Reward Managment - Assignment Example

?TOPIC: REWARD MANAGEMENT Reward management 23rd November Introduction As competition in the business arena becomes stiff, companies that are focused at putting at bay their rivals have adopted various strategies in to remain competitive. One of the major ways of enhancing the profitability of any company is by maintaining a productive work force. This is not only attained through hiking the salaries but also by providing adequate benefits either tangible or intangible. Based on the high competition that London and Provincial Bank is facing in the UK market, it is imperative for the company to emulate a differentiated reward package that will ensure retention of the productive employees while at the same time reducing the cash outflow of the company. In addition, the bank should take into consideration the personal values of the employees as well as the employee’s choices that keep on changing as a result of social and economic changes. Being responsible for developing and implementing an appropriate reward strategy, the Director of Rewards is at liberty to come up with an effective rewards program by considering the current rewards system. In this regard, the Director of Rewards adopted the Towers Perrin model that is focused at developing an integrated total reward that entails non-financial and financial rewards. This paper analyzes the total reward strategy that the Director of Reward might propose as a way of enhancing the performance of the employees and the profitability of the London and Provincial Bank. Pay structure and pay arrangements As mentioned earlier, employees are not only motivated by high salaries but also the pay structure and arrangements that make them to address their needs in a timely manner. As indicated by Towers Perrin model, I suggest that the Director of Rewards introduce a monthly base pay based on the responsibility of each employee. Based on the fact that bank employees have various duties with the manager being the overall boss, it is vital to initiate a structure that justifies the duties of the employees. This means that bank clerks can receive a monthly salary of $40,000 while the bank manager receives $80,000. This basic salary does not depict inequality since the manager has more responsibilities including supervising and evaluating other junior employees. To motivate employees, Armstrong and Baron (2004) argue that the director needs to introduce a contingent pay. This would entail establishing performance objectives for each employee and compensating them depending on the achievement of the objectives. This implies that employees will receive for instance 15% of basic pay as a contingent pay. In this way, the employees will not only be motivated but also they will improve their performance with an aim of getting promotion and receiving high contingency pay. Additionally, I suggest that the director introduces annual cash bonuses. This would entail evaluation of the bank employees by the mangers as well as customers followed by rewarding the high performing workers with cash bonuses that would be given during end of year parties. In the same way, it is essential for the director to establish a ratio that would be adopted in rewarding the employees by use of company shares. For example, during issue of shares, employees who have served the company for a long time might be given 10 more shares for every 100 shares they have (Perkins and White, 2010). In the same way, the bank can adopt profit sharing plan as a reward. However, this should involve prior communication with the employees on the ramifications of economic downturn on the profit sharing plan (Armstrong, 2002). In this way, the resentment and the backlash that would demotivate the employees will be highly avoided. Flexible benefits policy For the purpose of making the employees feel part and parcel of the London and Provincial Bank as well as strengthening the employee-employer relationship, a flexible benefit policy should be introduced. This way, the employees will choose the policy that best suits their needs. One of the key policies that the director of the rewards should include in his reward system is the pension scheme. This implies that the employees would be given lump sum money during their retirement. Additionally, employees would be given an opportunity to pay a monthly contribution of for example $150. Using the check off system, the bank would deduct such contribution from the employee’s salaries and deposited in their pension scheme accounts. According to Armstrong (2010), a health care policy should be introduced to cover all the employees and the bank managers. It is worth to note that even though it is the will of the employer to make all employees attend their duties without failing, sickness of the employees, their children and spouses may result to high rate of absenteeism that may affect the operations of the bank. In this regard, health care policy that covers the employees and immediate family members will play a vital role of ensuring continuity of the bank activities and employees motivation. To ensure that employees feel secured while at the work places, the director should establish an insurance policy that covers junior workers and the top managers. For example, the bank should introduce a life assurance cover that amounts to 1 to 10 times the salary paid to the bank employees (Jim, 2012). In the same way, the bank should establish an accident cover for the staff. Taking into consideration a lot of work that banks undertake on a daily basis, it is prudent for the introduction of holidays as a major benefit to the employees. Through such holidays, employees will not only relax their minds but also they will have ample time to share their personal life experiences thus avoiding stress during the performance of their duties. Non-financial rewards and informing employees of the sum total of the rewards In any organization, non-financial rewards are important in satisfying the self-actualization and the ego of the employees. To meet the psychological need of the employees, managers who are focused at motivating their staff and subordinates adopts non-financial incentives. In the case of London and Provincial Bank, I suggest that the Director of Rewards make use of praise and recognition. Through praising employees, they feel motivated thus responding to such praise with enhancing their performance. According to American Society for Training and Development (ASTD), top-performing employees are mostly retained by consistent recognizing them either in company meeting or during any other gathering. Another key reward that the director might introduce in his total reward system is the Job security. By ensuring