7HR03 Strategic Reward Management Student Assessment Brief

7HR03 Strategic Reward Management Student Assessment Brief

The 7HR03 Strategic Reward Management Student Assessment Brief can feel a little weighty at first glance. You’ve got terminology, a chunk of expectations, and this unspoken pressure to “get it right” from the start. But it’s not impossible, not really. This unit tends to ask you to think more broadly about pay and benefits than most people expect. It’s not just what’s fair or what works. It’s the question of whether your reward decisions actually fit the direction the business is going. Sometimes that’s a bit blurry. We’ll walk through it slowly. There’s no one way to write these assessments.

Assessment questions

As a part of the selection process for an internal promotion you have been given the following brief: Businesses continue to operate under a backdrop of economic instability, and many regions are experiencing a cost-of-living crisis. The latest CIPD reward management survey (2022) reports ‘that some employers are making a much valued difference to the financial wellbeing of their workforce; others are falling short of employees’ expectations’. To explore this further you are required to prepare answers to the following questions for discussion at a forthcoming interview. For the purpose of this assessment, you need to apply your answers to either your own organisation or one with which you are familiar. It is essential that your reading of the published literature is used to inform your responses to all questions.

Evaluating Our Organisation’s Reward Strategy: A Realistic Look at Attraction and Retention

Question 1 (AC 1.4): Critically evaluate the effectiveness of the organisation’s reward strategy recommending how this might be revised to more effectively attract and retain employees.

Let’s start by stating the obvious, keeping people happy at work has never been easy. And right now, it feels more precarious than usual. With inflation biting and the cost-of-living rising faster than most salaries can keep up, the cracks in how we reward our staff are becoming harder to ignore. Some colleagues shrug it off, others are quietly planning an exit. We’ve heard them talk, usually over lunch or when someone’s just had their bonus email. That tension, that quiet dissatisfaction, it tells us more than any survey could.

Current reward strategy: strengths, shortfalls, and sentiments

Our current reward structure follows a familiar model: fixed base salary, annual performance-related bonus, plus a standard benefits package, medical, pension, maybe a gym discount if you’re lucky. On paper, it’s serviceable. Not too extravagant, not too stingy. But in practice? It’s beginning to feel a bit out of touch.

The trouble is, most employees don’t feel the strategy responds to their lived realities. Bonuses, for example, are inconsistent. Some years they’re meaningful, other times, barely noticeable—yet expectations don’t change. The communication around rewards is another weak spot. People often don’t understand how pay decisions are made or what “good performance” even looks like. That uncertainty breeds frustration.

Some departments have more flexibility than others, which creates pockets of resentment. You hear whispers, why does Marketing get remote work stipends but Operations doesn’t? These small but persistent inequities chip away at morale. Even the benefits, which look generous on a slide deck, don’t always meet what people actually value. A few of our newer hires, for instance, have pointed out how little support exists for mental wellbeing or financial education. Things they expected as standard in 2025.

Retention and attraction: what’s working and what’s not

When we ask why people stay, it’s rarely about pay alone. Many like the team culture, the sense of purpose, or the flexible hours. But when we ask why they leave—compensation and progression top the list. That contradiction matters. People can enjoy their work and still look elsewhere if they feel under-recognised.

Recruitment has also become tougher. We’ve lost out on candidates who accepted offers from competitors, not necessarily for massive salary hikes, but for things like four-day workweeks, childcare allowances, or more transparent development paths. It’s not always the size of the reward that matters, it’s how relevant, predictable, and fair it feels.

Where we go from here

There’s no single fix. But we could begin with clearer, more inclusive communication about reward decisions, who gets what and why. We might consider offering more choice: letting employees pick from a menu of benefits that actually match their circumstances.

It may also be time to rethink the balance between pay and non-monetary rewards. Can we support wellbeing more tangibly? Could line managers have more autonomy to recognise people in-the-moment, not just at year-end?

We don’t need a total overhaul, but perhaps a few meaningful shifts. Enough to make people feel heard. Enough to show that we’re paying attention.

Evaluating Universal vs Flexible ‘Cafeteria’ Style Benefits

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.

When we talk about employee benefits in a modern workplace, especially one dealing with financial pressures, both internally and externally, the conversation inevitably leans towards what actually supports people in their everyday lives. In our case, working within a medium-sized healthcare support provider in Nairobi, the question is whether it’s better to offer the same benefits to all (universal) or to allow staff to choose from a menu of options, the so-called cafeteria-style approach.

