5HR03
REWARD FOR PERFORMANCE
AND CONTRIBUTION
PART 1: LEARNING – LEARNING JOURNAL
Let’s look at what we have noted in the Learning Journal:
1. What is your understanding of Reward?
2. What is a specific area of reward that interests you?
3. How will you apply this area of reward to your role?
2
AIMS 1. To explore how internal and external business factors
influence reward strategies and policies, the financial drivers
of the organisation and the impact of reward costs.
2. To consider the importance of the role of people practice in
supporting managers to make robust and professional reward
judgements and the impact of rewarding performance.
3. To analyse the potential cost to the organisation if this is
poorly managed, and the tools and interventions required to
mitigate this risk.
4. To apply theory in practice – embed your learning in the
context of your role.
3
LEARNING OUTCOMES
LO 1: Understand the impact of reward approaches and packages.
1
1.1 Evaluate the principles of reward and its importance to organisational
culture and performance management.
1.2 Explain how policy initiatives and practices are implemented.
1.3 Explain how people and organisational performance can impact on the
approach to reward.
1.4 Compare the different types of benefits offered by organisations and the
merits of each.
1.5 Assess the contribution of extrinsic and intrinsic rewards to improving
employee contribution and sustained organisational performance.
4
LEARNING OUTCOMES
LO2: Be able to develop insight from benchmarking data to inform
reward approaches.
2
2.1 Assess the business context of the reward environment.
2.2 Evaluate the most appropriate ways in which benchmarking data can be
gathered and measured to develop insight.
2.3 Develop organisational reward packages and approaches based on insight.
2.4 Explain the legislative requirements that impact reward practice.
5
LEARNING OUTCOMES
LO 3: Understand the role of people professionals in supporting line
managers to make reward decisions.
3
3.1 Assess different approaches to performance management.
3.2 Review the role of people practice in supporting line managers to make
consistent and appropriate reward judgements.
3.3 Explain how line managers make reward judgements based on
organisational approaches to reward.
6
DAY
1
7
ASSESSMENT SCENARIO
1. The board at GA Pensions has decided to undertake a review of its
reward strategies across the whole company. It is aware that the way
rewards are currently being implemented is fragmented (the Sales
Department qualifies for bonuses but the People Function does not)
and is causing dissatisfaction amongst employees, affecting business
and employee performance outcomes.
2. In your role as Reward Advisor, the board has asked you to provide a
report that gives it an understanding of the context and approaches
to reward and how these might influence a range of organisational
and psychological factors. It also needs you to clarify the role that
people professionals play in supporting line managers to make
reward decisions.
8
TASK
ONE
REPORT –
CASE STUDY
HARVARD
REFERENCING
(MANDATORY)
WORD COUNT
2600 WORDS
(+ / – 10%)
FOCUS ON THE COMMAND
VERBS
ASSESS, ADVISE
COMPARE, CHOOSE, DISCUSS,
EXPLAIN, EXAMINE, EVALUATE,
IDENTIFY, SUMMARISE, ETC.
9
LEARNING OUTCOME
Understand the impact of reward approaches and
1 packages.
10
A.C.1.1
Evaluate the principles
of reward and its
importance to
organisational culture
and performance
management
EVALUATE WHY THESE PRINCIPLES OF REWARD ARE IMPORTANT
TO GA PENSIONS’ ORGANISATIONAL CULTURE – WHAT IMPACT DO
THEY HAVE?
IDENTIFY 3 KEY PRINCIPLES OF REWARD (E.G. FAIRNESS; EQUITY;
TRANSPARENCY ETC.)
EVALUATE WHY THESE PRINCIPLES OF REWARD ARE IMPORTANT
TO GA PENSIONS’ PERFORMANCE MANAGEMENT- WHAT IMPACT
DO THEY HAVE?
APPROX.
300 WORDS
11
REWARD DEFINED
Reward is defined as: ‘’all financial provisions made to employees, including
cash pay, and the wider benefits package (such as pensions or private
medical insurance). It can also include wider provisions for employees, with
the term ‘total reward’ sometimes used to encompass non-pay benefits,
such as flexible working opportunities.’’ CIPD (2022)
• Remuneration – Reward – Wider benefits package
• Total Reward – Financial + Non-Financial + Psychological
• Intrinsic – Psychological – Meaningful work and good performance
• Extrinsic – Tangible and visible in exchange for performance – Monetary
12
LET’S REFLECT
• Write down 3 key principles of reward that
are most important to you
• Justify each
• Does your organisation’s reward policy
reflect these principles?
• Why or why not?
13
PRINCIPLES OF REWARD
Reward principles are broad statements which shape how a
company pays its employees and how to reward them for
on-target or above-target performance. They define what a
company pays its employees and why.
• Fairness
• Consistency and transparency
• Promoting a culture of trust
• Balancing internal fairness with external market rates
• Integrating reward with business objectives
14
IMPORTANCE OF REWARD PRINCIPLES TO ORGANISATIONAL CULTURE AND
PERFORMANCE MANAGEMENT
• Reward should be aligned with the organisational context and culture, relative to the external market environment.
• A good reward system aims to motivate employees to work harder, and align their goals with those of the organisation
they work for.
