The Effectiveness of Total Reward for Mitchell Bank - Coursework Example

TOTAL REWARD REPORT FOR MITCHELL BANK Unit: Table of Contents Table of Contents 2 6.0 IMPLEMENTATIONS……………………………………………………………………………………………………………………..9 REFERENCES 1.0 EXECUTIVE SUMMARY Having started in 1985, Mitchell Bank has achieved about 400 branches nationwide. The bank constitutes various major departments carrying out its operations: Retail Banking Department, Business Banking Department, Investment Banking department and Corporate Banking Department each responsible for specific tasks. The Bank has been experience low profitability in the recent times as compared to before. Despite of operating under 15,000 staffs, there has been a low turn over of staffs in retail branches and relatively high in Head Office. The bank has also experienced more staff movements between Business and Retail banking and few movements between Central Support functions and Corporate Banking (Wright, 2004). The foundation of reward carried out is job evaluation and the organization has 20 grades. Due to the difficulties experienced in the Mitchell Bank, this report has been made to find solution to the problems through Total Reward. The report is to analyze the effectiveness of Total Reward in MB and come up with recommendations to promote high profitability and employees’ motivation within the bank. 2.0 INTRODUCTION Total reward as a term had been adopted to give reward strategy that come with extra components like development, learning together with factors of the working environment, into the benefits package (Armstrong & Brown, 2001). Total rewards are all the equipments accessible to the employer that may be applied in the attraction, motivation and maintenance of the employees. According to Armstrong, total reward approach benefits involve total effects of different reward types giving a deeper and progressing impact on employees’ commitment and motivation (Wright, 2004). The employment relation developed by the total reward approach applies total use of transactional and relational rewards and hence more appealing to the employees (Davis & Edge, 2004). Total reward could be financial or non-financial. Financial Reward (FR) constitutes job-based payment which gives base pay considering the job’s significance, and person-based pay that gives rewards in the merit’s shape pay that identify individual’s capability or contribution. Non-financial motivators are the intrinsic factors that concentrate on recognition, achievement, influence, responsibility and personal growth (Armstrong, 2012). The model of total reward applied in this report Towers Perrin. Adopting this model would provide improvement on productivity and lowers staff turn over since it is more in details as compared to other models. The model assists in employing core talents and promotes the status of the employer both externally and internally in MB (Tsui & Lai, 2009). The three elements considered in the total reward includes: Compensation; stock options, salary and bonus on performance: benefits such as; private healthcare, life cover, cars, parks and pensions; and work experience; acknowledgement, work and life balance, and employee development. TRANSACTIONAL (TANGIBLE) INDIVIDIVIDUAL COMMUNAL RELATIONAL (INTANGIBLE) Figure 1: Total Reward Model (Armstrong & Brown, 2001) 3.0 PRACTICES OF OTHER BANKS Banks such as Royal Bank of Scotland (RBS), CIBC have taken wider approach that moves to strengthen preferred employees behaviors and actions and also are occupied in the creation of persuasive significance schemes. Royal Bank of Scotland provides total reward benefits parcel which was formed after staff discussions (Wright, 2004). The parcel is divided into six groups: Insurance like life assurance for partners and next of kin; private health cover; savings like charitable contributions to pension schemes; Lifestyle features like, retail vouchers, childcare vouchers, holiday and basic salary; Innovative features such as facility to be bought of sold until three days’ leave; lawful rights helpline stipulation; and accessibility of extra car leasing methods for the employees (Armstrong, Brown & Reilly, 2010). More benefits are now available for the employees like the availability of Christmas bonuses. Some important benefits that are not categorized under value account, however they are included in the statement of total reward that each em0ployee receives annually. These are benefits like group-profit share system, basic pension system, and death-in-check benefit and bonus related to performance (Thompson, 2002). Canadian Imperial Bank of Commerce (CIBC) is committed in the provision of employees with viable and fair reparation that shows people involvement, business presentation and related markets. The banks total compensation programs composed of direct and indirect mechanism. These both reward employees’ presentation and ability and encourage employees’ well-being (Tsui & Lai, 