The Business Activities of the Lego Group Organisation - Research Paper Example

Introduction The Lego Group is recognised as a family-owned corporation and is renowned for the production of toys of Lego brand. The company was established in 1932 by Ole Kirk Christiansen. It has its headquarters in Billund, Denmark. In the United Kingdom, the company functions around 10 independent stores. One of the major stores in the UK is located in Milton Keynes. The company has transformed over the years within its operations of around 80 years from a small shop to a large enterprise in the global context. Lego is the third largest producer of toys in relation to sales. The company offers various toy products as well as materials of teaching for children in over 130 nations. The Lego Group consists of 10,000 employees manufacturing toy products for children all over the world (Jensen, 2012). The objectives and goals of the group consist of five different sets which include providing safety and security to employees, ensuring zero percent products recalling, supporting over 100 million children for ensuring that they receive better learning outcomes and development. The company also contributes in terms of the financially aspects for underdeveloped children by providing Lego products. The group is also targeting to use 100 percent renewable energy by 2020. Moreover, the vision of the organisation is to manufacture more products without harming the stability of the environment (Jensen, 2012).The Lego Group emphasises on eight issues that are significant for the business activities of the organisation. The issues include sustainability, environment, climate, employees, human rights, stakeholders, governance and the Lego Foundation (Jensen, 2012). Organisational cohesion is present in Lego through which various challenges are dealt with by the organisation internally and externally regarding decision making process. However, with the changes in organisational effectiveness, employees can be regarded as an important aspect in the process. The present relationship in between consumers and the organisation enables to create an effective cohesion in the organisation through ascertaining greater productivity and inventiveness which is the prime feature of Lego (Jensen & Hummelgaard, 2011). In reference to performance optimisation, it can be stated that the communication process is an important element in the organisation which is a key constituent in the human resource management. It can be noted that culture plays an important role in enhancing the performance prerogatives in the organisation. Moreover, better work culture along with effective communication assist the organisation to gain higher productivity through optimised performances of the employees. Maintaining the level of motivation of the employees is a key dimension which requires to be upheld by the organisation to ensure that it maintains its competitive advantage on a global basis (Jensen & Hummelgaard, 2011). With this concern, the paper intends to design efficient and optimal strategies and policies with regard to remuneration for the employees in the Lego Group. Strategy Existing Remuneration Strategies of Lego Group The existing strategies and policies related to remuneration of the Lego Group aims to ascertain that each employee is treated consistently and fairly. Establishment of consistent strategies and policies with regard to international assignments as well as remuneration is maintained by the company. Board of directors are provided competitive compensation for their service and contribution to the organisation. With regard to ensuring efficient management of compensation and remuneration, the company has collaborated with Grant Thornton UK LLP, an organisation which offers tailored services to the employees. It is especially useful for expatriate employees of Lego Group as they can focus on performing their work efficiently without worrying about management of their finance. Grant Thornton UK LLP also undertakes as assessment of Lego Group’s payroll procedures to recognise and implement cost-savings. It is also to be noted that the employers are also provided with the services of planning taxes for assignments in the short and long-term planning (Grant Thornton, 2006). The management of Lego Group provides certain benefits and remuneration policies for the employees in the organisation which includes serving as a liaison and resource professional on benefits and compensation issues. It also assists with consultation and advice for each level of management in terms of administration to salary and compensation as well as ensuring compliance and confidentiality with Employee Retirement Income Security Act (ERISA) for handling matters of employee benefits (The LEGO Group, 2012). Apart from providing fixed remuneration through salaries, the key management personnel are bestowed with short-term incentive plans, long-term incentive plans and termination benefit. Short-term incentive plans generally provided on the basis of annual performance, while long-term incentive plans are offered to employees especially based on the review of value creation by the employee for the organisation. Moreover, the company has obliged to pay its past as well as existing employees with retirement benefits in terms of pension plan. Furthermore, paid annual leaves and bonuses are also offered to the employees in proportion with their provided services (The LEGO Group, 2010). Aspects of Consideration While Designing Remuneration Strategy With respect to Lego Group, the production division of the business operations in the UK is selected for preparing optimal reward and remuneration strategy. Alike its global operational units, the UK based segment of Lego Group is a crucial component for the organisation to maintain its organisational goals such as creativity, imagination, quality, learning, fun along with caring. The global benchmark set by the company is of a brand providing originality as well as quality. Thus, in order to uphold such requirements from the manufactured products, the