The paper "Assessment of Reward Systems in Organisations - Pro-Fit Inc" is an outstanding example of a management case study. A company aiming to succeed over the fierce competitiveness in today’ s business-scape needs to accomplish it through creating competencies that are hard to replicate. Some companies have successfully excelled at utilizing their employees to create a differentiation in their operations. Theories support that employee motivational level is a closely associated and influencing factor on organisational performance (Kerr & Slocum, 1987; Weiss, 2001). High motivation is associated with greater levels of employee retention, less absenteeism, innovation and achievement orientation (Weiss, 2001).
Theories of motivation indicate that extrinsic factors such as company reward system play a crucial role in managing the workforce motivation. Therefore, managing the reward system effectively within an organisation becomes critical for ensuring the achievement of overall organisational goals. The organisation in context is Pro-fit Inc. - Australia, which operates as a chain of retail outlets in the fitness equipment market. With over 28 outlets nationwide, the company differentiates its offer by not only offering the basic core product which is the equipment itself but also a host of other value-added services such as nutritional guidance, physiotherapy services and expert advice on exercise routines.
In this scenario, Pro-fit involves its human resource to deliver the service component of the product offer which makes up a crucial element in satisfying the customer. Therefore, it is exceptionally important that Pro-fit outlet teams are motivated to ensure proper service delivery, reduced absenteeism, and attracting and retaining high caliber staff. Rewards are directly linked to employee motivation, which in turn impacts the level of productivity and performance. Therefore, the reward system need to be well integrated into the overall business strategies.
An organisation, which aims to develop an effective reward system, should set its policies and reward strategies in alignment with business realities in the market, the overall company objectives and the core business model of the company (Dyer and Reeves, 1995). This report assesses the current reward system at Pro-fit Inc. and propose changes to develop a new reward system deemed more suitable for the company. Market and Organisational Background The fitness industry is rapidly growing in Australia and more and more people are interested in following a routine and systematic physical exercise program.
A large percentage of people choose to attend a gym but there is a sizable market that is growing at about 9-10% where customers wish to have their own fitness equipment at home. The main idea is that they save time travelling to the gym and also manage to squeeze in a workout in any given time available during busy schedules. Mothers at home are one of the key customer groups targeted by home fitness equipment.
The market for fitness equipment retailing heavily competes with many large scale retailers operating in the segment. Some regional level outlets also compete heavily in their own localities, based on goodwill and value-added services. Pro-fit Inc. was incorporated in 1979 with its head office in Melbourne, Australia. Starting with one retail outlet, the company has grown to be the 2nd largest fitness equipment retailer in the market. Currently, there are 28 Pro-fit outlets nationally and each outlet employees and nutritionist, physiotherapist and a number of sales staff, all with fitness instructor backgrounds.
The head office operates with a functional organisational structure with each department concentrating on separate functions. The marketing and sales department is arranged regionally and has a department manager and regional managers. The equipment is sourced from recognized branded suppliers as well as from more cost-effective sources such as China. Finance, procurement, IT, HRM, Sales and Marketing are some of the key functional departments at Pro-fit Inc head office. Although Pro-fit experience phenomenal growth in the market with its first-mover advantage, it had lost its market leadership to Workout World almost a decade back.
Other competitors as Fitness Market, Life Span etc. have also managed to encroach on Pro-fit’ s market shares since of recent years.