Federal Deposit Insurance Corporation Total Reward Changes - Essay Example

Introduction and Purpose

The project will attempt to provide a description of the Federal Deposit Insurance Corporation (FDIC), explore its current and future challenges, capture FDIC’s required competencies and competencies and how total rewards program may be applied by the firm. The project will also explore the manner in which metric systems may be applied to evaluate the effectiveness and success of the total rewards program. Metrics evaluation system utilizes several defined performance indicators, which may vary from one firm/ agency to the other.

A Description and Summary of the Federal Deposit Insurance Corporation (FDIC)

The Federal Deposit Insurance Corporation (FDIC) was established in 1933. FDIC is an autonomous federal government agency that insures bank deposits made by individuals, economic or commercial institutions, and companies. Deposits are insured to a maximum of $250,000 per entity. Formation of FDIC restored and promoted public and organizational confidence following failures of different financial institutions in the U.S. between the 1920s and 1930s. The agency is also tasked with identification and examination of risks associated with insured deposits and attempt to minimize effects of bank /financial institution failures on the U.S. economy. The FDIC does not provide cover for securities, stocks, money markets, bonds and mutual funds among other similar investments. It is being funded by the bank-paid premiums and other thrift institutions and from interest earned on U.S. Treasury securities. Latest bank failures due to mortgage crisis have captured FDIC attention and as a result, it has attempted to reimburse accountholders. However, the agency has been criticized for its recent activities, e.g. barring Wal-Mart from entering into the banking business (Wallechinsky, 2015).The agency offers some contractors for different services such as management, appraisals, data management, and securities financial advisory (Wallechinsky, 2015).

FDIC Responsibilities and Capabilities

The agency is responsible for covering deposits to a maximum limit of $250,000 per depositor. It also examines and oversees financials for the safety of depositor’s money and soundness of their operations. FDIC facilitate for resolution of big and complex financial institutions and management of receiverships (FDIC, 2016).

Essential Competencies of the FDIC Employees

 Integrity

 Cooperation

 Competency

 Effectiveness

 Fair-mindedness and

 Accountability

Challenges: Current and Future

The FDIC runs three major programs; namely, insurance, supervisory and receivership management.

Insurance

Current: deals with activities that are carried out by the FDIC to govern the Deposit Insurance Fund (DIF). DIF is financed through assessments and investment returns. The agency should allow depositors to access their money in cases a bank fails, so long as the funds are insured (FDIC, 2015).

Future: Community Banks will be experiencing completion pressures from large financial institutions as they are pushed to provide long-standing benefits to their clients. The decision could generate 600 bank losses to Community Banks if 100% of their capital is currently held (FDIC, 2015).

Supervision

Current: deals with activities carried out by the FDIC to endorse safe and rigorous operations and examine compliance with impartial lending, consumer protection and other relevant statutes and regulations. The agency offers backup responsibilities to other supervisory organizations (FDIC, 2015).

Future: IT and Cyber-security issues present a great risk in the future banking sector. Breaches of bank security are a big threat to the financial services market in the U.S. The FDIC will have obligations in the future to act appropriately to minimize IT and Cybersecurity associated risks in the future (FDIC, 2015).

Receivership Management

Current: Comprises of activities carried out by the FDIC, through its capacity to act as a receiver,to help resolve failed financial institutions in a cost-effective manner and to maximize recoveries when banks fail (FDIC, 2015).

Future: the FDIC hinge on talents and skills of its workforce to satisfy the fulfillment of its mission. A large portion of the current labor force will start to head into retirement throughout the following decade, while the demand for technical skills will continue to rise. The above challenge should be addressed; whereas, relevant strategies should be established and implemented to support recruitment, training, development and retention of extremely knowledgeable and skilled workforce (FDIC, 2015).

Total Rewards Model

The human resource managers need to pay for compensations and benefits to balance retention of personnel and incentives to initiate productivity and performance. Rewards may be in three categories that include benefits, compensations, and privileges (WorldatWork, 2010). Payment of the three rewards together may be a high priced expense to the employer. Therefore, employee remuneration should be balanced in such a way that satisfies business objectives of an organization and employee interests and needs at the same time. Benefits should be planned on organizational philosophy regarding the total rewards program (Richmond & Fox, 2012).

