Designing strategy-supportive reward systems.
Halimana, Nomathemba Y. V.
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This study looks at designing strategy-supportive reward systems and the benefits that an organisation can obtain from such a system. Aligning the reward system to the company's strategy is one way that an organisation can gain a competitive advantage. In the literature review section of the study, the author looks at strategy formulation and its link to human resources activities. The implementation process of a selected strategy is crucial as it relies upon the human resources skills base. Therefore, employee retention and motivation is important in ensuring correct strategy implementation. Theories of motivation are highlighted s it is important to understand what motivates your workers and managers, and ensure that the reward system is congruent with the employees' motivational needs. Different performance management systems are highlighted to show how important it is to measure performance if you are to reward that performance. A case study of Chemplex Corporation shows that the company needs to improve on its communication of the chosen strategy through the hierarchy down to shop floor workers. Furthermore, Chemplex Corporation does not have a performance management system resulting in a reward system that is not aligned t the company's strategy. Recommendations are made using a model of strategy formulation and implementation that ensures participation at all levels of the organisation. The Balance Scorecard concept designed by Norton and Kaplan is recommended for performance management and ensuring that the reward system is in line with the company's strategy. Finally, guidelines on implementing a strategy-supportive reward system are given so that management knows what pitfalls to avoid.