Issues of Mitchell Bank Which Affect Its Profitability and Reputation in UK Market - Coursework Example

Total reward Contents Contents 2 Executive Summary 4 Introduction 5 Best practice of similar organisations 5 Royal Bank of Scotland (RBS) 6 Ernst andYoung (E&Y) 6 Analysis 7 Company division 7 Individual businesses 7 MB staff attitude 8 Total Rewards Model 9 FR, NFR and PM of Mitchell Bank 10 Recommendations 11 Implementation of recommendations 11 Conclusion 12 References 13 Executive Summary This report discusses various issues of Mitchell Bank which affect its profitability and reputation in UK market. Presently the business of this bank is in a bad shape. The firm needs to reduce its cost and improve the performance of its employees for increasing its profitability. This report highlights the present problems of the bank in a detailed way. Various solutions are also provided in this report for overcoming those problems. The key recommendations of this report are: Bank has to establish good organizational culture Need to conduct more training programs. Has to increase the use of IT. Need to implement incentive schemes. Introduction Total rewards means the tools used in business for motivating, attracting and retaining employees for long term. Total rewards include all the things which employees perceive as valuable for building strong relationship with the company. With the change of business environment the concept of total rewards is continuously changing and becoming more advanced. TR is composed of five elements. They are benefits, compensation, performance and recognition, work-life, development, career opportunities etc. With the help of all of these elements an organization satisfies its employees. This report deals with Mitchell Bank. Various issues of the bank are discussed in this report. For motivating and retaining the employees, the bank can use Armstrong and Brown model of total rewards. This model will help the bank to improve its business condition and increase its profitability. Mitchell Bank was established in 1895 in UK. The bank operates its business functions with the help of different divisions. The organization has large number of employees. Presently with the increase of competition in banking sector, Mitchell Bank is facing some serious problems which are discussed in this report. Therefore for making Mitchell Bank’s business activities effective and to hold its position in competitive market the company needs to improve many things. Best practice of similar organisations The similar organizations of Mitchell Bank are Royal bank of Scotland (RBS) and Ernst and Young (E&Y). Both of these companies are involved in performing almost same types of business activities. These companies are very much concerned about their employees. They try to satisfy their employees by various ways. Total rewards of RBS and E&Y are slightly different from each other. The elements of their total rewards in these companies are very strong and effective which help them in motivating, retaining and attracting employees (Kaplan, 2007). As a result these companies are able to delivery good performance with its satisfied workers. This is one of the important factors which help these companies to increase their productivities. Royal Bank of Scotland (RBS) The reward strategy of RBS is not based on internal relativities and status but it is based on the value of the business. This bank pays to its employees for their loyalty and length of their service. Their salary depends on their competencies. Rewards are given to the employees when they successfully meet their targets. Their pay scale depends on their efficiency in maintaining internal and external competitiveness. Potentialities of the employees are considered by this company while paying them. Total reward of RBS aims to treat all of its employees fairly. Stakeholders of the company are involved in giving rewards. With the help of TR the bank analyses to what extent reward policies affect the employees. Organizational members involved in establishing reward strategies are HR, directors, unions, line managers, consultants and government of the country (Lyons and Ben-Ora, 2002). With the help of these members the bank has developed effective TR. While providing rewards to the employees RBS does not discriminate among its employees on the basis on race, sex etc. The bank communicates to its employees about various factors and information which make them capable to get more benefits. Ernst and Young (E&Y) TR of E&Y involves many elements like training, salary, organizational culture, work life balance, ethical reputation, benefits etc. All of these elements help the company to retain its efficient employees and attract many new talented employees. Effective training and development programs of E&Y help in motivating its employees. The company supports its employees in maintaining their work life balance. The business reputation and good organizational culture of E&Y influence the employees to perform better (Patricia and Jay, 2000). The company provides various benefits to its employees which satisfy their different types of needs. Salary provided by E&Y is also an important factor in improving the performance and productivity of the employees. Analysis Company division The business of Mitchell Bank is mainly divided into three divisions. These are Retail banking, corporate banking and investment banking departments. Retail banking department deals with small medium clients whereas corporate banking department deals with large companies. Investment banking deals with merger, raising financial capital etc. The main objectives of all of these departments of Mitchell Bank are to increase their profitability by reducing its extra costs and using IT in all of its business division. Objective of Mitchell Bank’s retail banking is to improve its customer service. The objective of its investment banking is to grow the business for long term. Objective corporate banking focuses on increasing the share price of the company. Individual businesses Call centre: The turnover of call centre is very low. The call centre of Mitchell Bank’s head office is relatively higher than the turnover of all its retail branches. The call centres provide customer support service. Finance: This department handles all the financial transactions of the banks and assists the bank in performing various financial services (White, 2005). IT: Information technology department of Mitchell Bank provides operational assistance to all of the departments and offices of this bank. Marketing: This department looks after selling financial products and acquiring customers for the bank. HR: This department is concerned about recruiting, evaluating and training the employees. Many benefits are provided to the employees by this department (Adams and Ferreira, 2008). MB staff attitude Mitchell Bank has many staffs in different departments. But the retail staffs are not efficient to provide good customer satisfaction. They deliver poor customer service. The bank has to lend more money to small medium business as per government rules. So the business managers are feeling pressurised for this. The investment banking department is facing difficulties in retaining efficient professionals. The staffs of this bank feel that their performance of delivering good customer service has deteriorated for meeting huge targets. They are concerned about miss-selling of financial products. Blame culture prevails in the bank with hampers the productivity of employees. Only top down communication system is present in the bank. Cost cutting measures