Strategic reward management is about planning and giving rewards in a way that supports a company’s main goals. These rewards can include things like cash bonuses, recognition programs, or other benefits. The key is to make sure the rewards match the company’s values and help achieve its objectives.
This kind of reward management is very important for any business. If employees don’t feel properly rewarded for their work, they may become unhappy and look for jobs elsewhere. But when rewards are given in a smart and fair way, employees feel valued and are more likely to work hard and stay committed.
Apple Inc. is a leading, innovative and very valuable technology company in the world that is known for its innovative products and special corporate culture (Podolny and Hansen, 2020). To effectively keep its competitive edge, Apple distinctly implements a comprehensive rewarded plan geared to ensure attraction and retention of top talent. This strategy encompasses financial incentives, stock options, career development opportunities, and an inclusive workplace culture (Accelingo, 2024). However, while its current reward system works well to achieve employee satisfaction, there are challenges with aligning satisfaction with retention. The report takes a critical view at Apple’s reward strategy, evaluating its strengths and weaknesses, and the recommendations to improve its capability to attract as well as retain employees.
Apple’s reward strategy depends mainly on combinations of both direct financial incentives, long-term compensation, and nonmonetary benefits (RORG, 2025). Under the company’s compensation model, competitive salaries, performance based bonuses as well as stock options through Apple Stock Purchase Plan (ASPP) are offered to employees to ensure their interests align with the success of the company (The Human Capital Hub, 2024). In addition, Apple gives additional benefits such as health insurance, wellness programs, tuition reimbursement, and employee discounts, which enhance job satisfaction and engagement.
A major strength of Apple’s reward strategy is that it relies on stock options and restricted stock units (RSUs) to retain employees (Bruce Brumberg, 2022). One of the positive aspects of this is that it helps employees feel a sense of ownership and commitment toward the products as well as long term financial security. In addition, Apple’s brand prestige and its culture of innovation stimulate intrinsic motivation of employees and hence tend to emotionally connect with the company’s mission and vision (Podolny and Hansen, 2020b). In addition, Apple has created a brand of offering learning and development opportunities that allows employees to excel professionally in the organisation and the industry.
Nevertheless, Apple’s reward strategy has some limitations. A major criticism is that corporate and retail employees are not treated equally (Nho Quyet Tran and Dan, 2022). Corporate employees, meanwhile, have high compensation and benefits including stock but retail store workers often enjoy salary and promotions that are slim, together with great levels of work stress. Not only are there concerns surrounding the demanding nature of the work environment, the limited work–life balance and that there is no upward mobility within the organization, but many retail employees have voiced their concerns (Ayesha Madhumali Dassanayake and Sanoon Fathima Fasana, 2019). As a result, Apple’s retention strategy can easily lose out to these high turnover rates among retail employees.
Within Apple’s corporate divisions, the high-pressure work culture is also another area of concern (Ganesh, 2024). While the company gets the best of top talent, the gruelling workdays can result in burnout and employee dissatisfaction. Long working hours and a staff burden are often reported by employees, which may kill morale and enthusiasm with time. In addition, performance based incentives used by Apple can be too competitive, where there is no inhibition on collaboration or teamwork (Shu, 2023). While fostering secrecy and internal competition would help the agency achieve innovation, they could have a negative impact on employee satisfaction and well-being in the long term.
Additionally, Apple’s reward strategy has been questioned for its success in attracting and retaining the diverse talent that it needs (Nho Quyet Tran and Dan, 2022). Despite these advances, some employees, external observers argue, DEI efforts at Apple have not gone far enough to ensure equitable compensation. According to reports, there are also pay and gender gaps within Apple, suggesting that Apple’s reward strategy may need to be refined for fairness and inclusivity (Li and Qiao, 2023).
In order to be successful in attracting and keeping its employees, Apple should think about balancing and including its reward strategy so as to narrow down existing gaps. One important recommendation is to enhance retail employees’ compensation and career development opportunities (Half, 2023). To make retail employees perceive themselves as valued and motivated to stay within the company, Apple can offer its employees higher base salaries, performance based pay incentives and clear promotion pathways.
