AC1.1 Explain the principles of reward and its importance to organisational culture and performance management

5HR03 Reward for Performance and Contribution

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Unit code:	5HR03
Unit title:	Reward for performance and contribution
Assessment ID:	CIPD_5HR03_24_01
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First resubmission date for centre marking – if applicable
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This unit focuses on how internal and external business factors influence reward strategies and policies, the financial drivers of the organisation and the impact of reward costs and rewarding performances.  

CIPD’s insight

Strategic reward and total reward (February 2024)

`Strategic reward` takes a long-term approach to how an organisation’s reward policies and practices balance and support the needs of both the organisation and its employees. The concept of `total reward` covers the tangible and intangible aspects of work that people value and may form part of a reward strategy.

https://www.cipd.co.uk/knowledge/strategy/reward/strategic-total-factsheet

Performance management

Performance management is about creating a culture which encourages the continuous improvement of individuals` skills, behaviours and contributions to the organisation. It’s a key part of the relationship between staff and managers. Views on how it should be carried out to the benefit of employees and the business have changed in recent years. Here you’ll find resources on managing performance, appraisal and reviews, feedback and using competency frameworks.

https://www.cipd.co.uk/knowledge/fundamentals/people/performance

Making reward more accessible and performance management fairer (January 2022)

Making reward more accessible and performance management fairer

How can technology be used to allow better access to pay and a fairer assessment of employee performance and potential?

https://www.cipd.co.uk/knowledge/work/technology/digital-transformation-insights/reward-performance-management

Please note that the purpose of this insight is to link you to CIPD’s research and evidence within the subject area, so that you can engage with the latest thinking. It is not provided to replace the study required as part of the learning or as formative assessment material.

Preparation for the Tasks:

• At the start of your assessment, you are encouraged to plan your work with your assessor and where appropriate agree milestones so that they can help you monitor your progress.
• Refer to the indicative content in the unit to guide and support your evidence.
• Pay attention to how your evidence is presented.
• Ensure that the evidence generated for this assessment remains your own work.
• Completing and acting on formative feedback from your assessor.
• Reflecting on your own experiences of learning opportunities and continuous professional development.
• Reading the CIPD Insight, Fact Sheets and related online material on these topics as well as key research authors on the subject.

You will also benefit from:

• Completing and acting on formative feedback from your assessor.
• Reflecting on your own experiences of learning opportunities and continuous professional development.
• Reading the CIPD Insight, Fact Sheets and related online material on these topics as well as key research authors on the subject

Scenario

Eco-Insulate UK is a medium sized private sector organisation that manufactures eco-friendly thermal insulation in the UK. The Managing Director (MD), who started the company in the mid-1970s has set up a meeting with you to discuss concerns regarding increased turnover of skilled and non-skilled employees.

During the meeting you are made aware that there is no incentive scheme in operation and there is an expected level of performance broadly related to the notion of measured day work. Standard times exist and are maintained by the Finance and Administration Department.

Most employees receive 28 days paid holidays per year. All employees are included in the non-contributory pension scheme however, it’s generally known that special schemes operate for senior staff only.

The MD is aware that the overall culture and performance of the company is quite negative and that it’s time to look at offering forms of reward incentives, benefits and recognition to stimulate positive change.

In your capacity as a reward specialist practitioner, he asks you to put together a report for the senior management team that will give them knowledge and understanding of the principles and components of reward and pay, including how these might influence organisational, psychological and cultural factors. In addition, he would also like them to gain an understanding of job evaluation and market rates.

Report

To complete the report, you should include written responses to each of the 10 points below, making appropriate use of academic literature, legislation, surveys, data intelligence, research and good practical examples to substantiate your response and illustrate key points.  Please ensure that you use reputable sources as indicated on the unit reading list and that all cited sources are correctly acknowledged and presented in full in a bibliography at the end of your report.

