Effects of the NMW on Business Performance and Reward Grades - Essay Example

National Minimum Wage (NMW) and the effect on business performance and increase reward grades With the introduction ofthe National minimum wage (NMW), there have numerous been debates on the validity and implication of the wage on employment. Other analysts argue that with an increase in the National Minimum Wage (NMW) there is a great likelihood that the employers will reduce the number of employees in the workplace, the working hours are also likely to lessen in the workplace, with the demand for labour in the workplace increasing on a high rate. According to Ram, et al. (pp.55), the National Minimum Wage (NMW) the wage refers to the wage imposed on the workers prior to the deductions. They continue to argue that with the introduction of this wage, a great percentage of human labor has been replaced by machinery since the employers attest to the fact that inclusion of the employees in the workplace has become extremely expensive due to the costs that come from reinstatement of wages to the employees. However, other analysts differ with this argument arguing that the wage has increased employee performance in the workplace. In the research carried out by Dickens & Manning (pp.95), the National minimum wage (NMW) has acted as a foundation in which employers can offer proper pay to their employees. This works by virtue of the wage being in a position to manage the increases in wages and controlling all aspects that may lead to cutting down of costs. The National minimum wage (NMW), on the other hand also attempts to be at par with the changes that take place in relation to employees and the wage rates. Nevertheless, other analysts argue that it is extremely tasking for employers to deal with the task of adjusting to the tough economic conditions and dealing with demands of the National Minimum Wage (NMW) as imposed by the government. This essay shall attempt to analyze the National Minimum Wage (NMW) and the effect on business performance and increase reward grades. The major aim of the National Minimum Wage (NMW) is to reduce poverty rates in UK. This is according to research conducted by Dickens & Manning (pp.95), who indicate that with the National Minimum Wage (NMW) the employees have no option but to work in their workplaces or risk being unemployed. In this case, therefore, employees do not want to risk getting into the labor market that does not allow for easy entry into the market; thus, give the best that they can manage whilst in their current jobs. With proper distribution of income in the market, Arrowsmith et al, (pp.435) indicate that there are high chances that individuals will be incorporated in the market. With higher wages being offered to the employees, it is indeed a motivation that boosts employee morale to give their best in the workplace, since an increase in the National Minimum Wage (NMW) motivates then to work. This, in turn, relates to an increase in the performance of the jobs by the employees whilst in their jobs. Minimal levels of exploitation by employers in the labor market are an explanation that workers will be more inclined to give their best in the workplace. This aspect relates to resrcah conducted by Urwin, Jack & Lissenburgh (pp.271) who indicate that one of the major advantages of the National Minimum Wage (NMW) is that there are reduced chances that the major players in the market will enjoy monopoly in the workplace; thus, less exploitation by the employers. If the employees feel secure in the workplace, chances are that they will dedicate a lot in offering the best for their organization. This fact also coincides with the argument of Lipsey& Chrystal (pp.246) who indicate that with the inclusion of National Minimum Wage (NMW) chances are that the monopolists will not exploit their employees in the workplace. In relation to the research conducted by Undy, Kessler & Thompson (pp. 360), regulation from National Minimum Wage (NMW) has been credited for motivating employees and retaining labor in the workplace. This is from the facts that with regulation of the National Minimum Wage (NMW) a great percentage of employees hold the notion of fairness in the workplace. Fairness interprets efficiency in the workplace, in that, employees feel recognized by the employers; in turn give their best to the organization. In terms of efficiency, the employers are required to train their employees so as to attain quality among the employees. With this, employees are able to improve business performance and increase reward grades. Improvement of employee training creates a situation whereby the employers are in a better position to increase productivity. The National Minimum Wage (NMW) has created a situation whereby the employees shift from contract forms of payment to permanent employment. The employees have minimal fears on the permanency of their jobs; there is proper control of the performance by employers, and emphasis on counteractive discipline on the employees’ side. In short, this is to say that employers have managed to monitor the performance of the employees in the workplace. Research conducted by Metcalf (pp.85) in relation