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Gaining a competitive edge

Identify three nonfinancial segments of total reward and discuss how each could be implemented,
especially across cultures or within a local multicultural labour pool.

What challenges might managers face in implementing such segments?



Gaining a competitive edge in the markets requires organizations to have competent
employees. Retaining these employees require these organizations to develop appropriate reward
systems. Providing intrinsic and extrinsic rewards as part of the total reward motivate employees,
and even increase their productivity. Providing nonfinancial rewards has also been proven to
motivate employees and improve their level of performance. The paper identifies three non-
financial segments, discusses their implementation across cultures or local multicultural labour,
and deliberates on potential challenges that managers may face implementing these segments.
Non-financial reward
Apart from financial rewards such as salaries, and bonuses, employees as well require
non-financial rewards for them to execute their duties well. Nature of these rewards may vary
from one organization to another depending on the size and the organizational culture (Phoenix
2006, p. 3). For instance, form of recognitions that employee appreciates depend on the
organizational culture. The three major forms of non-financial segments of total reward include
promotion/nomination, gifts/vouchers, and lastly appraisal.
Implementation of these rewards across cultures
It is important to consider cultural backgrounds and orientation of employees when
providing them with non-financial rewards. This is because; they have different orientation and
socialization that play a critical role in their motivation. Appraisal is one of the non-financial
rewards employees require to be motivated to remain committed to the organization (Kristiani,
Sumarwan, Yuliati & Saefuddin 2014 p. 113). This form of reward is through simple personal
acknowledgement by the management, appreciating and recognizing the exemplary performance
of employees. This reward system requires implementation across the organization. The
management should remain conscious about the input of their employees by always thanking

them and encouraging them whenever they perform well. Employees feel loved and cherished
when recognized and appreciated. It is however, important to be aware of conflicts ensuing,
especially when a single individual is appraised continuously. This may as well lead to unhealthy
internal competition. When implementing this reward system, is import to factor the aspect of
culture. Employees come from varied cultures and the meaning ascribed to this form of reward
may vary (Michael 2004, p. 2). Some may require closer attention and appreciation when they
make a smaller progress while other may not want so.
Organizations can also give employees gifts and vouchers to attend shows, holidays and
go shopping as a strategy to appreciate their efforts (Chiang & Birtch 2012, p. 538).
Implementing this form of reward requires managers to identify cultures of employees to give
gifts that rhyme with their beliefs, and value system. For instance, when employees excel, it is
important to give them gifts that resonate with their value and belief system.
Organizations as well use promotions/nominations to motivate their employees apart
from appraisal and gifts. Implementation of promotion is also a sensitive issue especially, in an
organization with multicultural labour force or in an entity with employees from diverse cultural
background. The strategy when implementing this is to ensure fairness by ensuring that
employees from various cultures are put into consideration. An approach to promotion will also
vary across cultures. For instance in Japanese culture, promotion is based on the length of stay in
an organization as opposed to western cultures where an individual is promoted based on their
level of performance.

Potential challenges in implementation

Managers when implementing these reward segments experience a number of
challenges. One is defining the value of the scheme as it becomes difficult for the manager to
include all staffs because they cannot maintain close watch on all these staffs especially, in
multinational corporations. Hence, good performing employees maybe ignored. Ensuring
fairness, transparency, and credibility in the process of offering these rewards may be a
challenge. Another challenge is cultural fit, as it becomes challenging for managers to align
rewards with cultures, values or belief systems of employees (Michael, 2004). This causes
conflicts and affects performance of employees.
It is evident that indeed non-financial segments such as promotions, gifts, and appraisals
can be adopted by organizations to motivate employees. Organizations however, need to remain
conscious about cultural diversities of employees when providing these rewards. There are as
well challenges that managers must deal with to ensure smooth implementation of these rewards.

Reference list

Chiang, F, & Birtch, T 2012, ‘The Performance Implications of Financial and Non-Financial
Rewards: An Asian Nordic Comparison’, Journal Of Management Studies, 49, 3, pp. 538-
570, Business Source Complete, EBSCOhost, viewed 9 September 2015.
Kristiani, E, Sumarwan, U, Yuliati, L, & Saefuddin, A 2014, ‘The Role of Relational Reward
Benefits for Developing the Non-Financial Value of a Customer to an Organization:
Structural Equation Modeling Approach’, Gadjah Mada International Journal Of
Business, 16, 2, pp. 111-142, Business Source Complete, EBSCOhost, viewed 9
September 2015.
Michael S 2004, ‘Non-financial reward: the most effective recognition?’.
People Management (2004), ‘Reducing features’, People Management Magazine, 15 july.
Phoenix, T 2006, ‘Rewards Transformation: Understanding the Internal Total Rewards
Marketplace. (cover story)’, Benefits & Compensation Digest, 43, 9, pp. 1-14, Business
Source Complete, EBSCOhost, viewed 9 September 2015.

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