The Strauss Car Rental Company. Reward management strategy - Essay Example

Human Resources Essay Introduction The of reward strategy is a quite complicated as it can have a serious impact on the realisation of financial, as well as non-financial objectives of any organisation. In many business organisations, reward processes are created from the existing strategies and policies for the purposes of preserving the appropriate pay structures at various organisational levels. In any company, the reward management system should assist in compensating people according to their skills, roles, competence and performance. Preliminary analysis of the organisation’s current reward management strategy The Strauss Car Rental Company has numerous firm is an enterprise that appears to have made significant steps towards becoming a well established corporation. However, it appears to be based on old-style methods of management which do not include the implementation of reward management systems (Armstrong 2006). In addition, it does not appear that a viable reward management system can be established by the human resources department, which is supposed to be in charge of matters concerning the treatment of workers, before changes are made in terms of communication between the senior management and ordinary workers. Kevin Pietersen, who has been in charge of the human resources department at Strauss, has not been emphatic in insisting that the company’s Board begin to consider the human resources company as a serious contributor to the goals of the company. From the information provided, human resources officials are not even invited to any meetings held by the board in which members consider serious issues and decide on regulations that will be followed in the organisation. For instance, the Strauss Car Rental’s Board is seriously considering redundancy programs and yet has not even elected to let the human resource department, which will be tasked with carrying out the practical aspects of this suggestion, know about the suggestion. Additionally, none of the workers have been informed about this, yet their lives will be irrevocably changed once this program is implemented. Kevin Pietersen, who runs the human resources department, also confirmed that the Board has decided on implementing plans without consulting the workforce, or the human resources department. This is indicative of a serious breakdown of communication between various divisions of the senior management. It also shows that the management does not really appreciate its workforce and is only interested in getting as much from them as possible before casting them aside in redundancy programs. It would appear that even the customer service managers are doubtful about the capabilities of Kevin Pietersen as the HR director, because they did not think to go to him first before reporting to the rewards manager about the fact that their employees, who are disgruntled about low pay, are leaving the company in hordes. The only reward system that is in operation in the Strauss Car Rental firm is that of regular pay. Employees only receive their stipulated pay and nothing above this figure. Even for the employees that perform exceptionally well, there are no additional monthly or annual bonuses. Employees of the Strauss Car Rental firm are thus less likely to be motivated to supersede any identified targets in regards to productivity. The fact that the employees can only look forward to their basic salaries, whether they perform poorly or well, is extremely discouraging. A Total Reward Management Strategy to Match the Board’s Proposed Plans The board of Strauss Car Rentals has proposed a program that will emphasize on increasing efficiency in terms of meeting the requirements of customers. This program is also centered on achieving organic growth. The board has made the decision to channel all sales operations through only its Edinburgh branch. This means that the workers in the company’s Cardiff and Manchester branches will have to move to Edinburgh, or be made redundant. The plan also includes the redesigning of the customer representative and customer service positions (Maurer and Lippsteu 2006). The customer service managers, though, will have to function as coordinators of various operations, while also seeking to attract new customers through the staging of marketing events and campaigns nationwide. The plan also includes the implementation of a redundancy program that will see the workforce reduced to manageable levels. In the first place, Joe Root should suggest that all proposals of redundancy be shelved for the meantime. The workers of the Strauss Car Rental company are already disgruntled with the working conditions, as well as the pay that they earn in the company. Implementing sudden redundancy programs can be counterproductive. The workforce would be seriously psychologically affected by any such moves. The workers who are left behind will have a lot of distrust in the company (Ali and Ahmed 2009). This will doubtlessly affect their performance. In addition, the company cannot possibly expect to increase the responsibilities of workers such as customer service representatives without increasing their pay (Stacey 2007). This could even result by negative behaviours such as stealing from the company. Also, the board has proposed that the customer service representatives should take on more advertising responsibilities even though they have not taken into consideration the fact that these are the supervisors who are losing many workers on a monthly basis due to low pay (Paswan, Pelton and Sheb 2005). Increasing their responsibilities is actually saddling them with countless responsibilities which they may not be able to perform due to time constraints. This particular proposal will result in shoddy workmanship, if it is actually realised (Chang, Ou