Topic 2 - Strategic Total Rewards Flashcards
What is a Total Rewards Strategy?
It is the combination of pay forms, plans, policies, and practices that enable long-term organizational performance.
What are the two main components of Total Rewards Strategy?
Content Strategies (what rewards are offered) and Process Strategies (how rewards are designed and implemented).
What does a Total Rewards Content Strategy specify?
The type, level, and combination of rewards offered to employees.
What are the three types of rewards covered in the Reward Forms Strategy?
Salary (cash), Benefits (e.g., retirement contributions), and Intangibles (e.g., safe working conditions).
What is the difference between Reward Absolute Level and Relative Level?
Absolute Level: A fixed reward amount (e.g., $50,000/year).
Relative Level: Rewards compared to the market (Leading, Matching, or Lagging).
What is a Hybrid Approach in Reward Levels
A strategy where an organization leads, matches, or lags the market in different reward categories (e.g., leading in benefits, lagging in hourly wages).
What are the key principles of a Reward Design Strategy?
Transparency, reliance on objective data, and broad input from employees at all levels.
Why is a Communication Strategy important in Total Rewards?
It ensures employees understand rewards, and it provides feedback to improve the reward system before employee dissatisfaction arises.
What is a Role and Control Strategy?
It defines who is responsible for designing, implementing, and managing the reward system (Centralized vs. Decentralized).
What are the three primary challenges of a Global Rewards Strategy?
Centralization, Reward Equivalence, and National Culture.
What is the difference between Centralized and Decentralized Global Rewards Strategies?
Centralized: Uniform policies across locations.
Decentralized: Policies tailored to specific countries or locations.
What factors must organizations consider for Reward Equivalence in global strategies?
Tax laws, cost of living, exchange rates, and perceived equity between expatriates and host country employees.
How does National Culture impact reward systems?
Individualistic cultures may value personal recognition, while collectivistic cultures may prefer group-based rewards.
What is the purpose of the Reward Level Strategy?
To define the amount of each reward offered, either absolutely or relative to the market.
What does the phrase “it’s not what you pay, it’s how you pay it” relate to?
The Total Rewards Process Strategy, focusing on how rewards are designed and implemented.
Why is employee feedback critical in a Communication Strategy?
It helps identify issues with the reward system before they lead to employee turnover.
What is the goal of Total Rewards Process Strategies?
To influence employee behavior and reactions by focusing on how rewards are designed and implemented.
What is the role of Broad Input in designing a rewards system?
It involves employees from all levels to ensure fairness and transparency.
True or False: Total Rewards Strategies are identical across all organizations.
False. They vary in content and process depending on the organization.
True or False: Reward Form Strategies are limited to salaries and legal benefits only.
False. They include salaries, benefits, and intangibles such as safe working conditions.
True or False: Leading the market means offering rewards below the industry average.
False. Leading the market means offering rewards above the industry average.
True or False: A Hybrid Approach allows an organization to lead, lag, or match the market depending on the reward type.
True. Hybrid strategies customize rewards to fit business needs.
True or False: The Reward Design Strategy should rely on subjective data and limited employee input.
False. It should rely on objective data, transparency, and broad input.
True or False: A strong Communication Strategy ensures employees’ reality aligns with the organization’s intended message about rewards.
True. Communication shapes employees’ perceptions of the reward system.