Apple should also address employees’ concerns of wellness in their work as that entails addressing the issue of healthy work-life balance (Apple, 2022). Option for remote work and additional paid leave would allow employers to give their employees and thus their job satisfaction and burnout would decrease dramatically. And by offering wellness programs specific to corporate and retail employees via mental health counselling and stress management, retention of employees can be improved even more.
On the other hand Apple could improve its approach with regards to the performance based rewards. Stock options and bonuses are effective ways to reward high performance but not team work and collaboration and therefore Apple should also consider alternative reward systems (Podolny and Hansen, 2020b). Introducing group based incentives and peer recognition program may create more supportive work environment and make employees want to work towards collective goals instead of just focusing on their own performance.
In addition, Apple should be proactive in guaranteeing equity for compensation between all employee demographics. Conducting pay audits on a routine basis and having open policies of remuneration would eradicate any disparity in gender and racial wages (Johnson, 2023). If Apple has a more inclusive approach to rewards, it can bolster its employer brand and hire more diverse talent pool.
Lastly, Apple should further take into consideration DEI in its reward strategy. Mentorship and leadership development programs focusing on diverse workers would improve the inclusion of a wider range of employees and prevent them from leaving (Tiao, 2024). Furthermore, if all the employees are made to have equal access to the career growth opportunities irrespective of the department they are working in or their background, it would help create a fairer and a more motivating working environment.
Apple Inc. has a well structured competitive reward strategy which plays critical role in attracting and retaining best talent. Financial Incentives, Stock Options, and the employee benefits that the company provides, has helped to make the company’s employer brand strong and promote high level of employee engagement. Nevertheless, compensation and career prospects for retail employees, work – life balance, and the inclusiveness of the retail reward strategy are major areas that need improvement. These challenges can be addressed by providing higher wages, more advanced career progression, flexible work arrangements and more advanced DEI initiatives to ensure the organisation is more attractive employer. A holistic and equitable reward strategy will not only benefit employees through greater satisfaction and retention but also reinforce Apple’s dedication to a thriving and inclusive workplace.
Learning Outcome 2 Understand the value of a ‘total rewards’ approach
Question 2
AC 2.4 Evaluate the concepts of universal benefits as opposed to flexible ‘cafeteria’ style benefits, recommending which approach would be most suited to the organisational context. Justify your recommendations.
Introduction
Employee benefits serve as an important aspect in attracting, retaining and motivating the employees of an organization (Tenney, 2024). Benefits packages can be structured differently including universal benefits and flexible benefits. The universal benefits are the same benefits given to all employees and flexible cafeteria benefits are employee specific and can be customized to respective needs. This report discusses the advantages and limitations in both approaches and their implications to organizations, and makes a justified recommendation of the most appropriate approach to be applied in a specific organizational context.
Universal Benefits: Advantages and Challenges
Universal benefits are benefits that are provided to all employees irrespective of the need, preference or role of an employee (Coakley, 2022). Commonly, these benefits include pensions, healthcare, paid leave, life insurance, and possibly other types of paid leave. Equity and fairness are one of the main benefits of universal benefits. Organizations provide same benefits to all employees to achieve consistency and avoid ambiguity or unfairness. Universal benefits according to Radu (2023) help in creating a sense of unity and shared organizational culture thereby enhancing employee engagement and loyalty.
Another advantage is administrative simplicity. Benefits plans that are standardised are a lot simpler for the HR department to manage, as there is no requirements of treating different choices (Verlinden, 2019). In addition, they have significant cost savings since employers can shop with the insurance companies for the best rates buying benefits. In addition, a universal system is also aligned with legal and regulatory requirements to prevent discriminatory practices (Hyatt and Gruenglas, 2023).
