Pay and Remuneration Packages - Assignment Example

Pay and Remuneration Packages: Objectives and Constraints Introduction While our company has been successful in attracting the right type of human resources which we need, getting the human resources to stay interested in the company and providing them with sufficient rewards to stay with the company is another matter altogether. The best tool we have to keep the people we have is the pay and remuneration packages that we have to offer and with the manipulation of the elements involved in the package, we can strategically guide our human resources to provide the best possible performance for the company as recommended by Boxall and Purcell (2003). While our objective remains to do the most we can for the stakeholders of the company, there are several constraints placed on us and an understanding of these constraints as well as the means by which we can work around them is essential for the management of the company. Legislative Issues The first and primary concerns which we have with regard to the pay and remuneration package are legal concerns. Since the call centre is not expected to have directors or people at the board of the company working within it, the issues surrounding stock based bonuses and director’s salaries may be removed from the table but other issues such as performance based bonuses which cause our call centre employees to become more than motivated to pressure customers into signing up for one of our products or another may be ethically and legally questionable. Therefore we must be careful while linking the sales of our products with performance. There is also the question of broader legal issues such as age, race, gender, religious affiliations and other measures of equality on which discrimination must not take place with regard to the salaries given to employees at the same level in the company (Foot and Hook, 2005). As a worker’s rights issue, a lot has been done in the past to create equality with regard to these measures and legislation certainly exists to prevent discrimination between employees. However, it is also certain that such discriminatory practices exist in Europe as well as America despite the push from the law against it. We need to make sure that as a company we do not discriminate and this assurance can come from an external audit of our salary systems and remuneration packages. Further, if we are ever taken to court on the basis of discrimination with regard to salaries given to the employees, an external auditor can be of great use in showing that we do not engage in such practices. Understandably, ethical concerns go hand in hand with legal concerns and both of them have to be followed in order for the cal centre to be successful. Job Evaluations In fact, the only manner in which discrimination of salaries to employees could be permitted is the performance or value which they give to the company (Maund, 2001). However, it can be difficult to measure performance or the output of an individual particularly in situations where the person is working in a call centre like environment. There are certainly some measures such as the time taken to deal with a customer or the satisfaction level shown by a customer which can be used to gauge the performance of the call centre but individual members can only be evaluated based on their meeting of performance criteria given by their team leaders and managers (Bettencourt et. al., 2001). Undoubtedly, hard work has to be rewarded since it is a good business philosophy and the idea for creating bonuses and remuneration packages used at many top companies and businesses. There are compensation and motivational theories given by experts and real world processes that have been implemented to ensure that the best employees of the company get the best treatment. The relationship between good performance and a good salary has to be made obvious to the workers at the call centre and this can be done quite effectively by using job evaluations. One such system is used by an internationally renowned company i.e. GE. General Electric has an exceptional record when it comes to recruiting and keeping talented employees. Management experts have given tributes to the innovative ways job evaluations takes place at GE. Even though the company has been in existence for more than a hundred years, it often comes in the top ten list of most admired companies as given by Fortune magazine (Demos, 2006). For four years in a row (1998-2002) it was at the No. 1 spot and in 2006, it took the top honours as the most admired company in the world (Fisher, 2006). Pay and Remuneration Packages As per the systems used by GE, we should link the rewards given to the employees directly to the mission of our call centre operations. Welch was the CEO of GE for a significant period of time and he reports on the reward management system of GE by saying that, “Every decision or initiative was linked to the mission. We publicly rewarded people who drove the mission and let go of people who couldn’t