Motivation, Compensation, and Rewards - Research Paper Example

Case Study: Motivation, Compensation and Rewards Introduction Townsend Rock Industries is a company that is a leader in the cement industry. The company is involved in producing, marketing and selling concrete materials used in construction and building. The company serves many consumers ranging from the residential to commercial consumers in various construction companies. It is a multinational company that serves customers from various countries the company was started in the 1930s and since then it has seen an improvement in technology, which has led to the realization of a challenge in the operation of the human resources department. It however has a large number of employees whom it ensures that they receive a fair and equitable treatment. TRI Company however will require an appropriate compensation, reward and benefits system to enable its employees to stay motivated and to improve their performance. The appropriate performance appraisal system will also be required to measure the performance of the employees. The appropriate reward system will therefore be needed and this involves the financial rewards, non-financial compensation and the employee benefits. The reward system will be composed of processes that measure the value of job, motivational practices applicable, structures that relate the appropriate pay to the value of work done, schemes for providing incentives and rewards and structures that help to maintain the reward system (Armstrong, 2002). Compensation models With the large number of employees available in the company, TRI will require compensation models that will ensure that the employees are more productive in their contribution to the company. The models that TRI may use to compensate their employees include merit pay, base pay, which include salaries, rewarding them using hourly wages, contingent pay, which includes use of bonuses, stock options, and gain sharing plans, indirect compensation and profit sharing. Base pay, which is also referred to as basic pay will include payment of a basic salary to the employees in the organization. The application of this model to TRI Company will involve ensuring that every employee is entitled to a basic monthly salary, which they should receive at the end of every month, year or other determined interval. The basis for this basic salary will be the managerial judgments that are used to recruit these employees. It is used as a platform through which other additional payments are determined. It also forms the platform on which other entitlements such as pensions are based. Merit Pay for TRI will involve determining the amount of output that can be derived from each employee and offering bonuses depending on the levels attained in addition to the basic pay that they receive. These bonuses will enable them to aim at achieving higher output levels. Payment of bonuses will also be used as a form of contingent pay model whereby employees will be entitled to other forms of pay other than just the basic salaries. Other forms of contingent pay will include payment of commissions, payment based on skill and payments related to career development (Grote, 1996). The other model that TRI should use is the stock options, which will require the company to offer compensation to the employees in form of offering them shares of the company at a price below the shares’ market price. This model will help to keep the employees motivated and will encourage then to work hard towards achieving of the company’s goals and establishing themselves as part of the company. The objective of maximizing the wealth of the shareholders will also be more relevant and they will be willing to work hard and delivering their best to the company in order to achieve its goals. The model of profit sharing will be applicable to TRI once the company has established the model of stock option. This will imply that employees will be entitled to shareholding in the company and therefore it will be necessary that the profits be shared to them in the proportions of the shares that they hold. Gain sharing model will involve encouraging the employees to improve the efficiency of the company, by linking the financial rewards of employees to improved performance of the business unit. Indirect model of compensation will require TRI Company to offer various benefits to the employees other than the financial rewards. The benefits will include programs such as providing employee welfare, offering them membership to clubs, vehicles, and offering scholarship for their children. These benefits will also benefit the employees since they are not taxable as the other forms of compensation are (Armstrong, 2002). There is however a wide variety of employees in TRI Company which will necessitate coming up with the most appropriate model of compensation that will put in consideration this wide variety which includes the senior executive, senior management, supervisors, other laborers and drivers. The most appropriate compensation models for the wide variety of the employees will be compensation by salaries and benefits. Determination of salaries will be based on the level that the employees belong in the organization. Employees in the higher levels such as the senior executive will be compensated with the highest amount of salary which will be based on the their qualification level and their performance in the company. The employees in the lowest level of operation will be entitled to the lowest amount of salaries. Other models that will be applicable for the employees in the senior levels of the company will include stock option to allow them some benefits of ownership of the company and to ensure that they work hard to see the effectiveness of the maximization of shareholders wealth. This will ensure that they come up with the appropriate strategies that TRI can use to increase the productivity in the employees and to ensure that maximum profits are achieved. This model will be accompanied by profit sharing model, which will ensure that the employees in the senior levels, who through the stock option model have acquired a portion of ownership in the company, receive a proportion of the profit, which is proportional to their stock ownership (Grote, 1996). For the employees in the lower levels of the company, other models that will be applicable to them in addition to their salary is bonuses and commissions which will be based on their productivity and the output levels attained. The bonuses and commissions will help to keep them motivated, realizing that higher productivity levels will attract higher levels of commissions and bonuses. Other employees whose performance is indirectly related to the performance of the company will be compensated using fixed salaries and other benefits. The benefit packages applicable for the different levels of employees will be different. TRI Company will therefore require designing different benefit packages for the different levels of employees. The employees in the senior levels of the company will require benefits that will ensure that they live prestigious lives that imply their positions in the company. These will include benefit packages such as giving them cars, offering them membership to clubs and offering them with holiday trips with their families. The employees in lower levels of the company will be entitled to benefit packages such as gifts, festival celebrations and entertainments. There is however other benefit packages that the company will apply for all the employees irrespective