Johnson and Johnson Total Rewards Program - Case Study Example

Johnson & Johnson Total Rewards Program of the of the Table of Contents Introduction 3 2.Organizational Capabilities 3 3.Organizational goals and objectives 3 4.Challenges faced by the organization 3 5.Organizational values and core competencies 4 6.Current total rewards philosophy of Johnson & Johnson 4 7.Three categories of offerings in Johnson & Johnson 5 8.Segmentation of the workforce 5 9.Current requisite capabilities of the organization 5 10.Whether the requisites will change due to the issues being faced by the company 6 11.Recommend for the total rewards program 6 12.Justification for recommendation 6 13.Risks of not implementing the program  7 14.Opportunities to be gained after implementation of the program 7 15.Evaluation of the total rewards program 7 16.Timeline for implementation 7 17.Concluding thoughts and summary 7 References 9 1. Introduction Total rewards offered in companies is an age old strategy followed by managers in order to maintain and subsequently enhance the motivation level of employees. Total rewards package include salary, incentive payments, monthly and annual business, personal development programs and other benefits offered by managers in order to strengthen the relationship with the employees (Gish, 2015). Thus to test the validity of this theory the researcher will be analyzing the total reward programs in Johnson & Johnson so as to adjudge its credibility and hence provide recommendation regarding any improvements to be made in the program. 2. Organizational Capabilities One of the core capabilities of Johnson & Johnson is the company’s regimented approach towards research and development. The managers emphasize a lot on rigorous investment, external and internal sources of innovation which are also some of the capabilities that has enabled the managers to position the company strategically for long term development. Johnson and Johnson’s launch capabilities and revitalized portfolio has helped the company to become market leader in distinguished categories. Johnson & Johnson is heavily engaged in pharmaceutical business which in turn has strengthened the leadership capabilities of the company’s managers globally, locally and regionally. The company’s strategy towards innovation has enriched its R&D capabilities especially in advanced technology zones as well as in the emerging markets (Johnson & Johnson, 2015a). 3. Organizational goals and objectives Very companies in the world enjoy the privilege of having a significant contribution in the lives of billions of people across the world every single day. Johnson and Johnson is one such company that has been entrusted by the global population to touch the well being and health of people across countries (Johnson and Johnson, 2015b). Paying respect to such trust shown by billions of people, Johnson and Johnson has taken several initiatives in order to make the world a better place to live in. One of the primary objectives of the company is to invest money for the development of advanced technologies that has positive impact on the health of patients. They also intend to conduct value added investment in order to maintain a strong alignment between the work done in all the Johnson and Johnson and family companies (Johnson and Johnson Development Corporation, 2014). 4. Challenges faced by the organization Johnson & Johnson faced severe challenges stemming from quality and ethical issues in three of the major divisions of the company. The organization had to call back numerous products due to improper manufacturing and packaging. The ethical incompliance can be witnessed in the production of contact lenses in the company’s manufacturing division in Japan. The managers had to recall 100,000 boxes of contact lenses as complaints regarding pain and irritation kept on coming from across the world (Rutgers, 2015). Johnson & Johnson is currently facing a charge following which the company might have to be liable to pay $2 billion as penalty (Rutgers, 2015). In addition, the company also had to recall several products used in hip manufacturing surgeries upon receiving complaint from several users. Johnson & Johnson is also facing another challenge in maintaining its reputation as a result of the buzz created by its Tylenol capsules for children and adult. Presence of chemical odor in packages and manufacturing violations were some of the major complaints (Rutgers, 2015). Therefore, there is a clear lack of supervision and business code within the company which has happened due to improper execution of leadership strategies. 