With reference to the above scenario:

1) Explain the principles of reward and its importance to organisational culture and performance management. (AC 1.1)

2) Assess the contribution of extrinsic and intrinsic rewards to improving employee contribution and sustained organisational performance. (AC 1.2)

3) Explain the differences between types of grade and pay structures. (AC 2.1)

4) Explain how contingent rewards can impact individual, team and organisational performance. (AC 2.2)

5) Explain the merits of different types of benefits offered by organisations. (AC 2.3)

6) Explain the merits of different types of recognition schemes offered by organisations. (AC 2.4)

7) Assess the business context of the reward environment. (AC 3.1)

8) Evaluate the most appropriate ways in which benchmarking data can be gathered and   measured to develop insight. (AC 3.2)

9) Explain approaches to job evaluation. (AC 3.3)

10) Explain the legislative requirements that impact reward practice. (AC 3.4)

Your evidence must consist of: A report, referring to the above scenario, with written responses to each of the 10 instructions above. Approximately 3900 words in total, refer to CIPD word count policy.

Assessment Criteria Evidence Checklist

You may find the following checklist helpful to make sure that you have included the required evidence to meet the task. This is not a mandatory requirement as long as it is clear in your submission where the assessment criteria have been met.

Task 1 – Report Section One Assessment criteria			Evidenced Y/N	Evidence reference
1.1	Explain the principles of reward and its importance to organisational culture and performance management.
1.2	Assess the contribution of extrinsic and intrinsic rewards to improving employee contribution and sustained organisational performance.
2.1	Explain differences between types of grade and pay structures.
2.2	Explain how contingent rewards can impact individual, team and organisational performance.
2.3	Explain the merits of different types of benefits offered by organisations.
2.4		Explain the merits of different types of recognition schemes offered by organisations.
3.1		Assess the business context of the reward environment.
3.2		Evaluate the most appropriate ways in which benchmarking data can be gathered and measured to develop insight.
3.3		Explain approaches to job evaluation.
3.4		Explain the legislative requirements that impact reward practice

Declaration of Authentication

Declaration by learner

I can confirm that: this assessment is all my own work.  where I have used materials from other sources, they have been properly acknowledged and referenced. I have not used Artificial Intelligence tools to generate content for my assessment. I understand the consequences of malpractice and accept that any violation of this agreement may result in disciplinary action.
Learner name:
Learner signature:
Date*  *This should be the date on which you submit your assessment

 

 

 

 

 

 

 

 

5HR03 Reward for performance and contribution

Assessment Criteria marking descriptors.

Assessors will mark in line with the following assessment criteria (AC) marking descriptors, and will indicate where the learner sits within the marking band range for each AC.

Assessors must provide a mark from 1 to 4 for each assessment criteria within the unit. Assessors should use the mark descriptor grid as guidance so they can provide comprehensive feedback that is developmental for learners. Please be aware that not all the mark descriptors will be present in every assessment criterion, so assessors must use their discretion in making grading decisions.

The grid below shows the range for each unit assessment result based on total number of marks awarded across all assessment criteria. 

To pass the unit assessment learners must achieve a 2 (Low Pass) or above for each of the assessment criteria.

The overall result achieved will dictate the outcome the learner receives for the unit, provided NONE of the assessment criteria have been failed or referred.

Please note that learners will receive a Pass or Fail result from the CIPD at unit level. Referral grades can be used internally by the centre.

Overall mark	Unit result
0 to 19	Fail
20 to 25	Low Pass
26 to 32	Pass
33 to 40	High Pass

