How much emphasis should there be on paying for performance? Should one programmer be paid differently from another if one has better performance and greater seniority? Or should there be a flat rate for programmers? Should the company share any profits with employees?

Policy regarding management of the pay system is the last building block in our model. It means ensuring that the right people get the right pay for achieving objectives in the right way. The greatest system design in the world is useless without competent management. While it is possible to design a system that is based on internal alignment, external competitiveness, and employee contributions, the system will not achieve its objectives unless it is properly managed (White & Druker 2000).

The remaining section of the pay model in Table 1 shows that the techniques that make up the pay system. Techniques tie the four basic policies to the pay objectives. Internal alignment is typically established through a sequence of techniques that starts with analysis of the work done and the people needed to do it. Information about the person and the job is collected, organized, and evaluated. Based on these evaluations, a structure of the work is designed (White & Druker 2000).

External competitiveness is established by setting the organization’s pay level in comparison with how much competitors pay for similar work and what pay forms they use. The sequence of techniques is to define the relevant labor markets in which the employer competes, conduct surveys of other employers’ pay, and use that information in conjuncture with the organization’s policy decisions to generate a pay structure.

The concept of TR is defined by Armstrong and Brown (2001) as being “the interlinked and cumulative impact of various forms of reward” and is more recently recommended by gross and Friedman (2004) as a “powerful drive of business success”, creating a “culture that motives and encourages commitment throughout” (Philpott 2004).

Helen Murlis and Steve Watson said that: “the monetary values in the reward package still matter but they are not only factors.” They went on to say: “Cash is a weak tactic in the overall reward strategy; it is too easily replicated. Intrinsic reward is far more difficult to emulate.” But they also stress that total reward policies are based on ‘building a much deeper understanding of the employee agenda across all elements of reward.’

The most powerful argument for a total reward approach was produced by Pfeffer: “Creating a fun, challenging, and empowered work environment in which individual are able to use their abilities to do meaningful jobs for which they are shown appreciation is likely to be a more certain way to enhance motivation and performance - even though creating such an environment may be more difficult and take more time than simply turning the reward lever.