5. Organizational values and core competencies Johnson & Johnson gives equivalent emphasis in ensuring that all its major stakeholders benefits from the business done by the company. The company focuses a lot on ensuring the wellbeing of its customers which includes the doctors, nurses, the fathers and the mothers who use the company’s products. The managers have always paid adequate attention in making sure that superior quality products are distributed to the customers. Furthermore, the managers have focused on the wellbeing of the employees as they are instrumental to the organization’s success. The managers respect the dignity of the employees and provide them with adequate facilities to ensure that they are motivated towards the word. The company has also shown responsibility towards the community by contributing to environmental development programs as well as charity. Lastly, the managers have always thrived to maximize the value of the shareholders (Johnson and Johnson, 2015c). The core competencies of the organization are what drive the managers to pursue the values. Sales and marketing skills combined with innovative manufacturing capabilities are the major core competencies that have kept Johnson & Johnson in the path that lead towards success and glory (Armstrong & Brown, 2006). The manager’s knack of forming independent collaboration with other companies is another core competency that has enabled Johnson & Johnson to gain the technological knowhow for making superior quality products (Greene, 2014). 6. Current total rewards philosophy of Johnson & Johnson Johnson & Johnson offers attractive reward packages to its employees in order to motivate and keep hold of skilled and talented workers. The organization has introduced a choice benefits program that allows the employees to select benefits from wide ranging options. These benefits are offered on a yearly basis to both salaried, as well as regular hourly wage and part time employees. The program allows employees to choose from number of options that include medical benefits, dental benefits, vision, care and health account, accidental insurance, life insurance, home and automobile insurance and many more. A standard life insurance and accidental insurance is provided for free to the employees as a means to recognize the efforts made by the employees towards the company. In addition to providing retirement pension plan, the company also provides its employees with several saving plans through which the savings made by the employees can be transferred post retirement. Johnson and Johnson also provide life insurance and accidental insurance to its employees post retirement (Johnson and Johnson, 2015d). The total reward philosophy of Johnson and Johnson is simple and that is to improve the health and well being of the employees. According to the company’s managers, enhancing the health and well being of the employees makes way for good business as it increases the engagement level of the workers and the productivity of the organization. The reward philosophy of Johnson & Johnson is also aimed towards decreasing the health care cost incurred by the employees. This is a means adopted by the company to increase the personal benefits of the employee base (Johnson and Johnson, 2015d). 7. Three categories of offerings in Johnson & Johnson The categories in which Johnson & Johnson offers total reward packages to the employees include compensation, benefits and work experience. As far as compensation is concerned, it includes benefits such as performance based bonus, monthly salary and stock options (Armstrong & Brown, 2006). In the benefits category, the company offers several options such as life coverage, accidental coverage, personal healthcare, pension schemes, company transport and many more. All these benefits are included by the company only to reduce the obligations of the employees which in turn helps the workforce to get rid of other tensions in life devote their focus on the professional dimension (Armstrong & Murlis, 2007). In the work experience category, Johnson & Johnson provides all those benefits that are aimed towards assisting employees to optimize their performance in order to make a significant contribution that adds to the company’s benefits. The total rewards program have been formulated in such a way that guarantees work life balance (Rumpel & Medcof, 2006). The benefits include proper training and development facilities, promotions in job position, effort acknowledgement and recognition. 8. Segmentation of the workforce As far as segmentation of workforce in Johnson & Johnson is concerned, it can be done on the basis of drivers that encourage employees to give their best performance. For example, the employees in Johnson & Johnson can be segmented on the basis of the flexibility offered by the company in terms of working schedules. The managers in Johnson & Johnson understand the importance of work life balance and that is why they try their level best to ensure that employees are able to achieve this balance between their personal life and professional life. That is why employees are provided with a flexible working schedule that enables them to work according to their convenience. They have to just maintain the standard working hours per week as stipulated by the company. The workforce in the company can also be segmented on the basis of their desire to demonstrate team success. The managers of Johnson & Johnson pride on the fact that their employees always focus on team success rather than emphasizing on individual interests (Johnson and Johnson, 2015d). Employees in Johnson & Johnson have always been known to support each other in their endeavors which in turn pave way for all round development. 