Break it Down – Reward Management
BREAK. IT. DOWN.
Unofficial Guide to Completing CIPD Award in Reward
Management– 5RMT
Photo by Geran de Klerk on Unsplash
Break it Down – Reward Management
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Introduction to Reward Management
Important Note
The CIPD operates what is known as an ‘Assessment Bank’, which includes a
number of different versions of the same assessment. This guide is written using
assessment briefs for ICS, which is also used by a number of other learning
providers. It is important to know that whilst the questions may be different, the
Assessment Criteria will always be the same.
Disclaimer
All guides in my ‘Break it Down’ series are intended to be advice and guidance only;
you will not pass the course solely by reading the guides. You will be required to
complete a number of hours’ independent study and write up each assignment
according to your learning provider’s guidelines.
I am not an employee of CIPD or any learning provider. I am a former level 5
student who has completed the Diploma in Human Resources Management in 2017.
Break it Down – Reward Management
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Learning Outcome
1 Understand the business context of reward and the use of reward intelligence.
What the Assessment Activity says:
Using your own organisation (or one with which you are familiar), investigate the reward environment and produce
a written report in which you:
1.1, 1.2 Assess the context of the reward environment and the key perspectives that inform reward
decisions. In this section you should:
• Use an appropriate analysis tool to identify the internal and external factors.
• Analyse the particular impact of business drivers and related factors on reward decisions.
• Give examples of different ways of gathering and presenting reward intelligence.
What the Assessment Criteria says:
1.1 Assess the context of the reward environment and key perspectives that inform reward decisions.
1.2 Explain the most appropriate ways in which reward intelligence can be gathered and presented.
Break it Down:
Remember that there are only three questions/tasks that you need to complete for this particular
assignment (other providers may vary!). This means that you have quite a large word count to
work with. For this question, I wrote over 1200 words. In an ideal world you should split the word
count in two, but I found that 1.1 required more work than 1.2 did. Bear this in mind when
writing up your own report.
1.1
The company I used was a care home operator that I used to work for. For this question, the first
part of my answer was dedicated to using both the PESTLE and SWOT tools. This really helped
me identify the internal and external factors that affected the organisation’s reward policy.
Using PESTLE and SWOT helps you assess areas such as:
• Profit and Loss affecting Affordability
• Is the company expanding or contracting?
• Is your business in a strong market position?
• How is the business functioning in comparison to yours? Are they expanding or
contracting? Can you benchmark your business against competitors in the industry? How
is your industry / sector functioning in terms of Reward?
Example from a Pestle:
Economic – The foremost external economic driver for Company X is the reductions in the social care budgets that mean local
authorities have less money to pay for residential care. That, coupled with increasing living wages and rising inflation on food and energy,
means that the bottom line is under great threat. This leave less for a reward budget.
Example from a SWOT:
Weaknesses
• Pay in relation to living wage
• High staff turnover
• Hard to differentiate between staff grades
• Attraction/retention differences across the businesses
• Lack of a longer-term view
• Overtime addiction to top-up wages
• We tend to reward effort more than output
• We don’t know how to measure output
1.2
Break it Down – Reward Management
Reward management data can be identified and utilised in a number of ways. In the broader 4
sense, the CIPD produces an annual industry survey into reward management which looks at
information such as pay positioning, pensions and performance-related bonuses. Within relevant
industries, reward analysis will be conducted and communicated, normally through industry-
specific journals.
You should split your answer into Internal and External Benchmarking. Examples you could
include are as follows:
Internal Benchmarking
• Exit interviews
• Employee engagement surveys
• Company reward and salary surveys
• Metrics – including retention rates
External Benchmarking
• Reward surveys
• Salary surveys
• Recruitment agencies regularly collate reward data, and offer it on to clients or customers,
possibly for a price. This will be highly accurate information and can be tailored to your
industry and region.
• Market Intelligence
• Sector analysis
• Reward journal articles and reports
• Trade journal articles and reports
• Consultants
• Job advertisements (cheaper, but more time-consuming than using a recruitment agency).
You are also asked how this information should be presented. This isn’t a trick question, but with
some learning providers it may be worded in a way that makes you think you have to actually
present this information in your assignment. You need to describe how you would get your
message across to your audience. Think about the following:
• How would CIPD present their research on reward intelligence? (Reports, on their website and at
seminars)
• What type of publication would an academic present their research studies on rewards? (Journal)
• If you were to gather feedback from employees regarding the reward culture in your business, how
could you do that (think SurveyMonkey)
Question 1 Checklist Done
I have written a comprehensive PESTLE to identify internal factors
I have written a comprehensive SWOT to identify external factors
I have analysed how business drivers can affect reward strategies and policies
I have given examples of different ways of gathering and presenting reward intelligence
Break it Down – Reward Management
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Learning Outcome
2 Understand key reward principles and the implementation of policies and practices.
3 Understand the role of line managers in making reward decisions.
What the Assessment Activity says:
2.1, 2.2, 2.3, 3.2
Demonstrate your understanding of key reward principles and the implementation of reward policies and
practices. In this section you should:
Evaluate the principle of total rewards and its importance to reward strategy.
Identify and explain the importance of equity, fairness, consistency and transparency in terms of
how they should underpin reward policies and practices.
