Managing a Total Rewards Program - Coursework Example

Managing a Total Rewards Program College Organization Overview This document will discuss the total rewards program for Rational Holidays Hotels, a leading multinational foodservice retailer that has locations in seventeen different countries. The organization has an employee base of 20,000 professionals, who are effectively managed by 2000 individuals. Given the firm’s global presence, each of the management staff is proficient in speaking a variety of languages. Most importantly, Rational Holidays Hotels fully understand that policy success demands that the policies be connected, simple and leveraged. Total Rewards Strategy Pursuant to the overview provided above, it is clear that Rational Holidays will only be capable of meeting its HR needs if it adequately accomplishes a number of crucial elements. According to WorldatWork (2007), the primary aims of a TR strategy are to communicate a unique value proposition that sufficiently meets the needs of current and potential employees in order to minimize unnecessary employee turnover. Secondly, the strategy aims to offer a framework for the design, administration and communication of rewards programs by employers. To achieve these objectives, Rational Holidays must conceive a suitable strategy involving the various elements: The first element is to lay out the company’s strategies. In other words, the firm must first articulate its core values together with its business strategies. Particularly, the firm must spell out how the proposed strategy will ensure that the business needs as well as aims are met. In addition to this, the company will need to stipulate exact timelines when goals are set to be achieved. The second vital element that be encompassed in the TR strategy is the statement of the firm’s overall objectives. It is well-known that multinational companies operate in an environment that is highly diverse, from a number of perspectives. Apart from the diverse legal requirements involved, multinationals have to respond to different customer needs, just the same way that it has to deal with the demands and conflicting opinions of numerous shareholders. As a result, the TR strategy for Rational Holidays will need to include distinctive statements that outline how the system will uphold these diverse needs. To accomplish this, the approach will need to clearly delineate the roles that will be played by every reward element. The third element is prominence. Every TR strategy ought to give a general description of the superiority of compensation rewards over other tools with an impact on actions as well as decisions. To achieve this element in the TR system, Rational Holidays should seek to envisage the experience of employees as a whole. The inference of this is that the strategy must be incorporated as a leading approach to employee motivation, rather than being used as a mere supporting component. Additionally, the company will have to decide what it wants to be celebrated for (WorldatWork, 2007). The fourth element entails performance measures. Here, the formulated strategy should plainly identify the criteria that will guide rewards and compensation, along with the measurement level that will be appropriate for business unit. Likewise, expectations concerning the extent of the effect of rewards on employee actions must be described. The fifth element of the TR strategy is to describe the various reference points to be used by the organization in defining how competitive the rewards scheme is. The important thing here is to keep in mind that the company faces strong competition, and that operations involve multiple business units. Regarding the latter point, this element requires careful evaluation of reference points that could differ among such units. Equally, Rational Holidays will need to design its rewards package in a way that relatively matches its key competitors, since these are likely to prey upon the first employee skill if the employees feel they are not being rewarded properly. The sixth element is competitive positioning. The firm will need to use the TR strategy as an avenue in which it will describe the position it desires to occupy among its competitors. WorldatWork (2007) advises multinational companies to define signature plans in order to avoid creating rewards systems that are no different from other industry players. The seventh element is to determine the extent of consistency and internal equity. What this means is that the TR statement envisioned by the company should provide a discourse of uniformity in the manner of application of the strategy throughout the organization. Here, it is vital to maintain a balance between the firm’s internal operations and the external aspects. In the event that internal relativities clash with the external ones, the company must draft a plan that defines the more important of the two aspects. The eighth element entails communication as well as involvement. Communication is a key factor of organizational success; and with reference to the TR system, a clear definition must be made concerning the scale of rewards program information that needs to be divulged to employees. On top of this, this element will involve the outlining of the extent to which employees are allowed to participate in designing and administering the rewards scheme. In