• Supports the organisation maintain a balance between providing market competitive wages to attract and retain
talented people.
• Fairness – merit-based pay ensures employees know they will be paid for performance, experience etc
• Consistency and transparency – no hidden agendas
• Promoting a culture of trust – Clarity of communication
• Balancing internal fairness with external market rates – Are we in line with the market or competitive
enough?
• Integrating reward with business objectives – impact everything from employee wellbeing and engagement,
through to the productivity of your workforce and staff retention.
• Stimulating performance by rewarding for value created
• Link to employee engagement – engaging employees to drive performance.
• Reinforcement Theory – cause and effect
15
IMPACT OF LEGISLATION
• UK Equality Act 2010
• Principles:
• Equal pay for equal work
• Same pay for jobs of equal value
• Anti-discrimination
• Nationals vs. Expats
• Regional legislation
16
A.C.1.1 – PRACTICAL – FLIP CHART DISCUSSION
EVALUATE WHY THESE PRINCIPLES OF REWARD ARE IMPORTANT
TO GA PENSIONS’ ORGANISATIONAL CULTURE – WHAT IMPACT DO
THEY HAVE?
IDENTIFY 3 KEY PRINCIPLES OF REWARD (E.G. FAIRNESS; EQUITY;
TRANSPARENCY ETC.)
EVALUATE WHY THESE PRINCIPLES OF REWARD ARE IMPORTANT
TO GA PENSIONS’ PERFORMANCE MANAGEMENT- WHAT IMPACT
DO THEY HAVE?
You have a new joiner in your team. They have asked for your guidance on the principle of
reward, their importance to organisational culture and performance management. Provide an
overview on the following:
17
A.C.1.2
Explain how Policy
Initiatives and Practices
are implemented
EXPLAIN HOW GA PENSIONS COULD PUT THIS REWARD POLICY
INTO PRACTICE. HOW IS IT IMPLEMENTED?
EXPLAIN ONE EXAMPLE OF A REWARD POLICY
SUMMARISE THE KEY STEPS: WHO IS INVOLVED; THE ROLE OF LINE
MANAGERS; CONSULTING EMPLOYEES TO INFLUENCE THE DESIGN;
INTEGRATING THE REWARD POLICY WITH OTHER PEOPLE PRACTICES;
EVALUATING THE SUCCESS OF THE POLICY AND HOW IT CAN BE KEPT
UP TO DATE.
APPROX.
300 WORDS
18
WHAT’S A REWARD POLICY?
A documented set of guidance that:
• Itemises what is included in the reward system i.e. monetary and nonmonetary (extrinsic – linked to the economic wellbeing of the employees
• Details on how the pay system is graded
• How this fits with accepted best practice across the industry/sector (perhaps
referring to a salary survey)
• Measures/statement avoiding discrimination on the grounds of protected
characteristics (UK Equality Act 2010)
• Takes into account the fit between the employee and the role that they
perform
• Emphasises and itemised intrinsic reward e.g. recognition
19
REWARD POLICY: PURPOSE
• To ensure that the organisation is able to recruit and retain sufficient
number of employees with the right skills.
• To motivate and engage employees.
• Increase productivity.
• To comply with legal regulations.
• Appropriate acknowledgement and appreciation of employees’ efforts
in a fair and timely manner.
• Employees are acknowledged for their performance in intrinsic or
extrinsic ways.
ACCA Global (n.d.)
20
EXAMPLES OF REWARD POLICIES
• Flexi-working
• You have control over your start and end work times within the
scope of regular office hours. The only requirement is you must
be in the office during core hours.
• Over-time
• All salaried employees now receive extra pay for working more
than forty hours per week.
• Vacation and other time off
• How do reward policies inform reward decisions?
• How are reward policies implemented to manage people successfully?
21
HOW TO CREATE A REWARD POLICY
• Step 1: Assess the Current System in the
Workplace
• Step 2: Have a Predetermined Goal Before
You Start
• Step 3: Research Types of Rewards and
Recognition for Employees
• Step 4: Implement and Optimise the
Companywide Policy
22
KEY STEPS TO CREATING A REWARD PROGRAM
• Who should be involved?
• The role of line managers
• Consulting employees to influence the design
• Integrating the reward policy with other people practices
• Evaluating the success of the policy and how it can be kept up to date
23
A.C.1.2 PRACTICAL ACTIVITY – DESIGN A REWARD POLICY
INCLUDE KEY ELEMENTS TO BE INCLUDED BASED ON YOUR ORGANISATION,
EMPLOYEES, LEGISLATION AND REGIONAL CONTEXT
OUTLINE A REWARD POLICY FOR YOUR ORGANISATION
SUMMARISE THE KEY STEPS: WHO IS INVOLVED IN THE DESIGN (STAKEHOLDERS); THE
ROLE OF LINE MANAGERS; CONSULTING EMPLOYEES TO INFLUENCE THE DESIGN;
INTEGRATING THE REWARD POLICY WITH OTHER PEOPLE PRACTICES; EVALUATING
THE SUCCESS
HOW WOULD THIS BE PUT INTO PRACTICE?
