Employment Relation and Reward Practices - Essay Example

Case Study: Heineken UK Reward Implementation Problem Case Study: Heineken UK Reward Implementation Problem Employment Relation and Reward Practices Introduction There are numerous factors that exert impact on employment relations. These factors may be locally, nationally or globally generated. In addition, they can be classified into several facets such as political, social, economic, technological, diversity, ethnic and environmental issues. Political factors emanate for legislations form the government, labor laws of the government, impacts of trade unions such as the EU, and influence of attitudes of the multinational corporations (Blyton & Turnbull, 2004). The economic factors revolve around state of employment and unemployment, taxation, interest rates, and economic growth rates. As for the social factors, issues such as immigration, emigration, and poverty are bound to surface. Employment relations in this context refer to the business relationship between employer and the worker(s). Perkins & White (2011) argue that it plays an important role in the motivation of the employees, building the organization’s reputation; ensuring that there is efficiency in the operations; and maximization of output or production and profit margins (Rose, 2008). There are two main approaches to employment relation. Wilkinson &Townsend (2011) elaborates that these approaches are through either collective bargaining or individual bargaining. Individual bargaining is a situation where the employees individually negotiate about working conditions and remunerations with the employers while in the collective bargaining approach they use trade unions to negotiate on their behalf. There is an emerging trend in the workforce that tends to make it flexible. Firms are increasingly employing the technique of employing part time workers or temporary workers instead of permanent workers (Daniels, 2008). This flexibility is perceived to be cheap as it enables companies to meet the demand of consumers and reduces cost of training. However, its disadvantages are lack of security and effective communication. Workers can influence the operations of businesses through the concept of employee participation and industrial democracy. Employee participation encompasses scenario where decisions made by organizations involve the inputs of the employee while industrial democracy entails the modalities workers can incorporate to influence decisions. In any organizations, disputes and conflicts are bound to surface. It is the modalities that companies or firms adopt that play a key role in providing remedy to the disputes/conflicts. In most cases these disputes emanate from issues such as the working, redundancy, and payment. Because of these, trade unions usually employ restrictive practices by insisting that all employees must be members of a trade union. They may also insist that member of their union are entitled to certain jobs. In situations where there is breakdown of negotiation between trade union bodies and the employer, they can direct the workers to down their tools through industrial strikes, and picketing among other actions. Companies, therefore, are mandated with the task of preventing and providing solutions to problems that surface at work place. According to Armstrong (2012), employment relations consist of factors such as the expectation of the employees and the employer; and theories on unitarism, radical, and pluralism among other numerous factors. The local, national, and global aspects as illuminated earlier have significantly shaped employment relations. Reward and Total Reward In an organizational set up, reward refers to benefits and compensation of employees or workers form a particular firm. On the other hand, Dundon & Rollnson, D (2011) describe total reword as rewards that emanate from the employment relationship that are perceived to be of value by the employee. The reward can either be intrinsic or extrinsic. Intrinsic rewards are rewards that are intuitively generated. An employee is intuitively motivated while working for his or her own satisfaction (Armstrong & Helen, 2007). The employee tends to value work that is challenging though very meaningful to the organization. The reward is usually intangible. However, the extrinsic rewards are usually not only tangible but are also quantitative. It encompasses bonuses, pay, holidays, and paid leaves (Gennard & Judge, 2010). The total reward practices consist of those that are either financial or non-financial. The financial rewards can be direct through cash in the form of salaries, bonus, and incentives or indirect in the form of insurance, childcare, medical and healthcare, holidays, and assistance of the employees. As for the non-financial, it is also faceted into two aspects: the job and the environment. The non-financial reward on the job involves the job being interesting, offering challenges to the employees, offering responsibilities, and also the opportunities for advancement in the job ladder (Armstrong et al, 2010). On the other hand, the environmental reward consists of supervisions of the employees competently; existence of good practices and policies; fair or indiscriminate treatment of the workers; and healthy and safe working environment among others. There are different approach characteristics to total reward (Armstrong & Stephens, 2005). The approaches are holistic, individual centered, integrative, distinctive, customized and strategic. They incorporate tools and mechanisms through which employers can employ with the aim of attracting, retaining and motivating workers. The main elements of total reword are benefits, compensation, recognition and performance, work-life balance, and career development and opportunities. Compensations are payment remittances to the workers in reference to services offered through the incorporation of time, skills, and efforts of the employee. However, benefits are usually employed to compliment the compensation of the employees. These benefits are usually aimed at providing the worker and the workers family protection in the event of an occurrence of financial risks, as well as other risks. The reward on work-life entails efforts and practices that are aimed at providing the employee with the requisite support for the success of the employee both at home and at work place. The work life strategy involves weighing issues related to the life of the employee, the community and the family of the worker (Kessler & Brian, 2003). On the other hand, recognition not only acknowledges but also provides attention to the performance and efforts of the worker. It attempts to acknowledge the intuitive psychological need for appreciation and it may provide support to the strategies of the business. It does so by inculcating certain behaviors that contribute to the firm’s success (Williams & Adam-Smith, 2009). The award on recognition may be monetary of non-monetary such as verbal appreciation. The developmental opportunities consist of experiences designed to improve the skills and competences of the employees (Kaufman, Richard, & Roy, 2003). They provide the platform which has the potential of enabling the employees to advance their career. The employment relation and reward also factors in the issues such as dismissal and redundancy. Organizations have the human resource management (HRM) departments that are usually mandated with the responsibility of attracting besides the recruitment of the employees (Bratton & Gold, 2012). The department in discussion also has the responsibility of termination of employees on grounds that are deemed fair. The termination can be in the form of dismissal, redundancy, resignation, and retirement. Employees can be dismissed form employment due to issues such as misconduct, legal requirements, and incompetence (Daniels & McIlroy, 2010). The dismissal of employees should be fair and procedural though the issues that surface that may lead to termination can always be internally solved. There are two scenarios which can be labeled as cases of unfair dismissal. These are through the discriminatory approach and constructive approach where a worker is compelled into resignation. Termination due to redundancy occurs when the employer’s ability to afford the services of the worker is slim or when the job in question ceases its usefulness (Fairbrother, 2013). The modalities employed in the redundancy dismissal are dismissing an individual using the concept of last in first out (LIFO) or the retention of the workers based on meritocracy or compulsory and voluntary redundancy (Leat, 2006). The termination of workers usually results in the occurrence of costs such as societal, economic, and human cost (Bach & Kessler, 2011). However, in the event that an employee feels infringed by being terminated, the UK laws have an employment tribunal that can aid solves such problems (Wright, 2004). Heineken as a case study The dynamics and competition in the market has compelled Heineken UK Company to focus on the need for the employees engaged so that they can be passionate about the company. The approach the organization had employed in not only delivering but also communicating to the worker about total reward package was perceived to having the potential of making the organization’s brands be the leading brands in the market. The appointment of a HR director helped the company realize the need to adjust its reward approach to ensure that it conformed to the existing trends in the market. In addition, there was a need to deliver packages that were exciting to its employees in the alignment with its market position (Hay Group, 2010). Heineken UK come to the realization on the need to update its approach to its reward system and practices. Its legal practices concerning S &N business continued to be in force far too long and had not been effectively reviewed for a longer duration of time. Consequently, it painted a picture of a brand that was different, as well as, working ways. There were signs of employees not being satisfied while the managers were frustrated. The frustrations emanated from some restrictions that hampered their ability to not only manage but also effectively motivate employees. The reward system and practices of the company had failed to meet the expectations of the worker since several concerns were brought to the attention of the managers/management. The conditions in the market proved quite challenging. On the other hand, the company focused on performance while the framework for the reward practices did not commensurate with the challenges and conditions. It was perceived that the reward system was neither adding value appropriately representing the Heineken brand. External influence exerted pressure on the organization to ascertain that the reward spent contributed to the delivery of optimum value to the company. Besides, the sector encountered the challenge of the increase in cost of production, as well as, competition. These challenges made it difficult for the organization to attract new workers, retain the existing workers, and to identify talents in roles that were perceived to be vital. Hay Group was therefore invited to evaluate and analyze the reward practices and to provide a remedy to the situation (Hay Group, 2010). Recommendations to Heineken UK Company The company should review its reward strategies to ensure that the strategies commensurate with the changing trends in the climate of business, as well as meet the expectation of its employees. The retention of employees has proved to be difficult as it results into incurring some cost in the event that they leave an organization (White & Druker, 2008). Some of the likely costs to be incurred emanate from the loss of an experienced worker, cost incurred in training the employee, the cost of recruiting a replacement of the worker, and the cost of training the new workers. The reward strategies should be geared towards gaining employees’ commitments (Van Wanrooy, 2013). This is only possible if the goals, objectives and the vision of the organization are aligned or commensurate significantly with those of the employees. The recommended reward strategy should be faceted into the following categories: the areas that need to be investigated; the framework of the total reward strategy; market; and the output of the company. On the areas that need to be investigated, the objectives and the strategies of the business should be aimed at minimizing tension at the work place and aligning them with the expectation of the workers. These will result into the employees having a positive perception of the organization which in turn will be reflected on their performance. As for the framework of the reward strategy, the company should review the benefits of the employees and the long term objectives as well. In addition, they should also incorporate rewards that are intangible in their reward practices and bonuses in terms of cash on annual basis. The marketing of the Heineken brand begins with the employees and if the employees are satisfied, the market will likely resonate with the employees’ satisfaction since they serve as the ambassadors of the brand. Finally, the company should develop a reward philosophy that is acceptable by all the stakeholders and this reward philosophy should be prioritized in the implementation plans of the organization (Lucy & Broughton, 2011). If the above framework is adopted then the company is likely to prevent situations where employees look for other opportunities in other organizations hence minimizing costs that are likely to be incurred. Conclusion Employment relation and reward are important aspects in any organization as they provide firm anchorage of these organizations. Companies with good employment relations are likely to benefit on several aspects such as huge annexation of profit margins (Townsend & Wilkinson, 2011). However, those that are not compliant or rather do not value employment relations and rewards are likely to perform poorly. This essay has focused on Heineken UK Company as a case study to illuminate the importance of employment relations and rewards. Reference List Hay Group (2010). A Refreshing Approach to Reward. Retrieved on 24th April 2015 from: http://www.haygroup.com/downloads/uk/heineken%20uk%20case%20study%20a%20refreshing%20approach%20to%20reward.pdf Armstrong, M. (2012). Armstrongs handbook of reward management practice : improving performance through reward, 4th ed., London : Kogan Page. Dundon, T & Rollnson, D (2011). Understanding employment relations, London: Mcgraw Hill Perkins,S & White, G (2011). Reward Management, London : Chartered Institute of Personnel and Development. Rose, Ed (2008). 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