2009). The bank also gives benefit package that fits the specific needs of the employees and the children. Benefits options given includes dental, insurance and medical. The employees are also qualified to employees’ offer whether they are part time or full time, permanently employed or temporary, despite of service years, job levels or salary. The offer given includes lower fees of transaction, special services and interest rates (Thompson, 2002). The bank also applies formal and informal systems to recognize employee and the contribution of the team across the year. Formal programs acknowledge outstanding presentation by the employees at the bank. The formal programs are those like, CIBC Achievers Programs, President and Chairman Council Awards. These programs were developed to appreciate those who showed Teamwork, Trust and Accountability. 4.0 ANALYSIS/DISCUSIONS 4.1 Across the Bank The bank has been facing various difficulties generally affecting its daily operations. The profitability of the bank has fall as compared to the previous years. This has occurred due to competition from various organizations such as building societies and supermarkets. The government has also come up with legislations that controls and monitors the amount of capital held by the bank (Armstrong & Murlis, 2007). Having experiencing low profitability the bank puts the burden on the employees. The stakeholders on the other hand push the mangers for more profits. This will lead to reducing the number of employees or reducing their salary. This on the other hand leads to the cutting down of rewards to reduce the company’s expenses. 4.1.1 Financial Reward MB has applied job evaluation in which there are 20 grades with each having a particular salary range. The salary ranges have to be short. The bank gives a pensionable salary increase after each twenty years. They bank is also on provision of employees benefits. The grading system is vital for the employees as the amount of work at various levels vary. However, some employees will be putting more efforts as compared to their colleagues. Such employees should be acknowledged and rewarded with benefits such as hardship as this motivates their colleagues to put more hard work towards the achievement of the goals of the organization. 4.1.2 Non-Financial Rewards MB has ensured the appraisal of staffs on annual basis through its managers. This move has acted as motivation to other employees. However complaints have risen from various staffs of poor award of ratings. The managers have been accused of carrying out the ratings as something that is just in the organizations calendar. The ratings should be done in a way to recognize potential employees who hardworking. 4.2 Departments The retail department staffs have felt that MB has many targets to achieve at their premises. This has brought confusion on which targets comes first. There is complaining of shifting from customer-oriented services to concentration on the objectives (Davis & Edge, 2004). This should be reconsidered as the customers are the ones who allow the business for achievement of the general objectives. Limited access to risks has affected the bank managers operations. The staffs are also under limit movements due to high prices of the houses. This requires for house allowance to make them afford good houses (Heneman, 2002). There is limit employment to the young professionals in the high ranks due to existence of the high population of the old mangers who should be allow to retire to give room to young and energetic professionals. The cost cutting exercise is of more disadvantages to the business staff as this will limit their expenditure hence cutting down their normal budget. The staffs in the Investment backs have complained on long working hours. This limits time for being with the family for having fun. This lowers the employee-family relations as they find it to concentrate more on work than family needs. 5.0 RECCOMMENDATIONS For the achievements of the objectives of the organizations and high profitability, various recommendations are required for reorganizing the organization. Achievement of the objectives usually requires a good employer-employee relationship. This can majorly be achieved through total reward to motivate the employees to work towards the achievement of the goals of the organization (Tsui & Lai, 2009). Various recommendations have been suggested to improve the services of MB: Well organized recruitment and retention: MB should give equal chances in terms of decision making or formulation of objectives. Positive workplace is crucial for the discovery of the talents. Valuing the employees and retention needs a well organized total reward. Promoting individual needs in the most efficient way of acting to retention and recruitment difficulties. Sensitive visibility in a tight labor market: profits have become low with some staffs moving to join other well organized firms. MB is therefore