Employee Reward and Recognition Systems - Essay Example

 One of important features of work in an organization is their ability to provide rewards and compensation to their members. Pay cheques, promotions, the fringe benefits, and status symbols are probably the most likely rewards that can be given to the employees. As these rewards are essential to boost motivation, the ways these rewards are formed and distributed can have profound effects on the quality of the employee work life and on the overall effectiveness of organization (EMPLOYEE REWARD AND RECOGNITION SYSTEMS, 2012). Rewards can be both financial as well as non financial. However, as financial rewards are more tangible in nature they seem to have greater impact on the employee performance level. Any form of financial reward needs to be based on the type of jobs performed; the skills and the expertise required as many relevant aspects. In a firm consisting of around hundred employees, the financial reward system can go a long way in improving the employee performance While developing the financial reward system, the company also needs to keep in consideration the legal clauses that can arise in case of any discrepancy seen in case of either the employee or the organization. Financial reward system needs to be formed cautiously keeping in mind all essential features and legal requirements so as to form a clear and fair form of rewarding employing. Motives for forming a financial reward system Electra Pvt. Ltd can build a financial reward system for its employees for attaining the following objectives. The reward system would help to motivate its employees to perform more effectively. It would help in increasing motivation levels in the employee to remain with the company and also encouraging others to join the organization. By proving financial rewards, the employees would be motivated to enjoy their work, avoid unlawful works and maintain punctuality. The biggest advantage would be that the rewards would encourage and motivate the employees by mentioning their position within the organization structure as the rewards would vary going by the levels in the company hierarchy (REWARD SYSTEM, 2008). Guidelines for forming the financial reward system in the company Electra Pvt. Ltd. can follow the following guidelines while framing its financial reward management system: 1. The guidelines should be clear, transparent and in accordance with the company policies. 2. The company has around one hundred employees. At present, there is no fixed hierarchy structure in the company. This can be modified by forming a hierarchy structure consisting of five levels. This would be essential as the financial reward awarded cannot be the same for every type of work or job done in the company. Proposed company hierarchy at Electra Pvt. Ltd Company president Director chief financial officer (CFO) Business/sales managers Territory managers Team leaders Executives Group D staff 3. The reward system has to be simple to understand. There needs to be detailed procedures formed for evaluating employee performance, for filling out forms, and it must be reviewed by the higher levels in the management that would lead to the final conclusion. The employees should be able to understand the criteria for the benefiting from the financial reward system. 4. For majority of the employees in the company as has been seen in an internal survey, that the most desired form of financial reward for work is the wage or salary they receive. Employees have ex pressed their wish of receiving an increase in their pay or additional benefits like bonuses, stock options (EMPLOYEE REWARD AND RECOGNITION SYSTEMS). For this, the company needs to chalk down an effective plan and an administered pay system which can enhance motivation and performance. 5. A clear distribution of financial reward should be followed while rewarding the team and its individual employee. 6. The company will have to evaluate its current financial condition and make an assessment of its asset and liability ratio. 7. The company should make clear the criteria and the requirements to the employees so as to help them assess themselves and work on their performance. 8. The accountants department will have to submit the monthly salary and wage structure to the HR department and the CFO to make an assessment of the hike or bonuses that can be provided in the reward system. 9. The company should make sure that all its reward system both financial and non-financial is presided over by the higher management. 10. The criteria and the amount should be mentioned in writing (EMPLOYEE REWARD AND RECOGNITION SYSTEMS). 11. There should not be any external influence guiding the decision making process like partiality or favoritism. 12. The company should make sure that the financial reward system is completely free from the influences and pressure of the workers body and trade unions within the organization. Sometimes, outside political sources can also hinder the reward system making process by provoking the group D workers and employees 13. The company must have legal attorneys to represent the employee and the organization separately. The proposed financial reward system at Electra Pvt. Ltd Electra Pvt Ltd has one hundred employees in its payroll according to the report submitted by the accounts department. The annual turnover in the fiscal year 2010-2011 was £7.5 million. The company has developed plans to expand itself in the overseas markets in the coming financial year. As such, there are chances of increasing its employee strength to around two employees at the same time retaining the present