Question

Critically analyse what effects the current economic climate has on rewards, and how this environment is affecting rewards in your organization.

Answer 1

There is a very direct and strong influence of the economic climate on the reward to be paid to the employees in any organization. The economic climate indicates the current economic situation prevailing in the economy, the type of expected monetary growth, the demand for the products, and the purchasing power of the customers. If the economic climate is good, it will indicate that the customer can buy more products, and thus the demand for the products will be high resulting in greater revenue generation for the companies. When the company will earn greater revenue, it will be able to pay higher salaries, compensation, and rewards to the employees so that they can be motivated and employees can put their best on the job to increase the supply of the products and to satisfy the demand of the customers.

On the other hand, if the economic climate is not good, the revenue generation by the company will fall causing the pay cuts, layoffs, and in some instances, there may be no rewards given to the employees as a measure of cutting the expenses.

So if the economic climate is good, more rewards can be provided to the employee and if it not good, then either les or almost no rewards will be given to the manpower.