production division in the UK plays a key role. The production team develops the products with creative mindset for children all over the world. It also focuses on the educational and learning aspects which would develop children to a great extent. The organisation focuses on independent work display as compared to teamwork. It also emphasises on interacting with every individual in the organisation and building trust and honesty among them. One of the significant aspects of Lego Group has been to demonstrate creativeness. The organisation and its employees provide imaginative thoughts and ideas in their work display as well as in their learning and innovation process while performing their activities for development of children. Lego performs its regular activities in a fast-moving and competitive market. As a result of which, management is highly responsible for developing the finished products and ensuring on time delivery of products keeping the quality intact. Thus, the remuneration policy should aim to uphold the aspect of creativity among the employees in the production division as it would go a long way to ensure that the company remains sustainable (The LEGO Group, 2012). There are various members in the production process who work for the development of the organisation by providing better quality of products without compromising on the quality of products. There are various remuneration strategies which can be taken into consideration which include performances and rewards, compensations, incentives, commissions, benefits both compulsory and optional along with developing a pay administration plan (SaskNetWork, 2003). With reference to designing a remuneration strategy for the production division of the UK of Lego Group as a HR reward consultant, a few of the above mentioned strategies are to be considered as significant. These strategies are to be implemented by Human Resource Manager with the aim of providing better remuneration policies for the employees in the production process. The responsibility of the management of Lego Group is to motivate the employees to a large extent by providing them adequate remuneration and benefits facilities. It is the responsibility of the HR manager to provide rewards and awards for the employees who are serving adequately by meeting the organisational objectives. It needs to be noted that providing rewards to efficient employees would enhance the productivity of the organisation and facilitate to maintain the objectives of supplying quality products to the consumers at an affordable rate. Better rewards and remunerations enable to increase the morale of the employees resulting in them providing additional efforts in their work process. It can also be stated that with additional efforts provided by employees, it not only increases the organisational effectiveness but also enhances the satisfaction level of the employees from their performed job (Du Plessis & et. al., 2010). Contextually, it can be said that the role of the human resource manager is to provide adequate facilities and benefits to the employees in the production division of Lego. For better remuneration strategy, it is required for HR personnel to implement certain adequate facilities and benefits such as rewards, performance based incentives, awards and bonuses among others to employees in the production system in order to motivate them to provide greater productivity and quality of products for satisfying the demands of the consumers. The strategies of remuneration also entail benefits which include promoting healthier workplace, assisting employees through intrinsic and extrinsic motivation, reducing employee turnover, providing assistance in decreasing level of stress of the employees, bestowing insurance in dental and other health aspects, short and long term disability insurance as well as life insurance. If the above mentioned benefits are provided to the employees, the productivity would increase significantly and there would be enhanced profitability for the organisation. With added benefits provided by the management with the aid of HR personnel, it is possible for the organisation to reduce stress among employees and employee turnover problem. With better and adequate work place, greater satisfaction among employees can be ensured leading to effective productivity and profitability. In order to develop an effective strategic plan in the remuneration context, HR manager needs to formulate a development administration plan for payment procedures. The payment related plan needs to be such which would facilitate to retain, attract as well as motivate employees. Shareholders’ interests also need to be kept in consideration while developing a payment plan as shareholders are the key players who ascertain the long run success of an organisation by a considerable extent. Encouragement of a high-performance culture by ensuring transparency as well as fairness in the provided benefits and compensations needs to be the key theme of the strategy employed by the Lego Group while designing the remuneration strategy. With the assistance of development administration plan, it is possible for HR manager to evaluate the performance of the employees, accordingly which would assist in recruiting, increasing incentives as well as motivating employees to a considerable extent (Armstrong & Murlis, 2007). Policy: Proposed Operational Practice Designing of Remuneration Policies The policies of remuneration can consist of various determinants such as fees of directors, expenses of directors and executive remuneration. The remuneration policies are to be handled efficiently by the organisation to ensure better workforce morale in the organisation. It has been observed that the policies of remuneration consist of various measures which are needed to be taken into consideration for Lego Group’s new production division. In the context of remuneration policies, it is to be noted that the overall remuneration system for non-executive directors should not exceed the annual amount that are determined by the organisation