MANAGEMENT ACCOUNTING AND FINANCIAL MANAGEMENT - Essay Example

Vodafone Company is a British multinational company that deals with telecommunication services. It holds the second position mobile telecommunication company worldwide. The company owns and operates in more than 30 countries. Evolution of Vodafone brand started in 1982 after the establishment of Racal electronics plc when Jan Stenbeck spearheaded the joint venture between Millicom and Racal Vodafone. This evolved to the modern day Vodafone. Recent research indicated that Vodafone has introduced a tiered employee reward program that offers an incentive to over 79,000 employees worldwide.

The Vodafone announced its intentions of creating the ‘Vodafone Heroes’ both internally and globally. This saw the company rewarding some of its stars. The Vodafone Heroes are entitled to quarterly incentives voted upon through the company’s SMS system. The company also recognizes its heroes on an annual basis where the management must select any gift and give to the people who perform exceptionally (Eaton & Duncan 2002, p. 284). While it is a great thing to recognize and reward employees, Vodafone is faced with challenges in establishing the reward and incentive systems for their employees.

This paper identifies challenges experienced by Vodafone in its establishment of reward and incentive system and proposes a constructive executive compensation system. Effective incentive system must enhance motivation and employee skills by acknowledging their successes and aggressiveness. Reward and incentive systems depend on employee effort and their progress towards the established goals. This must be, therefore, tailored to the objective of the organization and must enhance increased profitability, reduced employer costs and enhance employee-driven changes within the organization.

Effective rewards and incentives acknowledge what the organization aims at rewarding (Bean 2004, p. 11). Nevertheless, despite the great role played by rewards and incentives in the organization performance, the efficiency is faced by a number of challenges. The three main challenges facing effective establishment of rewards and incentives systems include the autonomy, finding the appropriate context and use of sponsored content (Westerman et al. 2008, p. 409). Sponsored content challenges The implementation of strong incentives and reward system triggers employees cross the ethical boundaries.

Valuing a reward compels employees choose the easiest and the shortest way of attaining it. Such a tendency to rationalize justifies unethical acts and harmful decisions. In addition, the management must be very cautious since incentives and rewards carry with them some form of payment inequality. This may encourage jealousy, resentment and disappointment upon the people who fail to receive incentives or rewards. Studies indicate that people the judgment made by people regarding payments is never in absolute terms; rather, it compares the pay with that of their peers.

Therefore, establishment of rewards and incentives must be carefully considered ensuring that some staffs never feel overlooked. This is because benefits to high performers seems to be outweighed by costs to low performers who feel unfairly treated and may tend to reduce their efforts. Studies indicate that the pay inequality undermines performance and retention of employees. Therefore, the management m