Total Rewards Programs - Research Paper Example

Introduction Total rewards is a concept that describes an approach to reward management that seeks to emphasize the importance of considering various aspects of the work experience of value to employees, not only a few for example employee benefits and pay. It is certainly not a new concept considering that Adam Smith was the first person to identify it in what he referred to as ‘total net advantage’ in addition to payment, adding elements such as job security, agreeableness of work, and the possibility of success or failure. In spite of the age old concept, worth noting is that total rewards is especially relevant in the present-day work environment, whereby globalization has made it possible for employees to work in diverse environments. The following total rewards system proposal seeks to focus on the latest available information with regard to creating, organizing as well as effectively managing a total rewards program. The program is targeted for the ABC Company, a service-based organization that employs more than 20,000 located in 17 different countries. There are also over 2,000 management level employees who speak in diverse languages. In consideration of the multiple regulatory environments, a total rewards systems is proposed. Firstly, a brief overview of the company requirements for a total rewards system is provided. A total rewards strategy has then been formulated and the various advantages of the proposed strategy explained. Further, the key communication components of the system are established. Lastly, but certainly not least, a strategy has been examined for devising a competitive pay structure. The total reward program is holistic and does not rely on one or two reward systems operating in isolation. Further, there is good account of every manner in which people can obtain satisfaction and are rewarded through their work. The objective of total rewards is to maximize the combined impact of a wide range of reward initiatives on motivation, organizational commitment and job engagement. This concept aims to blend the financial as well as non-financial reward elements into a cohesive whole. As put by O’Neal (1998) “total reward embraces everything that employees value in the employment relationship.” WorldatWork also offer an equally wide definition of total reward, stating that “all of employer’s available tools that may be used to attract, retain, motivate and satisfy employees.” Overview of company requirements for a total rewards system There is an increasing need for corporations to come up with reward systems that motivate employees to work harder and more effectively. These systems usually teach associates the importance of being productive and efficient, as well as their inherent value in companies. However, considering the pressures associated with incentives or performance, or even ineffective implementation procedures, in some situations, these systems can encourage unethical or even unwanted behaviors (White, 2005; Zhou et al, 2009). Therefore, to attract and retain the best workers, corporations need to have an appropriate rewards system that will always reward and encourage workers to always remain focused on producing the best quality services in an efficient manner, thereby meeting the needs of customers. This corporation needs a reward system that will be linked with goal-setting, competency measures and employee development. A reward system will help the corporation in moving toward a better alignment between company strategies and values and performance management. This will help in decentralizing the decision-making down company hierarchy to help in empowering every manager located in different parts of the world (Armstrong & Brown, 2005; Armstrong et al, 2006). Total Rewards Strategy Considering the company requirements for a total rewards system as explored above, the following is an analysis of a total rewards strategy that can encompass the fundamentals of compensation and the regulatory environments surrounding the corporation. Chen and Hsie (2006) indicate that the conventional seniority-based trend of rewards has been changed and in its place, a performance-based rewards system adopted. Further, the monetary trend has been changed into a non-monetary, independent into coordinated, unitary rewards system into differential and period reward into instantaneous. Schuster and Zingheim (1992) choose to coin the term “new pay” and associate it with employee and organizational performance. They also characterize the idea of new reward by various features, including its flexibility, strategy, integration, performance orientation with regard to the employee and employer’s action. Reilly (2003) argues that the unitary view-point asserts that the idea of new reward is very relevant in the present-day multicultural organizations. According to Gross and Friedman (2004) the human capital strategy for this move to new ways of rewards is because the new methodologies deal with the larger interest of employees with regard to their training, skills, attitudes as well as rewarding processes. It is therefore very important to take consideration of human capital strategies as they align the concept of best-fit, as opposed to unique strategies, and more importantly, because they focus on the distinctiveness of the corporation. There are numerous types of rewards established in consideration of these factors; however, for the purposes of this organization, a performance-based rewards system is proposed. The objective of proposing this type of a rewards system is because it will award the best performer accordingly. According to Ben-Ora and Lyons (2002), for a performance based rewards to be successful, it has to perfectly begin with, implemented and be implemented in alignment with the total reward strategy. When corporations structure the rewards system wholly according to their employee’s intent, it follows that the employees will work harder for the purposes of achieving their objectives as well as