in general meeting. The fees of the individuals in the non-executive directors’ panel are ascertained in a stipulated amount by the board according to the permission of the shareholders. The remuneration that would be paid to each of the directors in the non-executive panel during the monetary year would be included in the financial report of the organisation. Anther policy which can be identified in this context is that before entering into the contract, the director or the consultant needs to receive approval from the directors of the company. The directors are not entitled to obtain benefits in their retirement aspects. In the aspect of director’s remuneration, it can be stated that the organisation would compensate all the expenditures that are propounded by the director in accordance of company’s rules and various levels of authority policy. In reference to executive remuneration, it can be stated that it should be reasonable and fair according to the board of the organisation. It should be structured efficiently in order to motivate and preserve efficient executives with the approval of the shareholders (Tarantino, 2012). The remuneration can comprise fixed and variable remuneration as well as short and long-term incentive systems. The short-term incentives might comprise bonuses that are paid on the annual basis on achieving the targets set out by the management in the organisation. The long-term incentives would be the remunerations that can be provided to the employees under the guidance of Incentive Option Plan (Easton Investments Limited, 2012). From the above description, it can be comprehended that it is necessary for HR personnel to implement these policies in Lego Group which could ensure better performance from the employees in the organisation. In order to efficiently operate the desired remuneration policy, the key responsibility shall be bestowed upon the HR manager to determine the level of performance of each employee in the production division. Moreover, the HR manager requires consulting with Chief Executive Officer (CEO) of the company prior to confirming the remuneration benefits that are to be provided to the staff in the production department. Thus, the two key members responsible for the policy would be HR manager and CEO as CEO would have the final authority to provide consent to policies. In order to operate the policy transparently, the HR manager needs to determine the varied roles of the staff in the production department accurately. It can be said that in order to devise an appropriate remuneration policy, the degree of difficulties of tasks handled by the production division staff needs to identified. Based on this identification, the remuneration amount or rewards need to be set out. Consequently, with the incorporation of these policies the productivity of the organisation would enhance leading to greater customer satisfaction. Conversely, enhanced productivity ensured by the employees would lead to greater rewards from the organisational management. The HR personnel would also assist in providing greater benefits to the employees in terms of increased remuneration with additional benefits would assist employees to work efficiently and effectively towards meeting the organisational demands and producing quality products for meeting customers’ demands by a large extent. In the context of designing optimal reward and remuneration of strategies and policies, it can be stated that the policies and strategies are implemented for the betterment of organisational effectiveness as well as to ascertain certain effective measures for maintaining organisational performance. The organisational management i.e. the management of Lego Group as well as the key administrative level employee i.e. the HR personnel need to properly guide and devise suitable remuneration policies. The organisation needs to look after the organisational objectives, in doing so is required to motivate the employees to perform effectively towards fulfilling organisational goals along with providing superior quality products to maintain the sustainability of Lego Group. Providing better remuneration packages and better working environment to the employees would enhance the productivity and therefore would be reduce the turnover of employees in the production division of Lego Group in the UK. Subsequently, the employees would feel motivated to perform more effectively in a congenial environment and to provide added efforts towards meeting their own expectations and the expectations of the organisation from them. Conclusion From the above observation, it can be comprehended that Lego Group is one of the leading manufacturer of toy materials. The objectives and goals of the group consist of certain key dimensions which include providing safety and security to employees, zero percent products recalling, supporting over 100 million children for receiving better learning aspects and development. The Lego Group emphasises on eight issues that are significant for the business activities of the organisation. The issues include sustainability, environment, climate, employees, human rights, stakeholders, governance and the Lego Foundation. However, there are certain aspects in terms of remuneration which are needed to be sorted out for devising an optimal reward strategy for a new production division in the UK ensuring the organisational effectiveness and better working environment for employees in the organisation. With effective implementation of these policies and strategies, it is possible to incorporate greater productivity in the organisation. Increased remuneration along with added benefits would enhance effective productivity and would facilitate in motivating the employees to provide extra efforts in their work performance. References Armstrong, M. & Murlis, H., 2007. Reward Management: A Handbook of Remuneration Strategy and Practice. Kogan Page Publishers. Du Plessis, J. J. & et. al., 2010. Principles of Contemporary Corporate Governance. Cambridge University Press. 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