on payroll of the company. The financial reward system plan has been designed as follows for the company: a) The employee strength is presently hundred for the company. As the company plans to grow, modifications in the present structure for job evaluation in the company will have to be incorporated. The present form of job evaluation used in the company includes the ranking method. In this process, the jobs are ordered on the basis of their value to the organization. The present salary structure offered to the employees on this basis is as follows: The president - £2000 Director -£1000 Chief financial officer – £700 Business/sales managers – £500 Territory manager – £400 Team leader – £300 Executives – £200 Group D staff - £70 The company can introduce a financial reward system of salary hike by 10% for the 70 sales executives if they succeed to increase the sales volume or meet their assigned targets. Similar hike of 10% can be introduced in the salary structure of the five territory manager if they work for extended sessions, in holidays and if their team performs according to the desired levels. The group D workers would also have their wages increased if they work on Sundays. Before laying these values the company will have to check if the rates mentioned are in accordance with the human rights commission guidelines for employee welfare and guidance. Legal procedures must be followed before enacting these hikes in the salaries. b) A survey on the wage structure has shown that out of the 70 employees, five territory manager and ten group D staff, 55 % of the employees have shown dissatisfaction over their present salary structure. They feel they are not paid adequately. 40 out of the 70 sales executive said they feel underpaid as they are not paid their travel and phone bill expenses. In this concern, the company can form a reward system where in these expenses would be reimbursed up to15% by the company if they achieve their sales target. c) Every employee in an organization would love to feel that their work is being appreciated by their employers and value them as an asset for the company. Electra Pvt ltd. can show this form of employee appreciation and thus boosting their morale by implementing an employee incentive scheme. The company can provide incentives to the employees in the form of extra income in their salary and wages if they achieve their sales target and show productivity in other works. d) While evaluating pay equity which means equal pay for equal work, the company would ensure that there is no discrimination shown while regarding the employees on the basis of gender or race. The company consists of 45 female executives and staffs in all and 55 male members. A survey has shown that there are almost 30% female workers who felt they have been underpaid. This needs to be undone. The company needs to have strict legal measures to make sure that this form of injustice does not happen again in the company. e) The company can provide additional benefits to the company in the form of travel allowance, medical bills reimbursement, phone bills repayment, children benefits apart from paying bonuses and salary hikes. As the company aims for expansion there are chances where financial reward system alone would not be sufficient. Here, the company can introduce certain non financial reward like awarding with certificates, trophies, appreciation in company meetings. For the female executives, the company can arrange for reimbursing the maternity and post delivery costs. The company can also arrange to pay f or the child till the age of one year. The survey showed that this move was appreciated widely both by the female and male executives. f) The compensation strategy offered by the company for its employees must be fair and without any biases. The company must have compensation policies where in it would reimburse or compensate the full amount for the employees for any accident or any such condition faced during the working hours. However, the company will have to ensure that such situations have not arisen out of any negligence on the part of the worker. These would include fatal accidents within the company premises only. Conclusion Every employee desires to be awarded and appreciated for his work and efforts. The company needs to make sure that it addresses this need of the employee from time to time so that it retains the interest and morale of the employee. Rewarding the employee financially by providing different sorts of benefits is essential in this respect. However, the company needs to ensure that it forms its financial reward system by remaining unbiased and transparent. The company needs to evaluate its internal as well as its legal formalities while forming such a system for awarding its employees. Intangible or non financial benefits can also be given but it has been seen that it is the tangible or precisely the financial form that makes more impact on the employee performance. In case of Electra Pvt ltd, the company is on a growing spree. It wishes to expand its business. As such it would include more manpower and sources. It thus becomes all the more crucial to retain as well as absorb new recruits which can be done by appreciating their work on a regular basis. The company must be impartial and fair while rewarding its employees. References “EMPLOYEE REWARD AND RECOGNITION SYSTEMS”, (2012), retrieved on August 18, 2012 from: http://www.referenceforbusiness.com/small/Di-Eq/Employee-Reward-and-Recognition-Systems.html#b “REWARD SYSTEM”, (2008), retrieved on August 18, 2012 from: http://www.management4all.org/2008/11/reward-system.html Read More