their organization’s objectives (Milkovich & Newman, 2006). The most effective way to enhance the motivation and enthusiasm of employees is to use a performance appraisal system especially when their efforts have a direct link with reward through well set and formalized objectives. A performance based system will also be embraced in different cultures globally. According to Brown (2008) evaluating, gauging and expanding the efficacy of human resource compensation and pay practices has key prospective for the corporation in a knowledge based and service economy (Kaplan, 2007). Worth noting is that the interpretation issues such as capital, the length of vacation, as well as rank varies across different cultures; in the same way a contrast effect is evident with regard to rewards, either tangible or intangible, across different cultures. So as t testify the impact of rewards upon diverse cultures. Armstrong and Murils (2004) argue that many leading HR organizations as well as reward consultants develop their own total rewards systems in order to develop an effective and improved “employer brand”. For the purposes of this organization, the Worldatwork model is proposed, a model that presents the following modules: compensation, benefits, work-life balance, development, career opportunity and recognition performance, culture and environment (World at Work). Advantages The key advantages of the total rewards strategy proposed here is because its strategies will attract motivate and retain employees. Worth noting is that during the last several years, the total rewards system concept has considerably advanced. Business practitioners continue to increasingly experience the power to leverage many factors for the purposes of attracting, motivating and retaining talent; high-performing corporations realize that they need a proprietary total rewards strategy that will allow them to excel in new methods. In the same way, professionals of human resource, consulting firms as well as service providers choose the WorldatWork rewards model as it firstly, reflects the maturity as well as the power of the concept of total rewards. Most importantly, this model illustrates five elements which, collectively, make up total rewards. The WorldatWork model, unlike many total rewards models, also provides the environmental and organizational context whereby total rewards strategies as well as programs are in existence. This model was also chosen for this corporation because it will articulate the needed outcome of attracting employees, motivating them and even retaining them as satisfied and engaged workers, thereby enabling them to develop business performance and results. Further, this model is a favorite of many corporations because demonstrates the vibrant relationship between employers and employees, highlighting on the workers’ contribution of time, talent as well as efforts for better business results (Worldatwork). Key communication components of the total rewards system A system that is not effectively communicated is not any better than the lack of a system altogether. Proper communication is the decisive key to a successful total rewards system. The total rewards system proposed here needs the right amount of effective communication,, which should be delivered at the right time and using the right media to achieve it. For communication to be effective, it does not have to be expensive. The following are the key communication components of this system (Kantor and Kao, 2004). Using this total rewards system, the most important component is with regard to the system’s focus on employee value proposition. In this system, personal impact of employees is focused upon; using a holistic viewpoint of what the employee values most for himself or herself versus what his or her co-workers can appreciate is the focus in this model, and it recognizes what every employee needs to be successful, healthy and happy, considering opportunity and merit. Employee communications with regard to total rewards should clarify the interdependence of benefits, pay as well as work-life components. One of the key things that keeps workers from providing effective communication is the fear of unintentionally raising expectations with regard to unattainable levels. Worth noting is that a some employers have established that their efforts to be recognized as the most effective employer resulted to a better entitlement mentality among workers. However, the concern about raising expectations is bound to go beyond fears with regard to consequences that are not intended. Some workers have genuine concerns with regard to ability to make any promises to workers that they may not break in the future. The concept of cluttered channels is also bound to keep employees from providing the needed communication. Worth noting is that getting attention is a difficult task and in many companies, it is almost difficult to get information across. Still, in many multinationals customers are allowed to choose the channels, such as monthly statements made in mail, upgrades through smses, or even special e-mail offers made. Such type of customer-oriented thinning is an important component of this total rewards system, and it is what will be applied in consideration of the employees of the corporation. Further, overreliance in mass communication is another barrier that the communication components of this model seek to encounter. Certainly, mass communication is very effective in some total rewards elements; however, for the most effective elements and the most valuable employees, it may not be the ultimate choice. With this regard, the Internet has been a blessing as well as a curse. While it has offered potential as the central information source, it has also resulted to database and list mania with regard to total rewards. These are some of the issues that this model seeks to encounter. In addition, there are also global challenges that are covered in the various communication factors of this system. This system has a communications structure