As a reward specialist, you have been asked to:
24
A.C.1.3
Explain how people and
organisational
performance can
impact on the approach
to reward
BRIEFLY EXPLAIN WHAT ORGANISATIONAL PERFORMANCE IS AND
HOW YOU CAN MEASURE IT
BRIEFLY EXPLAIN WHAT PEOPLE PERFORMANCE IS AND HOW YOU
CAN MEASURE IT
EXPLAIN HOW SPECIFIC ISSUES WITH PEOPLE PERFORMANCE COULD
IMPACT GA PENSIONS’ DECISIONS ABOUT WHICH REWARD
APPROACHES TO TAKE? (E.G. IF YOUR EMPLOYEES HAD HIGH
ABSENTEEISM, WHAT REWARD APPROACHES COULD HELP ADDRESS
THIS?)
APPROX.
250 WORDS
EXPLAIN HOW SPECIFIC ISSUES WITH ORGANISATIONAL PERFORMANCE
COULD IMPACT GA PENSIONS’ DECISIONS ABOUT WHICH REWARD
APPROACHES TO TAKE? (E.G. IF THE ORGANISATION HAS LOW
PRODUCTIVITY, WHAT REWARD APPROACHES COULD HELP ADDRESS
THIS?)
25
PEOPLE PERFORMANCE DEFINED AND WHY DO WE
MEASURE
People Performance relates to how the individual employee is motivated,
incentivised and reviewed in terms of their performance.
• Why do we measure?
• Measuring employee performance helps assess those goals by providing insight into where
someone is doing well and could be stretched and areas that are not a strength yet.
• Based on performance feedback, self-reflection, and business needs, employees should set their
own goals – not the manager or the organisation.
26
PEOPLE PERFORMANCE: HOW DO WE MEASURE?
A structured approach, performance can be measured as
follows:
• Step 1: Clearly define, and ensure all employees understand, the true
purpose of measurement.
• Step 2: Increase employee buy-in to measuring performance and
ownership of KPIs
• Step 3: Remove KPIs and performance measures from employee
performance appraisals.
• Step 4: Upgrade your definition of accountability for performance.
• Step 5: Focus teams on measuring their impact on business
performance and strategy execution.
27
ORGANISATIONAL PERFORMANCE: DEFINED AND WHY DO
WE MEASURE?
Organisational performance is the ability of an organisation to reach its goals
and optimise results. In today’s workforce, organisational performance can be
defined as an organisation’s ability to achieve goals in a state of constant
change.
Organisational performance means the actual output or results of an organisation as measured against its
intended outputs (or goals and objectives).
• Why do we measure?
• Measuring organisational performance is an essential part of strategic decision-making.
Understanding organisational performance helps leaders at every level to set targets, track their
impact, and provide accountability to stakeholders.
28
ORGANISATIONAL PERFORMANCE: WHAT DO WE
MEASURE?
Three basic measures of organisational performance: an essential tool for
strategic decision-making. Measures at different levels are necessary.
• Individual Level Performance – shows employee contribution to the
organisation’s success
• Team-Level Performance – Helping teams establish effective
measurements will provide them with the information they need to
improve their performance
• Organisation-Level Performance – Better understand how well their
organisations are competing in the market, as well as future predicted
results.
29
ORGANISATIONAL
PERFORMANCE –
HOW DO WE MEASURE?
Organisational performance includes three specific areas of firm outcomes:
• Financial performance (profits, return on assets, return on investment, etc)
• Product market performance (sales, market share, etc)
• Shareholder return (total shareholder return, economic value added, etc)
30
HOW SPECIFIC ISSUES WITH PEOPLE PERFORMANCE IMPACT ORGANISATIONAL DECISIONS &
WHICH REWARD APPROACHES TO TAKE
• Employee behaviour
• Quality and quantity of work – absence of role clarity
• Unclear or unrealistic expectations
• Timeliness of the output
• Current Knowledge, Skills, Abilities / capability
• Absenteeism
• Presenteeism
• Lack of:
• Employee voice, commitment and motivation
• Feedback mechanisms, awareness, and autonomy
• Training and development, and empowerment
• Decreased productivity
• Resistance to change
31
HOW SPECIFIC ISSUES WITH ORGANISATIONAL PERFORMANCE IMPACT ORGANISATIONAL
DECISIONS ON WHICH REWARD APPROACHES TO TAKE
• Toxic Culture
• Increased labour turnover
• Difficulty blending different personalities into a unified team
• Lack of feedback mechanisms, awareness, empowerment, autonomy and
commitment
• Low productivity
• Lack of innovation
• Shortage of the right talent, skills and resources
• Inadequate rewards and recognition
• Inability to provide coaching and mentoring
• Failure to develop key competencies and behaviours
32
A.C.1.3 – PRACTICAL – FLIP CHART DISCUSSION
HOW DO COMPANIES USE REWARDS STRATEGIES TO INFLUENCE
EMPLOYEE PERFORMANCE AND MOTIVATION?
HOW DO PEOPLE AND ORGANISATIONAL PERFORMANCE IMPACT
ITS APPROACH TO REWARDS BOTH POSITIVELY AND NEGATIVELY?