of their levels of operation. These include medical covers and providing them with houses. The benefits granted to different employees in the different levels will ensure that they feel encouraged to be more productive and to put efforts in attaining the goals of the organization. Promotion of the employees in the lower levels based on their performance will also ensure that the others are as well motivated to work hard to attain the same promotion (Armstrong, 2002). Employees as the human resource are a basic requirement in any business organization. They see the effective operation of the company and its profit maximization goal achievement through their hard work in performing their duties in the company. The future growth of the company therefore is dependent on the human resource, which is made up of the employees. For TRI Company to grow in the future the contribution of employees will be basic and therefore the company will need to plan in advance about the employees needs in facilitating the growth. Growth will require that the company keep up with the dynamic world whereby constant changes in the business processes will be expected. To keep maintain this, the company will need to meet the changing needs of its human resource in terms of skill requirements that emerge with the changing businesses processes. These are the staffing needs that will either require the training of the existing staff and recruitment of more employees. The need to recruit more employees will be as a result of the excess capacity created following growth of the company. The excess capacity will create more opportunities for more employees who are qualified for the positions. There will be need therefore for the human resource personnel to carry out the appropriate recruitments that will help to see that the appropriate personnel are recruited for the various positions (Podmoroff, 2005). Efficiency of the compensation plan in this case will be a determinant for analyzing whether the company is able to attract, develop and retain the employees. Therefore, if the company maintains an efficient compensation system, it will be able to attract a large number of potential employees and will be able to have a wide range of the best suited for the job by analyzing their skills levels and abilities. This applies in the case whereby for instance the company holds a compensation scheme that keeps their employees satisfied and motivated to work. The employees in this case will pose a positive image of the company to the members of public and from this, many will desire to work for the company. The members of public might also feel attracted to work for the company due to their admiration f the benefits that they observe being enjoyed by the existing employees of the company. Efficient compensation scheme also will enable the company to develop the existing employees by training them to acquire the relevant skills. This will ensure that the employees are retained in their job positions even in the case of changes in the business processes. Good compensation models will also ensure that the employees are satisfied to work for the company and the rate of resignation will be minimal. It the company uses poor compensation models, it will not be able to attract new employees and will lack the ability to develop and retain the existing ones (Armstrong, 2002). Motivation Motivation of employees is a process whereby the human resource personnel will ensure that the needs of the employees are satisfied in order to keep them highly productive to achieve the goals of the company. Pay for performance is one method of motivating employees that is applicable to TRI Company whereby the motivation is based on quality and quantity of the work performed by the employees. This will involve using compensation methods such as gain sharing and merit pay. Another method of motivating employees is by use of management by objectives, which encourages a participative goal setting process by involving all the employees in the organization. This also ensures that the goals of all the employees are related to the goals of the company. Job redesigning is another method, which is made up of job enrichment and job rotation. Job enrichment involves breaking the boredom caused by jobs that are repetitive and inflexible while job rotation will involve moving the employees between different jobs to increase their interest. Another method is participative management, which will ensure that employees feel motivated from their involvement on decision-making and problem solving. Performance appraisal is the process of measuring the performance of the employees in a company and the most appropriate system for TRI Company will be a system that will involve the observation of performance of the employees, documentation of the performance and communication. Developing an appropriate appraisal system for TRI Company will involve working with the employees to set goals related to work and to set standards for their performance. The next step will involve observing and documenting the performance of the employees in relation to the set goals and standards. Another step will involve meeting with employees periodically to discuss their performance and reset the goals if need arises. The final step will be to conduct a formal performance appraisal at the end of every year in the company (Podmoroff, 2005). Communication plan The appropriate communication plan that TRI Company will use to communicate the performance appraisal system, compensation and benefit program to its employees is an open communication system that will ensure direct communication between the employees and the supervisors or the managers involved. The communication will begin at the point when the implementation of the appraisal system starts and will involve communicating the goals of the process to the employees. The two-way communication will ensure that the managers are able to understand the concern of the stakeholders especially the employees. This open communication plan will require the outlining of the need for communication and will ensure that the right communication is extended to the right stakeholders at the right time. The plan will also ensure that the objective of communication is maintained and that the right message is communicated. The open form of communication will be efficient in reaching the target audience, which is the company’s employees and will ensure that the supervisors are able to get the right feedback from the employees. It will therefore require great collaboration of all the parties to see the effectiveness of this communication and to ensure that all the clarification that might be required is efficiently made (Grote, 1996). Conclusion In conclusion, motivation, compensation and reward of employees are essential for any business organization considering that they relate to management of the human resource, which is an important resource in operation of any organization. TRI Company will therefore require implementing the models recommended to enhance effectiveness in its compensation, and motivation of employees. It will then require to implement the recommended communication plan to ensure that communication of the implemented plans. References: Armstrong, M. (2002). Employee reward. London: Chartered Inst. of Personnel and Development. Podmoroff, D. (2005). 365 ways to motivate and reward your employees every day-- with little or no money. Ocala, Fla: Atlantic Pub. Group. Grote, R. C. (1996). The complete guide to performance appraisal. New York: AMACOM. Read More