Reward strategy can be described as the most appropriate and effective instrument capable of enabling employers to reward their employees according to their practical contribution to the achievement of the organisation overall business strategy.
To develop an effectual and consistent reward strategy, nevertheless, having an appropriate command and consideration of the objectives pursued by the organization is not enough; having crystal clear ideas of the intent an organisation aims at pursuing by means of the development of a reward strategy is indeed of paramount importance, too.
In the overall alignment process which should characterise all organisations’ initiatives aiming at planning, designing and developing every organizational strategy, process and system, it should never be neglected that inasmuch as reward strategy flows from the overall business strategy (Armstrong, 2006), reward strategy has to align with HR Strategy. This 360° alignment has to be considered by employers as a necessary prerequisite for effectively and consistently fostering integrity within the organisation and providing evidence to the entire workforce that all the organisation efforts are converging towards a clearly, well-identified, common and shared direction and end.
Whether a reward philosophy is, for instance, aiming at enhancing productivity and endorsing high performance and substantial contribution to a firm efficiency at large, this will be very likely based on the tenet that individuals are rewarded according to their actual contribution to their employer success and to the return on investment they are able to generate.
Guiding principles can be considered as somewhat of a ring existing between a reward philosophy and the policies and practices emanating from it. These are intended to facilitate the shift from theory to practice, but being based on the organisational values and beliefs, guiding principles also have to foster these values and beliefs and ensure that these are reflected in the way individuals are rewarded within the organisation.
Longo, R., (2011), The importance of reward strategy rhetoric before its translation into action, HR Professionals, [online].
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