Compensation and Benefits in the Organisations - Case Study Example

Nike Corporation is the world's leading supplier and manufacturer of sports equipments, athletic shoes and apparels. It was formed in 1964, and by 1980, it already had more than 50% market share in the United States. The name Nike is derived from the Greek word of the same name meaning the Greek goddess of victory. Currently Nike has over five hundred factory or office locations in around 45 countries all over the world, the majority of these are in Asia. With such extensive locations, Nike, an American corporation has a sizeable percentage of employees from diverse groups, Nike targeted to become one of the best Employer of Choice at the turn of the 21st century. It wanted to be recognized as one of the finest places to work. To actualize that vision and mission, Nike implemented an incentive program in correlation with the mission. In any organizations including Nike, the workers do their duties for personal motivations like money (salary), but their motivation will get a great boost if they receive additional financial rewards, promotions and recognitions. When the reward component is analyzed from the perspective of organization's mission, it does somewhat supports Nike's mission. That is, Nike's mission is "To bring inspiration and innovation to every athlete in the world" (Nike Business, n.d.). Even though, this mission is customer centric, to achieve that mission the employees have to work effectively. To make the employee at Nike work effectively, the incentive program plays an important role. The incentive program implemented inside Nike perfectly fits with its resources. That is why, Nike has introduced an incentive program called Performance Sharing Plan, which correlates with the company's performance. "Performance Sharing Plan (PSP) - Nike has an annual bonus plan that rewards employees based on Nike's performance (to reward team success) and individual performance (to reward your contributions to that success)." (The New York Job Source, 2008). As the program rewards the workers who perform up to the expected level, it meets the expectations of the employees. Importantly, this incentive program is fully attracting and retaining the employees. That is, Nike by rewarding and giving incentives to the deserving and 'success achieved' employees through this program and other programs is making them stick to the organization. This system is very flexible because it changes according to the performance of Nike. That is, if the employees perform optimally and raise organizational productivity and profits, they will be rewarded optimally. As this program is applicable to all types of employees, it cannot be tailor made for specific workers. On the whole, this incentive program functions as one of the main motivating factors for the employees, making them stick to the organization and thereby helped Nike reach the status of the world's number one maker of athletic shoes, equipment and apparel. When organizations fail to reward the employees appropriately, it could wean way the workers from the group decision making process and the resultant work teams. That is, some times or even frequently, the management overriding tried and trusted individuals could give important posts and responsibilities to individuals with negative attributes. If this practice is followed in the organisation, it will create disenchantment among the workers and will destroy team work. This ritual of awarding plum posts, rewards, incentives, etc, to the inappropriate members by the leader or the management team is not a norm in Nike. Nike rewards the employees in an unbiased manner. As mentioned above even this main incentive program of Performance Sharing Plan is applicable to all performing employees. Because of this strategy, workers in Nike are not banding together in a kind of mutual protection society with a culture of its own, but unite as work teams and are working in unison for the organizations. Unison of workers into teams with an urge to usher an organization into a successful endeavor will actualize, if the organization formulate and implement optimal programs including incentive programs. And as Nike is able to do it, it is having a ubiquitous presence all over the world. General Motors (GM) is the world's largest automaker and the industry sales leader for 77 years. Founded in 1908, GM employs 266,000 people around the world (Company Profile, 2008). Today's credit crisis is affecting businesses all over the world. The auto industry is being hit in many different ways. Carmakers cannot get loans to restructure and to produce new advanced technology vehicles. Suppliers and dealers cannot get loans for routine business, and customers cannot get loans for new cars (GM, 2008). One group hit hardest is the salespeople. Facing a brutal sales year, many of the GM dealerships fear they are losing their best salespeople due to the declining sales and profits. The decline in sales and profits are causing many salespeople to look elsewhere despite incentive programs aimed at keeping them (LaReau, 2008). Sterling states "salespeople feel like they are on the endangered species list." Automotive marketing departments state that GM and other competitors need to train and pay sales staff before they lose them. Over the past 18-months, dealers have realized the need for a better compensation plan to hold onto top sales employees. Since the economic crisis, Lynn Thompson has been able to retain his salespeople by boosting his sales commission and reducing the number of vehicles a salesperson needs to sell each month to get a bonus. Yet other dealerships are offering easier ways to qualify for bonuses, sharing benefits of factory incentives, and awarding trips and prized to top performers (LaReau, 2008). Compensation and Benefits at McDonald's Founded in 1948, McDonald's motto is that it takes good people to serve good food. From our corporate staff to our restaurant crew, talented, committed employees are essential to our continuing success. With more than 31,000 restaurants in 118 countries, McDonald's campaign that hit airways in 2006 "Not bad for a McJob" helped to promote details about the working environment along with its pay and benefits package helps to attract staff (McDonalds's AboutUs, 2008). Neal Blackshire, McDonald's benefits and compensation manager, stated benefits that staff receive, typically depend upon their position in the company and are calculated according to whether they are an hourly-paid