Examine the Issues and Implications Associated with Strategically Integrated Renumeration System

Essay by Ibrahim Hussain April 2006

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All companies have strategies and policies whether they are written or unwritten, sound or unsound, followed or not followed, understood or not understood, complete or incomplete. It is nearly impossible to delegate authority without the existence of a policy. The purpose of this essay is to hold your attention about the issues and implications associated with strategically integrated remuneration/ compensation system. The two different methods of remuneration systems are integrated remuneration system (Flat rate system) and performance related remuneration system. Remuneration and methods of payment should be fair and afford the maximum possible satisfaction to employees and employer. This essay will mainly examine some issues and implications relating to remuneration systems. Firstly a brief introduction about the two types of remuneration systems and then issues and implications to be considered when establishing a remuneration system will be discussed. Finally the appropriate reward strategy that an organization must have in order to recruit, motivate and retain an effective work force will be assessed.

Performance related remuneration (PRR) have resulted in reward management becoming a very complicated and specialized area within the human resource management. It is a remuneration system whereby the employee's pay is based on his or her performance. It is basically a payment by results system that is designed to give incentive to the employee to work harder or more productively. Workers performance can also be measured and moreover it will lead to improve the business performance as well. Therefore performance related remuneration (PRR) is both improving the organizational performance together with employee's performance through a remuneration system. Workers will be motivated to do the work and their performance improved by the attraction and financial benefits.

A carefully researched and appropriately designed remuneration system is one of the key factor affecting recruitment, retention and motivation of an effective workforce.