How Nestle Company Utilizes Reward Management Styles - Case Study Example

Nestle assessment – Employee reward management Name Institution Background information In a previous session of this analysis, Nestle Company has been analyzed in such a manner that shows how performance in the company is managed and increasingly improved to ensure that efficiency and effectiveness is improved. As observed in this analysis, the concept of performance management is inter-linked with the concept of reward management in most companies. In Nestle company, there are a number of reward management systems (RMS) utilized in this company to ensure that their employees are efficiently rewarded for the services they offer. There are many different manners in which RMS could be applied in many organizations to reward their employees (Hafiza et al 2011, p. 328). In Nestle Corporation, RMS is applied in four different forms namely transactional rewards, individual rewards, communal and relational rewards. Some of these rewards are tangible and measurable for instance through financial forms while others are not measurable (Jiang and Xiao 2009, p. 180). This paper takes an illumination into the various reward management systems that exist in Nestle and other organizations generally. It will show how the management of the company rewards its employees and ensures that they deliver quality performance each time so that the goals and objectives of the organization can be reached. Definition of reward management system (RMS) RMS is a system of rewarding various employees in an organization to ensure that they are operating at their utmost capacity (Eisenberger, Pierce & Cameron 1999, p. 678). The main objective of the RMS is to ensure that all the employees in a company are performing well and each one of them is in a position to deliver quality and optimal productivity at any given time (Linz 2002, p. 3). The forms of RMS that Nestle company uses to manage its 280,000 employees, both permanent and contractual, across the various factories in the company have been extensively analysed in the following paragraphs. Transactional rewards such as bonuses and financial packages As noted in the introductory part of this paper, these rewards are tangible in nature. Some forms of these rewards include financial rewards. There are very many forms of financial rewards that companies can engage themselves in. due to its practicability, these rewards are definitely the most commonly utilized forms of rewards. Many companies give financial rewards to their employees in various forms. One of the most commonly utilized forms of transactional rewards is bonuses (Shafiq and Naseem 2011, p. 7). Smith (1993, p. 48) agrees with Shafiq and Naseem (2011, p. 7) and states that at the end of the fiscal year, most companies tend to reward their clients through issuing them with various forms of bonuses. Financial bonuses are the most common form of these rewards. The bonuses that are awarded to these employees result as a way of encouraging these employees to work even harder and better in the coming year so that they can be able to achieve the goals of the organization. Sometimes, bonuses are not issued at the end of the year. Some companies find it fit to issue random bonuses to their employees after these employees have been able to hit certain targets. The time for issuing bonuses depends on the decision to be made by the management of the company that is issuing these bonuses. This is a sign of goodwill on the side of the employer that shows that they appreciate the efforts that employees put in the completion of their goals and their objectives (Armstrong, Brown, Reilly 2011, p.109; Azasu 2012, p. 450). In Nestle Company, bonuses are issued on an annual basis if the objectives of the company has been hit (Nestle company website 2014). Bonuses are given in form of cash or other forms of financial incentives such as coupons, shopping and gift vouchers among others. When employees receive financial rewards, they get the incentive to work harder and better. However, the bonuses may differ from one employee to the other and the forms of payments in this case differ based on the levels of experience or skills that the employees have, their contribution as well as experience. In Nestle Company, employees are given bonuses in form of finances as well as vouchers and coupons. The level of each of these bonuses is different and the amount of financial reward that a certain employee receives is based on how skilled, experienced or competent they are in their work. In most cases in this company, the senior management staff receives the highest amount of bonuses because they have the highest amount of risk and responsibility in this company. Once a certain objective has been hit in this company, there is a kitty set out for rewarding the employees who made it all happen. This goes a long way in boosting their confidence about how they work. The financial bonuses are also designed to make the lives of these employees better. Better remuneration makes the employees live more healthier and more fulfilled lives. Employee involvement in decision-making Another form of reward management is through relational rewards that are intangible. Kerr and Slocum (1987, p.3) state that in most cases, the relational rewards complement the financial rewards discussed in the preceding paragraph. According to Druker and White (1997, p. 130), relational rewards offer a more cohesion to the transactional rewards. The forms of relational rewards include examples such as employee voice and