that employees job is secured, Burchell et al (2002) depicts that managers do not only provide great motivation to the workers but also it makes the employees to double their efforts as a way of ensuring that they achieve their personal goals as well as the objectives of the entire company. Job enrichment is another vital non-monetary reward that will enhance the productivity of the employees in the bank. I suggest that the director increases employee’s responsibilities, increasing the nature of their work and give the workers important designation as major way of enriching their jobs. In this regard, the efficient employees will be given an opportunity to prove their skills by giving them challenging assignments. Additionally, promotion of employees is one of the effective tools that increase the spirit to work in any company. Through promotion, employees are given chances to develop thus becoming more committed to their duties. The director should include a suggestion scheme in his reward plan. This entail taking suggestions from the employees and allowing them to participate in the decision making process. One of the ways of ensuring employees participation is through allowing them to publish articles on how to improve the working environment. By including such articles in the company magazines, employees feel motivated while still enhancing their innovativeness thus resulting to the growth of the concern. Job specifications and titles are additional non-monetary rewards that I suggest the director to include in his total reward program. In most cases, employees are motivated by being given a job title that indicates the kind of jobs they are doing. This implies that instead of being referred by their names, the director needs to establish titles such as senior manager, chief accountant, senior teller, marketing manager, loan officer, customer care representative, human resources manager, branch manager among others. Through provision of such titles, the bank employees will be highly motivated in the sense that they will mentally feel significant in expansion of the bank. To ensure that all employees are aware of the total benefits they are awarded by the bank, it is my view that the Director of Rewards liaise with the accounting department that is responsible for preparation of employees pay roll. The total remuneration statements should clearly indicate the amount of the basic salary and all the benefits that the employee has received within a specified of time. To avoid complexity and complaints from the employees, it is vital to involve the employees especially during the computation of their commissions among other financial rewards. Addressing ‘entitlement mentality’ and flexibility in reward arrangements between divisions The ‘entitlement mentality’ is a current issue that in my view the director should address in his plan. As the cost-of-living rise, consumer purchasing power decreases. To address this problem, employees should be given annual increment on their pay scale. For instance, each year, employees should be given a 10% salary increase regardless of their position in the bank. In this way, their disposable income will rise thus enabling them to meet family needs. Based on the variation in the needs of the employees in different divisions within the bank, it is fundamental for the Director of the Rewards to emulate flexibility in reward arrangements. For example, the sales executives who are paid on commission should be rewarded by providing higher travelling allowances to them. This will enable them to travel more as they market the bank products. In the same way, the bank management should establish objectives entailing the number of new customers they are supposed to bring to the bank in monthly bases. This implies that the contingency pay of the sales executives should be higher to motivate them thus increasing the number customers leading to an expansion of the bank. Based on the risky nature of banking operations especially during the transportation of the money between different branches, I suggest that the transportation division be provided with adequate insurance covers that would ensure that incase of any accident or burglary their families do not suffer at the expense of the bank operations. As the process of promotion continues to be enacted in the bank, employees performance will be enhanced since majority of them will be looking forward to occupy managerial positions. In this regard, the management division should be given more non-financial rewards such as training and holidays thus encouraging the junior employees to improve their performance in order to expand their benefits package. Line managers and reward programs During the rewarding of employees, the role of line managers cannot be overlooked. This is based on the fact that it is imperative to ensure that adequate evaluation and appraisal is done before the rewards are provided. In this way, the line managers should be involved in the employee’s evaluation process to ensure that rewards given are equivalent to the employee’s performance. As the competition in the banking industry intensifies, Armstrong et al (2011) argues that most banks are not ready to loose their experienced and skilled line managers who perform valuable jobs of training and controlling the junior employees. This implies that the London and Provincial Bank directors should also dedicate more benefits to retain their managers. As mentioned earlier, line managers can be rewarded by giving them more training, holidays, increasing of responsibilities as well as life assurance cover among others. Despite the wide range of responsibilities that the employees are undertaking in the bank, their pay levels are not competitive. This is based on the fact that their salaries are significantly based on the internal equity instead of the market rates (Tregaskis et al, 2012). Additionally, the bank complete relies on financial rewards. This means that all the company stakeholders including the employees and line managers are ready to welcome the Director of Rewards policies that will improve the working condition and work-life balance. As the rewarding system is being proposed and implemented by the director, I suggest that the bank allocate more financial resources to cater for the programs. This is due to the high demand of finance that will be needed to cater for employees training, holidays among other benefits. On their part, employees will be appreciative by the introduction of total remuneration statements that indicates their basic pay and other benefits. This will be a source of encouragement that will enable them to perform their duties with commitment and vigor. Sequencing the development of the rewards Despite