriched the bank’s top employees while destroying shareholders value. In turn, this caused financial instability in the system of these firms. The bonus driven structure of compensation in banks through the employment of excessive leverage made the 2008 banking crisis more severe. The situation was difficult until the government intervened and stopped the trend that could have resulted in the worst global depression. It is considered that compensation of key decision makers was increasing rapidly and this induced great risk taking by these firms. The issue was that bonuses increased irrespective of the performance of these banks. Thus, top management were paid higher compensation bonuses than their fixed salaries. Performance of most banks had less impact on the amount of salary given regardless of whether the bank performed well or poorly. Employees were being paid well as the bonus culture remained strong (Crotty 2009, p. 11). The perverse incentives of top management are a serious problem that has to be addressed effectively.

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According to Crotty (2009, p. 15) “Repeatedly cashing in large amounts of performance-based compensation based on short-term results did provide perverse incentives – incentives to improve short-term results even with prospect of an excessive rise in the risk of large losses at some (uncertain) point in the future.” This measure caused much ado due to the ensuing costs related to shareholders losing out, assets losing value due to collapsed market, and increase in taxes leading to increased cost of living. All these effects were attributed to the greedy bankers in society. The key lesson that we learned from the banking crisis is that employee rewards should be handled with care by considering the interests of the organization as well as its employees. The risk taking bonus culture made the banking sector fail because employees were rewarded with more money than their banks used to get. Boxall and Purcell (2003, p. 74) state that the bonuses were guaranteed to employees irrespective of performance of the banks. The key lesson that we learn from this is that bonuses should be based on increased profits made by the company which later can be distributed to employees. Suitable mechanisms must be embraced to empower human resource in making performance appraisal, salary revision together with other benefits to ensure that the core aim of the firm is attained. Lastly, since satisfaction of both employers and employees is crucial the package offered to employees should be in line with their performance, skills, and efforts.

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The Implications Posed on the Future of Reward Strategy in Organisations During the Next Five Years.

Effective employment strategy in organizations will ensure that firms succeed in productivity and results. The possible implication of engaging in a system that offers value to both employers and employees is that the company will be able to succeed and survive in tough economic conditions. Organizations should engage in rewarding employees strategically. The best reward is to foster a relationship that both parties will benefit from. As employees receive good package, they also out-perform in their assignments. In conclusion, the Total Reward Model should be embraced in organizations that plan to succeed in business given that it has proved to be successful in delivering results by ensuring that employees contribute positively to the performance of an organization. It is paramount for employers to incorporate the Total Reward Model into the business strategic plan.

Human resource which is an essential department in an organization should ensure that the operation of the business is accommodative in terms of offering the best environment, compensation, recognition, and development to its employees. By doing so the business will be successful in its operations for years to come since high-quality employees are attracted, retained and motivated. In this way the performance of an organization is propelled. According to Armstrong and Murlis (2004, p. 45) employees will be fully satisfied thus leading to their commitment and eventual engagement in the business. This will make them to be part of the organization. Even though it is important to compensate employees as well as give them good bonuses, these must be done with caution to ensure that the bonuses are taken from profits.


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