Managing Employee Relations and Reward - Assignment Example

Managing employee relations and reward (Authors Name) (Institutional Affiliation) Managing employee relations and reward Abstract The purpose of this report is to analyze the role of a good incentive scheme in increasing the company’s performance. Incentive schemes are activities that a company employs to reward its employees using cash, goods or holidays. The schemes are intended to motivate the employee and to encourage their commitment to the company thus increasing productivity of the company (Fisher 2008). Incentive schemes are also aimed at increasing the employee’s performance towards achievement of the overall goals and objectives of the company. Incentives may be offered for good sales performance, good production, or even time keeping. Question 1 A well structured incentive schemes is able to satisfy the physical and financial goals of an employee. The scheme should also enable the company to achieve its overall goal and objectives. A good incentive scheme is thus able to identify the key employees of the company. The engineers are considered to be key employees in this company. In order to clearly understand the problem behind the engineer’s incentive scheme that is their pay and reward package it is important to acknowledge the fact that the employee wants to prosper and grow just as the company is growing. This simply means that the employee views himself as an equal owner at the company. The problem associated with the engineers incentive scheme can be analyzed by evaluating the components to a successful incentive plan includes Discretionary vs. structured The first issue about the engineer’s incentive is that it is discretionary. This simply means that the incentive scheme was designed by the management without any considerations to the individual engineer’s achievements. The engineers are paid according to their productivity which states that they should visit at least four sites everyday and they are given the opportunity to earn a bonus from each site they visit thereafter. This pay plan clearly does not consider the achievements of the engineer but rather considers the engineer as a resource to the company. The engineer’s skills and knowledge are not considered important to the company. Employee empowerment: This issue assesses the fact that the engineers do not know how to contribute to the company’s performance and success. The engineers lack the opportunity to achieve desired goals within the company. The incentive plan for the engineers does not allow them to excel within the company. Lack of the opportunity to advance and to be involved with the company has driven down the commitment rate of the employees. The introduction of the new portable computers and the mobile phone has also detached the engineers to the internal activities taking place within the company. The new system has limited the ability of the engineers to focus on what is important to the company and it has thus reduced their commitment to the company. The engineers have thus started forming into groups to discuss their increasing isolation from the company as they feel that they do not contribute to the success of the company. Communication and transparency: A good incentive scheme is characterized of good communication and transparency of information (Peter 2002). From the look at the engineers incentive scheme it s evident that the company does not share financial and performance reports with them. In order for the engineers to be excited about their incentive scheme they must be able to understand the goals of the company and also be conversant with the performance measuring techniques. The engineer’s performance should be measured and they should be allowed assess their performance and improve on it. The company has isolated the engineers through its incentive and pay scheme and has thus lost their commitment. Clear Measurable goals: The company should develop goals that should be clearly measured over a period of time. The engineer’s bonus is not a clear goal as it is determined by the choice of the engineer either to visit additional sites or to only work under the specified agreed number of sites. This type of bonus does not motivate the engineer to work as it is not attached to achievement of a certain goal or objective. Recommendation: The company should align the bonus offered to the engineers with the overall goals and objectives of the company. The company should thus offer more than just financial gain to the engineers but should also offer them an opportunity to advance within the company. The engineers could be offered management positions in the event of high performances and productivity. The incentive plan moreover, should be designed with proper collaborations with the engineers. They should be given the opportunity to decide the best incentive that will work for them Question 2 There are many advantages that are associated with the sales/ consultants teams pay. The consultants are paid a salary plus commission while the sales people are being offered high rates for new businesses and are also offered a car. Advantages to this system include Motivation: The plan sufficiently rewards the sales people when they bring new business to the company thus they are motivated to pitch new clients. The company has also offered them a car to ease their mobility and thus be able to easily reach their clients. This is also advantageous to the company as it enables them to increase their customer base and thus they can be able to increase their overall productivity (Herwig 2003) Increase earnings: The more clients a sales person brings to the company the more he/she earns. Thus this incentive plan to the sales people is advantageous in that it is self supporting. The consultants are also supported by the monthly salaries they receive from the company. The self supporting nature of the incentive plan increases the performance of the sales person, the consultant and also the company as a whole. The company is able to meet its goals and objectives. Loyalty: This aspect is focused mainly on the company. The employees who are able to see their finances grow as a result of the incentive plans are more loyal and committed to