9. Current requisite capabilities of the organization Given the current challenges that are being faced by Johnson & Johnson, the company requires its managers to develop their leadership skills so that they can communicate with the employees effectively thereby conveying them the importance of conducting ethical business. Supervision needs to be improved within the organization so that any wrongful acts are kept at bay (Cao, Chen & Song, 2013). The employees need to enhance their knowledge base so much so that products can be developed without any faults in them. They need to have an in-depth knowhow regarding the chemical compositions of their medicines and medication products so that they do not pose any threat or harm to the user (Greene, 2014). 10. Whether the requisites will change due to the issues being faced by the company The requisites that have been mentioned above are in complete alignment with the issues that are being faced by the companies. Therefore, the requisites are not supposed to change currently. They have been mentioned keeping in mind the importance to deal with the challenges that the company is facing currently. It is expected that emulation of an effective leadership style combined with a proper supervision framework will enable the company to identify ethical issues and deal with it. In addition to that, it will also enable the managers to convey the core values of the organization to the employees which in turn will encourage the employees to work with integrity. Moreover, the knowledge base also needs to be improved in order to enhance the quality of products manufactured. However, the requisites might change if new issues escalate in the future. 11. Recommend for the total rewards program After conducting a brief assessment of the total rewards program of Johnson & Johnson, the researcher feels that there are scopes of improvement. For example, the company can offer its employees with the option of availing home loans, automobile loans and any other personal loans at a lower interest rates compared to the rates offered in banks (Bonache & Paz-paricio, 2015). This will enable the employees to enjoy the luxury of having their own home and car at a relatively lesser cost. Therefore the company by offering such lucrative loan options is actually reducing the cost of obligation for the employees. The managers of Johnson & Johnson are also recommended to extend to the insurance and accidental benefits to the next of kin of the employees provided that a certain amount of premium (although very less) is deducted from the employees’ salary. 12. Justification for recommendation The main reason behind offering the employees with the option of availing loan at lower interest rate is to ensure that they are able to enjoy all those luxuries that are normally availed by people in the higher income group. The managers of Johnson & Johnson will be able to encourage the employees to develop their lifestyle by availing the loans from the company at a lower cost (Cao, Chen & Song, 2013). This development attained in the employees’ personal life will surely be reflected back in their quality and productivity of the work they do for the organization (Brown, 2014). Moreover, by extending the life insurance and accidental insurance benefit to the next of kin of the employees will enable the manager to reduce a major proportion of obligation assumed by employees in their personal life (Nazir, Shah & Zaman, 2012). By offering this benefit to the employees, not only will the company be able to reduce this burden but will also be able to encourage the employees to focus in their professional field and achieve personal development. This will be good for business as managers will be able to increase the employee retention rate (Rumpel & Medcof, 2006). 13. Risks of not implementing the program  There are several risks to not implementing the recommendations within Johnson & Johnson’s total rewards program. First of all if the recommendations are not incorporated then the company might risk losing the employees who have greater skills, good knowledge base and expertise. This in turn will severely affect the performance of the company in terms of its productivity as well as the quality of products manufactured within the company. These facts holds true mainly for the employees who have served the company loyally for a very long time and thus expect the managers to take care of their well being. Moreover, failure to incorporate the recommendations will also affect the engagement level of the current employee base which in turn will also affect the company’s productivity and quality of work. This is a very important consideration at a time when the company is severe ethical challenges. 