In your role as an internal people consultant, you have been asked by the reward team to outline the
following:
33
A.C.1.4
Compare two different
types of benefits
offered by organisations
and the merits of each
IDENTIFY ONE FINANCIAL BENEFIT THAT GA PENSIONS COULD
OFFER AS PART OF THEIR REWARD STRATEGY
EXPLAIN WHAT A BENEFIT IS
IDENTIFY ONE NON-FINANCIAL BENEFIT THAT GA PENSIONS COULD
OFFER AS PART OF THEIR REWARD STRATEGY
APPROX.
250 WORDS
IDENTIFY THE MERITS AND DOWNSIDES OF EACH BENEFIT
COMPARE THEM – WHAT ARE THEIR SIMILARITIES AND
DIFFERENCES
A TABLE IS A GOOD FORMAT FOR COMPARISON
34
BENEFITS: DEFINED
Benefits are a form of non-cash compensation, which your employer usually
states in your contract. Benefits aren’t linked to employee performance,
unlike Rewards.
Examples:
• Base pay (either a salary or hourly wage rate)
• Access to healthcare / health insurance
• Dental and vision benefits
• Retirement plans and/or contributions
• Life insurance
• Paid time off (PTO)
• Stock options (if applicable)
What benefits are offered in your organisation?
35

BENEFITS OF FINANCIAL BENEFITS
• Advantages
• Attract and retain top talent
• Boost morale, energy and productivity
• Healthy workers = happy workers
• It can save the employee and employer money
• Helps shape the culture of the organisation
• Others?
• Disadvantages
• Rising costs
• Administrative costs
• May not appeal to all employees
• Others?
37
BENEFITS OF NON-FINANCIAL BENEFITS
• Advantages
• Attract and retain top talent
• Boost morale, energy and productivity
• Healthy workers = happy workers
• Improves engagement
• Strengthens the Employee Value Proposition (EVP)
• Helps shape the culture of the organisation
• Others?
• Disadvantages
• Administrative costs
• May not appeal to all employees
• Cultural expectations may not be met
• Demotivation for employees who may not be happy with the benefits being offered
• Others?
38
CONSIDERATIONS IN PLANNING BENEFITS
• Budgets – can the organisation pay?
• Culture – what’s the organisational culture?
• Employee preferences – diversity?
• Employee Value Proposition (EVP) – will they help attract potential talent?
• Business case for the proposed benefits and advantages – is it worth it? ROI / ROE?
• Facilitate motivation and increased performance – will these benefits help?
• Others?
39
A.C.1.4 – PRACTICAL – SAMPLE CASE STUDY – RECKITT
HOW DID THINKING
BEYOND FINANCIAL
INCENTIVES HELP
RECKITT?
WERE THERE ANY OTHER
ALTERNATIVES?
WHAT
RECOMMENDATIONS
WOULD YOU MAKE TO
STRENGTHEN THE REWARD
STRATEGY?
(This is how you need to answer your assessment case
study – GA Pensions)
40
A.C.1.5
Assess the contribution of
extrinsic and intrinsic
rewards to improving
employee contribution
and sustained
organisational
performance.
EXPLAIN THE LINK BETWEEN EXTRINSIC REWARD AND EMPLOYEE
CONTRIBUTION
DEFINE ‘EXTRINSIC’ REWARDS
EXPLAIN HOW BOTH INTRINSIC AND EXTRINSIC REWARDS COULD
SUPPORT ORGANISATIONAL PERFORMANCE FOR GA
APPROX.
300 WORDS
DEFINE ‘INTRINSIC’ REWARDS
EXPLAIN THE LINK BETWEEN INTRINSIC REWARD AND EMPLOYEE
CONTRIBUTION
41
EXTRINSIC AND INTRINSIC REWARDS
• Extrinsic Rewards: usually financial or tangible rewards given to employees, such
as pay raises, bonuses, and benefits. They are extrinsic because they are external
to completing the work itself and are controlled by people other than the
employee – short -term
• Intrinsic Rewards: usually non-financial or intangible rewards – the sense of
satisfaction that an employee feels when performing a specific task. Intrinsic
rewards are especially effective when one-off tasks are being completed,
typically which are considered to be unusually challenging for an employee –
long-term (behaviour)
42
EXTRINSIC AND INTRINSIC REWARD: LINK TO EMPLOYEE
CONTRIBUTION
What factors need to be considered balancing both types of rewards?
• Extrinsic:
• Budgets
• Industry standards
• Competitive
• Intrinsic:
• Employee Value Proposition (EVP)
• Employee retention
• Organisational culture
• Autonomy
• Social interaction
• Sense of satisfaction and achievement
• Highlights confidence and improves performance
• Improves organisational performance
• Essential to sustained behaviour change
43
EXTRINSIC AND INTRINSIC REWARD: HOW THEY SUPPORT
ORGANISATIONAL PERFORMANCE
• Extrinsic:
• Motivates and inspires employees based on financial rewards
• Directly proportionate to employee performance in most cases
• Boosts the employees’ performance through good working condition, noble
policies, security and reliable relations among peers
• Others?
• Intrinsic:
• Strengthens the employer brand and EVP
• Improves organisational performance
• Higher productivity
• Others?