Universal Benefits, Fair, Familiar, But Sometimes Frustrating

Universal benefits are the classic route. Everyone, regardless of age, family background or career stage, receives the same package, perhaps medical insurance, commuter allowance, and lunch vouchers. There’s a certain predictability to it, and from an HR perspective, it’s easier to manage. Less administration. Fewer decisions to second-guess.

But it isn’t always well-received. Some of our younger staff, fresh out of college, still living at home, don’t really see the value in life insurance. Others who don’t have children feel a little short-changed when we include a childcare allowance. So while universal benefits might feel fair on paper, the reality is more complicated. Fairness isn’t always about treating everyone the same. Sometimes it’s about offering a meaningful choice.

Cafeteria-Style Benefits, Flexible, Yes, But Also a Bit Messy

Then there’s the cafeteria model. We’ve not fully adopted it, but I’ve seen versions of it trialled within partner organisations. Here, employees can pick what suits them, maybe a gym membership instead of meal subsidies, or travel insurance over extra leave. It feels modern, responsive. And to many, it’s empowering. But we’ve also noticed that people often feel overwhelmed by the options, or they don’t quite understand what they’re giving up when they pick one benefit over another.

There’s also a risk of inequality creeping in. The more savvy employees, those who know how to compare costs and coverage, tend to get better value from the system. Others end up with benefits they barely use. Then there’s the issue of cost. Customisation isn’t cheap. Admin teams spend a lot of time explaining, tracking, and correcting things.

So, What Fits Best?

For our organisation, a blended approach probably makes more sense. Some benefits, like core health coverage or statutory pension contributions, should remain fixed. These are essentials. But layering on a few optional extras, perhaps an allowance that can be directed toward personal development, wellness, or even childcare, would give staff more of a voice in shaping their rewards.

This way, we preserve the simplicity and security of universal benefits, but acknowledge that our workforce isn’t a monolith. People want different things from their employer. We’ve heard that over and over again in our engagement surveys.

In the end, offering a little choice within a secure framework feels less risky than swinging completely one way or the other. It’s not perfect, but it’s probably closer to what people actually want.

Incremental Pay Scales: Do They Still Work in Today’s Organisations?

Question 3 (AC 3.2): Analyse the advantages and disadvantages of using incremental pay scales within organisations, explaining why these would/would not be appropriate to your organisation.

Understanding the Concept
Incremental pay scales are not exactly new, but they’ve persisted for a reason. They offer a structured way to increase pay over time, typically linked to years of service or performance milestones. In theory, they reward loyalty and provide a sense of progress. For many, they feel fair. Predictable, even. But fairness isn’t the same thing as flexibility, and that’s where things get complicated.

Perceived Benefits of Incremental Pay Systems
In our organisation, a private healthcare provider, we’ve considered structured pay bands to bring some clarity to how people move up the ladder. One upside is transparency. Staff know what to expect financially in the coming years. It removes the uncertainty that sometimes clouds salary discussions. People can plan school fees, mortgages, loans, with a bit more confidence.

There’s also something to be said for the psychological comfort of steady progression. Even a small annual increase can reinforce a sense of value. It signals: You’re still with us, and that counts for something.

The Disadvantages: Where the Structure Begins to Creak
But then you hit the ceiling. And this is where it becomes tricky. Once employees reach the top of their pay band, there’s nowhere else to go, unless they’re promoted. For some, this takes the shine off the system entirely. They’ve invested years, hit all their targets, and now flatline. That can be disheartening. It’s something we’ve seen more than once.

We’ve also had challenges in adjusting pay competitively when market conditions change. Some clinical roles, for example, suddenly become harder to fill, and the going rate in the market jumps. But our internal scales don’t always keep up. If we stick rigidly to them, we risk losing good people to more flexible employers. And yet, if we start bending the rules for new hires, our existing staff begin asking difficult, but fair questions. Why are they earning more than me when I’ve been here longer?

Cultural Shifts and Changing Expectations
Another issue we’re grappling with is a shift in what people value. Many younger professionals want recognition tied more to performance than tenure. They’re ambitious, and perhaps understandably, not interested in waiting years for small increases. If they’re doing the work now, why not reflect that in their pay now? That’s not a criticism, it’s a mindset that’s becoming more common. And a fixed pay structure doesn’t always cater to that.