short, a clear line separating rewards design from management accountability has to be drawn. Similarly, the strategy should state the firm’s policy regarding employee unions and any other collective bargaining entities. The other element in a TR strategy is governance. It is essential for Rational Holidays to ensure a fair degree of constancy in the core principles that govern its rewards program. However, it is highly essential to conduct a periodic review of underlying programs in order to ensure competitiveness. As such, the strategy must state the frequency of such reviews. The final element that should be included in Rational Holidays’ TR strategy is the management of data along with information. The company will need to highlight specific guidelines for managing data and its various information sources. Furthermore, the methodologies for gathering and reporting information must be outlined. In the same way, the firm should describe the general process it will use in measuring the effectiveness of the program. System Advantages From the foregoing exposition, several advantages of TR systems are evident, as discussed in the succeeding paragraphs: The first advantage is that the strategy helps employees to avoid depending on dubious as well as costly financial incentives (Armstrong, 2012). In essence, the TR plan comprises recognition, compensation, work life, benefits, and development opportunities. Unlike conventional reward plans that merely offer salaries or casual wages in return for employees’ effort and time, the TR plan provides a diverse range of rewarding employees. Apart from ordinary compensation, employers provide benefits such as social insurance, paid vacations and other schemes which protect employees from life-threatening financial risks (Terry, 2014). The second advantage is that TR systems promote cultures in which exemplary performance on the part of employees is recognized, valued and rewarded. It is fact that organizations that align their corporate performance with personal performance witness great things happening in the workplace. A distinct recommendation of the TR system is that the organization spends time assisting employees to create personal goals, all the time offering regular feedback concerning individual performance. Moreover, the recognition accorded by the TR system strengthens positive employee behaviour. The third advantage of the TR system is that it improves the organization’s responsiveness to dynamic employee needs. According to Armstrong (2012), a TR program introduces more flexibility, value and choice to employees. Another recommendation of the TR system is that employee support ought to be provided through a number of aspects, all of which are intended to set up a work atmosphere that is favourable for productivity along with satisfaction. Some of these aspects, as listed by Terry (2014) include workplace flexibility, paid as well as unpaid leaves among others. The fourth advantage is that it enhances the engagement of employees, thus improving their performance. Every well-designed TR program offers a direct motivation for employees to record outstanding performance. On the one hand, most employees are likely to perceive such TR programs as ostensible trajectories through which they can boost their careers. Conversely, aspects like professional development, which are crucial components of TR plans, allow workers to acquire new skills. In this way, employees’ knowledge together with the ability of job performance is significantly improved. The fifth advantage is employee retention. According to Esposito (2006), a TR plan is an immediate enticement for employees to remain in the organization. The TR system gives employees sequential long-term projections as well as goals. Similarly, TR systems create sense of transparency within the organization, which is instrumental in fostering healthy relationships in the workplace. The implication of this is that TR systems put managers and their employees on an equal footing with reference to the knowledge possessed by both entities concerning career trajectories. Communicating the Plan For a total rewards system to be flourishing, it must be extensively articulated. The ensuing paragraphs portray the richness of the communication plan that must reach such diverse people and geography: The first component of the plan that must be communicated is compensation. WorldatWork (2007) cautions that communicating compensation schemes has numerous innate challenges, a notable one being poor understanding of pay systems. To make matters worse, an organization like Rational Holidays that operates in diverse cultural settings is faced by communication obstacles given different corporate cultures as well as philosophies about human resource. Moreover, compensation is a highly emotional issue. To get over these obstacles, the organization ought to make it apparent to the workforce that they will be compensated depending on their job value. Accordingly, communication about compensation should be based on performance management, base pay, and variable pay. The second component of the plan is benefits (Costello, 2010). Unlike the communication of compensation, which is often procedural, benefits communications is centred on certain events such as employment and needs. This implies that an employee can be given certain benefits in the