CIPD Level 5 Samples: Associate Diploma in People Management - 5HR03

CIPD LEVEL 5 ASSIGNMENT HELP SAMPLES FOR 5HR03

5HR03: Rewards for Performance and Contribution

Introduction

Sufficient rewards are important in employee satisfaction, motivation, engagement, and retention. Through sufficient rewards, companies can attract and retain talent. This is attributed to the firm showing value to its workforce. Applying Herzberg two-factor theory, adequate rewards are fundamental to employee motivation (Artaya et al., 2021). This report involves an assessment of rewards for performance and contribution, including the principles of rewards, different nature of rewards, including intrinsic and extrinsic, and the business context of rewards.

Task One –Report Section One 

AC 1.1: Evaluate the principles of reward and its importance to organisational culture and performance management.

Two principles of rewards include;

Principle 1: Transparency, Fairness, and Consistency

When reward systems are transparent, employees understand how rewards are determined. Fairness ensures that rewards are distributed equitably. Employees perceive fairness when rewards are based on merit, effort, and contribution rather than favouritism or bias. Consistent application of reward policies across the organization reinforces trust and prevents resentment (Cotton, 2022).

Importance to culture and performance management

In relation to culture and performance management, transparent and fair reward practices contribute to a positive organizational culture. According to Sonboli et al. (2021), when employees perceive fairness, they are more likely to engage, collaborate, and align with the company’s values. Consistency reinforces cultural norms. It signals that the organization values consistency in treating employees, which aligns with a culture of integrity and trust. In terms of performance management, transparent reward systems motivate employees to perform better. Knowing that their efforts will be recognized and rewarded encourages higher productivity.

Principle 2: Linking Rewards to Objectives

Reward systems should align with organizational goals. When rewards are tied to achieving specific objectives, such as sales targets or project milestones, employees focus their efforts accordingly. For example, companies can tie individual performance bonuses to achieving revenue targets aligning rewards with business objectives.

Importance to culture and performance management

Linking rewards to objectives provides a framework for evaluating employee performance. Performance management processes can assess how effectively employees contribute to achieving organizational objectives, allowing for targeted feedback and development (Cotton, 2022). Rewards linked to objectives show employees that the company prioritizes certain behaviours and results. This alignment strengthens cultural norms and expectations, motivating personnel to achieve common goals.

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AC 1.2: Explain how policy initiatives and practices are implemented.

Stages of Implementing Anti-Discrimination in Reward Policies

To implement an anti-discrimination principle in reward policies and practices, a company should begin by understanding the organization’s demographics, including diversity in age, gender, ethnicity, and other characteristics. Secondly, they should assess the specific needs of different employee groups by considering factors such as family responsibilities, cultural expectations, and individual circumstances. Thirdly, they should ensure that rewards are not biased to avoid any discriminatory practices (Ringelheim & Ganty, 2023). The fourth stage is to train managers and HR personnel on anti-discrimination policies. Emphasize the importance of treating all employees fairly. For example, an organisation can conduct workshops on unconscious bias and cultural competence and educate managers on avoiding stereotypes. The sixth stage is to implement non-discriminatory practices consistently. They should monitor reward decisions to ensure they align with the anti-discrimination principle. Lastly, it is to address any bias and disparities. If disparities are identified, the organisation should take corrective action promptly and investigate any complaints related to discrimination.

Best Practices for Inclusion

To effectively manage a process, an organisation must consider equity for all of its employees. They should focus on equity rather than equality. They should understand that different employees may need other support to achieve similar outcomes. Secondly, they should involve employees from various backgrounds in reward policy discussions. Employee’s perspectives provide valuable insights (Chung et al., 2021). Lastly, an organisation should conduct regular audits to assess whether rewards are distributed fairly across demographic groups.

AC 1.3: Explain how people and organisational performance can impact on the approach to reward.

AC 1.4: Compare two different types of benefits offered by organisations and the merits of each. 

Benefits in rewards refer to additional aspects in the rewards, which will ensure the workforce remains motivated. This is important in fostering employee retention. The benefits can be financial and non-financial. 

Performance-Related Pay (PRP)

A PRP is a compensation strategy where an employee’s earnings are directly linked to their performance, achievements, or contributions. It aims to motivate employees by rewarding exceptional performance (Cotton, 2023). For example, an organisation can tie employee's annual bonuses to specific performance metrics, such as meeting project deadlines, client satisfaction, and code quality. High-performing employees receive substantial bonuses, while those who underperform receive smaller or no bonuses.

Profit Sharing

Profit sharing involves distributing a portion of the company’s profits among employees. It is typically based on a predetermined formula or percentage (Xiao et al., 2020). For example, a company can allocate its percentage of profits to employees at the end of each fiscal year based on tenure and salary level. This bonus is separate from regular compensation.

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Comparison

AC 1.5: Assess the contribution of extrinsic and intrinsic rewards to improving employee contribution and sustained organisational performance.

Extrinsic Rewards

Extrinsic rewards are external to the work itself and are typically tangible or financial. They include elements such as pay raises, bonuses, benefits, and promotions (Emmanuel & Nwuzor, 2021). For example, a company can provide quarterly bonuses based on sales targets to motivate the sales team to exceed performance goals (Malek et al., 2020).