the fact that all rewards are geared towards improving the performance of the employees and increasing the profitability of the bank, Thorpe and Gill (2000) argues that it is vital to sequence the manner in which they are implemented. Based on the resources that are at the exposure of the bank, it is my view that the bank first implements the non-financial rewards before adopting the financial rewards. For example, the bank can first take the employees including the sales executives for a training program. From such training, employees will be educated on how to sell the bank products depicting their benefits to new and existing customers. In this way, the customer base will expand implying more revenue for the bank. From the revenue generated, the bank can now allocate a portion to cater for the annual bonuses and contingency pay. At the initial stages of the implementation of the reward programs, holidays and seminars can be undertaken once per year. In this way, the bank will not incur a lot of expenditure. However, as the employees continue to receive contingency pay and annual bonuses, their performance will improve resulting to higher revenue for the bank (Perkins and Hendry, 2005). This would then allow the bank to hold seminars and give holiday to its employees for example on quarterly basis. The availability of more resources will also ensure the bank provide other non-financial benefits including insurance cover, travelling allowances and promotion among others. How the changes involved should be managed Armstrong and Brown (2009) stipulates that introduction of new rewarding system is a strategy that calls for the support of all stakeholders. I suggest that the Director of Rewards involve everyone especially in identifying areas that need some adjustments. It is worth to note that not all employees support changes within an organization. In this regard, employee’s feedback should not be overlooked since they are essential for the progress of any firm. To ensure that the reward initiatives remain stable, the director should fully engage human resources managers (HRM) since they play a vital role in employee’s development. Being experts in the filed of human resources management, HRM recognize the strengths and weaknesses of their employees. Similarly, audit and accounting managers are important in ensuring that the resources of the bank are appropriately allocated to ensure that rewards are provided in order of priority. By use of Towers Perrin model, non-financial rewards elements strengthens the impact of financial rewards to achieve an integrated rewarding approach. Even though the non-financial rewards do not include of money to motivate the employees, London and Provincial Bank will still need to have adequate financial resources on its disposal to implement the new rewarding system (Arrowsmith and Marginson, 2011). This implies that the bank should not provide very high salary increment that would act as an obstacle to providing employees training and annual bonuses. The rhetoric of total rewarding framework can be turned into reality by undertaking an annual evaluation of rewarding system to check if its goals and the company growth are at par. In case of any deviation, the Director of Rewards in consultation with human resources managers should discuss on how to make changes on the system (Corby et al, 2005). This would also involve consideration of the feedback from the employees. As mentioned earlier, sequencing of the non-financial rewards is appropriate since the bank may not have adequate resources to cater for the salaries and the benefits all at once. I suggest that the Director of Rewards implements the new rewarding policies within a period of 5 years. This means that after every reward policy is put in place, he analyses its impact on the individual employees and on the company before adopting the next one. This is based on the fact that each element of the reward provides a mutual support that may result to a complex analysis if more than one policy is implemented at once. Conclusion Attaining employee’s motivation is a goal of every firm either operating locally or internationally. Financial rewards are not the only factors that motivate employees. To ensure that workers are part and parcel of the company, firm such as London and Provincial Bank are now focused at looking at employees at an individual level. As a major step, the company has established the post of Director of Rewards an indication that the bank is focused at retaining a productive workforce to outdo its competitors in the UK market. Based on the Towers Perrin model, the director is focused at implementing a new rewarding policy that will transform the current rewarding arrangements thus empowering the bank employees. Some of the major policies that I have suggested to the director to make his rewarding arrangements successful include effective pay structure and pay arrangements, flexible benefits policy, providing employees with total remuneration statements, sequencing the development of the rewards, involvement of human resources managers as well as bank auditors. References Armstrong, M and Baron, A. 2004. Managing performance: action and impact. London: Chartered Institute of Personnel and Development. Armstrong, M and Brown, D. 2009. Strategic Reward: Implementing More Effective Reward Management. London: Kogan Page. Armstrong, M., Duncan B and Peter, R. 2011. "Increasing the effectiveness of reward management: an evidence-based approach", Employee Relations, Vol. 33 Issue: 2, pp.106 – 120. Armstrong, M. 2002. Employee Reward. London: Sage. Armstrong, M. 2010. Armstrong’s Handbook of Reward Management Practice. London: Kogan Page. Arrowsmith, J. and Marginson, P. 2011. Variable Pay and Collective Bargaining in British Retail Banking. British Journal of Industrial Relations, 49: pp54–79. Burchell, B., Ladipo, D and Wilkinson, F. 2002. Job Insecurity and Work Intensification. London: Routledge. Corby, S., White, G and Stanworth, C. 2005. No news is good news? Evaluating new pay systems. Human Resource Management Journal, 15: pp4–24. Jim R.2012. Managing People - Non-financial methods of motivation. London: Sage. Perkins, J and Hendry, C. 2005. Ordering Top Pay: Interpreting the Signals. Journal of Management Studies, 42: pp1443–1468. Perkins, J. and White, G. 2010. Modernising pay in the UK public services: trends and implications. Human Resource Management Journal, 20: pp244–257. Thorpe, R and Gill, H. 2000. Strategic Reward Systems. Financial Times: Prentice Hall. Tregaskis, O., Daniels, K., Glover, L., Butler, P and Meyer, M. 2012. High Performance Work Practices and Firm Performance: A Longitudinal Case Study. British Journal of Management. 23: pp12–26. Read More