However, universal benefits have limitations. There is a key issue of a lack of personalization. There are many differences in lifestyle, career stage, age, as well as health conditions among employees (Merkel, Ruokolainen and Holman, 2019). A standardized benefits package is not likely to suit totally the needs of all workforce demographics, and may create dissatisfaction to some. For instance, young workers work may support student loan payment assistance or adjustable functioning roles than a standard pension scheme. Moreover, elderly staff may prefer comprehensive care.
Flexible ‘Cafeteria’ Style Benefits: Advantages and Challenges
Flexible or cafeteria benefits, on the other hand allow employees to choose from a selection of benefit options based on their own individual needs (Kagan, 2020). It is an acknowledgement of workforce diversity as well as providing more employee autonomy. According to Gallup (2022), if employees are permitted to choose benefit levels that align with their personal situations, their job satisfaction and engagement levels increase. Additionally, the flexibility also serves to promote the brand of the company among potential candidates, given that they are searching for personalised employment benefits (Sirojuddin and Sopiah, 2022).
One advantage of flexible benefits is the cost efficiency. Universal benefits may result in underutilisation of some services due to offering equal coverage. Flexible benefits allow the employees to allocate their benefit budget more effectively and also at a maximum value to both the employee and the employer (AIHR, 2024). For example, an employee with no dependents would tend to choose child support rather than additional learning and development opportunities (Mathis & Jackson, 2019).
However, flexible benefits come with advantages and disadvantages. One concern is administrative complexity. Sophisticated HR systems and augmented administrative oversight can increase operational costs (IBM, 2023). Furthermore, employees may not have a clear steer on which option is best and will be confused and dissatisfied if not.
There is also a risk of inequity. However, employees who have greater knowledge or financial literacy may make better choices, while others may struggle to optimize their benefits selection (Lusardi, 2019). This disparity might inadvertently elicit perceptions of unfairness when some employees feel they are not getting equal value to their peers.
Comparing Universal and Flexible Benefits
Organizations need to take into consideration factors like the environment in which they operate, workforce demographics and culture of the organization, budget constraints, and strategic goals when choosing between offering universal and flexible benefits (Kabeyi, 2019). Due to the highly diverse nature of the workforce, large multinational corporations often enjoy flexible programs because they serve the employees of various stages of life and geographical spread. However, for smaller organizations or those with very small employee population, universal benefits can be more cost effective and less complex to manage (KBB, 2022).
In terms of ethics, universal benefits are beneficial since they offer equal support to all employees (ACT Alliance EU, 2024). However, in a competitive labour market, flexible benefits can be a differentiator for the organisation as it helps attract and retain talent. Furthermore, flexible benefits are also in line with current workforce trends of employees preferring a healthy work-life balance as well as health support and benefits like wellness programs and remote work agreements (Weideman and Hofmeyr, 2020).
Recommended Approach and Justification
A hybrid benefits model, combining the advantages and disadvantages of universal and flexible benefits, is the most appropriate approach. Hybrid model allows employees to access universal benefits such as pension contributions, and health insurance, statutory leave and the option of choosing flexible benefit packages based on their needs.
A hybrid approach ensures fairness and customisation, while benefiting all employees with essential benefits. It enables greater engagement and motivation while at the same time reducing administrative complexities. According to research from Ranta and Ylinen (2023), companies adopting a hybrid model experience higher employee satisfaction and retention rates because it offers the stability of universal benefits with the personalization of flexible benefits.
Flexible benefits offers strategic advantage in retaining talent in highly competitive industry areas (Voltage Control, 2025). For example, wellness programs, tuition reimbursement, and sabbaticals, flexible benefits schemes have been very successful for companies such as Google and Microsoft. These initiatives are in line with their innovative cultures and provide solutions to a diverse workforce (Brewster et al., 2020). On the contrary, organizations with lower turnover rate and a stable workforce, for example, from public sector institution, would find universal benefits more attractive, as universal benefits are cheaper and easier to implement.
