7HR03 Assignment Example

Task one – Report

Importance of aligning the reward framework to organisational context and strategy

Cotton (2023) defines rewards as financial and non-financial provisions that the employers give to their employees as compensation for their contributions and effort to work. The employees receive pay in form of cash and benefits. Employee rewards are in two types, the fixed pay and the variable pay. Fixed pay is the kind of payment that the employees receive in form of wages, following the National Minimum Wage regulations. Fixed pay is guaranteed after a specific period as agreed between the employer and the employee. Variable pay, on the other hand, is not guaranteed, and examples include bonuses given to the employees, incentives and overtime allowances. 

Organisations engage in developing reward strategies that align to the organisation values, goals and culture. Developing a reward strategy forms a framework that focuses on analysing the external and internal factors affecting the business, with considerations of the economic, legal, social, political, technological and environmental factors affecting employers’ decisions when making reward decisions. Reward strategies change depending on change within the external environment, and this is beneficial in determining the extent to which the organisation achieves a vertical and horizontal fit within the people practice environment. Perkins and White (2020) asserts that people professionals have a responsibility to ensure that they develop a reward policy that creates a fit that enhances effective maintenance of the reward environment. For example, after the Covid-19 pandemic, people professionals were engaged in the process of developing policies and practices that enhance effective compensation for the employees. Thus, when developing the reward strategies, they had to analyse the issues that contribute to development of effective reward systems (Whitehouse, 2020). 

Promoting employee training and development is one of the aspects that contribute to development of a learning culture, which enhance skills and knowledge development for increased employee pay (Armstrong and Taylor, 2023). When the employees learn and receive better compensation, they gain more motivation to work, which enhances performance improvement. Thus, when aligning the reward framework to the wider organisation guides people professionals to design and deliver improvement in people practices, which helps improve workforce characteristics. For example, an organisation with a good reward framework attracts a wide pool of talented candidates from the labour market, which is crucial in attracting candidates with knowledge and skills that the organisation requires for progress. Depending on the size of the organisation, the employer should consider a priority to ensure that they hire the number of people that the organisation is able to pay, and whose contribution to the organisation drives success and meets the organisational goals and objectives.