event that a certain need arises. Whichever the purpose, effective communication of benefits is essential as it helps in cost management. Like compensation, benefits have challenges. The basic guideline is that the organization must consider the prevailing legislation when communicating benefits plans. For example, the firm should state that the program may be changed or terminated under certain circumstances. Nonetheless, employees must be notified of such discontinuations or amendments. Other aspects to communicate under benefits include legal rights in case employees take leaves, and rules concerning insurance. The third component of the plan is work life. Employee motivation is greatly improved if the company strives to achieve a balance between the employees’ work and lives. Consequently, the TR plan ought to include work-life options that will essentially include the provision of flexible working hours to all employees. In addition to this, this component also requires the management of an organization such as Rational Holidays to reassign workers to assignments that are more meaningful and rewarding. Equally vital is the need to let employees know when they can take their time offs, besides communicating any plans that the organization has towards supporting its employees with care for their dependants such as children and elderly parents. The fourth component of the plan is performance together with somrecognition. Terry (2014) states that recognition of employee contribution is directly proportional to corporate success. Because of this, the TR strategy communication plan must also include the various recognition mechanisms to be deployed. For example, Rational Holidays could give cash rewards for outstanding performance. Alternatively, such recognition could take the form of verbal praise, trophies or even gift vouchers. The last component of the plan is development along with career opportunities. Employees perceive that they are growing when they are given learning opportunities. Rational Holidays could support development opportunities by arranging employee trainings, seminars or sabbaticals. Other ways of rewarding employees through this component include career guidance, internal job transfers and apprenticeships. Ensuring the Plan is Competitive Additionally, for a total rewards plan to be successful, external equity must be ensured. The succeeding paragraphs describe the steps that Rational Holidays will take to ensure the competitiveness of the plan for the multinational company: The first step is job analysis. In this step, the company will systematically procure pertinent information concerning the duties as well as responsibilities of every employee. This will guide the organization in determining employee’s compensation structure. Apart from this, the analysis will guide Rational Holidays in assessing employee performance; thereby help in documenting methods to be employed in employee training. The second step is job documentation together with descriptions. According to WorldatWork (2007), organizations cannot skip this step given the increasing legislations governing business operations. It is on the basis of the job descriptions that Rational Holidays will devise suitable pay programs for its employees. This documentation will have to be made from the standpoint of the prevailing market prices, thus ensuring that the company remains competitive. The third step is job evaluation, which is a phase in which Rational Holidays will ascertain the relative substance of its jobs. This step is imperative as it helps the firm formulates an equitable compensation system based on the job rather than the employee. The fourth step is for Rational Holidays to gather and evaluate data about the labour market. Like most international companies, Rational Holidays might decide to determine the hierarchy of its job-worth on the basis of the salaries paid by rivals in the same industry. If this is the preferred alternative for the company, it will be fundamental to identify relevant markets from which pay data will be collected. This step will enable Rational Holidays to decide wisely on its compensation program. The last step is to determine pay rates. After collecting data about market rates, the other crucial thing is for Rational Holidays to fix salary amounts or ranges for employees. In most cases, organizations rely on central tendency measures like mean, mode and median. Similarly, it could also be prudent to use percentiles in making these decisions. Nonetheless, selection of a suitable pay rate must consider factors such as geographic position, industry type, and market movements (WorldatWork, 2007). References Armstrong, M. (2012). Armstrongs handbook of reward management practice: Improving performance through reward. London: Kogan Page. Costello, R. (2010). Communicating Total Rewards:A Spotlight on the Employee Value Proposition. AoN Consulting. Esposito, F. (2006). Foundations of intelligent systems: 16th international symposium, ISMIS 2006, Bari, Italy, September 27-29, 2006 ; proceedings. Berlin [u.a.: Springer. Terry, R. (2014). 5 Advantages of a Total Rewards System. Retrieved from August, 2014. WorldatWork (Organization). (2007). The WorldatWork handbook of compensation, benefits & total rewards: A comprehensive guide for HR professionals. Hoboken, N.J: John Wiley & Sons. Read More