The evolution of
the concept of payment has been indeed made possible by the diminished role once
played by trade unions in salary negotiations. As long as staff salaries were bargained
by employers with labor unions, more often
than not at industry and national level, employers’ latitude to design and
develop their reward systems and decide the composition of the reward packages to
offer to their employees was sensibly reduced (Torrington et al, 2008). There
are indeed still several countries in the EU where the bargaining power and influence
exerted by trade unions considerably restrict the employers’ ability and
autonomy to design, develop and offer reward packages effectively enabling them
to achieve their intended business strategies.
In order to enhance
individual loyalty, ensure that employees would have continued to do their utmost,
reward good performers, retain quality staff and attract new skilled
individuals employers subsequently started offering employees benefits, bonuses
and other forms of financial recognition in addition to base pay.
It is not indeed only the economic factor which needs to be considered but, amongst the others, also the social one. Generation Y people, for instance, are in general considered to be particularly sensitive both to the financial component of reward and to work-life balance, albeit also in this case the aftermath of the past downturn altogether with the effects produced by the current slowdown seem to have made quite an impact on their attitude towards work.
Reward specialists have
to constantly investigate their business reward system and regularly come up
with brilliant and ingenious ideas to improve and enhance it. Reward
professionals have to regularly gain knowledge of the findings of the different
investigations performed over time and of the theories emerged from these,
which have hence to be critically evaluated and studied in order to find out whether
these can be successfully and consistently applied within their organizations. In
order for reward professionals to effectively perform their activities these need
to pay extra attention to both theory and practice; as an anonymous once said
“theory without practice is sterile, practice without theory is futile
(Armstrong, 2010).” This concept was also stressed by McGregor (1960) who
suggested that there is nothing as practical as a good theory; referring to
theory as an assumption supported by the rigorous research carried out within
the business telling how things are and not how things are supposed to be.