Reward Management in Heidelberg Insurance Services - Case Study Example

REWARD MANAGEMENT By Reward Management Introduction In a definition, reward management within an organisation is a concept that aims at developing and implementing strategies that would reward people in a fair and equitable manner as per the value or worth of the same (CIPD Factsheet 2013). Heidelberg Insurance Company is a renowned British company of German descent that provides insurance services through a range of policies that have seen it grow over the years. Using the study by Gerhart and Rhynes (2003), the company should see the need of venturing into employee rewarding as a way of fostering performance through its already existing workforce and the addition of others that have more skills in different fields (Wells 2006, p. 56). According to research, reward systems have the ability to motivate employees towards developing organisational commitment, influence an organisation’s turnover and loyalty and also increases job satisfaction within an institution. If employees have minimal or no satisfaction levels, then committing to their organisation becomes hard, hence they do not work towards achieving its goals and objectives. A workforce that has organisational commitment is relatively easier to control as compared to one that is not, hence making a manager’s task executable. On the other hand, an organisation needs to ensure job security to its workforce as security tends employees to commit and trust their employer and the organisation more. It is also important for employees to be aware of a company’s history, its current standing, and its future objectives as this helps in understanding an organisation’s goals. With this, essay will delve into ways in which Heidelberg Insurance services can redesign its existing reward systems in order to foster motivation and employee satisfaction. Further, the advice should also aim at improving employee retention and ways of attracting new staff members to join its workforce in order for the organisation to achieve its goals and objectives such as non-monetary rewards like a medical cover or life insurance as incentives (Boddy 2009, p. 368). Lastly, the essay will also give advice on how to redesign the existing payment plan for each of the employee clusters, which includes the directors, the sales division, the clerical division and the product development divisions respectively. 1. Directors In this organisation, the board of directors seems to be the most supreme governing body of this insurance company with its having five board members. For an organisation that has at least sixty five employees this team seems to be choking with responsibilities as they have to venture into fields that they have no expertise in. For example, the company does not have a human resource manager or finance manager, which are some of the sensitive dockets within an organisation that require a professional to handle them (CIPD 2012). In essence, having a team manager that heads these sensitive dockets would be helpful to this organisation as these professionals would be able to specialize in their line of work for the benefit of the organisation (Armstrong 2007, p. 435). This means that the organisation has to look into hiring new staff members that have the required qualifications to head these dockets rather than having people that have majored in other fields such as sales to run these operations. Other than them having the qualifications that their job descriptions require, they should also focus on enhancing their education credentials in order for them to continue being relevant in their field of work. Essentially, this would serve as an advantage to them as this helps them in making substantive decisions for their organisations and steering it towards its objectives. In any case, the review of pay for this cluster of employees should be in tandem with the efforts that the directors have put in place to make sure that they get to the other grades of payment (CIPD 2012, p. 14). As per the standards of the CIPD, the application should not be any less for the other job groups as this would facilitate equality and fair treatment of employees and that rewards should be on merit and not on an employee’s job title (Wright 2004, p. 69). 2. Sales division In any organisation, the sales division is one of the most vital organs of the operations of an organisation as its main task is that of carrying and selling an organisation’s products or services to a target market. In many cases, the sales team has to be a team that is on the ground and works directly with other for more motivation and positive competition (Kay & Banfield 2011, p. 2022). However, Heidelberg has used a divergent approach to doing its insurance product sales through a team that operate within a virtual space over the internet. Using this approach to conducting company business is risky for any organisation as this is highly likely to create communication breakdowns that might be costly to a company. The sales team, which comprises of consultants fall under one supervisor that heads a group of twenty individuals within different locations. As a recommendation, the company may opt to allow this sales team to be physically present within the organisation’s premises or source for another sales director to help in managing the workload (Javaid 2013). Ideally, employees that have high workloads tend to have job dissatisfaction, which is not healthy to a business as they are likely to spread this negative effect to employees that could be experiencing job satisfaction. Therefore, Heidelberg should ease the workload or have this division operate physically at an organisation’s premises as this is likely to minimize on the expenses while communicating with them over the telephone or through the monthly conferences. Essentially, the reduction of overheads that are not beneficial to a company’s operation is a vital practice for any organisation as this is likely to allow for the review of employee pay (McKeanna & Beech 2008, p. 277). Just like the directors, this cluster of employees has been no exception from obtaining training in their relative field as this could form part of the reason why the organisation has not attained maximum profits as it would want to (CIPD Factsheet 2014). Other than this, the sales team should also act out as par the price standards set by the organisation in order to avoid causing confusion to the clients that they target because of the price variations. As per the case study, some sales consultants hike prices for their own benefit, which can be detrimental to a company’s reputation within a market, but Heidelberg may introduce commissions to these sales as a reward strategy (Barrow 2011, p. 233). There should be uniformity in terms of service delivery in order for a company’s engagement in a market to be relevant and enforce commitment to the clients that they already have and the prospective ones (CIPD 2012, p. 3). 