deal with it for whatever reason (Welch, 2005, Pg. 16)”. Simply put, we should do exactly the same and reward employees who drive the mission of the company and let go of those who can not. The primary benefit of such a system would be to allow people to see what benefits can be gained from giving top performance to the company. The reward and remuneration system has to be based on a strict meritocracy and should only give benefits, perks or bonuses to those who deliver above and beyond the needs of the company (Demos, 2006). Making the rewards system public also gives the added benefit of transparency and creates a healthy competitive environment within the call centre. The disadvantage in such a situation has also been discussed by Welch (2005) who says that the idea of making the salary structure public along with the public declaration of rewards and bonuses can be dangerous since it can breed professional jealousy. However he also notes that in the real world, everyone seems to know what everyone else got which makes the whole idea of secrecy a sham. If the rewards are being based on the merits of an employee and the performance of an individual, there is no possibility of there being any jealousy or a toxic environment (Grote, 2002). Further, along with the rewards given to employees as a part of their pay and remuneration packages, the idea of differentiation must also be applied to those who do not make the cut. With regard to this sort of system for handling the pay and remuneration packages for employees, Welch (2005) wrote clearly that: “When people differentiation is real, the top 20 percent of employees are showered with bonuses, stock options, praise, love, training, and a variety of rewards to their pocketbooks and souls. There can be no mistaking the stars at a company that differentiates. They are the best and are treated that way (Welch, 2005, Pg. 41)”. As for the rest who do not meet the expectations of the employers, they have to be removed from service and that is the exact measure taken by GE since the bottom ten percent of the company’s HR strength is removed on a yearly basis. The basic idea given by Welch (2005) is to rank employees in three categories of which the top 20% get the best rewards and bonuses. The middle 70% are given some rewards while the bottom 10%, at the end of the year, are simply asked to leave. This method is used by many other global companies such as Microsoft, Cisco, Hewlett Packard, Sun Microsystems, CapitalOne, PepsiCo as well as Intel amongst many others. On average a fourth of all the companies on the Fortune 500 use this system to govern their overall salary packages (Grote, 2002). Simply put, the system of using differentiation and rewards is a method of strategically guiding the human resources of the company towards a set of employees who are able to perform at their best for the company. It is also a very powerful tool for removing those who are not fit for the call centre or need to be removed to new blood and new ideas into the organisation. While it may seem heartless and mechanical, Welch (2005) defends the process by saying: “When all is said and done, differ­entiation is just resource allocation, which is what good leaders do and, in fact, is one of the chief jobs they are paid to do. A company has only so much money and managerial time. Winning leaders invest where the payback is the highest. They cut their losses everywhere else (Welch, 2005, Pg. 38)”. It seems that this is one of the more realistic ways to manage the human resources within a company that wishes to keep the best HR and remove those individuals who have been recruited as a mistake or those who do not have a good cultural match for the organization. Conclusion It is easy to conclude that the pay and remuneration packages of the company need to follow the local laws with regard to recruiting, hiring and firing but the internal mechanisms that are used to adjust salaries need to be based only on the idea of merit. As it is an example set by some of the most successful and renowned companies of the world, it can serve as a model for us to follow and if applied correctly, there is no reason why we cannot gain the same benefits as those companies have in the past. Works Cited Bettencourt, L. et. al. 2001, ‘A Comparison of Attitude, Personality, and Knowledge Predictors of Service-Oriented Organizational Citizenship Behaviours’, Journal of Applied Psychology, vol. 86, no. 1, pp. 29-41. Boxall P. and Purcell J. 2003, Strategy and Human Resource Management, Palgrave. Demos, T. 2006, ‘The World’s Most Admired Companies’. Fortune, vol. 153, no. 4, pp. 71-72. Fisher, A. 2006, ‘America’s most admired companies’, Fortune, vol. 153, no. 4, pp. 65-76. Foot, M and Hook, C. 2005, Introducing Human Resource Management, Prentice Hall. Grote, D. 2002, ‘Forced Ranking: Behind the Scenes’, Across the Board, vol. 39, no. 6, pp. 40-46 Maund, L. 2001, Introduction to Human Resource Management: Theory and Practice, Palgrave. Welch, J. 2005, Winning, HarperCollins: New York. Read More