44
A.C.1.5 – PRACTICAL – MULTIPLE CHOICE
• Which of the following is an example of extrinsic motivation? Discuss.
• The passion for doing anything in the absence of any compulsion or reward is __________?
Justify.
• Do organisations need a balance between extrinsic and intrinsic rewards? Justify.
NEED FOR
ACHIEVEMENT LEVEL OF ASPIRATION ANXIETY REWARD
NEED FOR
ACHIEVEMENT LEVEL OF ASPIRATION ANXIETY REWARD
TRUE FALSE
45
DAY
2
46
RECAP OF DAY 1
• What are rewards?
• What are principles of rewards?
• What is a reward policy? Examples?
• What are people performance and organisational performance?
• What are benefits – Financial and Non-financial?
• What are extrinsic and intrinsic rewards?
Look at the assignment writing guide on the HUB. Against each AC, put a tick on
any task that you can answer, and highlight the ones you need clarity on. There
are additional resources on the HUB can help you with that
47
LEARNING OUTCOME
Be able to develop insight from benchmarking data
2 to inform reward approaches.
48
A.C.2.1
Assess the business
context of the reward
environment
APPROX.
400 WORDS
ASSESS HOW THESE ELEMENTS IMPACT ON GA PENSIONS’ REWARD
DECISIONS (E.G. HOW WOULD RECENT LEGISLATION ON EQUALITY
IMPACT REWARD STRATEGY?)
PICK 3 ELEMENTS OF A PESTLE ANALYSIS AND RELATE THESE TO THE
REWARD ENVIRONMENT. (E.G. LEGAL, ECONOMIC AND SOCIAL)
YOU COULD CONSIDER EQUALITY LEGISLATION; REGIONAL
DIFFERENCES IN PAY; LABOUR FORCE TRENDS, PAY TRENDS, THE
ECONOMY; THE POLITICAL ENVIRONMENT ETC.
49
PESTLE ANALYSIS
• What is a PESTLE analysis?
• A PESTLE analysis studies the key
external factors (Political, Economic,
Sociological, Technological, Legal and
Environmental) that influence an
organisation.
• How is it used?
• It can be used in a range of different
scenarios, and can guide people
professionals and senior managers in
strategic decision-making.
CIPD (2021)
POLITICAL
• Policies &
Laws
• Stability
• Corruption
LEGAL
• Antitrust
• Labour
• Copyright
• Data
Protection
• Health &
Safety
ECONOMIC
• Growth
• Inflation
• Interest
Rates
• Employmen
t
• HH Income
SOCIAL
• Population
• Ageing
• Career
Views
• Lifestyle
• Cultural
Barrier
TECH
• Tech
Incentives
• Innovation
• Automation
• R&D Activity
ENVIRONMENT
• Climate
Change
• Ethical
• Recycling &
Disposal
• Sustainabilit
y
PESTLE
50
HOW DOES THE PESTLE ANALYSIS RELATE TO THE REWARD
ENVIRONMENT?
• Governs how much you can give your employees as rewards
and how often you can introduce rewards.
• Legislative and regulatory compliance
• Competitiveness of reward
• Shortage of skills / tight labour market – availability of talent
• Demographics
• Income distribution
• Environmental considerations
• Political complexities and alliances
• Budgets – ability to pay
• Regional context
• Industry trends
51
LEGISLATION UK EQUALITY ACT 2010
• The Equality Act legally protects people from discrimination in the workplace and in wider society.
• Protects people from discrimination, harassment and victimisation – gov.uk (2015)
52
A.C.2.1 – PRACTICAL ACTIVITY – PESTLE ANALYSIS
• Pick any 3 relevant elements of the PESTLE analysis and
relate these to the reward environment.
• Assess how these elements impact on your organisation’s
reward decisions (e.g. how would recent legislation on
equality impact reward strategy?)
• You could consider equality legislation; regional differences
in pay; labour force trends, pay trends, the economy; the
political environment etc.
• Do any of the PESTLE elements link to GA Pensions in their
current situation?
53
A.C.2.2
Evaluate the most
appropriate ways in
which benchmarking data
can be gathered and
measured to develop
insight EXPLAIN WHAT IS MEANT BY BENCHMARKING
THIS TASK IS ABOUT BENCHMARKING AS THE BASIS FOR PLANNING
A REWARD STRATEGY
PROVIDE A CONCLUSION – WHICH METHOD WOULD BE THE MOST
USEFUL FOR GA PENSIONS TO DEVELOP INSIGHT INTO THEIR REWARD
STRATEGY?
APPROX.
400 WORDS
IDENTIFY 3 DIFFERENT WAYS IN WHICH GA PENSIONS CAN GATHER
BENCHMARKING DATA. (E.G. PUBLISHED DATA, PAY CLUBS, SPECIAL
SURVEYS, REWARD CONSULTANTS ETC.)
EVALUATE EACH EXAMPLE – WHAT ARE THEIR PROS AND CONS?
54
BENCHMARKING DEFINED AND ITS IMPORTANCE
Benchmarking is the process of gathering information from outside an organisation in relation to benefits and
pay and using this data to compare with remuneration and reward packages offered by others in the market for
the same role.
