(Solution) 5HR03 (AC1.1) Explain the principles of reward and its importance to organisational culture and performance management
Solution
Principles of Reward
Fairness– This principle ensures that the employees develop a feeling of appreciation through the reward offered for their input and capability (CIPD, 2021). In Eco-Insulate case, there lack an appropriately structured incentive program and as such issues with favouritism and inequalities. Through fair reward strategy, this lead to increased trust hence morale and engagement enhanced amongst staff.
Transparency– This is a principle defined with reward structure initiating confidence amongst the staff hence a culture of being open (CIPD, 2024). Today, issues of mistrust emerge due to special pay/rewards being advanced to senior ranked employees. For Eco-Insulate attraction of qualified talents, there is a necessity for managing their staff in an equal manner ion terms of their rewards, bonus issued and benefits.
Equity– For this principle, it is identified in CIPD (2024) as contributing to fairness in rewards of the employees. This is in terms of their skill, knowledge and experience and input to organisation. In EcoInsulate for instance, their strategy generates inequality issues particularly for the rewards offered to senior employees in terms of special schemes.
Importance to EcoInsulate Organisation Culture
Achievement of fairness, transparency and equity as part of reward strategy assist in shaping EcoInsulate organisation culture. When rewards/incentives are lacking, inappropriate workplace environment is initiated leading to disengaged staff and lower morale. As evidenced in CIPD (2021),……
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