Marking Descriptors

Mark	Range	Descriptor
1	Fail	The response DOES NOT demonstrate sufficient knowledge, understanding or skill (as appropriate) to meet the AC. Insufficient examples included where required to support answer. Insufficient or no evidence of the use of wider reading to help inform answer. Presentation or structure of response is not appropriate and does not meet the requirement of the question/assessment brief.
2	Low Pass	The response demonstrates an acceptable level of knowledge, understanding or skill (as appropriate) to meet the AC.  Sufficient acceptable examples included where required to support answer. Sufficient evidence of appropriate wider reading to help inform answer. Satisfactory in-text referencing. Answer is acceptable but could be clearer in responding to the question/task and presented in a more coherent way. Required format adopted but some improvement required to the structure and presentation of the response.
3	Pass	The response demonstrates a good level of knowledge, understanding or skill (as appropriate) to meet the AC. Includes confident use of examples, where required to support the answer. Good evidence of appropriate wider reading to help inform answer.  A good standard of in-text referencing. Answer responds clearly to the question/task and is well expressed. Presentation and structure of response is appropriate for the question/task.
4	High Pass	The response demonstrates a wide and confident level of knowledge, understanding or skill (as appropriate) to meet the AC. Includes strong examples that illustrate the points being made and support the answer. Considerable evidence of appropriate wider reading to inform answer. An excellent standard of in-text referencing. Answer responds clearly to the question/task and is particularly well expressed or argued. Presentation and structure of response is clear, coherent, and responds directly to the requirements of the question/task.

Marking grid and feedback for learner

Unit 5HR03: Assessor Feedback to Learner
Centre number
Centre name
Learner number (1st 7 digits of CIPD Membership number)
Learner surname
Learner other names (e.g. first name and middle name(s))

Note to Assessor – Please enter a mark for each AC. You need only provide feedback where you have awarded a mark of 1. This feedback should be developmental.

Task- Written report
AC Number	Assessment Criteria	Mark 1-4
1.1	Explain the principles of reward and its importance to organisational culture and performance management.
	Assessor feedback first submission (if applicable)
	Assessor feedback resubmission 1 (if applicable)
	Assessor feedback resubmission 2 (if applicable)
1.2	Assess the contribution of extrinsic and intrinsic rewards to improving employee contribution and sustained organisational performance.
	Assessor feedback first submission (if applicable)
	Assessor feedback resubmission 1 (if applicable)
	Assessor feedback resubmission 2 (if applicable)
2.1	Explain differences between types of grade and pay structures.
	Assessor feedback first submission (if applicable)
	Assessor feedback resubmission 1 (if applicable)
	Assessor feedback resubmission 2 (if applicable)
2.2	Explain how contingent rewards can impact individual, team and organisational performance.
	Assessor feedback first submission (if applicable)
	Assessor feedback resubmission 1 (if applicable)
	Assessor feedback resubmission 2 (if applicable)
2.3	Explain the merits of different types of benefits offered by organisations.
	Assessor feedback first submission (if applicable)
	Assessor feedback resubmission 1 (if applicable)
	Assessor feedback resubmission 2 (if applicable)
2.4	Explain the merits of different types of recognition schemes offered by organisations.
	Assessor feedback first submission (if applicable)
	Assessor feedback resubmission 1 (if applicable)
	Assessor feedback resubmission 2 (if applicable)
3.1	Assess the business context of the reward environment.
	Assessor feedback first submission (if applicable)
	Assessor feedback resubmission 1 (if applicable)
	Assessor feedback resubmission 2 (if applicable)
3.2	Evaluate the most appropriate ways in which benchmarking data can be gathered and measured to develop insight.
	Assessor feedback first submission (if applicable)
	Assessor feedback resubmission 1 (if applicable)
	Assessor feedback resubmission 2 (if applicable)
3.3	Explain approaches to job evaluation.
	Assessor feedback first submission (if applicable)
	Assessor feedback resubmission 1 (if applicable)
	Assessor feedback resubmission 2 (if applicable)
3.4	Explain the legislative requirements that impact reward practice.
	Assessor feedback first submission (if applicable)
	Assessor feedback resubmission 1 (if applicable)
	Assessor feedback resubmission 2 (if applicable)
Total marks for TASK
Total marks for TASK (resubmission 1 if applicable)
Total marks for TASK (resubmission 2 if applicable)