• Benchmarking matches internal jobs with market pay data, by using a salary survey aiming to identify the
market pay rate for each position.
• It’s a vital component of your organisation’s talent management strategy and contributes to your employee
engagement strategy.
• Ensuring competitiveness with the market rate
• Alignment with the employment market
• Strengthening the Employer Brand
• Compliance with legal requirements
• Pay ‘Efficiency’ is the level of wages paid to workers above the minimum wage to retain a skilled and
efficient workforce
• Ensuring equity and fairness
• Avoid losing talent to the competition
55
HOW IS DATA GATHERED FOR BENCHMARKING?
• Networking
• Formal interviews with potential candidates
• Questionnaires/surveys – profession specific
• Consultants – Korn Ferry, Hay Group, Towers Watson
• Published data
• Pay clubs
• Pros and cons?
• Effectiveness?
56
Your CEO has asked to review the current reward strategy and wants a
report on the short presentation on the following:
• Identify 3 different ways in which your organisation can gather
benchmarking data. (e.g. published data; pay clubs; special surveys;
reward consultants etc.)
• Evaluate each example – what are their pros and cons?
• Provide a conclusion – which method would be the most useful for
your organisation to develop insight into your reward strategy
• Which method is most relevant to GA Pensions?
A.C.2.2 – PRACTICAL – CREATING A BUSINESS CASE
57
A.C.2.3
Explain how
organisations use
insight to develop
reward packages and
approaches
EXPLAIN HOW YOU COULD DEVELOP AN ORGANISATIONAL REWARD
PACKAGE BASED ON THE INFORMATION GATHERED AS PART OF YOUR
PESTLE ANALYSIS IN AC 2.1
THIS SECTION FOCUSES ON HOW YOU WOULD MAKE SENSE OF THE DATA
TO INFORM THE CREATION OF A REWARD STRATEGY
APPROX.
400 WORDS
WHAT WOULD GA PENSIONS NEED TO CONSIDER WHEN DEVELOPING A
REWARD STRATEGY? YOU NEED TO INCLUDE JOB EVALUATION, GRADE AND
PAY STRUCTURES, ENSURING FAIRNESS OF REWARD AND CORRECT
LEVELLING OF JOBS WITHIN YOUR NARRATIVE
PROVIDE A CLEAR CONCLUSION. HOW DO THESE FACTORS HELP TO
DEVELOP A STRONG REWARD PACKAGE OR APPROACH?
58
HOW IS A REWARD PACKAGE BUILT BASED ON THE PESTLE
ANALYSIS
• Remember these are external factors
• Understand the impact of each factor and how it links to the creation of a
reward package
• The reward package must be suitable to the regional and organisational
context
• Job evaluation
• Correct levelling of jobs/ job classification –
• A system the People Function and People leaders use to define a job role,
develop career pathways and internal mobility processes, and create clear
levels or job hierarchies within an organisation.
• Availability of budgets / organisational capability to pay
• Prioritise from high importance to low importance
• Ensure it’s fair and competitive
POLITICAL
LEGAL ECONOMIC
SOCIAL
TECH
ENVIRONMENT
PESTLE
59
• Using the data from the PESTLE analysis used in AC
2.1, develop your organisational reward package.
• What things would you need to consider when
developing the reward strategy
• How would these factors help to develop a strong
reward package?
A.C.2.3 – PRACTICAL DEVELOP A REWARD PACKAGE
60
TASK
TWO
REPORT –
CASE STUDY
HARVARD
REFERENCING
(MANDATORY)
WORD COUNT
1300 WORDS
(+ / – 10%)
FOCUS ON THE COMMAND
VERBS
ASSESS, ADVISE
COMPARE, CHOOSE, DISCUSS,
EXPLAIN, EXAMINE, EVALUATE,
IDENTIFY, SUMMARISE, ETC.
61
A.C.2.4
Explain the legislative
requirements that
impact reward practice
APPROX.
300 WORDS
YOU MUST PROVIDE THE FULL NAME AND TITLE OF EACH PIECE OF
LEGISLATION. ENSURE YOU INCLUDE YOUR SOURCE SHORT
REFERENCES
IDENTIFY THE LEGAL REQUIREMENTS THAT MUST BE CONSIDERED
BY GA PENSIONS WHEN CREATING A REWARD STRATEGY. WE
EXPECT TO SEE 3 SPECIFIC EXAMPLES OF UK LEGISLATION SUCH AS
EQUAL PAY, MINIMUM WAGE, WORKING HOURS, PAID LEAVE, ETC
EXPLAIN HOW EACH OF THESE LEGISLATIVE REQUIREMENTS
IMPACT ON GA PENSIONS’ REWARD PRACTICE.