The Total Rewards Philosophy

The total rewards model explores the changing relationships between employees and their employers. The model was developed in 2000 and has transformed much to include strategic elements governing employee-employer relationships, examination of external influence on how they may affect the relationships. There are several factors that may affect employee attraction and retention, motivation, and engagement (Richmond & Fox, 2012). The agencies’ philosophy about the total rewards program needs to be understood clearly to be managed appropriately. Leaders in an organization should consider several factors such as (Richmond & Fox, 2012):

• the kind of workforce culture the desire to change, promote and reinforce

• the kind of employee behavior they would wish to encourage

• the kinds of functions that the employees should handle

• the nature of desirable employee and talent attraction and retention

• the determination of cost constraints

The reality is that there is no single comprehensive reward philosophy, but the vision and will of all agency leaders should be recruited and reflected upon of the general reward system. In some cases, different reward philosophies may be effective for various segments of the workforce. Strategies for the employee reward program should be developed concerning a well-established reward philosophy. Rewards are classified into two broad categories; namely, tangible and intangible. Tangible rewards may include retirement, life, health, and disability. Intangible benefits may encompass policies in support of work-life-balance, development of carriers and other non-financial recognitions and benefits. The value of benefits should agree with the existing reward philosophy in the organization. The agencies’ total reward philosophies characteristically deliberate the value of the benefits in aspects such as affordability on the organization and value of compensations that are offered by competitors (Richmond & Fox, 2012; WorldatWork, 2010). An organization should;

1. Decide on best compensation packages to give to their employees regarding percentages on competitors who wish to attract the same talent (Richmond & Fox, 2012).

2. Evaluate on the organization’s current status compared with competitors for the similar talent (Richmond & Fox, 2012).

3. Adjust the compensation design to bring the sum remuneration package to the desired value in comparison to competitors (Richmond & Fox, 2012).

To better align and integrate the compensation strategies with organizational philosophy on the same, the total rewards philosophy should be first put in place or be formulated. The mixture of existing rewards should be evaluated to ensure that they support the organizational culture. The value of benefits should also be evaluated as a component of the total reward remuneration program so as to ensure that the rewards are offered in line with organizational philosophy. The benefits should always be adjusted to the changing labor force market and competitor’s abilities (Richmond & Fox, 2012).

Segmentation of the Workforce

Workforce segmentation comes in after the organization has identified and recruited its desired talent. Workforce segmentation is completely an internal process. It enhances the effectiveness of organizational strategy and its competitive advantage. The following should be considered before the implementation of the workforce segmentation (Workforce Segmentation, 2016).

• Identification of clear workforce segments

• Determination of the effective size

• Access to promotional efforts

• Appropriateness of the companies resources

The main goal is to develop best or compensation programs in the market. An organization should examine the external employee market forces and evaluate total capacities and capabilities of its competitors for the top talent. Integration of the segmented workforce should be taken into consideration before appropriate compensation policies are developed. Data can be collected through internal workforce surveys, decisions on benchmark positions concerning market pay or benefit programs. The organization is then expected to take a lead by adopting policies that focus in identified positions to better attract and retain the workforce compared with competitor’s abilities (Workforce Segmentation, 2016).

Recommendations

The FDIC should consider the following suggestions:

1. Identify and evaluate competitors’ abilities and capabilities to attract and retain the high demand talent

2. Segment the work on external forces

3. Carry out annual surveys to determine employee satisfaction with the existing total reward program

Justification for the Recommendations

The FDIC should always be knowledgeable about the market trends, especially on information regarding the ability and capability of its competitors. If the competitors have better employee attraction and retention abilities, then FDIC will lose its grip to get and keep the talent it so much wish to have in place. Segmentation of the workforce is a necessary step to enable the organization to develop effective promotion and compensation policies to enhance employee satisfaction of the existing total reward program. Segmentation will also help the organization to put in place competitive compensation policies in the dynamic market. Annual surveys will let the organization learn about the changing needs and wants of its workforce (Workforce segmentation, 2016).

Metrics for Evaluation

The FDIC has an established Workplace Excellence Council, which monitors employee initiatives and interests. Through the conduction of surveys, the council can collect information concerning benefits that make the employees happy and the ones they wish for. The purpose is to develop a total rewards package to draw and keep employees. Evaluation approaches may be quantitative or qualitative in nature. Qualitative studies utilize numerical data to reach a conclusion; whereas, qualitative studies attempts to collect opinions and subjective observations (UMUC, 2015). Relevant metrics enables an organization to measure the effectiveness of the total rewards program and take appropriate steps as deemed necessary. A functional performance management system helps to improve decision making regarding the existing reward system by concentrating on factors that create value. Besides, it gave way for a valid and ordered justification for decisions that affect resource allocation (UMUC, 2015).