Extrinsic rewards contribute to employee contribution by increasing employee effort and output. When employees know that their hard work will be rewarded financially, they are more likely to go the extra mile. Extrinsic rewards also contribute to organizational performance through retention and talent attraction (Malek et al., 2020). Organizations that offer competitive extrinsic rewards retain skilled employees and attract top talent.

 Intrinsic Rewards

Intrinsic rewards are psychological and arise directly from task performance. They include feelings of accomplishment, personal growth, autonomy, and a sense of purpose. For example, a Tech Start-up Company can encourage employees to participate in hackathons and innovation challenges. The thrill of solving complex problems and contributing to cutting-edge projects serves as an intrinsic reward.

Intrinsic rewards contribute to employee contribution through rewards and personal growth and enhance job satisfaction (Manzoor et al., 2021). Satisfied employees are more likely to contribute wholeheartedly. In contribution to organizational performance, intrinsic rewards foster long-term commitment. According to Chung et al. (2021), engaged employees are more likely to stay with the organization, reducing turnover costs and maintaining performance continuity.

AC 2.1: Assess the business context of the reward environment.

AC 2.2: Evaluate the most appropriate ways in which benchmarking data can be gathered and measured to develop insight.  

AC 2.3: Explain how organisations use insight to develop reward packages and approaches.

Task Two - Report Section Two

 AC 2.4: Explain the legislative requirements that impact reward practice.

AC 3.1: Assess different approaches to performance management.

Performance Management Meetings

Performance management meetings are structured interactions between managers and employees to discuss performance, goals, and development (Atmaja et al., 2022). For example, a manager in an organisation can conduct monthly performance check-ins to discuss achievements, challenges, and growth opportunities.

360-Degree Feedback

360-degree feedback involves gathering performance insights from various sources related to an employee. For example, a company can use 360-degree feedback to assess leadership effectiveness, fostering continuous improvement. It gathers input from multiple sources, like peers, subordinates, and supervisors, providing a holistic view of an employee's performance and behaviours (Granados-Ortiz et al., 2023).

AC3.2: Review the role of people practice in supporting line managers to make consistent and appropriate reward judgements. 

AC3.3: Explain how line managers make reward judgements based on organisational approaches to reward. 

References

Artaya, I. P., Kamisutara, M., Muchayan, A., & Deviyanti, I. G. A. (2021). Abraham Maslow's Hierarchical Need Fulfillment and Herzberg's Two-Factor Theory for Creating Worker Loyalty. The Spirit of Society Journal, 4(2), 66-75.

Atmaja, D. S., Fachrurazi, F., Abdullah, A., Fauziah, F., Zaroni, A. N., & Yusuf, M. (2022). Actualization Of Performance Management Models For The Development Of Human Resources Quality, Economic Potential, And Financial Governance Policy In Indonesia Ministry Of Education.

Chung, B. G., Dean, M. A., & Ehrhart, K. H. (2021). Inclusion values, practices and intellectual capital predicting organizational outcomes. Personnel Review, 50(2), 709-730.

Cotton, C. (2022). Reward management survey. Retrieved from https://www.cipd.org/uk/knowledge/reports/reward-surveys/

Cotton, C. (2023). Performance related pay: Factsheets. Retrieved from https://www.cipd.org/en/knowledge/factsheets/pay-performance-factsheet/

Granados-Ortiz, F. J., Gómez-Merino, A. I., Jiménez-Galea, J. J., Santos-Ráez, I. M., Fernandez-Lozano, J. J., Gómez-de-Gabriel, J. M., & Ortega-Casanova, J. (2023). Design and Assessment of Survey in a 360-Degree Feedback Environment for Student Satisfaction Analysis Applied to Industrial Engineering Degrees in Spain. Education Sciences, 13(2), 199.

Emmanuel, N., & Nwuzor, J. (2021). Employee and Organisational Performance: Employees Perception of Intrinsic and Extrinsic Rewards System. Applied Journal of Economics, Management and Social Sciences, 2(1), 26-32.

Manzoor, F., Wei, L., & Asif, M. (2021). Intrinsic rewards and employee's performance with the mediating mechanism of employee's motivation. Frontiers in psychology, 12, 563070.

Malek, S. L., Sarin, S., & Haon, C. (2020). Extrinsic rewards, intrinsic motivation, and new product development performance. Journal of product innovation management, 37(6), 528-551.

Ringelheim, J., & Ganty, S. (2023). Anti-Discrimination Law and Economic Inequalities. C. O’Cinneide, J. Ringelheim and I. Solanke, Research Handbook on European Anti-Discrimination Law (Edward Elgar, Forthcoming).

Sonboli, N., Smith, J. J., Cabral Berenfus, F., Burke, R., & Fiesler, C. (2021, June). Fairness and transparency in recommendation: The users’ perspective. In Proceedings of the 29th ACM Conference on User Modeling, Adaptation and Personalization (pp. 274-279).

Xiao, S., Chen, Y. J., & Tang, C. S. (2020). Knowledge sharing and learning among smallholders in developing economies: Implications, incentives, and reward mechanisms. Operations Research, 68(2), 435-452.

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