Ineffectiveness of Employee's Compensation and Benefits at Subway - Essay Example

Choice Table of Contents 1 Background of the Company 3 2 Research Question and Objectives 3 3 Research Rationale 3 2. Literature Review 4 2.1 Introduction to Literature Review 4 2.2. Outlining the Ineffectiveness of Compensation and Benefits 5 2.3 Assessing Major Influences of an Ineffective Compensation and Benefits on the Organisations 6 2.4 Identifying Major Causes of an Ineffective Compensation and Benefits Mechanism 8 a. Overlooking Employee Needs and Expectations 8 b. Deficiency in Complying HRM Policies 9 c. Avoiding Ethical Norms 10 2.5 Conclusion 10 2.5.1 Summary 10 2.5.2 Practical Implications 11 2.5.3 Research Implications 11 References list 13 1. Introduction 1.1 Background of the Company Founded in the year 1965, Subway is regarded as one of the biggest American based fast-food restaurant franchisers, which is primarily renowned for its exceptional deliverance of submarine sandwiches along with broad assortment of fast-food products. Currently, the organisation is operating its business in 103 global nations with 40,975 numbers of fast-food outlets that correspondingly serves millions of customers (SUBWAY 2013). 1.2 Research Title, Question and Objectives Emphasising the current business practices along with various business functions of the organisation i.e. Subway, the title of this research is “Critically analyse the “ineffectiveness of employee's compensation & benefits at Subway in Singapore.” In this regard, the major question of this research study can be stated as ‘How the ineffective compensation & benefits program affect employees performance and motivation at Subway in Singapore?’ The primary objectives of this research study are to critically outline the concepts of compensation and benefits and their influence on employees’ performance and motivation. Moreover, the research study also tends to identify the major causes that lead towards the ineffectiveness of compensation and benefits along with its impact on Subway towards attaining competitive success. 1.3 Research Rationale According to the recent trends observed in the fast-food service industry, it can be viewed that organisations generally seek to formulate various policies and regulations with the aim of gaining superior competitive position over their major rivals. In this context, the Human Resource (HR) policies of the organisations are often recognised to provide incomplete or insufficient beneficial aspects to their staff members. Therefore, the rationale of this research can be determined based upon critically assessing the importance of compensation and benefits that can be regarded as major elements of Human Resource Management (HRM) of an organisation. 2. Literature Review 2.1 Introduction to Literature Review Armstrong (2011) critically stated that the offering of an adequate compensation package or any financial incentive can build a productive relationship between the organisations and their respective employees. Therefore, the organisations must need to be ensured providing justifiable compensation and employee benefits. The process would significantly support the employers along with the employees to gain substantial support in attaining considerable growth (Armstrong, 2011). In relation to the present HR policies practiced by Subway, it can be affirmed that the organisation should highly focus on providing justifiable compensation facilities to the employees in order to increase its overall business performance and willingness towards attaining the organisational goals. This particular practice can help the organisation in building a strong along with an effective relationship with its employees, resulting in lessening employee turnover rates of the organisation at large. The study of Berber & et. al. (2012) provided a major rationale in determining the role of compensation and benefits within various organisations. The study has analytically demonstrated that effective practice of compensation facilitates an organisation to gain numerous financial and operational benefits. Moreover, according to Berber & et. al. (2012), employees’ compensation and benefits are often regarded as an effective tool of refurbishment that ensures intensifying the corporate culture of a particular organisation. Employees’ compensation is duly considered as one of the direct financial costs for the organisations, which may substantially increase the operational costs of a particular organisation. Furthermore, the analytical research of Berber & et. al. (2012) also demonstrates that incentive compensations play a major motivational role for the managers in stabilising their skills and performing accordingly towards the attainment of the desired financial and operational goals of the organisations. According to Bratton (n.d.), employees play a decisive role for an organisation not only in attaining its financial goals, but also establishing its long-term sustainability within a particular business market. In relation to the fiercely competitive market scenario in the unconventional fast-food service industry, fair and well-build HRM related policies are viewed as the core set of practices for any organisation to attain superior competitive position. In this regard, employees’ compensation and benefits is one of the imperative parts of HRM policies that influences on the overall operational functions of a particular organisation Bratton (n.d.). According to French & Rumbles (2010), compensating the employees in the form of increasing