Total Reward Approach to Compensation and Timeline - Research Paper Example

Total Reward Approach to Compensation al Affiliation Rewards program Introduction International human resources management has developed into a controversial issue around the world. The complex management of various personnel within any organization is becoming a great challenge. This has been fuelled by the increasing need for personnel as competing companies and organizations try to beat each other in the business. To acquire and retain the best person in an organization requires more than management. It calls for active engagement of the employees in changes that take place in the organization especially if these changes affect them and their working conditions. Further, compensating the employees’ efforts remains a basic and foundational concept in employees’ retention and motivation. To ensure a comprehensive and fool proof operation of these types of compensations that are besides the salaries, most companies have established systems that recognize what is to be rewarded and how the process is supposed to take place (Kowalewski, College, & Phillips, 2012). These programs are called total rewards programs and are meant to direct the organization on how the employees are to be rewarded to ensure efficient motivation and maximum retention of the employees. The rewards program encompasses all things and activities that the employer regards as motivating from the employees point of view and which are valuable to the general and specific welfare of the employees. Although they include both monetary and non-monetary commodities, the financial and related rewards are the most notable and the foundation of rewards system in an organization settings. Most companies recognize four categories of rewards (Burris, 2012). There are the membership and seniority-based rewards, work status-based, competency-based and performance based rewards. The established system dictates what type of reward is to apply in each employee’s case and how these rewards are to be executed. This paper is aimed at designing a total rewards system based on Coca-Cola Company’s system. By exploring in details the total rewards system of the company, this paper will provide an insight on the basic contained in a specific system. To arrive at this design, the paper will first look into the company and its main objectives, missions and vision and an analysis of the reward system. It is from this analysis that the design will be developed. The organization: Coca Cola The Coca-Cola Company is undoubtedly the world largest manufacturer of beverages and soft drinks. It has been ranked the world’s number one brand on several occasions. Since 1889, the company, whose headquarters are in Atlanta, Georgia has been rising and expanded. It has operated a franchised distribution system. The major market for Coca-Cola brand is the United States of America, United Kingdom, Middle East, Russia, Asia and The other parts of North and South America. The newest markets in the developing countries in Africa are also emerging as important points of consideration. Based on this wide market, the company has branches in more than 200 countries with over 700,000 system employees in the world. The company was founded in Atlanta, Georgia in 1886 by Dr. J. S. Pemberton, who produced the first soda formula. Currently, the company has more than 500 brands of non-alcoholic beverages. The development and success of the company are based on its mission which is to refresh the world, inspire moments of happiness and create value while making a difference. It is on this direct mission that the company bases its standards on. The vision of the company takes into consideration six aspects that the company considers important in their business. These are presented as the six Ps and include people, portfolio, partners, and the planet. Profit and productivity. It is the vision of the company to provide a great working environment for its employees; produce quality products for the consumers; nurture and sustain a winning partnership programs with various partners such as suppliers; ensure environmental sustainability and ensure a profitable production. The company culture over the years has been unique and the main motivator to the management and the stakeholders, like any other culture, it describes experiences, attitudes, values and beliefs of the company. It has always been based on the passion that is converted into action by the members. The passion develops as a result of social interactions among the members that keep them together and drive the actions of each of them. This culture is recognized as an application of the main values of the company that includes leadership. Innovation, collaboration, quality, accountability, diversity, passion and integrity. This culture is then enforced through a variety of ethical principles that the company subscribes to. These principles of integrity, honesty, abiding with the law and accountability have always guided this award winning brand for decades. Although the company claims a high level of success, the progress has not always been simple. This is because the business is always filled with challenges and competition. The major competitor of Coca-Cola Company is Pepsi Company. Which has also been successful in establishing its own market in various parts of the world. The challenges that Coca-Cola Company has faced over the years are mainly related to the legal issues and court proceedings. Most of these have been in relation to cooperate social responsibility of the organization over the past years. The issues are embedded in other issues facing the organization and its brand to include racial discrimination, manipulation of market tests, earning manipulations to disrupt arrangements by contractors and incidences of poisoning (carbon dioxide poisoning in Belgium in 1999) among others. The current challenges of the organization include decreased