Similarly, a flexible benefits model necessitates investing in Human Resources technology for managing administrative tasks efficiently (BEBS, 2021). Organizations should prioritise providing clear lines of communication and clarity for employees regarding available benefits and the autonomy to make decisions. Another important aspect is training HR professionals to assist the employees in making their benefits choices to avoid confusion and dissatisfaction (Stirpe, Profili and Sammarra, 2021).
Learning Outcome 3 Understand pay structures and approaches to establishing pay levels.
Question 3
AC 3.2 Analyse the advantages and disadvantages of using incremental pay scales within organisations, explaining why these would be appropriate to your organisation or not.
Introduction
Incremental pay scales are structured means of employee compensation that allows salary increases at predetermined intervals depending on employee’s tenure, expertise, or performance put in (CIPD, 2024). It is extensively utilized in the public and private sector organisations and is a clear pathway in determining an employee’s salary progression. This report investigates the advantages and disadvantages of incremental pay scales and their appropriateness in specific organizational contexts.
Advantages of Incremental Pay Scales
Predictability is one of the key benefits of incremental pay scale. The expectation of salary increase empowers employees with job security and motivating them to continue putting in regular effort. Structured pay progression perceives improves engagement as individuals are rewarded for their continuous service and commitment to their job (Osborne and Hammoud, 2019). It also benefits employers, by leveraging on their wage increase predictions to ensure accurate budgeting and planning of finances.
Fairness is also a key advantage. When employees believe that incremental pay scales are equitable because the progression of pay is based on clearly defined and standard criteria (CIPD, 2024b). The risk of pay disparity and favouritism is also reduced because all employees follow the same progression pathway. Equality Act 2010 in the UK for supports structured pay frameworks particularly in maintaining non-discriminatory compensation practice (GOV.UK, 2010).
Offering incremental pay scales may also help to deter employee attrition. When an organization gives a clear path for their employees’ salary progression, it becomes less likely for their employees to quit because they experience a clear financial trajectory. As discussed in Mani (2024), firms with transparent pay progression frameworks experience higher retention rates and lower recruitment costs.
Moreover, pay structures may stimulate skill development and career development. The aforementioned arises when incremental pay is aligned with competency acquisition where employees are required to demonstrate some increase in skill or take completion of a training program in order to receive incremental pay (Abu Hassan Asaari, Mat Desa and Subramaniam, 2019). This approach aligns with the principles of the performance based pay as well as allowing for stability.
Disadvantages of Incremental Pay Scales
However, incremental pay scales have their own disadvantages. A major limitation is that it is not flexible. However, these systems may not adequately compensate high performing employees because increases to your salary are based on tenure rather than merit. It can result in disengagement amongst top performers indicating that they are not valued enough for their contributions. Rigid pay structures limit the talent retention, especially in competitive industries where performance based pay is a norm (Fitri, 2024).
The second concern is salary compression where the long-serving employees earn more than new and productive employees. In the dynamic industries, where skill and market demand changes very fast, this issue can lead to resentment among staff. One effect of salary compression is that it is detrimental to employee morale and can impede recruitment (VidCruiter, 2024).
In addition, incremental pay scales can be financially burdensome to the organizations. This means employers have to be willing to give regular pay increases, particularly in economic downturns that can strain employers’ budgets (Dorman and Boden, 2021). Unlike performance-related pay that allows firms to adjust rewards based on financial performance, incremental pay scales dictate a constant wage growth, preventing an organization to invest into training and innovation.
Moreover, these pay structures may also discourage good performance. For example, employees can become complacent since they know pay increases automatically, even if no effort or output is made. This phenomenon can lead to poor productivity and efficiency in the employees. According to Ukandu (2022) firms that have adopted rigid pay structure, might experience lower levels of discretionary effort from employees than those organizations with performance linked pay systems.