that is universally appropriate as well as culturally specific to meet the needs of workers in specific cultural settings (Rumpel, 2006). Strategy for devising a competitive pay structure To achieve a competitive pay structure for this total rewards system, the following strategy is recommended. The first step will encompass assembling the appropriate team members. The chance of succedding in this endeavor and for achieving the objectives of this system is based upon the inputs of all parties that are impacted by this system. Every stakeholder should be given a place at the table. The second step involves assessing and ranking every program involved in the system. To achieve this, surveys and benchmarking strategies will be carried out. Internal employee surveys and industry benchmark surveys will be conducted with the purpose of assessing the effectiveness of every program adopted here. These surveys will measure the effectiveness in different ways. For example, factors such as low participation rate mean the presence f low interest or even limited understanding of a program. In addition, every policy and its association to organization strategies will be reviewed. This is a critical step whereby the policies will be mapped to every corporation strategy and goal devised. For example, purposes of each policy will be identified and analyzed, including purposes such as to motivate workers and retain them in the organization. The third step of the assessment involves carrying out an impact analysis. Before the implementation of the system, the financial, employees, organization and consumer impact of each plan will be analyzed. The question whether the company profit drops or whether revenue doubles, both in the present and in the future, will be explored (Thompson, 2002; Stone at al, 2006). The other very important step of the strategy is with regard to implementing changes in each and every stage. A timeline will be set to ensure that each program is phased in. Every manager will also be given enough time to absorb every initiative as well as to develop new performance measures before establishing the roll-out. In case many divisions or facilities are included, a pilot plan will be used. The last step is in the strategy is with regard to communication. As was aforementioned, communication is a very important step of every strategic plan; communication is especially important in this total rewards program as it will help in the effective implementation of the program. References Armstrong M, Brown D (2004). Reward strategies and trends in the United Kingdom: the land of diverse and pragmatic dreams Compens. Brown D, West M (2005). Rewarding service? Using reward policies to deliver your customer service strategy. WorldatWork J., 14(4): 22-30. Chen HM, Hsieh YH (2006). Key trends of the total reward system in 21st century. Compens. Hiles A (2009). Tough times demand focus – total rewards strategy. Jiang Z, Xiao OQiH, Xiao L (2009). Total Reward Strategy: A Human Resources Management Strategy Going with the Trend of the Times. Johnson MD, Hollenbeck JR, Humphrey SE, Ilgen DR, Jundt D, Meyer CJ (2006). Cutthroat cooperation: asymmetrical adaptation to changes in team reward structure. Acad. Manage. J., 49(1): 103-119. Kalleberg AL, Van Buren ME (1996). Is bigger better? Explaining the relationship between organization size & job rewards. Am. Sociol. Rev., 61(1): 47-66. Kantor R, Kao T (2004). Total rewards: clarity from the confusion and chaos. WorldatWork J., 13(3): 7-15. Kaplan S (2007). Business Strategy, People Strategy and Total Rewards. Int. Found. Empl. Ben, 44(9): 12-19.th Q., 25(4): 44-47. Milkovich GM, Newman JM (2004). Compensation (8th ed.). Burr Ridge, IL: Irwin McGraw- Hill. Miller D, Hartwick J (2002). Spotting management fads. Harvard. Bus. Rev., 80(10): 26-27. Reilly P (2003). New approaches in reward: their relevance to the public sector. Pub. Money Manage. , 23(4): 245-252. Rowley D (2009). Debate: how to ensure that benefits spend brings results. Rew. Benefits. T., 4(2): 17-25. Rumpel S, Medcof JW (2006). Total rewards: good fit for tech workers.Res. Technol. Manage., 49(5): 27-35. Schein EH (1985). Organizational Culture and Leadership. San Francisco, CA: Jossey-Bass. Silverman M, Reilly P (2003). How flexible is total reward. IES Research Networks, Brighton, UK. Stone DN, Bryant SM, Wier B (2010). Why are financial incentive effects unreliable? An extension of self-determination theory. Behav. Res. Account., 22(2): 105-132. Thompson P (2002). Total Reward, CIPD, London. Trevor CO, Gerhart B, Boudreau JW (1997). Voluntary turnover and job performance: curvilinear and the moderating influences of salary growth and promotions. J. Appl. Psychol., 82(1): 44-61. Vandenberghe C, St-Onge S, Robineau E (2008). An analysis of the relation between personality and the attraction of total rewards components. Ind. Relat., 3(3): 425-453. Watson Jr. BW, Singh G (2005). Global pay systems: compensation in support of a multinational strategy. Compens. Ben. Rev., 37(1): 33-36. Wei YS, Atuahene-Gima K (2009). The moderating role of reward systems in the relationship between market orientation and new product performance in China. Int. J. Res. Mark. 26(2): 89-96. Westover JH, Taylor J (2008). International differences in job satisfaction: the effects of public service motivation, rewards and work relations. Int. J. Prod. Peform. Manage., 59(58): 811-828. White R (2005). A strategic approach to building a consistent global rewards program. Compens. Ben. Rev., 37(4): 23-40. WorldatWork (2000). Total Rewards: From strategy to implementation. World at Work, Scottsdale, AZ. Zhou Y, Zhang Y, Montoro-Sanchez A (2009). How do the reward approaches affect employees’ innovative behaviours? – An empirical study in Chinese. Acad. Manage. Annual Meeting Proceedings, 1-6. Zingheim PK, Schuster JR (2004). Winning the battle for super keepers. Compens. Ben. Rev., 36(2): 38-44. Zingheim PK, Schuster JR (2007). What are the pay issues right now? Compens. Ben. Rev., 39(3): 51-55 Read More