wages, providing bonus along with rewards and other benefits can motivate them to increase their individual performances and also strengthening their commitment towards the accomplishment of organisational targets. In the context of the business practices that perform by Subway in Singapore, it can be viewed that employees’ compensation and benefits mechanism of the organisation has created significant issue associated with offering a minimum break time to the workers. In this regard, it can be critically stated that the ineffectiveness in the aforesaid mechanism may lead the organisation towards raising various sorts of complexities, resulting in minimising its productivity along with augmenting annual employee turnover rate. 2.2. Outlining the Ineffectiveness of Compensation and Benefits In relation to the fundamental concepts of compensation and benefits, Idemobi & et. al. (2011) affirmed that managing employees’ compensation and benefit is one of the central pillars of an effective set of HRM policies persisting within an organisation. The perceptions of compensation and benefits are often considered as a process of formulating and implementing organisational strategies to compensate the workforce fairly and equitably in line with their contribution made and value provided to the organisation (Idemobi & et. al., 2011). In this similar context, the study of Connors & et. al. (n.d.) observed that employee compensation and benefits is a set of practice, which ensures to provide justifiable return to each employee in accordance with the responsibility and the organisational commitment made by the employees towards any organisation. In relation to the study made by the Society of Human Resource Management (SHRM, n.d.), it has been recognised that lower wages or unjustifiable financial benefits not only represents the inefficiency in compensation plans, but also entails lower interests of the organisations towards fulfilling the needs of their respective staff members. In this context, the organisations should also need to enclose different other beneficial aspects including flexible working hours or a justifiable break time that might result in raising the productivity in the operational performance of the employees. In relation to the present business scenario of Subway in Singapore, the organisation has been identified to provide minimum or shorter break time. This particular practice of the organisation has therefore negatively influenced its workforce and made them to face various types of depressive behaviour due to increasing workload within the respective business market. In this regard, the current compensation mechanism of Subway can reduce the self-efficacy of each of its employee towards successfully accomplishing predetermined business objectives. 2.3 Assessing Major Influences of an Ineffective Compensation and Benefits on the Organisations The influence of an ineffective compensation and benefit strategy can severely impact on the organisations to obtain their long-term business objectives in any respective business market. In this regard, Hansen & et. al. (2009) critically stated that the compensation and benefit plan plays an imperative role for the organisations in motivating and stabilising the performance of each staff member towards attaining organisational goals. According to Hansen & et. al. (2009), the inefficiency in compensation and benefits program would considerably demoralise the willingness along with the integrity of the workforce in accomplishing their desired performance goals (Hansen & et.al, 2009). In relation to the present day context, the study of SHRM (n.d.) critically identified that the employees working in the restaurant service industry often face certain critical issues associated with compensation and benefits especially in the context of wage, break or recess schedules along with additional remuneration provided by the employers. With respect to the current prevailing issues faced by the Singaporean employees, the compensation mechanism of Subway tends to negatively impact on offering valid and justifiable recess time for each of its employee. Although the company ensures to provide justifiable wages, the issue associated with shortening the break time during the working hours may lead the company to increase employee turnover rate (SHRM, n.d.). In this similar context, the study of Murphy (2001) has critically evaluated the major implications of an ineffective compensation and benefits program. According to this particular study, it can be apparently observed that the inefficiency in the compensation and benefits plan often leads towards increasing employee turnover rate, which can drastically impose unfavourable impact upon an organisation to achieve its desired business goals (Murphy, 2001). In the context of the current compensation and benefits system prevailing at Subway in Singapore, the lower amount of interests towards meeting the needs of the employees can create severe complexities for the organisation to increase its overall productivity and improve profitability. In accordance with the research findings of Cherian & Jacob (2013), it has been recognised that self-efficacy significantly influences individuals’ performance at workplace. The research demonstrated that the notion of self-efficacy impose significant impact on the emotional thoughts and reactions of the individuals by a certain extent. The concept of self-efficacy tends to define as functions of personal belief through which an individual can successfully achieve his/her own task or activity (Cherian & Jacob, 2013). With reference to the present compensation and benefits mechanism prevailing at Subway, the lower interests of the organisation towards complying with the preferences of the employees generally demoralises their emotional thoughts and reactions. These eventually lead towards lowering their self-efficacy at large. As a result, the lower amount of self-efficacy would generally reduce the optimum proficiency and propensity of the employees towards successfully achieving their personal goals. With this regard, the compensation and benefits plan or system prevailed in Subway can negatively influence on the overall performance of the employees and on the other hand, it can also motivate the employees to seek for other opportunities in the similar business industry. 