Appropriateness of Incremental Pay Scales in Different Organizations
However, incremental pay scales are suitable in different industries and organizational structure. For a multinational company such as Apple incremental pay scales may not be the most effective way for compensating employees (CIPD, 2024a). In the highly dynamic and technologically advanced market in which it operates, Apple, faces the challenge of attracting and keeping the best of the best to remain in the race. Within the company, performance based pay structures, stock options, bonuses are commonly used to reward innovation, productivity and towards achieving strategic goals.
Apple’s compensation strategy is flexible and aligns with the company’s culture of constant innovation and flexibility (Accelingo, 2024). Unlike traditional incremental pay structures whereby preference is given to seniority over merit, Apple’s pay structure is built to attract very skilled professionals that expect to get competitive and based on performance remuneration. Apple goes out of its way to ensure that the people benefitting from its success also have a stake in it with equity-based incentives like Restricted Stock Units (RSUs), which give individual reward based on the company’s performance (SSF, 2024).
However, although most roles in this company have no structured pay progression, there may be some benefit in some roles in Apple Stores (retail employees), retail managers and some long-term corporate staff in administrative roles (Podolny and Hansen, 2020b). For these positions, incremental pay scales would guarantee stability through continuous wage growth hence lower turnover. In Apples case, a hybrid approach which combines structured pay progression and performance based incentives may be suitable for these roles..
Conclusion
There are several benefits associated with the incremental pay scales including predictability, fairness, retention and professional growth opportunities. Nevertheless, it presents difficulties as it such as rigidity, salary compression, financial burden, and disengagement of high performers. Although this pay structure would be appropriate to an organization’s strategic goals and industry context, it depends on the industry context and the organization’s workforce. In stable, long-term employment sectors, incremental pay scales promote equity and consistency while on the other hand performance driven compensation model is beneficial in the dynamic industry.
Learning Outcome 4 Understand the importance of organisational approaches to compliant and ethical reward practice.
Question 4
Introduction
Performance based pay or variable compensation is a form of reward in which is offered as contingent to specific performance outcomes (Cotton, 2022). Contingent rewards include bonuses, commissions, and profit share schemes, stock options that are aimed at motivating the employees to meet or exceed targets. While such reward systems can contribute to increased productivity and help to work toward the goals of the organization; however, there are ethical implications that come with them (Figueiredo et al., 2025). In this analysis, issues associated with contingency-based rewards are examined with an emphasis on their fairness, motivation and employee wellbeing.
Fairness and Equity Concerns
Fairness is among the principal ethical issues when considering contingency-based rewards. In some instances, contingent rewards are skewed in such a manner that high performing employees benefit disproportionally, while marginalizing those that may have made significant contributions to the organization in other less quantifiable ways (CIPD, 2022). That system can create division and resentment between employees who believe that their work is not valued. Firdausa Nuzula and Nurmaya (2020) concludes that people’s perception of distributive justice has a big impact on employee morale and commitment to the organization. Unfairness of the allocation of contingency rewards can lead to dissatisfaction as well as disengagement among employees.
In addition, organisations may penalise employees with jobs that do not have clearly quantifiable performance metrics (Vuong and Nguyen, 2022). For instance, administrative and support staff may find it difficult to gain performance based incentives even though they play critical roles in improving operation efficacy. This inequality in imbalance can then contribute to inequality reduced cooperation and greater focus on individual achievements rather than collective success.
However, proponents posits that contingency rewards foster a more meritocratic culture where employees are rewarded for their work and not based upon tenure or hierarchy. However, the aforementioned can be mitigated through clear and transparent performance criteria to minimize perceptions of unfairness and encourage pursuit for excellence (Hill and Plimmer, 2024).
Manipulation and Unethical work Practices
Additionally, there is the risk of manipulation and unethical behaviour at work. This is because when the performance outcomes are tied to some form of financial incentives, employees may feel pressured to achieve these targets including through dishonest means. An example of this issue is the Wells Fargo scandal where employees faked opening accounts to meet goals numbers and receive performance-based bonuses (U.S Department Of Justice, 2020). Although such situations show how contingency rewards can be pervasive leading to unethical behaviour and ultimately harm organizational reputation.
