CHAPTER 2 THE REWARD SYSTEM

 BASE OR BASIC PAY

The basic rate is the amount of pay (the fixed salary or
wage) that constitutes the rate for the job. It may be varied
according to the grade of the job or, for shopfloor workers,
the level of skill required.
 MARKET RATE ANALYSIS
 GRADE AND PAY STRUCTURE
 Broad- graded structures: grade and pay structures with
six to nine grades.
 Spot rate: the rate for a job or an individual that is not
fitted into a grade or band in a conventional grade
structure and does not allow any scope of pay
progression.
PAY PROGRESSION

Pay progression takes place when base pay advances

through pay brackets in a grade and pay structure or
through promotions or upgradings. Progression through
pay brackets may be determined formally through a
contingent pay scheme or by means of fixed increments as
described below.
 CONTINGENT PAY FOR PERFORMANCE,
CONTRIBUTION, COMPETENCE OR SKILLS
Contingent pay is concerned with answering two
fundamental reward management questions:1) what do
we value? and 2 ) what are we prepared to pay for?
Individual contingent pay schemes provide additional
financial rewards related to levels of performance,
contribution, competence or skill. Contingent pay may be
related to team or organizational performance (profit
sharing, gain sharing or employee share schemes).
 Performance- related pay, which provides individuals
with financial rewards in the form of increases to basic
pay or cash bonuses that are linked to an assessment of
performance, usually in relation to agreed objectives;
 Skill- based pay, which provides employees with a direct
link between their pay progression and the skills they
have acquired and use effectively.
 PENSIONS AND EMPLOYEE BENEFITS
 ALLOWANCES
 NON- FINANCIAL REWARDS
Non- financial rewards (see Chapter 9 ) do not involve any
direct payments and often arise from the work itself, for
example recognition, achievement, autonomy, scope to use
and develop skills, training, career development
opportunities and high-quality leadership.