The Problem with ESOP’s
Employee Stock Option Plans (ESOP’s) are one of the most popular ways in which modern startup companies reward their early employees. In Silicon Valley, many companies such as Google and Facebook have used Employee Stock Option Plans (ESOP’s) to lure the best talent from the market. Since these companies have become very successful, there are…
Reward Systems and Policies
Reward Systems and Policies Perhaps the most important aspect in any organization is the reward system in place. This is because employees are not providing their services for free and on the other hand, the organizations do not run a charity show. What this means is that the contractual obligations between employees and organizations are…
Rewarding the Givers Instead of the Takers
The Givers and Takers and the Rewards Systems The previous articles discussed the theme of rewards and their uses in modern organizations from multiple perspectives. The focus of the discussion was on how an effective rewards management system can boost productivity and improve job satisfaction leading to all round benefits to the companies and their…
The previous articles in this module discussed how rewards systems are developed in organizations and the various aspects that go into making the rewards system viable. The discussion so far was on the components and factors affecting the rewards system. It is now the turn to discuss designing a comprehensive and total rewards system that takes into account both monetary and non-monetary rewards as well as building a holistic rewards system that factors in performance from all perspectives.
In other words, a total rewards management system takes a holistic look at performance from all angles and not only linear or quantitative measures alone. This means that employees are rewarded according to their performance that is apprised from all perspectives including their on the job performance, soft skills, contribution to the company, and teamwork and team building efforts.
Further, a total rewards management system does not provide monetary incentives alone but instead, includes non-monetary incentives like perks, motivational incentives like recognition, and self-actualization incentives like job satisfaction and quality of work.
The total rewards management system has to be designed after taking feedback from the employees as to whether they are satisfied with the current rewards structure and after consulting with market research firms about rewards systems in place in other companies in the same vertical.
Moreover, the total rewards management system has to incorporate the vision and mission of the organization and hence must be consistent with the specific attributes that are inherent to the organization and at the same time must be competitive in relation to the rewards systems of other organizations.
A total rewards management system must have the buy-in from all stakeholders in the organization. If all these requirements sound idealistic and not actionable in practice, it is important to remember that many world-class organizations like Apple, Microsoft, PG, and Unilever have successfully designed total rewards management systems like the ones described here. Moreover, many multinationals like Fidelity have their own versions of a total rewards management system that caters to the need for financial incentives and emotional incentives as well as job satisfaction and self-actualization of the employees.
The key implications of such systems are that they provide the employees a reason to get out of bed each morning and go to work with a spring in their step.
In other words, employees are encouraged to be at their best because of these rewards systems. This is certainly not lost on the stakeholders who then perpetuate the system by tweaking it and ensuring that the total rewards management systems are constantly updated with new feedback.
Finally, no employee exists in a vacuum and hence, comparisons with peers are inevitable. Hence, any holistic rewards management system would take into account the need of the employees for peer approval and reduction of peer pressure. This is the key aspect that is often overlooked when designing rewards management systems.
Article Written by
Himanshu Juneja, the founder of Management Study Guide (MSG), is a commerce graduate from Delhi University and an MBA holder from the esteemed Institute of Management Technology (IMT). He has always been someone deeply rooted in academic excellence and driven by a relentless desire to create value. Recently, he was honored with the “Most Aspiring Entrepreneur and Management Coach of 2025 (Blindwink Awards 2025)” award, a testament to his hard work, vision, and the value MSG continues to deliver to the global community.
Article Written by
Himanshu Juneja, the founder of Management Study Guide (MSG), is a commerce graduate from Delhi University and an MBA holder from the esteemed Institute of Management Technology (IMT). He has always been someone deeply rooted in academic excellence and driven by a relentless desire to create value. Recently, he was honored with the “Most Aspiring Entrepreneur and Management Coach of 2025 (Blindwink Awards 2025)” award, a testament to his hard work, vision, and the value MSG continues to deliver to the global community.
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