Strategic Remuneration
Tutorial 1 - Workbook 1
Introduction to Remuneration
Remuneration is probably the most important function
Employees come to work and expect remuneration for performing their jobs
Remuneration is holistic it includes recognition, motivation, rewards and taking care
of employees
Employees are looking for a stimulating work environment, flexibility, work-life
balance and performance-related pay
SA is faced with challenges related to complying with government legislation,
meeting the needs of unions and balancing the demand and supply of labour
Remuneration will need to be tailored to individual and organisational needs
The HRM function in organisations manages the employee remuneration.
Defining remuneration?
Compensation is used interchangeably with other terms such as remuneration, pay,
or reward.
Remuneration is the most commonly term used in SA
It means it is remuneration that an employee gets for services rendered to the
company that employee works for. Thus, employees come to work, to work towards
achieving the organisational goals and gets remunerated for the achievement thereof.
It is not only money, it also includes non-monetary rewards such as work-life balance,
motivation, recognition.
Remuneration includes both intrinsic and extrinsic rewards which employees receive
for performing their jobs. This is also known as the "Reward Package" or the "Total
Rewards Approach", meaning the total rewards and benefits (monetary and non-
monetary) that you can offer an employee. Refer to your study guide to see what is
the different components of Remuneration System. i.e. intrinsic and extrinsic rewards
(aka; job characteristics, monetary and non-monetary).
Some elements that are included in the Remuneration System includes: policies,
practices, procedures, reward criteria, reward strategy.
Remuneration Components
Remuneration consist of financial and non-financial elements, these terms consist of
base pay, incentive pay, benefits and various allowances
Financial rewards are monetary forms of pay. The employer pays financial rewards
and are cash payment such as base payments and pay for performance
Direct Remuneration (salary, incentives, bonuses and commissions)
Indirect remuneration (benefits, medical aid, pension)
Non-financial rewards (work life balance, telecommuting, flexi-time, career
development, recognition and job security)
, discretionary benefits are voluntary benefits and legally required benefits are
compulsory benefits (what does this mean, be sure to explain this in a question).
Importance of Remuneration
Cost Control – employers do need to focus on cost management of remuneration.
Remuneration makes up 50% of operational cost. Remuneration influence employee’s
perception
Individual needs – remuneration fulfil individual needs, maintain a certain quality of
life and employees wants to feel fairly treated
Competitive advantage – remuneration reflects the values of the organisation and in
remuneration policies and practices. Organisations use their reward package to assert
Motivator – organisations use the pay packages as a long-term motivator. Both for pay
for performance and non-monetary rewards are motivators
Organisation objectives – employees must meet organisational objectives.
Remuneration packages direct employee behaviour
What is meant by strategic remuneration?
The world of work has changed and is changing drastically. While organisations and
the needs of employees change so should remuneration systems. Organisations are
striving for alignment – alignment between their strategies and bottom line. Different
strategies require different remuneration systems.
Organisations want to implement reward programmes that set them apart from their
competitors, therefore they want to have a competitive advantage by motivating
employees to excel, learn new knowledge and skills.
Competitive Advantage means that your organisation's product is so unique and set
you apart from another organisation's product and therefore it becomes a product
that everyone will want to have and therefore can be charged at a premium rate. This
is called a differentiation advantage. If your product is similar to other organisations'
products and it is selling at lower cost, it is called a cost advantage.
What is meant by tactical and strategic activities?
Strategic decisions are concerned with the entire environment in which the
organisation operates, the resources and the people who form the
organisation. Strategic decisions support the business objectives.
Tactical decisions, affect the day-to-day implementation of steps required to reach the
goals of a strategy, for example recruitment, which supports the implementation of
strategic decisions.
Refer to the figure in your Study Guide to provide you with a better picture of what
this means.
What competitive strategic choices should I make if I am doing strategic decision making?
Tutorial 1 - Workbook 1
Introduction to Remuneration
Remuneration is probably the most important function
Employees come to work and expect remuneration for performing their jobs
Remuneration is holistic it includes recognition, motivation, rewards and taking care
of employees
Employees are looking for a stimulating work environment, flexibility, work-life
balance and performance-related pay
SA is faced with challenges related to complying with government legislation,
meeting the needs of unions and balancing the demand and supply of labour
Remuneration will need to be tailored to individual and organisational needs
The HRM function in organisations manages the employee remuneration.
Defining remuneration?
Compensation is used interchangeably with other terms such as remuneration, pay,
or reward.
Remuneration is the most commonly term used in SA
It means it is remuneration that an employee gets for services rendered to the
company that employee works for. Thus, employees come to work, to work towards
achieving the organisational goals and gets remunerated for the achievement thereof.
It is not only money, it also includes non-monetary rewards such as work-life balance,
motivation, recognition.
Remuneration includes both intrinsic and extrinsic rewards which employees receive
for performing their jobs. This is also known as the "Reward Package" or the "Total
Rewards Approach", meaning the total rewards and benefits (monetary and non-
monetary) that you can offer an employee. Refer to your study guide to see what is
the different components of Remuneration System. i.e. intrinsic and extrinsic rewards
(aka; job characteristics, monetary and non-monetary).
Some elements that are included in the Remuneration System includes: policies,
practices, procedures, reward criteria, reward strategy.
Remuneration Components
Remuneration consist of financial and non-financial elements, these terms consist of
base pay, incentive pay, benefits and various allowances
Financial rewards are monetary forms of pay. The employer pays financial rewards
and are cash payment such as base payments and pay for performance
Direct Remuneration (salary, incentives, bonuses and commissions)
Indirect remuneration (benefits, medical aid, pension)
Non-financial rewards (work life balance, telecommuting, flexi-time, career
development, recognition and job security)
, discretionary benefits are voluntary benefits and legally required benefits are
compulsory benefits (what does this mean, be sure to explain this in a question).
Importance of Remuneration
Cost Control – employers do need to focus on cost management of remuneration.
Remuneration makes up 50% of operational cost. Remuneration influence employee’s
perception
Individual needs – remuneration fulfil individual needs, maintain a certain quality of
life and employees wants to feel fairly treated
Competitive advantage – remuneration reflects the values of the organisation and in
remuneration policies and practices. Organisations use their reward package to assert
Motivator – organisations use the pay packages as a long-term motivator. Both for pay
for performance and non-monetary rewards are motivators
Organisation objectives – employees must meet organisational objectives.
Remuneration packages direct employee behaviour
What is meant by strategic remuneration?
The world of work has changed and is changing drastically. While organisations and
the needs of employees change so should remuneration systems. Organisations are
striving for alignment – alignment between their strategies and bottom line. Different
strategies require different remuneration systems.
Organisations want to implement reward programmes that set them apart from their
competitors, therefore they want to have a competitive advantage by motivating
employees to excel, learn new knowledge and skills.
Competitive Advantage means that your organisation's product is so unique and set
you apart from another organisation's product and therefore it becomes a product
that everyone will want to have and therefore can be charged at a premium rate. This
is called a differentiation advantage. If your product is similar to other organisations'
products and it is selling at lower cost, it is called a cost advantage.
What is meant by tactical and strategic activities?
Strategic decisions are concerned with the entire environment in which the
organisation operates, the resources and the people who form the
organisation. Strategic decisions support the business objectives.
Tactical decisions, affect the day-to-day implementation of steps required to reach the
goals of a strategy, for example recruitment, which supports the implementation of
strategic decisions.
Refer to the figure in your Study Guide to provide you with a better picture of what
this means.
What competitive strategic choices should I make if I am doing strategic decision making?