Total marks for UNIT		Grade
Total marks for UNIT (resubmission 1 if applicable)		Grade (resubmission 1 if applicable)
Total marks for UNIT (resubmission 2 if applicable)		Grade (resubmission 2 if applicable)
Assessor Feedback Summary Please use this box to summarise your feedback on the assessment overall. This should highlight strengths and any areas for improvement, either referring to specific (good or requires improvement) ACs or commenting more generally across the assessment. (Note: developmental feedback on any ACs awarded a mark of 1 should have already been provided in the relevant box of the assessment form above. Please use a different font colour for any resubmission comments)
Assessor name	Submission		Resubmission 1	Resubmission 2
Assessor signature* I confirm that I am satisfied that to the best of my knowledge, the work produced is solely that of the learner.
Date

*This must be a true signature, so a handwritten signature, or a photo or scan of a handwritten signature, or an e-signature. A typed signature is not acceptable.

Sample Answer

Explain the Principles of Reward and Its Importance to Organisational Culture and Performance Management

The principles of reward refer to the strategic framework used by an organisation to offer financial and non-financial benefits to its employees in exchange for their contributions to the business. These principles are crucial to attracting, motivating, and retaining talent while aligning employee behaviour with organisational goals. Reward strategies typically include base salary, bonuses, benefits, recognition, career development opportunities, and work-life balance initiatives.

At Eco-Insulate UK, which currently lacks a formal incentive scheme, introducing an effective reward system could directly influence organisational culture and performance management. A well-structured reward system can foster a positive work environment, enhance employee engagement, and reinforce desired behaviours. It can contribute to a shift from the current negative culture towards one that is more dynamic and performance-driven.

Organisational Culture: Reward systems play a central role in shaping organisational culture. By clearly linking rewards to performance and behaviours that align with company values, employees are more likely to internalise these values and work towards common objectives. For instance, if Eco-Insulate UK implements a reward structure that rewards sustainability or innovation, it can encourage a culture of environmental responsibility and creativity. Conversely, a lack of reward systems may reinforce complacency, leading to disengaged employees, as is the case in the company currently.

Performance Management: Reward is integral to performance management, serving both as a tool for setting expectations and recognising achievement. In the case of Eco-Insulate UK, the absence of a formal incentive structure means that performance might be managed in a vacuum, with little reinforcement of desired outcomes. When rewards are tied to clear performance indicators, employees gain a sense of accountability and direction. Moreover, it encourages a results-driven approach to work, which is necessary for improving the company`s productivity and addressing the concerns of high turnover.

Reward systems are also vital for managing performance through feedback mechanisms. For example, performance-based bonuses or recognition schemes provide employees with both tangible and intangible feedback, thus reinforcing desired behaviours and boosting morale.

References:

• Armstrong, M. (2020). Armstrong`s Handbook of Reward Management Practice: Improving Performance through Reward (5th ed.). Kogan Page.
• Purcell, J., & Kinnie, N. (2007). Human Resource Management and the Work System: A Guide for Managers and Practitioners. Oxford University Press.

Assess the Contribution of Extrinsic and Intrinsic Rewards to Improving Employee Contribution and Sustained Organisational Performance.

Extrinsic Rewards: Extrinsic rewards are tangible benefits given to employees in exchange for their work, such as salary, bonuses, benefits, and other financial incentives. These rewards are important for meeting employees` basic needs and motivating them to perform their tasks effectively. At Eco-Insulate UK, introducing financial incentives or bonuses tied to performance metrics could immediately enhance employee motivation. For example, linking employee performance to quarterly or annual bonuses can help drive productivity and align individual goals with organisational objectives.

However, while extrinsic rewards can drive short-term performance, their effect may be diminished over time if they are not aligned with employees` intrinsic motivators. If rewards such as pay increases or bonuses are not seen as fair or are inconsistent, they may fail to sustain employee motivation and contribute to turnover, which is a concern at Eco-Insulate UK.

Continued...