to NMW and distribution of pay in the workplace, the Low Pay Commission indicated a hike in the earnings by the employees (Norgrove, pp.146).The NMW has created an opportunity whereby the employers have no option but to boost the employees’ pay in the workplace. After the enforcement of the pay in 1999, the rates of pay in the workplace have increased on a high rate. With the increase in the wages, the government has managed to cover over 1.8 million jobs in the UK. By the year 2002, the rates of the NMW have increased on an immense scale and statistics on the average earnings index indicate that by the year 2004, the NMW has increased to over 4.5$ for adults above the age of 18 years. By the year 2006, the wages had increased on a higher level; thus, a boost in the pay for the employees in the workplace (Ram, et al., pp.56). With these facts, it is valid to make the assumption that the NMW has indeed been beneficial in an increase in the aggregate pay by the employers. This is for the reason that, the NMW works on the basis that the NMW as a measurement strategy on the amount of remuneration being offered to the employees- whether the pay is standard or not. In the case of home care centers for example, the general pay distribution in the workplace has increased on a higher level. The home care centers have for a long time been associated with a low pays. The NMW can, therefore, be described as the basis in which employees can access better grades, consequently, better performance in the workplace. Through the NMW, the employees provided with an opportunity to respond to aspects that concern their wellbeing in the workplace. With the regulation of the NMW rates, the working conditions of the workers are flexible with the pay rates being maintained. In the case of low paying jobs, the employees are likely to work more, increasing the business performance, since there is need by these employees to acquire bonuses from excess working hours and other bonuses. In one way or another, the NMW allows for the employers regulate the amounts of remuneration to the employees in relation to the kind of job being performed, so as the more the workers dedicate themselves to the job, the more they earn. In this case, therefore, it would be warranted to argue that, the NMW has managed to motivate employees to performing their jobs through an increase in the rewards with the ranking of the employees. Conclusively, the National Minimum Wage (NMW) plays a great role in the improvement of the performance of the business and increasing the rewards to the employees. With the employees being paid a certain amount of money by the employers, a great percentage of these employees are willing to work for the employers; thus, an increase in the performance of employees in the workplace. Since the employers are aware of the repercussions that they would go through upon breaching the terms and conditions of the law, they are careful with the offers they offer to the employees. In this case, both parties have an extremely vital role to play whilst conducting businesses. Just as discussed in the essay above, employees are fully aware of the law and employers have no option, but to pay the wages to its employees. Armstrong (pp.156) indicates that though it may be tasking to determine the successful implementation of pay, the management must not overlook the role of employees in coming up with the definite schemes for payments.With the wages, the employees are able to work and give a considerable share of the profits of the business to the employees. In this case, it is warranted to argue that, with the entitlement of the employees to certain amount of money, since the employees believe in the fact that, it is their responsibility to work for their employers in the work place. Works cited Armstrong, Michael. Armstrong’s Handbook of Reward Management Practice. London: Kogan Page Publishers, 2010. Print. Arrowsmith et al. ‘The impact of the National Minimum Wage in small firms’, British Journal of Industrial Relations, 2003; 41 (3) pp.435-56. Dickens, Richard. & Manning, Alan. Spikes and spill-overs: The Impact of the national minimum wage on the wage distribution in a low-wage sector. The Economic Journal, 2004; 114 (494). pp. 95-101. Lipsey, Richard. & Chrystal, Alec. Economics. Oxford: Oxford University Press, 2007. Print. Metcalf, David. ‘The Impact of the National Minimum Wage on the Pay Distribution, Employment and Training’. The Economic Journal, 2004; Vol. 114, No. 494, pp. C84-C86. Norgrove, David. National minimum wage: Low Pay Commission report 2011. London: The Stationery Office, 2011. Print. Ram, et al. ‘Pay determination in small firms in the UK: the case of response to the National Minimum Wage’, Industrial Relations Journal, 2002; 33 (10) pp.52-67. Undy, Kessler, I. & Thompson, Marc. ‘The impact of the national minimum wage on the apparel industry’. Industrial Relations Journal, 2008; Vol. 33, Issue 4, pp.351–364. Urwin, Jack, G. & Lissenburgh, Stephen. ‘The Impact of the National Minimum Wage in Low-Wage Sectors: Does the Earnings Top-Up Evaluation Study Add to Our Understanding?’ Industrial Relations Journal, 2006; Vol 37. No.3, pp.259-277. Read More