2.4 Identifying Major Causes of an Ineffective Compensation and Benefits Mechanism With reference to the observation of the researches conducted by different scholars, it can be recognised that the inefficiency of a compensation and benefits mechanism can impose unfavourable impact upon the organisations to achieve long-term sustainability in the markets where they operates. In relation to the major causes underneath an ineffective compensation and benefits mechanism, several aspects require to be taken into concern that makes the organisations to face future challenges. In the context of Subway, few major aspects leading to the ineffective compensation mechanism have been illustrated in the following discussion. a. Overlooking Employee Needs and Expectations According to the study of Lunenburg (2011), significant overlook in meeting the needs along with the expectations of the employees can be duly considered as one of the major causes of a poor or an ineffective compensation and benefits mechanism. Organisations in this present competitive business world are generally focussed upon implementing various cost cutting strategies in order to minimise their direct expenses that they incur while performing various operational functions. In this context, the compensatory and beneficial aspects of the employees are often overlooked by the organisations. However, this particular aspect or strategy can also severely impact on the overall performance of the organisation through reducing the productivity level of the workers. In this context, Heneman (2002) critically analysed that in order to achieve greater productivity from the workforce, the compensatory framework must need to incorporate the fundamental needs of the employees. In this context, the compensation and benefit mechanism must need to ensure deliverance of adequate support to the employees through offering justifiable wages along with additional advantages with respect to the fulfilment of their basic needs along with expectations (Heneman, 2002). The current compensation and benefits mechanism of Subway has been identified to involve significant deficiencies concerning the fulfilment of the desired needs along with the expectations of the employees. This can be justified with reference to the fact that the mechanism focused on shortening the break time of the employees within the actual working hours. b. Deficiency in Complying HRM Policies In accordance with the research conducted by Deb (2009), the deficiency in complying with the basic HRM policies can also be duly considered as a major reason for the design of an ineffective compensation and benefits plan. As compensation and benefits has been identified to play an imperative role in the overall HRM functions, therefore, the mechanism should also need to comply with the fundamental HRM policies of the organisation. In this context, the compensatory framework of Subway should be included with appropriate HRM regulations that can enable the organisation to motivate employees towards forming long-term relationship in the markets where it operates. Moreover, the organisation must also consider the basic needs and the expectations of its workforce through providing justifiable refreshment hours. These strategies would certainly enable the employees of Subway to increase their interests and remain much motivated towards accomplishing the desired organisational objectives. c. Avoiding Ethical Norms According to McAfee & Anderson (1995), ethical norms within the employee compensation and benefits mechanism often play a decisive role for the organisations in satisfying the needs and the expectations of the employees. The intervention of ethical conducts and practices often supports the marketers to gain adequate competency towards motivating and encouraging employees to increase their ultimate performance level (McAfee & Anderson, 1995). Moreover, Rao (2007) stated that the compliance of adequate ethical norms also enables the decision makers of a particular organisation to streamline the employee compensation policies along with simultaneously increase the self-efficacy of each individual towards the attainment of organisational goals and vision (Rao, 2007). Therefore, the lacunas of ethical conducts within the strategic framework can be regarded as one of the major and primary reasons behind the failure of any effective compensation and benefit mechanism of an organisation. In this regard, the deficiency in maintaining ethical conducts can be duly considered as one of the major factors for making Subway’s compensation and benefits mechanism quite ineffective. The offering of unjustifiable recess time can be identified as a major concern of the present compensation and benefits mechanism of Subway. 