learning resources

The role of line managers in reward

Overview

Line managers play a role in many aspects of human resource management, and this is certainly also the case in reward. Making use of research in the area, these learning resources explore role of line managers in reward management. In the audio clip (to the right) your HR tutor Andrew gives an overview of the purpose and content of this learning, and below is a summary of how this fits with the CIPD unit.

The resources on the impact of intrinsic and extrinsic reward may also be of interest.

Version 1.1 – updated March 2024.

Listen to "The role of line managers in reward - introduction" on Spreaker.

Associate (level 5)

This learning relates to unit 5HR03 – Reward for performance and contribution.

LO3 – Understand the role of people professionals in supporting line managers to make reward decisions.

AC 3.2 – Review the role of people practice in supporting line managers to make consistent and appropriate reward judgements.

AC 3.3 – Explain how line managers make reward judgements based on organisational approaches to reward.

1. Financial and non-financial reward

In terms of line managers, most will be able to identify how they are involved in determining levels of financial reward, such as bonus payments and pay rises. But what other role do line managers play?

Activity

The CIPD study Rewarding work: The vital role of line managers (CIPD, 2007) used four case studies to look at the influence of line managers in terms of financial and non-financial rewards.

Click on the icon on the right to view the report and:

  • make a note of the main points on pages 8 & 9 – Line managers’ involvement in reward.

Summary

Financial rewards – Although the methods of operating performance related pay may vary across organisations, line managers play a critical role in terms of the effective implementation of the system in place. For example, the line manager has to set the performance standards, make the decision about the assessment, communicate the results, and so on. Throughout this process there are many areas of potential difficulty. For example, differentiating between excellent, good and poor performance; or the process itself may be bureaucratic and time-consuming.

One of the most common ways that the line manager can give a financial reward is through special bonuses for work well done or skills gained. The line manager’s discretion to give a reward in this way is usually limited by rules and restrictions, for instance, a limit on the amount of bonus that can be given. However, bonus schemes can be divisive and frustrating for managers and their employees. For example, employees may feel that the bonus has been unfairly awarded or that the amount of bonus does not sufficiently reward the work done.

Another potential area of financial influence is starting salaries where, for example, the line manager may recommend additional pay if the job vacancy has been hard to fill.

Non-financial rewards – These can provide the line manager with an opportunity to offer a reward in a more spontaneous and personal way. But, some organisations do have formal award schemes, such as an ’employee or team of the month’ award, which both rewards and publicly acknowledges the contribution of an individual or team. The study found that in all of the case study organisations line managers rewarded staff in ways that weren’t formally recognised as part of the reward strategy or policy, for example, by allowing employees to leave early once a job is complete, giving flexibility around lunch breaks, letting employees work from home, and so on.  Yet, it can take maturity and confidence for line managers to use their discretion in this way.  In addition, the line manager has to ensure that these rewards are given in a fair and consistent way.  Examples of reward around the job itself included giving more responsibility or discretion, or a simple ‘thank you’ to the employee for a job well done.

2. In practice

Having identified the role of line managers in financial and non-financial reward, and some of the challenges, let’s consider how this works in practice.

Activity

The CIPD periodically conducts surveys in relation to reward and their report from December 2019 focused on pay. Click on the icon on the right to view the report and complete the following activities.

  • read the section on the role of line managers (pages 28 – 33) and make a note of the trends identified
  • read the evaluation of front-line managers section (pages 38 – 41) and make a note of the main points
  • reflect on the ways in which managers in your organisation contribute to reward decision making
  • in what ways does the HR function support managers in this area?
  • what recommendations would you make about the role of line managers and the support offered by HR?

3. How HR can support line managers

Armstrong and Brown (2006) suggest a number of approaches to help secure the commitment and build the capability of managers with regard to their reward management responsibilities:

  • Provide leadership from the top: top management must deliver the message that reward is an integral part of managerial practice. HR plays a vital role in facilitating this.
  • Communicate:  the message has to reach line managers that they are expected to adopt the new reward approach.  Crucially, line managers play a vital role in communicating any new or revised system to their staff and discussing the possible implications.
  • Don’t over-engineer:  the design of the reward system should take into account what line managers will have to do to implement it.
  • Provide clear guidelines:  managers should know exactly what is expected of them.  HR has to ensure that line managers understand the reward strategy, including the finer detail of reward policy and practice.
  • Involve: develop ownership and commitment by involving line manages in the design and development of reward management processes, for instance, through membership of working parties looking at a range of issues such as performance measures, competencies, pay-banding and the appraisal system.  Also, from a HR perspective, line managers are a vital source of information.  For instance, if the organisation is to operate some form of contingent pay system, line managers have crucial knowledge and understanding about performance, competence and employee skill.
  • Brief and train: line managers need to be fully briefed on the reward policies and practices. For instance, HR professionals must explain grade and pay structures to line managers and indicate where and when rewards, whether financial or non-financial, might be distributed.  Formal training is likely to be needed on making objective judgements about relative levels of performance, competence and skills; giving and receiving feedback, etc.
  • Provide personal support:  line managers are likely to need individual coaching and guidance from HR.
  • Provide systems support:  technologies should be used to support line managers, for instance, in conducting pay reviews.

Armstrong, M. and Brown, D. (2006) Strategic Reward, London, Kogan Page.