Total Rewards Program Geico - Case Study Example

Geico Case Study Table of Contents 1.0 Total Rewards Program 3 1.1 Compensation 3 1.2 Benefits 3 1.3 Work-life 3 1.4 Performance & Recognition 4 1.5 Development & Career Opportunities 4 4 2.0 Case Analysis 4 2.1 Advantage 1 5 2.2 Advantage 2 & 3 5 2.3 Advantage 4 6 2.4 Advantage 5 6 3.0 Strategy Map 7 4.0 Effectiveness of Website Communication of Geico 8 5.0 Improvements for Geico’s Total Rewards Program 9 1.0 Total Rewards Program Research report shows that total reward program offers more benefits in contrast to traditional performance appraisal system. Frederick Hertzberg has identified six motivators such as advancement, work itself, growth, responsibility, recognition and achievement affecting job attitude of employee. Total reward program includes other ten hygiene factors and six motivators’ altogether to develop a sustainable reward system. The concept of total reward has significantly revamped over last few years. Five key components of total reward program can be briefed in the following manner. 1.1 Compensation Compensation system Total Rewards Program relies on four verticals such as fixed pay, variable pay, short term incentive pay and long term incentive pay. 1.2 Benefits According to Total Rewards Program there can be four types of benefits such as Pay for Time Not Worked, legal facility, Health & Welfare and Retirement. 1.3 Work-life Total Rewards Program includes seven categories such as work place flexibility, paid and unpaid time off, health & wellness support, community involvement, caring for dependents, culture change initiative and financial support in order to support work life effectiveness. 1.4 Performance & Recognition Performance of an employee depends on assessing individual activity in terms of fulfilling organizational objective while recognition refers to acknowledging employee effort. 1.5 Development & Career Opportunities This section covers three verticals such as learning opportunities, coaching/mentoring and Advancement Opportunities of Total Rewards Program. Integration can be done among career development process and Human Performance Improvement or HPI in order to share knowledge of among new recruits (Rothwell, Sanders, & Soper, 1999, p. 6-7). (Source: WorldatWork, 2007, p. 6) 2.0 Case Analysis Research scholars have found that there are five key benefits of Total Rewards Program and these advantages are mentioned in the following section. Flexible benefits such as giving opportunity to employees to select remuneration package in accordance to their needs. Increased employee retention rate for companies adopting Total Rewards Program It is obvious that employee satisfied by total reward program do not want to leave the organization hence employee turnover rate decreases. Providing benefits to employee helps the company to receive more employment application from prospective applicants. Companies need to remix existing reward system with cost effective techniques without increasing financial investment. Reallocating rewards in a cost effective not only increases value of the program but increases profitability also. In the case of Geico, Education & Training, Health & Well-Being and Finance & Retirement are three key facets addressing all the advantage of Total Rewards Program. 2.1 Advantage 1 Finance & Retirement plan of Geico includes traditional plans (associate can select investment pattern and can also manage their account through Vanguard Web site), Profit Sharing Plan, Insurance plan (life and accident insurance) and assistance program for associates. These huge collections of benefits give the flexibility to associate to select remuneration package in accordance to their requirement. 2.2 Advantage 2 & 3 Education & Training program designed by Geico includes promoting internal employees to new job responsibility instead of hiring external candidates. Geico also focuses on giving sufficient training & development and virtual mentoring in order to increase employee retention rate. Promote from within adopted by Geico helps employee to get motivated to perform well because they know that performing well can help them to get promotion hence turnover rate decreases. This strategy also helps the company to reduce costs (giving advertisement through various channels of media, paying contract fees to external recruiting agents, paying additional salary to employees who have resigned and other miscellaneous expenses) related to recruiting new associates. 2.3 Advantage 4 Study conducted by Stacey L. Kaplan shows that people strategy adopted by companies play critical role on making employers acceptable among employees. Employees send more application to their favorite companies in contrast to other companies. Health & Well-Being benefit offered by the company includes Medical, Dental & Vision Coverage (associates can select HMO or PPO plan in accordance to their requirements); Associate Assistance Program and other benefits maintain work life balance of associates. These benefits will help the company to create positive image about them among employees. Satisfied employees spread good word of mouth about Geico among potential applicants hence automatically visibility in tightened labor market gets heightened. 