“Reward strategy is a business focussed statement of the intentions of the organisation concerning the development of future reward processes and practices which are aligned to the business and human resource strategies of the organisation, its culture, and the environment in which it operates”
Reward strategy is part of the framework that is Strategic HRM. It is created to allow for fair and equitable reward in return for good employee performance. What role does it play in the overall business strategy of an organisation? How does a changing business environment impact upon reward policies and practices? Is Michael Armstrong’s statement true to fact or just theoretical?
To answer these questions, one needs to closely examine the reward policies of several organisations, (current and emerging). We will look at the strategies of three companies – T-Mobile ®, Heinz UK® and Penguin Books® – all of whom are facing economic difficulties due to market instability and a changing business environment.
1.1 Strategic HR Management
In the majority of organisations, people are now the biggest asset. The knowledge, skills and abilities have to be deployed and used to the maximum effect if the organisation is to create value. The intangible value of the people an organisation employs is now gaining recognition and it is now generally accepted that this has implications for long term sustained performance.
Strategic HRM is based on HRM principles incorporating the concept of strategy. So if HRM is a coherent approach to the management of people, strategic HRM implies that it is done in a planned way that integrates organisational goals with policies and action sequences, i.e. your business strategy.
It is however too simplistic to say that strategic HRM stems from business strategy. The two must be mutually informative. The way in that people are managed , motivated and deployed, and the...