recognition. In this case, it is important to have employees’ opinion being considered in various issues. For instance, during the process of decision making in an organization, employees should also be given the chance to air their opinions, criticisms as well as comments on various issues in the workplace. When employees are given the chance to contribute to the process of decision-making, they feel as if they own the system and they are duly responsible for the accomplishment of the goals and objectives of these companies. Each one of the employee feels obligated to some extent to make a willful contribution towards the accomplishment of these goals. When each of these employees fulfills their obligations in their own individual capacity, it goes a long way towards the accomplishment of the overall goals of the organization. Nohria, Groysberg and Lee (2008, p. 6) argue that there is a need to allow employees contribute to the process of making decisions because this allows them to become more involved in trying to achieve the goals of the organization. In Nestle Company, this form of reward management is utilized to a great deal. For instance, employees in the company are allowed to engage themselves in the process of making decisions. This is done through a number of ways. One of the ways through which this is done is through encouraging employees to be innovative and to be critic of their own work. Through this way, they get then chance to participate in various activities in the company. Opening channels of communication Communication is key in growing a company. When employees are given the chance to engage each other, they are capable of coming up with more polished forms of decisions in this company (Martins and Meyer 2012, p. 6). When decisions are made in a collective manner in organizations, it becomes easier to have these decisions ad goals accomplished as opposed to when a decision is made from a central figure and pushed down to the employees. As a way of appraising employees, channels of communication are kept open and each employee is given an equal chance and opportunity to air their views. In nestle, the communication aspect is handled very seriously. Here, people have the opportunity to share what they know with other employees in the organization. They can be able to criticize various formations in the company, offer more insight into a new product and development, redefine and refine existing products, offer different sales pitches and much more. This form of openness and communication in this company allows these employees to engage themselves actively in the running of the business. This is a form of intangible reward system where the satisfaction is derived from the capacity to air their opinions on different matters relating to the organization. Through this policy, attainable and realistic goals are made and every person works hard to make sure that these goals are achieved. Workers’ promotion and reviews Another reward mechanism used in Nestle and many other organizations is promotion of workers. In every company, workers need to be given the confidence that once they work hard, they are in a position to increase their capacity and become promoted (Schuler and Jackson 1996, p. 10). When avenues of promotion are open and employees realize that they can be able to rise internally to higher posts, this gives them the morale to work even harder as they anticipate this promotion. In companies where promotions do not occur often, employees are skeptical about working hard and being rewarded. Chiu and Luk (2002, p. 119) argue that in a company where promotions and reviews of employees salaries occur frequently, it becomes possible to have these employees working harder than in companies where this does not happen. In Nestle Company, there is a lot of internal competition because the company promotes employees internally based purely on their merit. Because of this, employees in this company work harder to ensure that they are considered for promotion when such chances come up. Creation of promotion opportunities to the employees is also one of the best reward systems that various employers engage in. employees need to be assured that there is room for growth in the company. This reduces the turnover ratio in the company. For a company of Nestle magnitude, the turnover ratio could be extremely high if the concept of employee promotions and salary reviews is not conducted. Salary reviews are done as a way of appreciating that the employees have transitioned from one realm of their life to another. Salary reviews also act as cautions when there are no vacancies and promotion chances. Employees of the company still feel comfortable working in the company in their original positions because their salaries are reviewed upwards periodically. Professional complaint handling Handling of complaints that emanate from the employees is also another form of reward management in itself. Understandably, conflicts may arise in the company because of the diversity of the different employees who work in the large company (Lewis 2001, p. 100). It is vital to know that employees of a company form the internal customers of the company. As a rule, customer service is very important and thus all customers must be handled the same way. This applies unconditionally to the internal consumers as well. When the customer is made to feel appreciated, there is a higher chance that he or she would offer repeated business to the company. The same applies for internal consumers. When conflicts arising internally are