2.5 Conclusion 2.5.1 Summary To summarise, it can be affirmed that the concepts of employee compensation and benefits have been recognised as the major attributes of the HRM policies of a particular organisation. In relation to the current compensatory mechanism prevailing at Subway in Singapore, certain lacunas can be critically observed with regard to employee compensation and benefits in the HRM policy of the organisation. The organisation i.e. Subway can be apparently observed towards discriminating the fundamental needs along with the expectations of the employees in the form of providing shorter break times. Although the company tends to offer appropriate wages in accordance with the performance or the designation of the employees, the compensation and benefits mechanism of the company has also been viewed to involve certain deficiencies in terms of shortening break time. In various cases, the ineffective compensation and benefits mechanism might lead the organisation to face a higher rate of employee turnover. 2.5.2 Practical Implications With regard to the major issues associated with compensation and benefits mechanism faced by Subway, the organisation should highly focus on following the fundamental ethical norms, HRM policies along with addressing the basic needs and the expectations of the employees. The adequate compliance with the ethical norms would certainly support the organisation in motivating employees towards improving their self-belief and developing their performance by a considerable extent. Moreover, the continuous development of the compensation policies in line with the HRM regulation would further enable the organisation to increase the proficiency and the propensity of each individual towards the accomplishment of organisational targets and values. 2.5.3 Research Implications Reference Year Country Focus Armstrong 2011 United Kingdom Strategic Human Resource Management Braton n.d. United States Strategic Human Resource Management Cherian & Jacob 2013 Abu Dhabi, UAE Motivation and performance of employees Connors & et. al n.d. rational Compensation and benefits Deb 2009 India Compensation management SUBWAY 2013 US Company background French & Rumbles 2010 rational Recruitment and selection Hansen & et. al 2009 US Reward Recognition in Employee Motivation Heneman 2002 rational Strategic Reward Management: Design, Implementation, and Evaluation Idemobi & et. al 2011 Nigeria Compensation management Inyang 2010 rational Strategic human resource management McAfee & Anderson 1995 rational Compensation dilemmas Murphy 2001 rational Impact of compensation Rao 2007 India Human resources management Society for Human Resource Management n.d. Rational Role of compensation The above researches fundamentally discussed about the importance of providing effective compensation along with benefits to the employees of an organisation. Moreover, the ineffectiveness of this significant aspect i.e. compensation and benefits prevailing at Subway in Singapore has also been discussed. Therefore, no such research gap can be apparently observed while determining the ineffectiveness of compensation and benefits program prevailing at Subway especially in Singapore. References list Armstrong, M., 2011. Armstrong's Handbook of Strategic Human Resource Management. Kogan Page Publishers. Braton, J. No Date. Chapter Two: Strategic Human Resource Management. Human Resource, pp. 37-71. Cherian, J. & Jacob, J., 2013. Impact of Self Efficacy on Motivation and Performance of Employees. International Journal of Business and Management, Vol. 8, No. 14, pp. 80-88. Connors, C. J. & et. al., No Date. Overview. Chapter 3, pp. 3.1-3.51. Deb, T., 2009. Compensation Management: Text and Cases. Excel Books India. SUBWAY, 2013. Explore Our World. Doctor's Associates Inc. [Online] Available at: http://www.subway.com/subwayroot/exploreourworld.aspx [Accessed December 17, 2013]. French, R. & Rumbles, S., 2010. Recruitment and Selection. Leading, Managing and Developing People, pp. 169-190. Hansen, F. & et. al., 2009. Reward Recognition in Employee Motivation. SAGE Publication, pp. 64-72. Heneman, R. L., 2002. Strategic Reward Management: Design, Implementation, and Evaluation. IAP. Idemobi, E. I. & et. al., 2011. Compensation Management as Tool for Improving Organizational Performance in the Public Sectors: A Study of the Civil Service of Anambra State of Nigeria. Sacha Journal of Policy and Strategic Studies, Vol. 1, No. 1, pp. 109-120. Inyang, B. J., 2010. Strategic Human Resource Management (SHRM): A Paradigm Shift for Achieving Sustained Competitive Advantage in Organization. International Bulletin of Business Administration, Iss. 7, pp. 23-36. McAfee, R. B. & Anderson, C. J., 1995. Compensation Dilemmas: An Exercise in Ethical Decision-Making. Developments in Business Simulation & Experiential Exercises, Vol. 22, pp. 156-159. Murphy, K. S., 2001. The Impact of Compensation on the Turnover Intentions of Outback Steakhouse Managers. Literature Review. [Online] Available at: https://www.google.co.in/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&ved=0CDEQFjAA&url=http%3A%2F%2Fwww.ccsenet.org%2Fjournal%2Findex.php%2Fijbm%2Farticle%2Fdownload%2F26770%2F16992&ei=XTKxUqraIcjkiAfSsYDoCw&usg=AFQjCNGyUoKcDIPT9pphURDtl1FUZ8JuBw&sig2=J494JBGy6qyUHJMTqLiz_g&bvm=bv.58187178,d.aGc [Accessed December 17, 2013]. Rao, V. S. P., 2007. Human Resources Management: Text and Cases. Excel Books India. Society for Human Resource Management, No Date. Compensation’s Role in Human Resource Strategy. Chapter 3, pp. 21-36. Read More