Assess the contribution of both extrinsic and intrinsic rewards to improving employee
contribution and sustained organisation performance. Refer to academic research and the
literature in this area and illustrate with examples of good practice.
Explain how reward policy initiatives and practices are implemented in your chosen organisation.
What the Assessment Criteria says:
2.1 Evaluate the principle of total rewards and its importance to reward strategy.
2.2 Explain the significance of equity, fairness, consistency and transparency as they affect reward policies
and practices.
3.2 Explain how policy initiatives and practices are implemented.
2.3 Assess the contribution of extrinsic and intrinsic rewards to improving employee contribution and
sustained organisation performance.
Break it Down:
2.1
The first thing you should do is write up a brief explanation of what ‘Total Rewards’ actually
means. Then expand on this, as total reward goes far beyond salaries, as some businesses cannot
afford high salaries, or excessive bonuses.
When evaluating the principle and importance of a total rewards approach, you should be able to
write up information that looks outside just pay as a form of reward. For example:
• work–life balance
• development and career opportunities.
• flexible benefits
• access to professional and career development
• a challenging role
• freedom and autonomy
• opportunity for personal growth
• recognition of achievements
• preferred office space or equipment
• capacity to raise matters of concern
• involvement in decisions that affect the way work is done
• flexible working hours
• opportunities for home working
• administrative support
2.2
Break these four down into their own headings.
Equity – this has become more relevant in recent times as businesses have to be legally and
socially transparent when it comes to transparent and fair pay structures. Adams has a theory on
this that you might wish to include (Adams’ 1965 Theory of Equity)
Break it Down – Reward Management
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Fairness - Reward policies should be seen not to discriminate and be achievable. The fairness of
how the reward policy is implemented is the responsibility of HR, to ensure it is available to all,
and to line managers, who should ensure it is implemented fairly.
Consistency - The rewards system should treat everyone fairly, and in a consistent manner.
Transparency - the perception of fairness is subjective, and complex reward systems mean that
employees may feel they are being treated unfairly. There is a really good case study on the RBS
that looks at the subject of transparency, although it is a bit old now (Srivastav and Pandey, 1995)
Each heading should describe how they affect reward policies and practices making reference to
good practice.
3.2
Extrinsic rewards in the form of salary and bonuses will help to attract and retain employees and
assist in improving their performance and reduce discontent short-term. Intrinsic rewards are
more long-term and are non-financial, looking at recognition, praise and responsibility. The table
below describes the reward framework:
Financial Rewards Non-Financial Rewards
Intrinsic • Job design and role development (responsibility,
Rewards autonomy, meaningful work, the scope to use and
develop skills)
• Opportunities to achieve and develop
• Quality of working life
• Work/life balance
Extrinsic Pay and benefits • Recognition
Rewards • Praise
• Feedback
(Adapted from Armstrong, M. (2015) Armstrong’s handbook of reward management practice: Improving performance through reward.
London, United Kingdom: Kogan Page.)
This AC requires you to look at academic literature, research and at theory when preparing your
answer. You need to ensure that you can understand the terms ‘intrinsic’ and ‘extrinsic’ in terms
of reward and what contribution these make to improving employee performance – how do they
motivate the employee to help achieve organisational objectives?
2.3
How are reward policies and practices are implemented in your chosen organisation? I cannot
really help you with this one!
Question 2 Checklist Done
I have explained the term ‘total rewards’
I have discussed the importance of ‘total reward’ in relation to reward strategy
I have explained the significance of equity, fairness, consistency and transparency and
how they affect reward policies and practices.
I have explained how policy initiatives and practices are implemented.
I have assessed the contribution of extrinsic and intrinsic rewards to improving employee
contribution and sustained organisation performance.
Break it Down – Reward Management
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Learning Outcome
3 Understand the role of line managers in making reward decisions.
What the Assessment Activity says:
3.1
Demonstrate your understanding of the role of line managers in making reward decisions. In this section
you should:
Explain the various ways line managers contribute to reward decision-making.
What the Assessment Activity says:
3.1 Explain the various ways in which line managers contribute to reward decision making.
Break it Down:
Line managers play an important part in the context of reward management. Line managers have
a crucial role in coaching employees and providing them with guidance and feedback through
performance management. Such positive feedback helps provide employees with the motivation
they need to keep performing through periods of uncertainty and change.
In your answer, you should look at the following:
• What influence a line manager has, and do they always have access to ‘pots’ of money for
bonuses or other rewards such as training or promotion.
• Performance reviews – Also known as 360-degree appraisals, these are a popular method of
reviewing the progress of an employee.
• Performance-related pay – Performance-related pay is commonly used for manual workers
to ensure there is less of a disparity between them and salaried staff.
• Competency-related pay –Competency-related pay is when employees receive financial
incentives for reaching the next level of competence in their role. It is widely used in the
knowledge sector.
• Non-monetary recognition – Non-financial rewards can be typically seen as praise or
recognition, but it can be much more than that.
• Reviewing job roles – Also known as ‘Job evaluation’,
• Related-pay banding - When two jobs have similar scores and are placed in the same grade
within a grading structure then they are ‘rated as equivalent’ and must be paid within the
same grade band
Question 3 Checklist Done
I have explained the various ways in which line managers contribute to reward decision
making.
I have discussed Performance reviews, Performance-related pay, Competency-related pay,
Non-monetary recognition, Job evaluation and Related-pay banding