losing more skilled employees to other competitive organization. The bank should therefore come up with a powerful employee brand that other organizations cannot adapt. This is done by the bank bringing together and marketing convincing reward package that would retain and attract more employees into the organization. The employees should therefore be allowed a wide range of allowances and benefits. Recognizing the individuals who are committed and competent is very important. The bank should not only look at the mangers but also the individual effort. Mangers who are not performing should be impeached and the staffs who are hardworking given their position. This will also acts as a motivator to other staff members. The bank should concentrate more on the departmental objectives as compared to the general objectives. This is due to its many branches the achievement of the objective at that level makes it easier to achieve the general objectives. 6.0 IMPLEMENTATIONS OF RECCOMMENDATIONS This is the most crucial part to prove the effectiveness of the report in the provision of solutions to MB. The implementation process followed by the team is a follows: development phase; analysis of the existing package; elements found in total reward; design phase; implementation; and engagement of employees and communication (Manas & Graham, 2002). STAGE EXPLANATION DEVELOPMENT OF THE CASE OF MB The team is involved in the reviewing of the objectives of report. This also involves the reconsideration of the state of MB. The team should understand the reason for the implementation. For MB this is to promote profitability and motivation of the staffs for the achievement of the bank’s objectives. The team also involves the selection of the organization members to engage in implementations. This will need the department mangers and human resources. ANALYSIS OF THE EXISTING PACKAGE The team will then be involved in the analysis of the recent total reward of the bank. Reviewing the current reward will guide the team on where to start from and what to include and omit. The team will check the demographic of the organization and compare the departments if they accesses different rewards. There will be need for consultation of the experts and the high ranked mangers on the rewards used. ELEMENTS FOUND IN TOTAL REWARD The team will analyze the identified rewards to find out what they constitute or what the rewards cover in details. Each aspect identified can be taken in a step by step approach or implemented simultaneously. DESIGN PHASE After consultations, the team may decide to prove the new benefits. The members should therefore ensure that the benefits would bring positive changes to the bank. This phase also allows for the analysis of best reward for different sectors. The organization should also be considered in deciding which scheme fits it. IMPLEMENTATION The new reward should first be tried on a group of employees to see its effectiveness. Rewards that do not bare fruits or affects the business negatively should be rolled out. ENGAGEMENT OF EMPLOYEES AND COMMUNICATION Employees should be tested on what they expect from a given reward. This will have the views of the employees considered. Communication policy is also important to give message on what the required organizational behaviors are. This can be strengthened by developing employer brand. Figure 2: Implementation phases (Armstrong, 2012). References Top of Form ARMSTRONG, M. (2012). Armstrongs handbook of reward management practice: improving performance through reward. London, Kogan Page. Bottom of Form ARMSTRONG, M. & BROWN, D. (2001). New Dimensions in Pay Management, Chartered Institute of Personnel and Development. Top of Form ARMSTRONG, M., & MURLIS, H. (2007). Reward management: a handbook of remuneration strategy and practice. London, Kogan Page. Top of Form ARMSTRONG, M., BROWN, D., & REILLY, P. A. (2010). Evidence-based reward management: creating measurable business impact from your pay and reward practices. London, Kogan Page. Top of Form DAVIS, M. L., & EDGE, J. T. (2004). Executive compensation. San Diego, CA, Windsor Professional Information. Bottom of Form Bottom of Form Top of Form HENEMAN, R. L. (2002). Strategic reward management: design, implementation, and evaluation. Greenwich, Conn, Information Age Publ. Bottom of Form Bottom of Form Top of Form MANAS, T. M., & GRAHAM, M. D. (2002). Creating a Total Rewards Strategy a Toolkit for Designing Business-Based Plans. New York, AMACOM. Bottom of Form Top of Form THOMPSON, P. (2002). Total reward. London, Chartered Institute of Personnel and Development. Top of Form TSUI, A. P. Y., & LAI, K. T. (2009). Professional practices of human resource management in Hong Kong: linking HRM to organizational success. Aberdeen, Hong Kong, Hong Kong University Press. Top of Form WRIGHT, A. (2004). Reward management in context. London, Chartered Institute of Personnel and Development. Bottom of Form Read More