Reward and Incentive System Coursework Example | Topics and Well Written Essays - 1000 words

Reward and Incentive System - Coursework Example One of the challenges that might be faced in establishing an effective compensation system for the Tesco Company executives is the biased attitude (Hill & Jones, 2010). The compensation system has the potential of creating biases to the lower cadre employees in compensating the top executives. The lower employees who are responsible for implementing the policies and strategies developed by the executive of Tesco Company will be demoralized due to the insignificant feeling. This will hinder the realization of commercial interest of the company that will make the compensation strategy adopted impossible due to lack of adequate funds. The perception of the compensation been unfair compared to the external equity is another challenge that Tesco will face is establishing the incentive system for it executive employees (Hill & Jones, 2010). The modern market is facing intense competition that has seen companies rewarding their top management heavily to attract the most effective and effici ent strategic team to compete effectively in the market. Thus, the reward system that Tesco will develop will be judged by the executive team on its coherence with the market reality. This has the potential of drawing the negative reaction from the executives if they perceive the system to be unfair to the market competitiveness or equity. The top management of Tesco Company will shift to the competitors who are offering better incentive and reward compensation strategy. The two challenges will heavily impact on the establishment of the incentive and reward system that Tesco Company will employ in compensating its executive to ensure it is balanced towards the perception of the internal employees at the lower level and perception of the executive towards the market equity.