Climate Surveys

Climate surveys attempt to estimate the level of satisfaction upon receiving or accessing each reward. Surveys will be designed in a way that questionnaires inquiring on employee satisfaction, with ratings ranging from very satisfied to the least feedback – very dissatisfied. The main objective of the climate surveys will be to see it through that the workforce is satisfied with existing reward system. In case a good part of the labor-force is dissatisfied with specific reward programs to adjust the reward or erase it altogether from the general rewards package (Heleman& Coyne, 2007).

Retention Percentage

The metric will examine the retention percentage of top performers holding strategic positions. Also, the turnover rates for crucial positions will be evaluated. General employee retention percentage in the agency will be then compared with similar retention statistics among the key position holders. Employee annual reviews will give vital information of who are the top performers within the agency. An exit survey should be conducted on the exiting workplace to collect vital information and their perspective about the agency’s existing reward system and what they would like to see it changed. The percentage values for every aspect above should be evaluated to decide on whether employee retention is appropriate and to help hold employee turn-over rates at a possible minimum (Heleman & Coyne, 2007).

Promotion Percentage

Evaluation under this category will seek to establish the percentage of employees who are eligible for promotions to hold better or top positions. Besides, the evaluation will concentrate on the comparison of hiring rates on promotion rates. Employee annual reviews will major on candidate pools to determine which qualified personnel are holding positions but are not considered for promotions. Promotion statistics will examine vacant positions for up to two years for instance and determine whether it is fit to promote employees from within the agency to assume vacant positions or outsource employees from elsewhere (Heleman & Coyne, 2007).

Justification of Metrics

The FDIC covers for depositors’ funds and attempts to prevent economic failures, which may affect U.S. economy. The agency should, therefore, maintain a professional and reliable workforce to support its mission. The personnel should be knowledgeable, skilled and trustworthy; whom the banks and the government may have confidence in. In the larger picture, measurement of employee retention, promotion rates, and total reward satisfaction will enable the attraction and retention of trustworthy and knowledgeable employees in the organization (Heleman & Coyne, 2007).

Implementation Plan and Timeline

The FDIC recognizes that it must allocate resources to sectors that need the most; thus, the workforce is a very important resource that should be treated with special attention (FDIC, 2016). The following strategic plan should be put in place to improve the total reward program in the agency and as a result, enhance talent attraction and retention.

1. Identify and evaluate market demands on competitors’ employee attraction and retention powers. To be done twice per year.

2. Segmentation of the workforce. To be carried out in 6 months.

3. Carry out surveys within the agency in areas such as general opinions about the agency’s reward program, retention, and promotion. Annual reviews.

4. Workforce development initiative: Retirement plans and fresh recruitment. An evaluation is done on monthly basis.

5. Career development and employee learning. A lifetime process.

Conclusion

The Federal Deposit Insurance Corporation (FDIC) was established in 1933 to control and prevent a series of bank failures that we common from the 1920s and 1930s. The FDIC is an important agency in the U.S. to insure funds of millions of bank depositors from bank failures and to guard against economic downs fueled by bank failures. The FDIC’s total rewards program needs to be effective and appropriate to satisfy employee needs and wants. The current and future FDIC plans seem to be appropriate on its goals and mission; however, goals and missions will not be possible without the existence of satisfied, knowledgeable and skilled workforce. The total rewards program is an exorbitant effort and a necessity for the smooth and successful running of operations in an agency. The total reward program contributes a lot to the achievement of employee satisfaction and attainment of company’s goals and missions. Metrics should be in place to help in the evaluation of vital factors such as general perspective about the program as well as retention and promotion percentage. Metrics are vital since they will establish the level of program’s cost effectiveness and determine offered rewards are benefiting the organization or contributing to losses. If rewards system is not beneficial to the agency in any way, then the funds could be channeled in a different manner, to better employee welfare still. Employees act as one of the major backbones in an organization; therefore, the existing reward system should fit the exact needs and wants of the workforce. Rewards which should not contribute to employee satisfaction should be eliminated.