14. Opportunities to be gained after implementation of the program If the recommended total reward program is implemented then it is expected that the company will be able to attract more talented and skilled employees in the organization thereby broadening the horizon of knowledge that is being shared between employees. Moreover, a total rewards program that includes the benefits mentioned above is sure to enhance the motivation level of employees which in turn will inspire them to work towards innovation thereby driving the company to the next level of success. 15. Evaluation of the total rewards program The total rewards program of Johnson & Johnson is very effective and flexible, at the same time that allows employees to choose from a wide range of facilities (Johnson and Johnson, 2015d). Out of all the benefits that are being offered by Johnson & Johnson within the total rewards package, the ones that are most beneficial are life insurance and accidental insurance to employees and their next of kin, medical claim benefits for employees and next of kin, home and car loans facilities for employees. These benefits are arguably the best inclusion within the total rewards program of the company precisely because not only are these beneficial for the employees but also for their family members. These benefits are expected to enable employees to achieve work life balance and also enhance the engagement level of employees. 16. Timeline for implementation The life insurance and accidental insurance for next of kin benefit program should be implemented in the next financial year owing to several issues related to accounting. Nevertheless, the home and car loan facilities should be made available to employees with immediate effect. It is expected that a swifter implementation of the reward program is going to be good for business as well as for the company’s reputation. 17. Concluding thoughts and summary Having an effective total rewards program in place is extremely important for companies in the contemporary business environment. This is precisely because managers are expected to give equivalent emphasis on both the productivity of the company as well as the wellbeing of the employees. The amalgamation of the aforementioned factors is the primary element of managerial success. Johnson & Johnson’s total rewards program is extremely effective and is directed towards strengthening the personal relationship between managers and employees. Nonetheless, there are areas that need development. That is why the company was recommended to include accidental and life insurance coverage for family members of employees and home and automobile loan facilities for the employees. These benefits are expected to encourage employees to give their optimal effort and ensure superior quality work output. References Armstrong, M. & Brown, D. (2006). Strategic reward: making it happen. London: Kogan Page Publishers. Armstrong, M. & Murlis, H. (2007). Reward management: a handbook of remuneration strategy and practice. London: Kogan Page Publishers. Bonache, J. & Paz-Aparicio, C. (2015). 13. Compensation and total rewards: trends in emerging markets. Handbook of Human Resource Management in Emerging Markets, 293. Brown, D. (2014). The Future of Reward Management from Total Reward Strategies to Smart Rewards. Compensation & Benefits Review, 46(3), 147-151. Cao, Z., Chen, J. & Song, Y. (2013). Does Total Rewards Reduce the Core Employees’ Turnover Intention?. International Journal of Business and Management, 8(20), p62. Gish, W. (2015). The Advantages of Having a Total Reward in Organizations. Retrieved from http://smallbusiness.chron.com/advantages-having-total-reward-organizations-14161.html Greene, R. J. (2014). The Role of Employee Ownership in the Total Rewards Strategy. Compensation & Benefits Review, 46(1), 6-9. Johnson & Johnson. (2015a). Johnson & Johnson Highlights Strategies for Growth Through Differentiated Medicines, Transformational Pipeline and Global Product Launches. Retrieved from https://www.jnj.com/news/all/Johnson-and-Johnson-Highlights-Strategies-for-Growth-Through-Differentiated-Medicines-Transformational-Pipeline-and-Global-Product-Launches Johnson and Johnson Development Corporation. (2014). About Johnson & Johnson Innovation - JJDC, Inc. (JJDC). Retrieved from http://www.jjdevcorp.com/ Johnson and Johnson. (2015b). Our Citizenship & Sustainability. Retrieved from http://www.jnj.com/caring/citizenship-sustainability Johnson and Johnson. (2015c). Our Credo. Retrieved from http://www.jnj.com/sites/default/files/pdf/jnj_ourcredo_english_us_8.5x11_cmyk.pdf Johnson and Johnson. (2015d). Benefits. Retrieved from http://www.jnj.com/caring/citizenship-sustainability/strategic-framework/benefits Nazir, T., Shah, S. F. H. & Zaman, K. (2012). Literature review on total rewards: An international perspective. African Journal of Business Management, 6(8), 3046-3058. Rumpel, S. & Medcof, J. W. (2006). Total rewards: Good fit for tech workers. Research-Technology Management, 49(5), 27-35. Rutgers. (2015). Faculty Insight: It may be time for Johnson & Johnson to challenge its credo...again. Retrieved from http://www.business.rutgers.edu/news/faculty-insight-it-may-be-time-johnson-johnson-challenge-its-credoagain Read More