and Wu 2004). Apart from the fact that the customer service representatives may not have the time to see to so many tasks, they also have no incentive to perform the duties, as they are not even promised pay rises or bonuses. Joe Root has to create a reward management strategy that is aligned with some of the proposals of Strauss Car Rental’s Board. In the first place, Root should seek to streamline all salaries, after first establishing the jobs that are necessary. This is because the firm’s marketing department has admitted that there are inconsistent salary levels in the in the company. Even though job evaluation processes had been introduced in the past, they were not formal or professionally conducted (Bohlander and Snell 2004). This means that there are still unaccounted for jobs titles, which need not be there. There also seems to be a haphazard method of judging the compensation packages that should be accepted by the organisation. Due to the fact that the human resources department is not even aware of the different jobs that exist in the organisation and their purposes, it is difficult for it to set up an appraisal system which determines the measures that are used to determine performance (Mello 2007). The lack of such a systematic review of the performances of different workers means that the company cannot use a systematic review method to determine what the salary levels ought to be. These are things that ought to be corrected. There are other things that Joe Root should consider when designing a reward management system, so that employees can feel inspired to give their best performances (Ongori and Agolla 2009). There are various types of reward systems that can be used to motivate workers. For instance, Strauss could set up a system of rewards that is based on gain-sharing; where employees are awarded for showing concern about their customers in unique ways (Cappelli 2008). Strauss could also incorporate non-traditional methods of compensation which tie base salaries to skills, effort and knowledge and not the task performed, or even position of the employee within the company (Byars and Rue 2004). Rewards could also be monthly bonuses. Basic salaries cannot be considered as being an incentive, if the company hopes to attract and retain excellent and not mediocre, workers. Rewards could also be employment security and monetary rewards for extra effort. The main point is that the workers need to be given incentives for remaining with the company and going above and beyond their stipulated duties. Perceptions of equity in the workforce can also affect the worker’s ability to perform at maximum capacity. According to Adams and Ferreira (2008) equity is essentially a multidimensional framework that takes into account external factors such as the current levels of pay in various positions in the external labour market and internal equity, which has to do with the extent to which a company differentiates pay between its workers according to performance in identical jobs. Equity could also be defined in terms of individual equity, or the extent to which workers are compensated according to their personal performance (Boyens 2007). The Strauss Car Rental Company could also use psychological reward methods such as praise and write-ups in the firm’s newsletter. Joe Root ought to invest in finding out each worker’s need profile so as to be able to identify the worker’s strongest needs and then fashion rewards that cater to the different needs that have been uncovered. According to Ali and Ahmed (2009) some corporations have even instituted a system in which there are reward packages that are aligned with the goal of matching rewards to each worker’s personal needs by making it possible for workers to be able to select the types of rewards that they most value. For Strauss’s rewards to be seen as being valuable by its employees, it could institute an Employee Reward System that could also take into consideration when would be the best time to allocate assorted rewards (Barney and Hesterly 2006). Usually, the most valued reward will be that which is received by the worker soon after he or she accomplishes a given goal, or attains a certain performance level. This is because such rewards will stimulate the desire for improved, additional achievement (Samodien 2004). The reward thus becomes the extension of the worker’s performance in his or her mind. Benefits and problems that Joe might encounter in trying to extend the new approach to reward management to include head office roles (Benefits) Implementing a reward management system that takes into account all, or at least part, of these suggestions, will completely change the company for the better (Edgar and Geare 2005). For instance, employees who work under the customer service representatives will stop leaving in droves, because they will be offered similar terms to those that exist in other similar organisations all over the world. Making such changes will also make the plan proposed by the board more practical. For instance, the jobs that will be rendered redundant are those which have been discovered to be unnecessary (Memon, Panhwar and Rohra 2010). The streamlining of all jobs will increase the possibility of the equity of salaries being an achievable aim. The enhancement of company positions, such as the customer service representatives, is also something that is likely to be more achievable. This is because the responsibilities they are entrusted with will not be theirs alone. With the fair distribution of tasks, there will not be positions that have excessive duties when compared to others. Implementing changes such as the introduction of reward packages is something that could be extremely beneficial for the company (Collins 2007). This is because it will encourage the workers at the Strauss Car Rental firm to give their best