employee or salary. For instance hourly-paid employees received free private medical coverage after three years' service whereas most salaried staff do not have to serve for a qualifying period before receiving the perk (Lovewell, 2006). Compensation and benefit programs are designed to reward, energize and retain talented individuals. Health benefits include medical, dental, flexible spending accounts and supplemental vision. Profit sharing which includes a 401(K), credit union and financial planning invests in your future, while vacation, holidays, leave of absence and other benefits give you a work/life balance. Compensation consists of base pay, incentive pay and other recognition programs (JobBank USA, 1995). In addition to all these benefits McDonald's is also offering a sabbatical to their employees. McDonald's is offering an eight-week sabbatical to full-time employees with 10-year of continuous employment that must be taken by December 31st of their 15th year. The company is also offering another eight week-sabbatical for full-time employees with 20-years of continual employment that must be taken by December 31st of their 25th year. The sabbaticals do come with a few rules, first the time off must be taken in one shot, it cannot be divided up and you must have management approval. Employees cannot be paid for sabbatical if they depart the company before they take the time earned and they must reimburse the company the salary received while on the sabbatical if they leave within six months of taking the sabbatical (Anonymous, 1994). Lockheed Martin Lockheed Martin offers a friendly working environment. Lockheed Martin mandates employees to take the annual corporate compliance training courses that provide guidelines about the safe, friendly and free-of-harassment working employees. By offering a friendly environment and being genuinely interested by their employees Lockheed Martin creates a company of dedicated staff that is interested in providing excellent performance. Bob Stevens, Lockheed Martin's President and Chairman, said, "As a world-class advanced technology leader, we must continually reach out to new and different points of view to succeed in the global marketplace. This means we must have an environment that attracts the best people with the biggest dreams and the highest standards - and give them the support and encouragement they need to reach their full potential. It also keeps us focused on assuring the widest possible circle of suppliers with whom we do business. It's more than Equal Opportunity Employment and Affirmative Action. Though both are important, they are just a part of our commitment to inclusion. They are based on legal requirements. If we want to achieve our goal of "institutionalized inclusion," we must demand more." (Lockheed Martin, 2008). In addition, Lockheed Martin offers a great package of benefits that include the regular health/medical/disability insurance and other special programs that benefit the employees' life, such as pension, retiree medical, and Quit-For-Life (tobacco cessation), (Lockheed Martin, 2008). Cisco As many high-tech companies that were heavily affected by the fall-out of dot.com, Cisco had to layoff eight thousand employees. The remaining employees were very distressed because there were still rumors that layoffs were going on. During many following years, the annual salary increase was one of the main issues to be complained by employees. In addition, the pay system did not satisfy the employees who were hired prior to the dot.com period. The morale was going down. The productivity was also decreased. Cisco's leadership team decided to do something to bring the company back to the right track. Cisco does the employee survey quite often because employees' views are of great importance to Cisco. Employees' feedbacks are considered the company's best-informed critics, and reflect their view supports to the company's objectives of recruiting and retaining the best talent. This contributes to the employees' motivation because they know that they feel they are a really a part of the company, they feel as if they have some type of ownership. Cisco creates "a morale agile and productive workforce that responds to the needs of the customers and a changing market" (Cisco, 2008). Cisco employees are encouraged to plan and manage their own training and career development, which reflects their needs of skill enrichment and career aspirations, through a companywide initiative called Cisco University. This initiative provides all career development activities, such as training/coaching/mentoring, job opportunities, and so on. Employees who want to transfer to other departments are also provided assistance, guidance and transition services, including individualized career coaching, job search seminars, etc. Cisco promotes innovation and recognizes that the most value assets of the corporation is the workforce. Compensation packages include a competitive base salary, stock options, and other basic benefits in health insurance (medical, dental, vision, long-term disability), 401k plan matching, paid holidays and personal time off (PTO), and military duty leave. In addition, Cisco also has Work/Life programs for the employees, Childcare services, Employee Discount programs and Reward/Recognition programs. In 2008, Cisco was ranked fourth in FORTUNE magazine's "100 Best Large Companies to Work for in America" list (Cisco, 2008). Conclusion The organized or planned human activity under the structure of organization has to be carried out with precision for it to succeed and thereby retain its employees. But, precision in organizing or planning cannot be done without the initiatives and the fullest co-operation of the managers and the employees, without giving the chance for exodus. If a goal is set and the motivation level is heightened with the help of an effective incentive program reward, promotion and recognition system, then the managers and the employees can work in cohesion to achieve success. If the incentive program and the recognition system is optimized by incorporating all the above mentioned aspects as well as aspects from the real life case study, the excellence of the manager and the employees will also be optimized. When the employees' excellence is optimized, the organization will show great success and profits, a portion of which will be rewarded as part of the incentive program, making the employees mentally happy and motivated, thereby continuing and sticking to the organization Read More