Is There a Middle Ground?
We’re not entirely against the idea of incremental pay scales, but a rigid model doesn’t seem realistic for our needs. A hybrid model might work better. A system where there’s a general pay framework for fairness and consistency, but enough room for performance-based progression too. Some structure, some discretion.

No system is flawless. And maybe that’s okay. What matters is having open conversations, and a willingness to tweak things when the old ways stop working.

Ethical Concerns of Contingency-Based Pay in the Workplace

Question 4 (AC 4.3): Examine the potential ethical issues associated with the use of contingency forms of reward within the organisation.

Contingency forms of reward, where pay is directly linked to performance outcomes. Reward good work. Encourage effort. But in practice, it’s rarely that clean. There are ethical questions that emerge, often, and they can have real implications on fairness, wellbeing, and even culture.

We’ll look at four key areas where contingency pay structures can raise ethical concerns: fairness and equality, wellbeing and pressure, collaboration versus competition, and transparency and trust.

Fairness and Equality

Let’s begin with fairness. People naturally compare, especially when pay is involved. Contingency rewards often depend on hitting targets or metrics, which may not be evenly distributed or achievable. Two people might have similar roles, but vastly different opportunities to earn bonuses depending on how their work is measured or supported.

We’ve seen this first-hand. One team had clearer KPIs and stronger internal systems. Their incentives? Regular and visible. Another team, working just as hard, but with messier metrics, rarely qualified for extras. Understandably, frustration built. Questions were raised: are we rewarding performance, or just circumstance?

Then there’s the equality issue. Contingency pay may inadvertently disadvantage groups who can’t commit the same hours or volume of work. Part-timers, or even newer staff may find themselves constantly just behind the line. It creates a gap that’s difficult to close.

Wellbeing and Performance Pressure

Another point, often discussed informally but rarely acknowledged outright, is pressure. Performance-linked pay can turn motivation into anxiety. Targets don’t always account for external factors, economic shifts, resource shortages, unpredictable client behaviour. Someone might do everything right and still fall short.

Over time, this kind of stress builds. It’s not just emotional fatigue either, there’s a risk that people begin adjusting their behaviour, consciously or not, to meet metrics. That could mean overpromising, underreporting problems, or even ignoring ethical boundaries in favour of short-term results. Nobody really wants that, but sometimes, people feel they have no choice.

Impact on Teamwork and Culture

The structure of reward systems affects how people behave, not just as individuals, but within teams. When bonuses or incentives are individually allocated, it can discourage teamwork. People start protecting their own contributions, avoiding collaborative work that might “dilute” their impact.

We noticed this once with a cross-departmental task force. Instead of pooling ideas freely, team members became guarded. Everyone was subtly keeping score. It wasn’t anyone’s fault, really, the pay scheme just didn’t reward shared effort. Still, it left its mark.

Transparency and Perceived Fairness

Finally, there’s transparency. Or, more often, the lack of it. If people don’t understand how rewards are calculated, who gets what, and why, they start guessing. Assumptions replace facts. And trust slowly erodes. We’ve had comments in staff feedback hinting at this confusion, suggesting people feel left in the dark. When that happens, even a well-intended reward scheme can do more harm than good.

Remember, contingency pay isn’t inherently wrong. It can work well in certain contexts. But it carries ethical baggage that needs unpacking. People aren’t machines, they notice when systems don’t feel right. And they remember. That’s why any reward strategy needs not just to work, but to feel fair, human, and grounded in shared values.

Frequently Asked Questions (FAQs)

1. What is the 7HR03 Strategic Reward Management assessment about?
It asks you to evaluate how reward strategies affect both employee motivation and wider business outcomes. You’ll be expected to apply real-world reasoning, not just textbook theories.

2. Do I need to use a specific organisation for the assessment?
Yes, typically. You’re encouraged to focus on either your own workplace or one you can research easily. The point is to show you understand how theory plays out in practice.

3. What’s the hardest part of this unit?
Many students struggle with linking reward to long-term business strategy. It’s easy to talk about salary bands or bonuses, harder to explain how they help retain talent or support growth. Some over-focus on fairness and forget business intent.

4. How long should my answers be?
CIPD doesn’t give a strict word count for every question, but clarity matters more than quantity. Stick to the brief. Don’t waffle. But don’t leave your arguments half-baked either, find a middle ground.

5. Can I include personal opinions?
Yes, but keep them grounded. Saying “this didn’t work in my company” is fine if you explain why. Don’t just make sweeping claims; always relate it back to evidence or context.