performances and seek to make a significant difference, whether on a personal, or team basis. Implementing the new reward packages will also allow for exemplary workers to receive the recognition that they deserve. Workers should be regarded for achieving personal bests, as well as making significant inroads into the realisation of corporate goals. In addition, workers should not just be rewarded when they achieve the long range goals (Christina and Gursoy 2009). Rewarding them for small steps in the right direction is also something that will result in them being encouraged to make more progress in the right direction. For a company such as Strauss, which has actually sought to infringe on the rights of workers in the past due to its harsh policies, there is a deeper work to be done in the workforce. The workforce is not just disillusioned due to the company’s existing policies and low pay, the workers also do not appear to have enough trust among themselves (Beauregard and Henry 2009). The senior workers do not trust the supervisors and the workers do not appear to trust the human resources director. In reporting their problems to the rewards manager, they are indicating that they believe that he has more clout than the HR director (Kaplan 2007). It would seem that at Strauss, the need for social connections to be formed is almost as big as that for promotions and financial bonuses. The consultant, Alistair Cook, should probably work in league with the human resources director to find a way of developing confidence in his position and skills in such a way that he is able to tackle the wanting attitude of the Board in regards to the unflattering way that the human resources division is perceived (Adams and Ferreira 2008). In addition, the consultant could suggest that there has to be time allocated for regular meetings between the senior management and the regular workforce, so that the members of the company may be able to discuss the problems that are affecting the company (Vandenberghe and Trembley 2008). This would also allow the senior management to be able to hear suggestions from the workforce, which is more acquainted with the situation on the ground than the senior officers, about how the problems of the company can be solved. Problems that may be encountered Moreover, it may not be an easy process for changes to be implemented at the Strauss Car Rental Firm. In many firms that are run using the traditional methods, the management usually adopts a hierarchical power structure, which shuts the workforce out of important operations that affect decision-making (White 2005). In such internal structures, power is concentrated around ‘fiefdoms’ which then determine the people that should or should not be rewarded, according to the level of loyalty that is shown to the power circle. This is evident in the example of Strauss (Henderson 2006). The power is consolidated at the top, among a select few. This clique then deigns to include only the elements that they desire, while exiling others (Shields 2007). This is a method of operation that has almost destroyed the organisation; as is evident in the way the customer service department is beginning to unravel because the human resources department is unable to control the Board’s decisions on how to deal with the workforce, or determine the right amount of compensation. It is not likely that such a Board will now turn and see to support the requirement that workers should be allocated more rights, incentives and bonus packages. Such a board will even be more disinclined to accept any advice given by members of the workforce. This is not entirely done on purpose; neither can it be considered as an indication of the true characteristics of the board members. According to Abang, May-Chiun and Maw (2009), many business corporations, across different industries, are trapped in a vicious cycle that they had a part in creating. It is an established fact that companies usually stress on certain low compensation levels. They pass such terms in the hope that they will be able to save costs by not allocating large percentages of revenue to paying workers. However, creating rules like these means that the only workers who will agree to work under such terms are those who have serious financial needs. Allocating meagre pay to workers is something that also increases the needs of those who are already employed, so that they are haplessly tied to the company (Abang, May-Chiun and Maw 2009). This means that the employees’ perception of the worth of money is actually shaped by the company. Having increased the significance of money in the perception of their employees, the company’s management then has to respond to workers who do not attach any significance to psychological rewards, but will always seek for more financial compensation as a sign of reward. If money is presented as the most important mark of accomplishment, that emphasis will persist in the consciences of workers, even though employing a compensation structure with a different emphasis might have the same motivational value with less administrative problems (Ibbotson 2007). Money is not irrelevant, but its level of importance, for workers, can be determined by the kind of compensation system that is adopted by a company’s management board. Conclusion There are many benefits that an organisation can benefit from by implementing reward management systems. When creating reward programs, it is important to first assess the existing situation and then plan rewards in a way that will motivate the workers. In addition, performance-based monetary rewards or non-financial rewards will inspire workers to achieve their best, while preventing workers from perceiving promotions as rewards. This is an important fact because it prevents ineffective management. 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