The Relative Importance of Reward and Resourcing - Essay Example

Critically discuss the relative importance of Reward and Resourcing within the overall role of the Human Resource function.” Introduction The present composition describes employee rewards and resourcing aspects of management. Contemporary rewards management focuses on integrating HRM and strategic rewards in a manner that prioritizes managerial deliverables. The concept of employee rewards is a complex framework that reinforces the interplay between different aspects of organisational behaviour other than the financial perspective. Employee resourcing is concerned with equating business goals in terms of resources as per the forecasted work. It also involves evaluation of the required skills and technical know-how. In this composition, an attempt to understand the relation between employee resourcing and rewards has been made along with an understanding of how these practices impact each other and the business in positive and negative ways. From rewards perspective, contemporary organisations and businesses focus on developing attracting and developing talent alongside improving organisational performance. A comprehensive reward system has to meet the requirements of flexibility in terms of pay and incentives; as well as meet governmental regulations put forth in the form of labour law and wages; in addition, this system should include a provision for continuous negotiation between employer and employee, which will extract optimum performance from the employee and also provide maximum benefit in the form of rewards. Framing such a comprehensive reward system is therefore very complicated. Such comprehensive reward function is referred to as the total reward programme, which Vicky Wright defines as, “an approach to providing a ‘package’ of reward to employees in ways that optimize employee satisfaction with reward from their work, and which does this in such a fashion that the employees’ contribution to the employer is optimized at an acceptable cost” (cited in Armstrong, 2002; p.9). Emergence of the new reward system can be related to the changes in businesses and also the factors that have an impact on the businesses. Hence, the contemporary reward systems are also based on the business needs. The reward systems are designed in such a manner that they enhance employee loyalty and commitment. The reward systems are strategically integrated with organisational goals. These rewards are based on performance and can be flexibly altered according to the business and/or employee preferences. As described by Armstrong and Brown (2006, p.22), the holistic approach of total rewards provides for the integration with reward of a number of HR policies and practices such as employee development, resourcing, life-work balance, recognition schemes, work design and participation. Yet, the total rewards system does not make the purpose of attracting and retaining the best talent simple; the system is always complex and time consuming. Different practices adopted in reward management include merit or individual performance pay, profit-sharing, broadbanding, competence-related pay, flexible benefits, team pay and gain-sharing. Of these, merit or performance pay practice is adopted by most of the companies (Armstrong, 2002). Evolution of the contemporary rewards system has culminated in total rewards system, a concept that has been adopted by most of the organisations. organisations have modified the system to fit their strategy, which has further resulted in a variety of total reward models. The most renowned models according to CIPD are those of WorldatWork, Hay Group, Towers Perrin and Schuster-Zingheim and Associates (Thompson, 2002). Of these, the most elaborate and comprehensive model is that of the Hay Group, which considers reward design to be a platform that enhances engaged performance. This model includes financial, motivational and practical aspects of work and is made of six elements: inspirational values, quality of work, enabling environment, tangible rewards, work-life balance, and future growth/opportunity. This comprehensive model is meant to gain a competitive advantage besides attracting and retaining best talent, because these elements embed many finer aspects of organisational sustenance, which would be very difficult for competitors to replicate. Nevertheless, these finer aspects are highly flexible because they are under constant influence of culture, economy, and competition. Another model is the Towers Perrin’s model that includes four critical elements namely pay, benefits, learning and development and work environment in the form of a 4-quadrant matrix. Of these, pay and benefits form the tangible rewards and can be accounted in terms of resourcing in the form of recruiting and retaining employees; and hence can be replicated by competitors. The other two, learning and development and work environment are intangible rewards; hence, these cannot be replicated by the competitors and can also create human capital and human process advantage (Armstrong, 2010). Although this model is as comprehensive as the Hay Group’s model, its effectiveness depends upon the ability to create stable balance between the tangible and intangible rewards. Total rewards model proposed by WorldatWork includes five elements namely, compensation, benefits, work-life balance, recognition and development and performance and career opportunities. Even these rewards are decided based upon external environment, work experience, culture and HR strategies. The Schuster- Zingheim model comprises of total pay, individual growth, compelling future and positive workplace as the total rewards (Armstrong, 2010). These and many other models have four common elements, ie., pay, benefits, learning and development and workplace/environment. Based on these elements, organisations strive to provide the best rewards to their employees in order to achieve optimum output as well as maximum retention. Employees are the most critical aspects of any business. This proposition has been proven and adopted by many organisations that have eventually achieved immense success. Armstrong describes that people