Reward
strategy basically aims to provide guidance, direction and a clear path in
order to employers developing reward policies and practices enabling them to
achieve their intended business’ overall strategy. While formulating reward
practices, hence, employers should constantly give serious and careful
consideration to the main aims the business intends to pursue. This clearly
entails that a reward strategy cannot be developed regardless of the business’
strategy from which it instead should practically flow, and that, on the
contrary, reward strategy needs to be tightly connected, i.e. aligned, to this.
As
suggested by Torrington et al (2008), in fact, a reward strategy is, above all,
intended to align an organisation’s payment arrangements and wider reward
system with its business objectives. This means developing systems enhancing chances
that individuals will actively seek to contribute to the achievement of their employer
objectives. So that, if improved quality of service is amongst the major
business aims, this should be reflected in a payment system which rewards
front-line staff who provides the best standards of service to customers. If
the main aim of the organisation is to increase productivity, an approach
rewarding efficiency would, instead, be more appropriate.
Broadly
speaking it can be said that alignment represents an important part of a reward
strategy developmental process. Indeed, for crucially important vertical
alignment – as it is defined the alignment of a strategy to the overall
business strategy – is, it only represents part of the overall alignment
process. Another critical aspect of alignment, on which employers should
therefore also focus, is, in fact, represented by the attainment of the horizontal
alignment, which refers to the alignment of reward strategies with the HRM
practices and policies developed and implemented within an organization.
Indeed,
a slight difference can be identified between the purpose that vertical and
horizontal alignments are meant to achieve. Whereas, in fact, the latter is
mostly intended to provide consistency between the reward and HRM practices
introduced within a business, the former is mostly concerned with scope, i.e. supporting
the attainment of the overall business strategy. So that the predominant
feature of horizontal alignment can be identified with integrity, whereas the
most remarkable feature of vertical alignment can be associated with business
objectives attainment. In any case, the successful attainment of both the horizontal
and vertical forms of alignment generates a virtuous circle based on the
supportive action played by the successful introduction and implementation of a
type of strategy over the other.
Clearly,
a 360-degree alignment process is everything but straightforward to achieve in
practice, not only because when devising reward strategies reward managers have
to take into account a large number of variables, but also and foremost because
business strategy and hence HRM strategies and policies, being remarkably
influenced both by the internal and the external context, are subject to
frequent changes which can make the alignment process rather tricky to achieve
and once achieved, difficult to sustain.
Indeed,
such difficulties are sensibly likely to increase when, for instance, business
strategies aims and objectives are not clearly stated and/or understood within
the organization.
But
this is not all. In order to genuinely attain a 360-degree alignment, in fact,
reward strategy development also needs to take into due consideration
organizational values and shared beliefs. The careful consideration of the
impact of these factors over reward strategy can actually enable employers to
develop sound reward strategies enabling them to simultaneously attain two
different objectives: on the one hand foster consistency and integrity within a
firm and on the other hand provide support to corporate culture. Also in this
case, reward strategy can actually allow employers to generate a virtual circle
where corporate culture and reward strategy reinforce one another. Reward
strategy will, in fact, contribute to induce, foster and favour amongst staff the
kind of behaviour desired by an employer, whereas values and beliefs
underpinning organizational culture will support the consistency of the reward
practices developed and introduced within the business.
If
within an organization fairness and equity are, for instance, amongst the main
values underpinning corporate culture, these have to be reflected in its reward
strategy and system as well.
It
finally emerges that reward systems can be crucially important to foster and
encourage the behaviour, ideals and principles an organization values the most and
is expected from its staff.
As
seen above, one of the most, arguably the most, important form of reward
management alignment is represented by the vertical alignment, which
essentially aims to consider, during the strategy developmental process, business
needs. Notwithstanding, an effective reward strategy also needs to duly take
into consideration employees’ wants and the way they can be satisfied,
ultimately balancing the needs of the one with those of the others. To some
extent this too can be considered as a form of alignment of its own, and since
this kind of alignment is meant to consider the entire staff wants and
expectations it can be considered as a transverse form of alignment.
It
can finally be concluded that in order to reward strategy being effectively and
practically supportive of organizational objectives and consistent with
business strategy and other HRM practices a 360-degree alignment process has to
be considered as a mandatory prerequisite. A process, hence, aiming to achieve
both a horizontal and vertical alignment but also ensuring the alignment of
reward strategy with corporate culture and individuals’ wants and expectations.
Attaining just a partial alignment will surely reveal to produce a limited, if
any, effects. Actually, this approach very much recalls to mind the
bundling-approach typical of HRM models, that is an approach according to which
only the concomitant combination of different actions and initiatives can
effectively enable employers to achieve the intended outcomes.
But
the apparent complexity of this approach, basically intended to devise
consistent and effective reward strategies, has not to be confused with
complexity and let alone with over complexity. One of the main features
characterizing reward strategy should, in fact, definitely be represented by simplicity
instead. Overcomplicated strategies can only contribute to deter individuals to
try understanding the mechanic of a reward system and the way it is operated,
making employers efforts pointless and causing them to waste massive amounts of
resources
Amongst
the backlashes typically associated with complex reward systems can also definitely
be included the likely difficulties which will be experienced by managers in
executing the system (Armstrong, 2010). Yet, excess of complexity and
difficulties are all too often associated with programmes failures and consequently,
with the withdrawal of the reward system introduced as a result of the final
stage of the reward strategy implementation process.
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