In response to the emerging environmental pressures, organisations are transforming their structures and management systems. As a result, many organisations are rethinking their reward strategies to better align them with the new realities. This paper provides an overview of key considerations that must be kept in mind in developing organisational reward systems. Against this background, it examines four alternative approaches to rewards that have been recently suggested in the literature. These include skill-based pay, broadbanding, variable pay, and team rewards. The paper highlights relevant design issues that need to be addresses in developing and implementing these approaches. Today's organisations are faced with a highly dynamic, complex and competitive environment. In order to cope with this environment, organisations are undergoing fundamental changes in their structures and management systems. In this paper, the author focuses on the impact of these changes on employee reward systems. He begins by providing an overview of key requirements for effectiveness of reward systems. Next, the prevailing reward system in organisations is described and the pressures on these systems to change. Then, a detailed discussion is provided on selected new approaches to rewards. For each approach, the underlying logic is explained, the available evidence on its usage and experience is examined, and key design and implementation issues are highlighted. (A)
Abstract