profit margins than projected in planning owing to changing consumer preferences, rising obesity concerns, the possible increase in taxation of sugar-sweetened beverages, increasing health consciousness and growing regulatory pressure. The Total Rewards System for Coca-Cola Company The general elements of the total reward programs include compensation, work-life balance, monetary and non-monetary benefits, performance and recognition and career development opportunities (Robillard, 2008). All these are necessary for guiding an organisation to realise and make considerations necessary in having the employees motivated and retain them in the organisation. As expressed in the constitution of Coca-Cola Company, the rewards system follows these elements although with some overlap. Regarding compensation, the company bases the rewards on the performance of an individual employee, the experience and work status. Under this element, the company recognises basic salaries, annual incentives, long-term incentives and diversity as major rewards programs. The company compensates mainly by addition of share to an employee who is indirect compared to base salary incentive. This is in line with the long-term compensation for the employees. Equally, the employees get retirement benefits as a long-term measure of motivation (coca-colacompany.com). Cultural diversity in the company is achieved through the many branches that the company has established in many countries. Employees are thereby given an opportunity to choose from a variety of cultural backgrounds that they can work. The work-life balance rewards programs are established in line with the core values of the company and encompass the inclusion of social interaction programs that allow the members and employees to make a health combination of work and life. The annual leaves and holidays allow the members to lead a healthy life away from the work. Similarly, the allowance to work in a culture or among the people that a worker chooses allow them to lead a life that they want. Coca cola offers benefits as incentives to the employees and their families as a means of total reward compensation approach. The leading benefit that an employee gets according to the brand it the ability to make a difference. Since the brand is a world leader in soft drink manufacture and distribution, it offers the employee numerous opportunity to work at different stations as well as to rise through the ranks in different nations as represented by the brand. The employee also gets an opportunity to increase the shareholder value thereby contributing to community development and improvement. This serves as an intrinsic measure of motivation. The benefits system is also diverse and focuses on the individual and the family of the employees in the Promotion of healthy living, offering of sponsorship opportunities to coca cola events for associates and families of the associates (coca-colacompany.com). Further, as a means of ensuring that its employees are fully motivated and feel indebted to the company, Coca-Cola organizes career development programs for its employees all over the world (coca-colacompany.com). Some of the programs that the company has been used over the years to motivate and develop the employees include: Peak performance, which is a performance-based reward that recognises individuals performance and managers who are top performers; Coca-cola university which is a virtual global university for all learning and capability building related to activities in the organization; Assessment and development forums for the employee to ensure that the training needs are identified ahead of time; Functional development program for the enhancement and building of skills, knowledge and competence among employees according to employee department or area of function; and Short-term assignments for job diversification to prevent boredom and monotony as well as build up experience and wide exposure to stimulate new interests (Burris, 2012). Total Rewards program Metrics The company recognises three levels of rewards categories. These are compensation, benefits and career development metrics. The rewards are, therefore, offered under these three metrics. In Compensation, the company recognizes that: Total compensation revenue ratio= (compensation + benefit cost) / revenue. This metric is of great relevance because it includes both cost benefits and compensation for both contingent workforce and employees. It is useful as an indicator of the workforce that an organization spends as a percentage of revenue. It further allows for the addition of turnover costs in the event the organization wants insight into the total work force cost as a revenue percent (coca-colacompany.com). In benefits metrics, the company has always held the concept that: benefits cost factor= benefits cost / total number of employees. The metric, therefore, helps an organization assess and evaluate the cost of benefits that are paid to employees and the cost of administration. When these are compared to the returns on these benefits in terms of skills retention, the profitability of the whole program is evaluated. Development and career opportunities metrics recognizes that: Career path ratio= promotions / (promotions + transfers). The metric measures the number of employees in the organization moving up the ladder of promotion as a percentage of all the employee movement within and without the organization in the promotion. This metrics helps the organization to assess and evaluate the organization hiring program and quality together with training programs for the employees in the organization. Some of the programs that develop the employees include: Peak performance which rewards individuals’ performance and managers who are top performers and the virtual Coca-Cola University for all learning and capability building related to activities in the organization. Workforce Segmentation To ensure an effective reward