resourcing is concerned with ensuring that the organisation obtains and retains the human capital it needs and employs the productively (2006; p.359). On the whole, resourcing is concerned with human resource planning, talent management, recruitment, selection and interviewing, selection testing, introduction to the organisation and release from the organisation (Armstrong, 2006). The Department of Employment defines HR planning as a strategy for the acquisition, utilisation, improvement and preservation of an organisation’s human resources (cited by Bratton & Gold 2003; p.169). HR planning is a comprehensive work that includes HR processes to assess future resource requirements as well as plans to fill the future resource requirements. Various organistional activities associated with the resourcing or HR planning function include expansion of the business, preparing for the competition and globalisation, adjust to the technological advancements, adhere to the political and legislative regulations, and adhere to the social, economic, and ecological norms. Besides these, resourcing involves filling recruitment gaps with the right talent and in accordance with organisational pay patterns. Planning and executing training and developmental activities of employees is also a part of the HR function, which is also related to resourcing because resourcing enables preparing the employees for future suitable roles within the organisation. This function is two-fold because it addresses employee commitment and motivation as well as resource planning. Resource planning requires accurate planning of staff costs with an aim to achieve high efficiency with low costs. Another function associated with resource planning is preparing for redundancies through early retirements, retraining, freezing recruitment, and other job-related activities such as job rotation, job enrichment etc. HR planning is also useful in collective bargaining between management and trade unions in terms of forecasting pay increase or reduction in working hours. Lastly, resource planning information helps in assessing the future need for space, facilities, logistics etc (Taylor, 2005). Many reasons may be associated with employee rewards programmes of which few include developing high performing culture, encouraging continuous learning and development, and paving the way for futuristic growth. Secondly, provision of flexible pay patterns and rewarding people based on merit as well as define the desired behaviour. Now that total rewards aim to achieve strategic business goals, this system entails numerous benefits for the organisation. According to Armstrong and Brown (2006), total rewards considerably enhance employee motivation and commitment. Most of the rewards framework fosters creation of stronger employment relationships. For organisations, total rewards provide greater cost-effectiveness in terms of flexible pay systems, employee development, and a healthy organisational culture. Moreover, the rewards can be modified to meet specific individual needs. However, total rewards can be effective only when their strategic integration with business goals are complete and meaningful. Further these programmes need to be communicated to the employees in a clear manner so that employees make appropriate use of the rewards. The relation between employee rewards and resourcing is that rewards can affect resourcing through competitive pay (Armstrong, 2002; p.11). As a part of total rewards programme, organisations adopt specific approaches that enrich employee pay and benefits with flexible pays systems, pay according to the performance or merit-based pay etc. While these form a part of the rewards, they are also linked with resourcing such that these practices provide a forecast of payment costs, resources and productivity improvements. However, when such practices do not work as expected, very often organisations tend to change their strategies which further leads to loss of time and disturbance in the resourcing. Moreover, ineffective reward progarmmes can demoralize the employees thereby lowering commitment and productivity. Both these can result in employee turnover or lower productivity thereby disturbing the resource capacity. Secondly, research indicates that fairness and equity are more appreciated than higher pay scales; this fairness and equity is sought in salary, appreciation, bonuses, and other rewards (Odendaal & Roodt, 2009). Yet, there are differences in the way equity is perceived in different settings. Employees’ conclusions about equity depend on what they choose as a standard of comparison (Noe, 2006; p.371). considering this, if the total reward programme does not entail transparency in reward systems, then the aim of employee motivation and commitment cannot be achieved. This is because it is important that employees are made to believe that their pay is equitable to others in similar job within and outside the organisation. If employees feel overrewarded, then their attitude and morale remains unchanged; however, if they feel underrewarded, then their behaviour changes towards putting lesser efforts, or finding other ways (unethical) of increasing their outcomes, or tend to leave the organisation. In addition, employees’ beliefs of fairness also influences their attitude towards promotions, transfers etc. These issues necessitate the need not only for inclusion of equitable reward systems but also accurate and transparent communication of their pay and reward systems. These processes will facilitate HR by keeping the employees motivated as well as committed to the job. Researches have identified that pay and benefits outweigh other reward programmes in creating employee engagement (CIPD, n.d). Employees tend to equate fairness with their pay, which further decides their level of engagement. This makes the total rewards programme ineffective if it fails to establish justifiable pay. Therefore, the employee rewards programme should clearly reinforce fair and justifiable pay system besides other practices such as clear communication, job satisfaction, work-life balance, safety and hygiene, equal opportunities and fair treatment, and performance management. Taylor (2005) describes that the routine HR planning processes are of more relevance to larger organisations than to smaller organisations. Yet, smaller organisations are also required to plan their resources in order to move with the market, adapt to the technological advancements and sustain their businesses. This would require different approaches to HR planning, applicable both to large and smaller organisations. Such planning focuses on overall organisational and employee development rather than operations and finance. These implications of resource planning include micro planning, contingency planning, succession planning, skills planning, and soft HR planning (Taylor, 2005). All these processes form a part of employee rewards. Micro planning involves discrete planning for specific processes or key problem areas according to the demand-supply relationship (McDonnell & Collings, 2010). For this organisations adopt practices such as temporary staffing, flexible working, job rotation, consultation, outsourcing etc. These practices vary with the need and nature of the organisations. Of these practices, temporary staffing, flexible working, multiskilling and job rotation are a part of employee reward practices as well as cost saving approaches. Schweyer (2004) explains that if organisations adopt microplanning, then their recruitment and selection will focus on specific talent; provide a fair idea of deployment; clarify what positions would require external hiring and internal promotion (McDonnell & Collings, 2010). Contingency planning has strong significance as a risk control measure in most of the organisations that operate from multiple locations. Contingency planning helps HR to be proactive in taking decisions at the time of crises so that business does not suffer. Though contingency planning does to fit as a employee reward practice, it certainly helps organisations from losing productivity, time, and business. Succession planning has a two-dimensional benefit; in terms of HR, it helps in recruitment and development of individuals to fill the positions (Taylor, 2005); for the individuals, it provides clear direction of their career progression. Succession planning involves training existing employees on job specific skills so that they are equipped to take on different roles. From reward perspective, succession planning helps employees to take on higher responsibilities as well as grow in their career within the organisation; it acts as a retention tool (Chew, 2005). However, issues such as biasness, availability of the right people with right skills emerge during succession planning. HR succession planning covers only those employees that are likely to be with the company for longer periods, and hence includes fewer individuals in their plan. Skills planning is embraced by organisations that run highly volatile businesses. Skills planning involve practices such as temporary employment of resources with specific skills on a need basis and providing skill enhancement training in view of futuristic requirement. Succession planning can be integrated with skills planning by identifying high potential individuals and preparing them via project-based learning experiences or manager-facilitated workshops (Groves, 2007). Soft HR planning has critical implications for employee rewards. Soft HR planning involves planning for achieving the right attitude and behaviour from the employees. A systematic soft HR planning ensures long-term shifting of employee attitudes and behaviour and considers the characteristics, skills, aptitude and attitude required for future assignments (Kotler et al, 2010). Soft HR planning is useful in all types of organisations, but difficult to achieve especially in multinational organisations (Taylor, 2005; Armstrong, 2010). Moreover, effective leadership is critical because soft HR planning involves creation of specific type of organisational culture and systems. Employee retention is critical to employee resourcing, which is achieved through various practices covering the HR planning processes as well as total rewards. Strategic orientation for employee retention comes from the goal of retaining skilled and experienced employees for longer periods. Loss of such employees results in significant loss in terms of costs and talent. Employees attrite due to various factors such as low satisfaction in job, pay, relationships, and ineffective leadership (Ramlall, 2003). Organisations strive to address these issues through succession planning, rewards management, soft skills planning and micro planning, job rotations, job enrichment, internal promotions etc, most of which are embedded in the total reward programmes. Conclusions In conclusion, contemporary organisations invest heavily on employee rewards programmes through different strategies of which employee resourcing is critical. In fact, employee rewards and resourcing are intertwined in organisational strategies such that each function derives benefit from the other or is dependent on the other. Employee resourcing entails organisational strategies that include methods and practices to create sufficient talent and resources to achieve the key goals. Employee rewards are meant to achieve larger organisational goals such as growth and sustenance with the help of human resources. The interdependent relationship between employee resourcing and rewards can create competitive advantage for the organisation. Failure or ineffectiveness of eve one programme or practice can significantly impact the other. Therefore, employee motivation and commitment have direct impact on resourcing. Resource planning practices can significantly enhance/lower employee motivation and commitment. Bibliography Armstrong, M. 2002. Employee Rewards. 3rd ed. London: CIPD Publishing. Armstrong, M and Brown, D. 2006. Strategic reward: Making it happen. London: Kogan Page Publishers. Armstrong, M. 2010. Armstrongs Handbook of Reward Management Practice: Improving Performance Through Reward. 3rd Ed. London: Kogan Page Publishers. Bratton, J and Gold, J. 2001. Human resource management: Theory and practice. 2nd ed. London: Routledge. Chew, Y. T. 2005. 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