3. The product development division In order for any organisation to succeed in its operations, all the departments and employees should be able to work as a single unit as the failure of one arm translates to the failure of an entire institution (Harris & Leopold 2009, p. 224). As for the case of Heidelberg, the Product Development division is one of the departments that appears to be working as an independent unit because most of its members tend to be outsourced. In essence, these outsourced individuals tend to be professionals with high educational qualifications that may make them non-retainable (Harrison 2005, p. 195). As a recommendation, Heidelberg should employ at least two out of the five insurance specialists on a permanent basis within the company’s establishment, which will be cost effective and beneficial at the same time. This will also influence their flexibility while working in Heidelberg as they will have more time to concentrate on developing projects and products that will be of benefit to the organisation (Pilbeam & Corbridge 2006, p. 255). 4. The clerical division Many organisations rely on the clerical division for the sooth operations of the organisational tasks and responsibilities as they tend to do most of the basic functions. As for this organisation, the number of those assigned to execute clerical duties exceeds the number of those employed in other departments making this department to be ineffective. In essence, being a telephone operator or working in the reception area does not require high qualifications as an entry requirement, hence illustrating the fact that this company lacks adequate human resource capital. As a recommendation, Heidelberg should either allow part of these staff to acquire additional training that may make them eligible for promotion or lays them off (Bhattacharyya 2011, p. 9). Key of all is the fact that the promotional strategy should comply with ethical practice that will also advocate for fairness in this process (Jackson, Schuler & Werner 2008, p. 22). Having a department that is more concentrated in terms of human capital creates gaps in terms of creativity and new product development (Armstrong & Brown 2006, p. 51). The company may opt to facilitate the training of these employees or they create a student loan facility that will allow to access training in a field that will be of benefit to the organisation. In turn, this will influence employee loyalty towards the company as they will be able to increase their output as a sign of gratitude (Wilton 2013, p. 213). In so doing, the organisation will also be able to attract new employees because of the incentive that it applies for allowing employees to better themselves (Armstrong, Brown & Reilly 2010, p. 47). The other alternative would be to decongest the Manchester office headquarters and send these employees to other branches where they can be useful. This will make them feel valued because their contribution will be noticeable because they will not have to compete for recognition or rewards (Langley 2008, p. 9). Conclusion As per the strategies suggested above, their implementation would require the enforcement of tougher measures that may make some employees within the company, but it will be for the organisational good (Mumford, Gold & Thorpe 2012, p. 165). In order to ensure that team members work towards delivering the organisational goals, it is pertinent that they have the right motivation and skills that will make them competent for the tasks given to them (Tomé 2010, p. 52). Therefore, the Heidelberg Insurance Company may as well be among the best performing companies in the UK if it applies the reward systems recommended above. Bibliography Armstrong, M & Brown, D 2006, Strategic reward making it happen, Kogan Page, London. Armstrong, M 2007, A handbook of employee reward management and practice. Kogan Page, London. Armstrong, M, Brown, D & Reilly, P, 2010, Evidence-Based Reward Management: Creating Measurable Business Impact Your Pay and Reward Practices. Kogan Page, London. Banfield, P & Kay, R 2011, Introduction to human resource management. Oxford University Press, Oxford. Barrow, C 2011, Starting a Business from Home: Choosing a Business, Getting Online, Reaching Your Market and Making a Profit. Kogan Page, London. Bhattacharyya, D K 2011, Performance management systems and strategies. Pearson, Dehli. Boddy, D 2008. Management: an introduction, FT Prentice Hall, Harlow. CIPD Factsheet. 2012. Building productive public sector workplaces. Available from http://www.cipd.co.uk/binaries/5864%20Boosting%20HR%20performance%20%28WEB%29.pdf [Accessed 25 Feb. 2014] CIPD Factsheet. 2012. The role of line managers in HR. Available at http://www.cipd.co.uk/hr-resources/factsheets/role-line-managers-hr.aspx [Accessed 25 Feb. 2014] CIPD Factsheet. 2013. Performance-related pay. Available at http://www.cipd.co.uk/hr-resources/factsheets/performance-related-pay.aspx [Accessed 25 Feb. 2014] CIPD Factsheet. 2014. Market pricing and job evaluation. Available at http://www.cipd.co.uk/hr-resources/factsheets/market-pricing-job-evaluation.aspx [Accessed 25 Feb. 2014] CIPD, Annual Survey report, 2012. Reward Risks. Available at https://www.cipd.co.uk/binaries/6013%20Reward%20risks%20%28WEB%29.pdf [Accessed 25 Feb. 2014] European Conference ON Knowledge Management, & Tomé, E 2010, Proceedings of the 11th European conference on knowledge management: Universidade Lusiada de Vila Nova de Famalico, Portugal 2-3 September 2010, Reading Publishing. Gerhard, B & Ryanes, SL 2003, Compensation: theory, evidence and strategic implications, Sage, London. Harrison, R 2005, Learning and development. Chartered Institute of Personnel and Development, London. Jackson, S, Schuler, R & Werner, S 2008, Managing Human Resources, Cengage Learning, Boston. Javaid, M 2013, Employee reduction more important than workload when establishing redundancy. Available from http://www.cipd.co.uk/pm/peoplemanagement/b/weblog/archive/2013/10/29/employee-reduction-more-important-than-workload-when-establishing-redundancy.aspx [Accessed 25 Feb. 2014] Langley, AL 2008, Employee Reward Structures, 3rd Ed, Spiramus, London. Leopold, J & Harris, L 2009, The strategic managing of human resources, Prentice Hall/Financial Times, Harlow. McKenna, EF & Beech, N 2008, Human resource management: a concise analysis. Financial Times Prentice Hall, Harlow. Mumford, A, Gold, J & Thorpe, R, 2012, Gower Handbook of Leadership and Management Development. Gower Publishing Ltd, London. Pilbeam, S & Corbridge, M. 2006. People resourcing: contemporary HRM in practice, Financial Times Prentice Hall, Harlow. Wells, A, 2007, Improving Patient Outcomes: A Guide For Ward Managers. M & K Update Ltd, London. Wilton, N 2013, An Introduction to Human Resource Management. Sage, London. Wright, A 2004, Reward Management in Context, Chartered Institute of Personnel Development, London. Read More