Similarly, employees could manipulate results or withhold critical information to access the rewards (Manzoor, Wei and Asif, 2021). For instance, in sales driven environment, reps may prioritize quick bucks at the detriment of the long-term customer relationship, which will be unethical sales tactics and loss of customer trust. Such behaviour violates ethical business practices and is at odds with a company’s values, and could result in compliance penalties as well as expose a company to legal claims.
On the other hand, structured contingency reward can also work as a means of encouraging positive behaviour when used in appropriate manner. Employee actions aligned to the company goals can be achieved through performance-based incentive. However, these rewards can be used by ethical organizations, which encourage ethical performance improvements rather than manipulation (Ryan, 2023).
Workplace Stress and Employee Well-being
Another ethical concern is the link between contingency rewards and workplace stress. Performance based incentive is a good as its intention to motivate employees but this can also lead to overworking and burnouts. According to the research done by Salama et al. (2022) on job demands and resources, environments with high expectations that are accompanied with insufficient support systems are likely to give rise to stress related health problems, lower job satisfaction and high turnover rates.
However, employees on highly competitive roles in commission-based jobs will often get stress when meeting the goals, resulting in very long hours and poor work life balance (Adom, 2018). The ethical dilemma may arise when organizations fail to prioritize employee wellbeing and fail to put in place adequate mechanisms to support employee wellbeing such as mental health programs and reasonable workload expectations. Thus, proper people management for ethical people should adopt a balance between performance incentives and the workers welfare so as not to create too much of the stress and tiredness on employees.
However, other studies showm that performance based incentives give employees control over their earnings and professional growth. Employees who thrive under pressure may perceive contingency awards as more motivating hence greater job satisfaction and career growth (Kumari et al., 2021).
Discrimination and Bias in Reward Allocation
The allocation of contingency rewards can potentially be discriminatory and biased. Recent research by Hing et al. (2023) shows that performance-based pay systems can reinforce these existing biases, under which groups, for example, women, minority employees or older workers are rewarded less due to unconscious bias or systemic inequalities. While formal policies may exist, there is still the possibility of discrepancies in distribution of reward due to personnel manager’s subjective assessment of employees’ performance.
For instance, women in sales roles have not been able to earn the same levels of commission, despite nearly identical levels of performance as their male colleagues, because of the bias inherent in the allocation of client assignments and opportunities (Catherine University, 2021). To ensure the process is fair, organizations must set out evaluation criteria, which should also be transparent, and regularly audit the reward system in order to identify and remove any bias.
Nevertheless, properly designed contingency reward systems may encourage diversity by allowing all employees to have an equal opportunity to succeed according to merit. Organizations can increase their culture of inclusion and achievement if they set clear and proper to achieve performance criteria (Okatta, Ajayi and Olawale, 2024).
Ethical Recommendations for Contingency-Based Rewards
Therefore, organizations can apply fair, transparent, and balanced reward structures to address these ethical issues (Friday Ojiyovwi Onavwie et al., 2023). Organisations should ensure there is an objective and comprehensive set of performance metrics that consider qualitative elements and quantitative performance. For instance, combining peer reviews customer feedback and team performance assessments would allow getting a more holistic picture of how each employee contributed.
In addition, organizations should implement safeguards against unethical behaviour through building a strong ethical culture and providing ethical training (CIPD, 2023). This could include establishment of whistle-blower policies and internal reporting mechanisms to aid in the detection and prevention of fraudulent activities connected to contingency reward.
Organisations should also should also promote employee wellbeing by setting achievable performance goals and offering stress management support (Suff, 2024). High-pressure incentive schemes can have adverse effects; however, flexible work arrangements, mental health resources and workload balancing can help.
Finally, organizations should conduct regular equity audits to check equity in reward distribution (Gonzales, 2024). This can ensure there’s transparency and accountability in pay structures which helps in creating a more inclusive and equitable workplace culture.
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