handled appropriately, there is harmony in the company and harmony creates a perfect avenue for the growth and management of the business (Kirkcaldy and James 1999, p. 55). In Nestle Company, internal customers are taken very seriously. It is the understandings of the management team that these internal customers are the cogs that drive the whole organizational machine and enable the whole company achieve its goals and objectives. As thus, they should be given respect and have their complaints handled appropriately. There is a department that is concerned with handling of complaints that arise within the company. This department is tasked with the prerogative of making sure that each of the employees in this company works hard towards the accomplishment of a specific goal without having any issue. Cultural tolerance policy in the company Another concept that results into a very high degree of turnover in many companies in the world is the concept of employee turnover based on cultural intolerance. This usually occurs in large multinational corporations that operate in different countries. It is very vital to ensure that each employee in a company, regardless of their cultural, creed or racial inclination is given the maximum respect that they deserve (Martins and Meyer 2012, p. 78; Svyantek 2003, p.168). It is important to understand that the accomplishment of the goals of an organization is a collective affair. This implies that each person working in the company is expected to offer their contribution towards a certain end so that these goals could be achieved. In a large multinational like Nestle Company, there exist a very high number of people who have different cultural inclinations. These people are very different and very diverse in their cultural aspects. Sometimes, this could be an avenue for conflict where employees come from different places and it is important to ensure that every employee in the company is made to feel comfortable (Jamal 1999, p. 155). There is a cultural tolerance policy in Nestle as a corporation that enables every employee to be respected and given the space they deserve to coexist with other people. Due to its wide base and its expansion into different countries across the globe, the company has attracted a wide workforce from diversified areas and cultures. This has made the company adopt policies that would ensure that every person is made comfortable irrespective of where they come from. This is achieved through a number of ways in this company. One of the ways is through offering a rotation of workers in the company to work in different areas so that they can get acquainted with the diversity that exists in these areas. This policy makes the employees feel appreciated and they are encouraged to work even harder. Study shows that there is a lower turnover ratio in the companies that have adopted the concept of cultural tolerance compared to those which have not (Kendall and Hulin 1969, p. 13). Good working conditions Lunenburg (2011, p. 4) argues that every worker aspires to work in an environment where he or she is comfortable and where the company management have gone to an extent of ensuring that the comfort of these workers has been given some form of prominence. In nestle companies, the working conditions are very well taken care of. The employees who work inside these factories have been provided with the necessary gear to prevent them from having accidents or any forms of complications while working in the company. The environment is also very clean and the company has adhered to all the requirements of the authorities in different areas where they have set up shop. Good working conditions goes a long way in ensuring that these employees feel appreciated and the management is concerned of their health and other benefits through providing them with good working conditions and working environments (Chew 2005, p. 90). Conclusion The above discussion has offered an insight into how Nestle Company utilizes reward management styles to rewards the employees in this company. As observed, reward management mechanisms lead to an improvement in the way different employees work and how the company is run. When the employees are appreciated through a reward mechanism, they feel the need to work even harder following this motivation and this pushes them to become even better workers. There are a number of avenues of reward management that have been covered in this paper. These reward mechanisms are both tangibles as well as relational. The reward management mechanisms that have been covered in this paper following a case study of Nestle company include Transactional rewards such as bonuses and financial packages, Employee involvement in decision making, Opening channels of communication, Workers’ promotion and reviews, Professional complaint handling, Cultural tolerance policy in the company as well as Good working conditions. All these forms of reward management have been shown to lead towards one end: ensuring the smooth accomplishment of the goals of the company. The forms of reward management systems discussed here have also been shown that they can be applied appropriately to other organizations for the accomplishment of the various goals of these organizations too. The key concept in this case is the fact that once employees are satisfied, they have the capacity to develop and accomplish the collective goals of the organization. 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International Journal of Organizational Analysis, vol.11, no. 3, pp.167 – 169. Read More