Geico Analysis - Case Study Example

I. Determine which facets of the Geico total rewards program align with the five (5) top advantages of a total rewards program outlined in Chapter 2 of the textbook and discuss your reasoning.  Rewarding employees is one of the most critical functions of a company not only as an act of remunerating its employees for its work but also as an expression of how it value its most important asset - its people. Failure in this area would be disastrous to the company for it will translate to high attrition rate, lack of talent, ineffectiveness and inefficiency which would ultimately redound to the incompetitiveness of a business leading to its demise in the market place. Such, each company must strive not only to attract talent, but also to retain them as well through a total rewards program. Traditionally, rewarding employees has been equated with pay. Today, it is no longer applicable and “the definition of rewards encompasses the overall value proposition that the employer offers to the employee. It’s a total package that includes compensation (comprising of base pay, short-term incentives and long-term incentives), benefits (including health, retirement and work/life benefits, which account for an increasing portion of the rewards package) and careers (including training and development, lateral moves,stretch assignments and career incentives)” (Morris, nd, pg 6). In the case of Geico (2012), it employed a six facet item as part of its Total Rewards program which include Health and Well-being, Building and Securing Your Financial Future, Time Off and Leave Programs, Family and Life Programs, Education and Development and Amenities and Perks. Many aspect of Geico’s total rewards are consistent or aligned with the lectures in the Chapter 2 of our textbook which are as follows; 1. Increased Flexibility Geico’s reward program is not only tied up with pay. It accommodates the varying preference of employees which could range from younger employees preference for a good work environment and learning and development to older workers emphasis on pay and benefits. The program also accommodates all employees concern with health care, wealth accumulation, career development, and time off as enunciated in the building and securing financial future and perks component of its total program package. This provides Geico greater latitude to address the needs of its employees that would not keep them but also to make them highly motivated to perform. 2. Improved?recruitment and?retention The range of Geiko’s total reward program is indicative that the company really intends to retain its employees. More especially is the emphasis on family and life programs which very few companies offer as part of its compensation package. This component of Geiko’s total reward program would also be very attractive if not hard to resist among prospective employees who values work-life balance (Guld, 2007). It would also serve as a retention tool among its employees who have families to attend. For Geiko’s part, it would retain its best talent and attract the best talent in the market because of its attractive total rewards program. 3. Reduced Labor Costs/Cost of Turnover Having a flexible reward system designed to retain its employees will have an effect on Geiko’s bottom line in terms of minimal attrition rate, reduced labor cost and low or no cost for turnovers. Opportunity costs associated with labor turnover such as the low learning curve of a new recruit, higher inefficiency and disrupted work will also be avoided. 4. Heightened Visibility in a Tight Labor market One of the big advantages of having a responsive reward program is that employees would not only stay longer in the company but are also motivated to perform. Highly motivated employees performance would resonate to the labor market that a particular company, such as Geiko is a good place to work thus becoming Geiko as a preferred place of work among the best talents in the labor market. 5. Enhanced Profitability All of the advantages of total rewards program that is designed to attract the best talent, keep them and make them happy and highly motivated has the ultimate advantage of enhanced profitability. People are the company’s best asset and if it is working at the optimum, the company will become highly competitive due to its high efficiency and productivity. In addition, innovative products and services that would enhance a company’s profitability are also a product of motivated employees. II. Create a strategy for ensuring that the Geico plan addresses all of the advantages.  Creating an effective strategy to emphasize the advantages of total rewards program is necessary to make employee recruitment and retention cost effective. Among the strategy that would be employed to make the Geiko total reward package more responsive is to incorporate the non-remuneration package in the orientation of the employees so that they would better understand and avail it. These would have several advantages to Geiko in terms of optimizing its existing program and being more responsive to the needs of its employees as well as keeping its employees happy. Geiko must have the mindset that the more employees avail of its programs such as Profit-sharing Plan, work-life balances etch., the more chances that its employees would be staying in the company because they are already attached to the organization (Sarachek, 1968). III. Evaluate the effectiveness of the communication of Geico’s total rewards program based upon the Website’s descriptions of the benefits. There is no doubt that the Geiko rewards program covers the majority needs of its employees. It can also be said that Geiko is a mature company because its perspective on how to keep and motivate its employees is not limited to the present but also genuinely looks after the welfare of its employees that includes their future and contingency needs. There are programs that addresses the future need of its employee through its retirement program and also shares its profit to its employees as a manifestation of how much it value its best asset. As a company, it is also sensitive to the non-remunerative needs of its employees by balancing life with work and offers handsome time off from work as a benefit to its employees. Geiko as a company also think long-term to ensure the viability and growth of the company. It invests on the development of its employees though its Geiko University that will not only address the personal development of its employees but also by continually equipping its employees the necessary skills and knowledge that would enable the company to be competitive (Radclife, 2005). IV. Recommend two (2) areas for improvement. Assuming employees are unhappy with the current plan, offer two (2) improvements or changes to Geico’s total rewards program.  1. Career advancement is not clearly indicated – without question, Geiko’s total package program addresses the biological need of its employees through its remunerative and non remunerative compensation. It is very “Maslowish” as it only addresses the biological needs through its compensation and security package (401 package etch) (Goodman, 1968). The total reward package’s ultimate enticement to employees is its work-life balance program and handsome time off which is just designed to refresh the employees from the drudgery of work. The program does not enunciate a clear career path that would indicate that there is a future in the company professional wise. With the look of the existing total rewards program, it seemed that Geiko would just like to keep its people as lowly workers without any plan of advancing them in the organization. It failed to recognize that challenging and meaningful work are also valued by employees (Herzberg, 1987). 2. Basic rights at work such as equal employment opportunity and discrimination is not clearly enunciated – The total rewards package at Geiko is nice but it leaves the employee vulnerable. Basic rights at work which are clearly stated in most companies are not indicated in its program. It seems that Geiko is tolerant of discrimination and sexual harassment at work because it is silent on these important issues. Also, Geiko does not seem to care about giving equal employment to prospective employees and it prejudices against talented people who do not fit the stereotype of employable workers. If indeed Geiko is conscious about the rights of its employees and cares about social responsibility, it should include this in its total rewards program. As it is, Geiko’s remuneration program may be called as Total Rewards Program but it is not really “total” because it fails to enunciate the basic needs of its employees which are to give equal opportunity, be free from discrimination and harassment. References Goodman, R. A., 1968. On the operationality of the Maslow need hierarchy. British Journal of Industrial Relations 6(1) p. 51-57. Guld, Michael, 2007. Recruitment number two priority. Supervision 68(12) p. 19-21. Herzberg, Frederick I., 1987. 'One more time p. How do you motivate employees? Harvard Business Review, (65) p.30, 48-61. Morris, Iain (nd). A Total Rewards Overview. Mercer Human Resource Consulting. http://www.sunlife.ca/static/canada/Customer%20Solutions/thefutureofwork/pdf/chapter1.pdf [accessed April 22, 2012]. Radcliffe, Daniel, 2005. Critique of Human Resources Theory. Otago Management Graduate Review (3) 51-67. Sarachek, Bernard, 1968. Elton Mayo's Social Psychology and Human Relations. Academy of Management Journal 11(2) p. 189-197. Read More