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LEGISLATION – UK EQUALITY ACT 2010
• The Equality Act 2010 gives a woman the right to be paid the same as a man (and vice
versa) when carrying out:
• Like work: two employees who are doing the same or broadly similar roles, or
• Work rated as equivalent by analytical job evaluation study: this could be totally different jobs
which have been given the same rating as the result of an analytical job evaluation, or
• Work of equal value: when there are two jobs that are very different, but the employee claims
that they require a similar level of skill and ability
• Minimum Wage – The National Minimum Wage is the minimum pay per hour all workers are
entitled to
• Paid Leave – Legal entitlement to 5.6 weeks’ paid holiday a year (known as statutory leave
entitlement or annual leave)
• Working Hours – Capped at 48 hours maximum a week on average (gov.uk 2015)
What happens within your regional context?
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HOW DOES LEGISLATION IMPACT ORGANISATIONAL
REWARD PRACTICE?
• Sets a minimum standard of pay for employees, which results in employers not
paying staff less than the stipulated standard
• Organisations are subject to monetary penalties in case of any breaches
• Ensures fairness, transparency and equity
• Boosts organisational reputation
• Supports talent attraction
• Lends credibility to the organisation
• Others?
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A.C.2.4 – PRACTICAL – PRESENTATION
YOU MUST PROVIDE THE FULL NAME AND TITLE OF EACH PIECE OF LEGISLATION. ENSURE YOU INCLUDE YOUR
SOURCE SHORT REFERENCES
IDENTIFY THE LEGAL REQUIREMENTS THAT MUST BE CONSIDERED BY YOUR ORGANISATION WHEN CREATING
A REWARD STRATEGY. WE EXPECT TO SEE 3 SPECIFIC EXAMPLES OF UK LEGISLATION SUCH AS EQUAL PAY,
MINIMUM WAGE, WORKING HOURS, PAID LEAVE, ETC
EXPLAIN HOW EACH OF THESE LEGISLATIVE REQUIREMENTS IMPACT ON YOUR
ORGANISATION’S REWARD PRACTICE.
EXPLAIN HOW EACH OF THESE LEGISLATIVE REQUIREMENTS IMPACT ON GA
PENSIONS’ REWARD PRACTICE
Your reward strategy is being revised and the legal team have expressed concerns that legal requirements
must be firmly covered in the new policy. Create a short presentation
outlining the following:
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LEARNING OUTCOME
Understand the role of people professionals in supporting line
3 managers to make reward decisions.
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A.C.3.1
Assess different
approaches to
performance
management
APPROX.
350 WORDS
ADVISE GA PENSIONS OF 3 SUITABLE APPROACHES THAT THEY
COULD USE TO MANAGE PERFORMANCE. (E.G. REVIEW MEETINGS;
DEVELOPING CAPABILITY THROUGH CONTINUOUS PROFESSIONAL
DEVELOPMENT (CPD), COACHING AND MENTORING; OBJECTIVESETTING, APPRAISAL PROCESS, 360- DEGREE FEEDBACK
DEFINE AND EXPLAIN WHAT THE PERFORMANCE MANAGEMENT
CYCLE IS. WHAT ARE ITS KEY STEPS?
ASSESS THE PROS AND CONS OF EACH
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PERFORMANCE MANAGEMENT DEFINED
• ‘Performance management’ describes the attempt to maximise the value that
employees create. It aims to maintain and improve employees’ performance in
line with an organisation’s objectives. It’s a not a single activity, but rather a group
of practices that should be approached holistically. (CIPD, 2022)
• Performance management is a set of processes and systems aimed at developing
employees, so they perform their job to the best of their ability. The goal is to
help employees build on skills that enable them to perform better in their roles,
reach their potential, and boost their success while also accomplishing the
strategic goals of the organisation.
• Effective performance management establishes a continuous conversation
between employees, managers, and HR.
Academy to Innovate HR AIHR (n.d.)
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PERFORMANCE MANAGEMENT PROCESS
• The performance management
process is used to communicate
organisational goals and objectives,
reinforce individual accountability for
meeting those goals, and track and
evaluate individual and
organisational performance results.
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PERFORMANCE MANAGEMENT
APPROACHES
• Review meetings
• Developing capability through Continuous Professional
Development (CPD)
• Coaching and mentoring
• SMART objectives – setting
• Appraisal process
• 360-degree feedback
• Performance roadmaps
• KPIs
• Reward and recognition programs
• Continuous feedback
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• Choose 3 suitable approaches that could be used to
manage performance.
• Group 1 will discuss the benefits/pros
• Group 2 will discuss the risks/cons
A.C.3.1 – PRACTICAL – DEBATE
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A.C.3.2
Review the role of
people practice in
supporting line
managers to make
consistent and
appropriate reward
judgements
APPROX.
300 WORDS
PROVIDE 2 EXAMPLES OF HOW PEOPLE PROFESSIONALS COULD
SUPPORT GA PENSIONS’ LINE MANAGERS IN MAKING DECISIONS
ON REWARD
ADVISE GA PENSIONS AS TO WHY IS IT IMPORTANT FOR PEOPLE
PROFESSIONALS TO SUPPORT LINE MANAGERS IN THEIR REWARD
RELATED ACTIVITIES
WHY IS IT IMPORTANT THAT REWARD DECISIONS ARE CONSISTENT
AND APPROPRIATE?
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WHY PEOPLE PROFESSIONALS NEED TO SUPPORT LINE
MANAGERS IN REWARD RELATED ACTIVITIES
• Support line managers and supervisors to have a constructive
conversations with employees regarding their performance.