the company. The sales people are able to earn low rates for repeat customers this enables their earnings to increase with time provided they maintain their clients (Frederick 2003). Reduced turnover: This aspect simply implies that employees often look for other employment opportunities when they feel like they are not well compensated for their efforts. The company’s incentive plan clearly creates a feeling of appreciation to the sales persons as they are also provided with a car. The advantage to the company is that it is cost friendly as it reduces the cost of hiring new sales people. The disadvantages that are associated with the sales/consultant’s pay include: Commissions: A commission is an effective motivator however it can also be a source of insecurity and pressure. The consultants who have a small base pay and sales people who earn most of their income from commissions have the pressure to perform well. The management also puts pressure on the consultants and the employees to meet the required sales targets. This can cause resentment on the management as the employees fear losing their jobs and also lack financial security. The discouraged workers might seek alternative jobs thus causing a high turnover to the company (Guy 2005). Employee conflict: The company views offering the sales and the consultant people large commissions as an effective motivator however some employees might become unfriendly to those who earn high commissions as they consider their contributions are not as substantial as theirs. The engineers might be resentful of sales persons who earn high commissions as they view themselves more important to the company than the sales people. Such notions can spread across the company and may lead to decreased morale amongst the employees. Recommendation: The sales persons should be offered salaries in order to reduce the feeling of insecurity associated with commissions. The management should also develop achievable sales targets in order to reduce the pressure exerted on the sales people and consultants. High performing sales people should also be offered more than just commissions in order to curb resentment from other employees. Question 3 After successful assessment of the insurance company there are various theoretical perspectives that support the need for a successful incentive scheme. The content theory argues that all human beings have needs that they need to satisfy. It is thus important for organizational managers to understand the needs of their employees and to acknowledge the fact that these needs change with time. The company should also know the fact that every employee has different needs. Von Glinow (2000) stated that the organization needs to develop a flexible incentive system that is able to adapt to the various needs of the employees. The effectiveness of the incentive framework is therefore dependent on the needs of the employees. Process theory states that the individual need accounts for one part of the process that determines his/her behavior. The other determinant of individual behavior can be rewards. The employee behaves in a certain manner in order to get a reward thus the reward becomes the motivating factor for employee behavior (Martin 2005). Expectancy theory argues that the motivation of employees is dependent on three guiding principles. The first principle is expectancy which states that there is a probability between exerting high pressure and levels of performance. A positive probability means that the employees possess skills necessary for them to be high performers. The second principle is instrumentality. This perspective is focused on the employee’s view that performance will lead to the expected outcomes. The instrumentality perspective otherwise referred to as the P-O expectancy is positive when the employee perception is that high performance will result in outcomes such as a promotions or increase in pay rise (Adams 2007). Valence is the other perspective of expectancy theory. This principle states that employees are attracted by the rewards being offered by the company. The rewards are perceived by employees differently. However, positive valence expectancy implies that the organization has been successful in identifying the rewards that are most valuable to the employees. The expectancy theory therefore in conclusion states that employees view the fact that increased effort leads to increased job performance which then leads to rewards. (Griffin 2008). In practice the theory states that if an employee with the capability to perform well does not expect at a reward from his/her efforts then the he/she will not be motivated to perform his/her tasks and responsibilities. Thus the theory simply states that the three factors expectancy, instrumentality and valence should be high in order for the employee motivation to be high. The insurance company does not have any performance expectations for the engineers. They only expect them to visit more than four sites a day. Any additional site visited is an autonomous decision taken by the engineers and is not geared towards any reward being offered by the company. The sales persons however, are offered Christmas bonuses in the event of high organizational performance and they are even given the opportunity to join pension schemes. References Peter T. Chingos, (2002) Paying for Performance: A Guide to Compensation Management, John Wiley & Sons Fisher John (2008) How to Run Successful Employee Incentive Schemes: Creating effective programmes for improved performance, Kogan Page Adams, J. (2007). Managing people in organizations: Contemporary Theory and Practice. Palgrave Macmillan Dessler, G. (2008) Human Resource Management. New Jersey: Person Prentice-Hall Frederick F. Reichheld and Thomas Teal (2003) The Loyalty Effect: Hidden Force Behind Growth, Profits, and Lasting Value, Havard Business Press Griffin, R.W. (2008) Management. Houghton Mifflin Company Martin Jacobsen, (2005). Point Process Theory and Applications, Springer Publishers Guy Lincoln and Conrad Lashley, (2005) Business Development in Licensed Retailing, Routledge Herwig Kressler (2003), Motivation and Reward: Performance Appraisal and Incentive Systems for business success, Palgrave Macmillan Read More