of the bank are making them worried about loss of job which creates negative impact on their performances. Young professionals of the company feel that too many old managers of the bank are blocking their growth opportunities. The bank consumes huge time in implementing any decision. The call centre employees feel that their job is monotonous. The supervisors of the call centre are much obsessed about achieving target. The employees feel de-motivated for inflexible work. Long working hour and culture of investment banking department of this bank influence the performance of employees negatively (Armstrong and Brown, 2006). Employees of this department have problems with their salaries and bonuses. Total Rewards Model Proper reward system for employees helps the company to improve its productivity and performance. At present Mitchell Bank is experiencing many problems with its employees, profitability, cost and business position. Improving the TR will help the bank to overcome these problems. Figure 1: Armstrong and Brown Model Armstrong and Brown Model focuses on various aspects through which an organization can satisfy, motivate and retain its employees. By this process the company can improve its productivity. This model highlights various financial and non financial rewards which influence the performance of the employees. Various types of rewards provided with the help of this model are combined together to form total TR. Performance of the employees are managed through these rewards (Armstrong, 2007). FR, NFR and PM of Mitchell Bank FR: In Mitchell Bank financial rewards are provided to the employees on the basis of their performance. The bank has 20 grades and the job is evaluated on those grades. Particular salary range is fixed for each grade. Annual appraisal of the employees takes place based on their rating. An employee receives special pensionable salary after completing 20 years of service. The bank increases the salary of its employees either by merit or by its general increment pattern. Key professionals of Investment banking department receive bonus and modest salaries (Armstrong, 2009). NFR: In NFR rewards the Mitchell Bank provides some types of benefits to its employees. For this reason some staffs are loyal to the company. The bank provides effective training to young graduates. This training program is named as Graduate Development Scheme. The young professionals are able to enhance their professional skills with the help of this training. This training program makes them understands about the business process of the company. As a result they get to realise that which department of the bank will be suitable for them. Earlier the employees of MB received housing ladder which was considered as one of the desirable benefits by them. PM: Performance of MB employees is managed by appraisal system. The managers annually appraised the employees. The bank has 5 appraisal ratings. Most of the staffs get outstanding or good in the ratings. Individual employees are informed about the bank objectives for coming year at the annual appraisal meeting. Recommendations Mitchell Bank has to overcome its all its problems for increasing its profitability and enhancing its reputation in UK market. The bank needs to establish performance culture and improve various aspects of its organizational culture for retaining efficient staffs. Proper management system will help the company in establishing good organizational culture. To reduce cost and to increase profitability the bank should not lend money to the clients who have the possibilities of not paying back the money. By marketing new products and services the bank can also increase its profitability. MB needs to improve its customer service team for acquiring and retaining more customers. By increasing the usage of IT, the bank can enhance its services. Most of the employees of MB are not satisfied with the business and organizational process of the company. Therefore the bank needs to change its different processes for motivating the employees. MB needs to use incentive schemes for motivating its call centre employees. The managers and supervisors of the banks need to maintain good communication with employees for understanding their problems. This will help the bank to improve various factors which influence the performance of its employees. Implementation of recommendations MB can implement these recommendations by using the Armstrong and Brown Model of total reward. Presently many of the employees of MB are not satisfied with their salaries. Therefore MB can provide variable pay to its employees for making them satisfied. This will help to increase the total remuneration of employees. At the time of retirement MB can provide pension benefits to the employees. This will help the company to retain many employees. The bank can satisfy its employees by giving various non financial rewards. Good performance of staffs should be recognised by the managers. MB can improve the performance of employees by organizing more training programs for developing their skills. Performance of the bank staffs can be managed by establishing good working environment. Efficient employees will stay in this bank for getting many opportunities to develop their career. For reducing its costs MB can implement new technologies which will help the bank to operative various business operations easily within a short time. Conclusion This report deals with Mitchell Bank and its various issues. The bank is present in UK for long time. But with the increase of business competition and complexities the bank is presently facing many problems with its staffs. This report highlights how total reward can help the bank to retain, satisfy and motivate its employees. MB’s profitability is reducing for bad performance of the employees. For this reason the bank is unable to retain and acquire customers though it has presence in many parts of UK. The work process of MB does not encourage the employees for delivering good performances. Some of the employees feel their work as very much monotonous. Moreover the employees are experiencing the threat of losing their job. So they are trying to shift in other companies. All of these issues of Mitchell Bank can be handled by improving its TR. With the help of TR the company can provide many benefits to its employees which will motivate them to deliver good performance. As a result the bank can increase its profitability. Good profitability and strong organizational culture of the bank will help MB to enhance its reputation in UK market. References Adams, R. B. and Ferreira, D., 2008. Do directors perform for pay? Journal of Accounting and Economics. 46(1), pp. 154–171. Armstrong, M. and Brown, D., 2006. Strategic Reward: Making it Happen. Philadelphia: Kogan Page Publishers. Armstrong. M., 2007. A Handbook of Employee Reward Management and Practice. Philadelphia: Kogan Page Publishers. Armstrong. M., 2009. Armstrongs Handbook of Performance Management: An Evidence-Based Guide to Delivering High Performance. Philadelphia: Kogan Page Publishers. Kaplan, S. L., 2007. Business Strategy, People Strategy and Total Rewards. Benefits & Compensation Digest. 44(9), pp. 12-19. Lyons, F. H. and Ben-Ora, D., 2002. Total Rewards Strategy: The Best Foundation of Pay for Performance. Compensation & Benefits Review. 34(2), pp. 34-40. Patricia, K. Z. and Jay R. S., 2000. Total Rewards for New and Old Economy Companies. Compensation & Benefits. 32(6), pp. 20-23. White, R., 2005. A Strategic Approach to Building a Consistent Global Rewards Program. Compensation & Benefits. 37(4), pp. 23-40. Read More