system, coca Cola as an organisation has effectively segmented its workforce on the job level basis. This entails the segmentation of employees into groups depending on the job families such as administrative or technical. A segmentation criterion is on the job function under the first hierarchy described above. Thirdly the job-specific profiles are considered, and the responsibilities, skills, performance and competence are considered. Under this system of segmentation, the company is able to recognise and subsequently reward the specific drives of an individual employee, their growth potential that may determine their need for career development as well as the obligations and responsibilities that each of them has. This guides the management in decisions related to compensation program. As a rule, high obligations translate to higher monetary compensation in the company. Workforce Requisites Having been in the industry for long, the company has a wide knowledge and concern for its workforce. The company, in a bid to attract, retain and motivate quality employee pool has several prerequisites. The prerequisites include recognizable ability to make a difference in turning the company’s position into action. The on boarding and old employees are expected to be creative, and critical thinking under the core value of innovativeness to enhance freshness in the workplace and motivation through creation and to solve of new challenges. Teamwork training and readiness is widely encouraged through the spirit of collaboration that is created and enhanced in the company’s culture (Why Work at, 2014). Since the company has to make profits, pragmatism and commercial mind-set is a critical evaluating point that the company considers in the process of hiring and training its employees. The company has many challenges in meeting its goals using the total reward program. These include ability to make work meaningful and challenging to ensure creativity by employees since the company has a standard brand that employees have been working on repeatedly in manufacturing. Others are challenges of providing diverse opportunities to develop a wide array of skills for the employees to hold different positions and competition from other organizations in need of skilled employees. Many of the competitors target the employees who have been developed by Coca-Cola Company. If offered better remunerations and attractive benefits, some employees are ready to move. This disrupts the company’s programs for career development as it appears to benefit the competitors. To handle this, the company is tempted to increase rewards that may not be sustainable in the long run. Owing to these challenges, it is likely that the company will also start targeting personnel who are developed from other companies. Other than being a training ground for employees who go and benefit other companies, Coca-Cola Company can also be a consumer of trained personnel. Although this will require revised remunerations, it is a better move to ensure sustainability of the other rewards programs. However, this also comes with a new level of challenges. When key members of the workforce are obtained from other sources, there is a threat to the company culture. Nevertheless, this can be countered by having the administrative workforce, and the main managers developed from the available workforce other than from outside. Recommended Changes to the Rewards Program Retaining and motivating employees is always the main objective of a sound total rewards program. This means that a reward program must ensure that there are effective acquisition and retention of employees in an organisation. Various changes can be applied to the Coca-Cola total rewards program to enhance its effectiveness. First, the company should ensure that they give the employees competitive benefits and remunerations from the time they are brought aboard (Kowalewski & Phillips, 2012). The main reason people get into careers and employments is to get economic benefit. Although it is not the only thing, the employees should be able to identify a comparably better remuneration in the company to prevent them from leaving. This should be strengthened by a detailed description of all the benefits that the employee will obtain and clear conditions for each give. Still on the compensation metric, the company should identify more categories of job segments that can be worth compensating. This ensures that a higher percentage of the workers are motivated through the compensation program. On career development, the company should ensure that all the employees have equal opportunities and access to on job and external training and development. This will increase the technical pool in the company and ensure motivation. Although funding the training programs will promote many employees, it is largely unsustainable and may fail. The company can, therefore, promote study leaves for technical and vocational training. In these leaves, the employees attend trainings at their own cost. When this is effectively balanced with the sponsored training, the company makes training to more people and does not incur higher losses in case trained employee leaves (Luthans, 2000). Funding such training for employees in the form of loans also ensure that the employees will remain with the company for some time paying the loan and hence benefit the company. Outsourcing trained employees as opposed to the newbies in the industry also helps to get past the initial costs of employees development. This will however involve a higher remuneration for the attracted trained employees (Nujjoo & Meyer, 2012). Those who are loyal to the company can be assured lifetime employment. This type of job tenure will ensure that the best are retained in the company to promote its culture and practice. The importance of this is also that with a job tenure, the employees are not only motivated but they too become a motivation to junior employees. Lastly, it