• Improves their performance and help to retain employees
• Maintaining equity, fairness, consistency and transparency
• Compliance with law
• Ownership of extrinsic and intrinsic reward
• Job evaluation
• Promoting responsibility
• Reporting requirements
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HOW PEOPLE PROFESSIONALS SUPPORT LINE MANAGERS IN
REWARD RELATED ACTIVITIES
• Provide leadership from the top: ensure that the line managers understand the overall reward strategy of the
company.
• Provide systems support: technologies should be used to support line managers, for example, conducting pay
reviews.
• Communicate and train: offer training and coaching and clear guidelines on the importance of communicating your
reward offer to staff, people management and how to have difficult conversations.
• Ask for frequent feedback: ask line managers on what they think is attractive to staff – managers are a vital source
of information.
• Brief: to provide insight and educate managers of up-to-date rewards data about both financial and non-financial
rewards – remote working, training, and development opportunities – encourage line managers to take ownership
of the process and to communicate the results to their subordinates.
• Involve: develop ownership and commitment by involving line manages in the design and development of reward
management processes, for instance, through membership of working parties looking at a range of issues such as
performance measures, competencies, pay-banding and the appraisal system.
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WHY IS IT IMPORTANT FOR REWARD DECISIONS TO BE
APPROPRIATE AND CONSISTENT?
• Reward distribution should be consistent and based on predetermined
policies
• Increases productivity and motivation
• Be ethical
• Easy to administer
• Comply with legislative regulations
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• As a People Professional, how would you support line
managers in your organisation in reward related
activities?
• Identify and explain 3 examples
• How will you ensure consistency and fairness?
• Discuss the benefits and challenges
A.C.3.2 – PRACTICAL – GROUP DISCUSSION
As a people professional, you are a strategic partner for the business and line managers when making
reward-related decisions. As a [point of reflection, provide bullet points on:
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A.C.3.3
Explain how line managers
make reward judgements
based on organisational
approaches to reward
APPROX.
350 WORDS
EXPLAIN HOW THESE APPROACHES HELP LINE MANAGERS TO MAKE
CONSISTENT AND FAIR REWARD JUDGEMENTS
IDENTIFY 3 ORGANISATIONAL APPROACHES THAT LINE MANAGERS
AT GA PENSION’S COULD USE TO MAKE REWARD JUDGEMENTS.
APPROACHES INCLUDE ETHICS AND ORGANISATIONAL VALUES;
SPECIFIC POLICIES; CAREER DEVELOPMENT OPPORTUNITIES; LINE
MANAGEMENT APPROACHES TO NON-FINANCIAL REWARDS (E.G.
WORK-LIFE BALANCE, RECOGNITION)
IDENTIFY 1 CHECK GA PENSIONS MIGHT USE TO ENSURE FAIRNESS
AND EQUITY IN LINE MANAGEMENT REWARD DECISION MAKING?
77

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WHAT CHECKS MIGHT THE ORGANISATION USE
TO ENSURE FAIRNESS AND EQUITY IN LINE MANAGEMENT
REWARD DECISION MAKING?
• Regular compensation reviews
• Peer Reviews
• Surveys
• Audits
• Training and resources for line managers to make informed and equitable
decisions.
• Check for gender bias
• Check for cultural bias
• Review the relative impact on your employees
• Understand industry compensation norms
• Factor in cost-of-living differences
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A.C.3.3 – PRACTICAL – MULTIPLE CHOICE
• Fairness and equity in reward mean all employees are paid. Discuss.
• Checks and balances in reward decisions. Discuss.
• What approach can line managers use in reward decisions. Justify.
BEING PAID THE SAME BEING PAID ON WASTA
PERFORMANCE
BASED ON LENGTH OF
SERVICE
ARE
UNNECESSARY OPTIONAL CRUCIAL OVER-RATED
MICRO
MANAGEMENT EVIDENCE BASED JUDGEMENT SUBJECTIVITY LET PEOPLE FUNCTION DECIDE
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RECAP OF DAY 2
• How does the PESTLE analysis relate to the reward environment?
• What does the UK Equality Act 2010 discuss?
• What’s benchmarking and why is it important?
• How is a reward package built based on the PESTLE analysis?
• How does legislation impact organisational reward practice?
• Discuss 5 performance management approaches?
• Why and how do people management professionals need to support line managers with
reward related decisions?
• Why is consistency and appropriateness important in reward related decisions?
• What approaches do line managers use to reward performance? How do they help make
consistent and fair reward judgements?
• What are some checks the organisation could use to ensure fairness and equity in line
management reward decision making?
• Look at the assignment writing guide on the HUB. Against each AC, put a tick on any task that
you can answer, and highlight the ones you need clarity on
• There are additional resources on the HUB can help you with that
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QUESTIONS?
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ASSESSMENT BRIEF
• Pre-assignment activities
• Assignment template
• Explain theory and practical application
• Research
• ‘Assessment Guidance’ document
• ‘Materials’
• Harvard Referencing – minimum of 1/question
• Structure
• Spelling and grammar
• Wordcount (+/- 10%)
• Assignment writing guide on the HUB
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