2.4 Advantage 5 Finance & Retirement plan of Geico has remixed the exiting remuneration in to various subparts hence the company has saved huge amount of financial investment on developing new remuneration package. Diversified benefits also helped the company to earn profit from their fixed investment allocated for employee remuneration program. 3.0 Strategy Map Geico needs to link business strategy, people strategy and total reward program altogether in order to fulfill all the five advantages. The following strategy map can be used for this purpose. Developing Business Strategy People Strategy Total Reward Program Analyzing Financial Impact Implementing and Monitoring Geico needs to set their vision and mission statement Proper mapping of workforce demographics Channelizing existing total reward system such as Health & Well-Being, Education & Training, Finance & Retirement, Time Off & Leave, Family & Life and Amenities & Perks altogether Cost benefit analysis is to be done in order to evaluate profitability of the program Administrative policy needs to be designed by top management in order to monitor effectiveness of the program They need to identify core competencies of their business Analyzing value drivers for employees Introducing new benefits such as flexible timing (working without fixed deadline to report at predefined time to office) Calculating annual return on investment for the program Program auditing needs to be done in necessary condition (Source: Kaplan, 2007) 4.0 Effectiveness of Website Communication of Geico Although the website tried to describe benefits of total reward system to associates but in several cases it fails to serve the purpose. Following recommendations can be used to address communication problems. There is no mention of flexible timing option in the website hence they need to incorporate flexible timing section to increase motivation level among employees. Paid vacations for junior employees are not sufficient enough to give them opportunity to get refreshed. Geico needs to increase number of holidays for employees in order to give them proper rest. The website design is clumsy in nature which increases confusion among associates for navigating right benefits. The website needs to use separate color code for each benefit in order to specify them. Visitors needs to scroll down and click on each benefit in order to know detail description about them but this is a time taking process. The website can use left hand toolbar and quick link option in order to help visitors to navigate various benefits of total reward program. 5.0 Improvements for Geico’s Total Rewards Program The company can follow financial reward system of Volkswagen of America in order to promote team work and increase synchronization among team members (Rao, 2004, p. 120-123). Geico can share profitability by designing suitable incentive programs for employees and associates. Incentive program should distribute benefits in top down manner from top management to lower subordinates. They should do quantification of job performance in terms of monthly task accomplishment, working hour and target achievement to help top management to design total reward program for employees. The whole system will help employees to perform at highest level in order to fulfill predetermined target. Geico can synchronize promote from within strategy with performance quantification in order to encourage employees to improve their performance (Gatewood, Feild, & Barrick, 2010, p. 622). The company can develop a flexible work environment inside the organization by taking help from work environment designed by Google. Google is named as best employer in the world by Forbes Magazine. Google has incorporated unconventional work environment (facilities such as games parlor, gym, meditation room, food corners and many others are installed inside the office) and also changed their attitude to perform a particular task. Geico needs to develop such kind of environment inside the organization in order to develop a healthy work life among associates. References Gatewood, R., Feild, H. S., & Barrick, M. (2010). Human resource selection. Stamford, Connecticut: Cengage Learning. Kaplan, S. L. (2007). Business strategy, people strategy and total rewards. Retrieved from http://staceykaplan.com/pdf/Stacey_Kaplan_Total_Rewards_And_Business_Strategy.pdf. Rao, T. V. (2004). Performance management and appraisal systems: HR tools for global competitiveness. Thousand Oaks, California: SAGE. Rothwell, W. J., Sanders, E. S., & Soper, J. G. (1999). Astd models for workplace learning and performance: Roles, competencies, and outputs. Alexandria, Virginia: ASTD. WorldatWork. (2007). The worldatwork handbook of compensation, benefits & total rewards: A comprehensive guide for hr professionals. Hoboken, New Jersey: John Wiley & Sons. Read More