is important that employees are allowed chances to be innovative. Considering the current market competition in the beverage industry, single or concentrated ideas are not helpful as diversified ideas. The development of new brands should be done by the employees in their respective work environment. The interaction with the consumers allows employees to identify and respond to specific needs of the consumers. This should be provided by the company (Kwon & Hein, 2013). It increases the scope of the company and the employees whose ideas are put into place will be proud of the company and are easily retained. Risks of Not Implementing the Recommendations Failure to achieve competitive remunerations will drive the employees out of the organisation. The reason behind this is that currently, capitalism recognises the essence of employment to be an economic benefit above all else. Therefore, an employment will be tempted to seek better salaries and remunerations including benefits from other organisations that might be the competitors. Secondly, if the company seeks to develop the employees without considerations of its own future, then there is a risk that many of those who are trained will be lost to the competitors. This is because the company will have spent more on training and fail to give competitive compensations and benefits. Those trained and developed employees will, therefore, find netter pay elsewhere. However, if trained in a form of loan, the company will ensure that they remain in the system for long to pay the loans while benefitting the company. Giving job tenures will help to motivate the employees who have been with the company long enough. As the industry grows, competition is increasing. New companies will seek to recruit managers from established organizations. If not given a job tenure, most of the administrators and executives will be willing to go to other companies where there are more economical, as well as social benefits. Lastly, inability to recognise individual innovations risks having the employees demotivated and ready to go into companies where their ideas are recognised and implemented. When such employees leave, they help the competitors to manipulate the company’s ideas and develop new products to fight those of the company in the market. Recommended Metrics The success of a rewards program is based on three objectives of human resources management. These are attracting, retaining and engaging the best of the workforce available. The three metrics that can be applied in this case are, therefore, the identification and categorisation of attraction drivers such as the company culture, salaries and benefits and the competitiveness. Secondly, evaluation needs to look at the retention drivers in the company. These are conditions that make the attracted employment choose to stay rather than leave. They include resources availability, management issues among other drivers. Thirdly the evaluation needs to look into the engagement drivers or the factors that make the employees feel engaged and wanted in the organisation (Datta, 2012). These will include factors such as training and development, and ideas implementation and involvement is changing. Implementation of the Recommendation (Action Plan) The broad objectives of this plan are; To identify the factors within the organisation that attracts employees into the company. To assess the part that these factors play in obtaining the right personnel for a job. To identify factors that drive retention of employees in the organisation. To identify the main factors in the organisation that motivates employees and make them feel engaged. The implementation will involve the application of the identified factors starting from flagship departments and extending them to the rest of the organisation. The whole process is expected to take up to months to completion. The timelines for this project are as indicated on the appendix. Conclusion Organisations’ success rests on the workforce. This means that with a competent workforce, an organisation can easily achieve its goals and objectives. To get such a workforce, any organisation must be able to attract, retain and motivate a pool of personnel who are competent enough to meet the objectives of the organisation, promote its competitive position and its culture (Zaidi & Abbas, 2011). Such employees are needed by all organisation and are, therefore, easily lost. Total rewards programs ensure that the identified quality of employees is attracted retained and motivated in an organisation. A simple failure in making important considerations can cost the organisation a competent employee. This becomes a greater loss when an employee is taken by a competitor. References Burris, E. R. (2012). The risks and rewards of speaking up: Managerial responses to employee voice. Academy of Management Journal, 55, 851–875. doi:10.5465/amj.2010.0562 COCA-COLA COMPANY. http://www.coca-colacompany.com/ Datta, P. (2012). An applied organizational rewards distribution system. Management Decision. doi:10.1108/00251741211216241 Kowalewski, S. J., College, D. Y., & Phillips, S. L. (2012). Employee Rewards: Evidence From SMall Business Environment. Journal of Management and Marketing Research, 5, 65–76. Kowalewski, S. J., & Phillips, S. L. (2012). Preferences for Performmance Based Employee Rewards: Evidence from small business environments. International Journal of Management & Marketing Research (IJMMR), 5, 65–76. Retrieved from http://ezproxy.lib.monash.edu.au/login?url=http://search.ebscohost.com/login.aspx?direct =true&db=bth&AN=82214311&site=ehost-live&scope=site Kwon, J., & Hein, P. (2013). Employee benefits in a total rewards framework. Benefits Quarterly, 29, 32–38. Retrieved from http://www.ncbi.nlm.nih.gov/pubmed/23488085 Luthans, K. (2000). Recognition: A Powerful, but often Overlooked, Leadership Tool to Improve Employee Performance. 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