Reward Systems and Organisational Culture at Focus Pointe - Assignment Example

Running Head: REWARD SYSTEMS Reward Systems Name of the Writer Name of the Institution TABLE OF CONTENTS Exclusive Summary 3 Types of Rewards 5 Related Cases 6 Reward Systems and Organisational Culture at Focus Pointe 8 Designing Reward Systems at Focus Pointe 10 Conclusion 12 Recommendations 13 Reward Systems Exclusive Summary The Video case study from the Chapter ‘Reward Systems’ brings to light a range of different problems faced by the organisation Focus Pointe, most of which stem from unsuccessful or nonexistent reward systems. Focus Pointe faces human resource management (HRM) issues common to many organisations in the areas of recruitment, retention and organisational culture. As these issues can all be linked to the organisation’s reward system, an analysis and reform of this system may provide answers to these issues and enable the organisation to become more competitive and successful. A reward system or reward management is the aspect of HRM in an organisation that deals with the administration of remuneration. It is this very function at the Focus Pointe which seems to have the deficiency. Organisations, like Focus Pointe, can use two types of rewards for goal achievement: financial and non-financial. Financial rewards refer to compensation with cash value such as salaries, bonus pay, stock options and benefits. Non-financial rewards include recognition, training and psychological characteristics of work (Heery & Noon, 2001). A successful reward system can help the organisation to attract and retain the best employees whilst promoting a constructive organisational culture. Reward systems are designed by businesses as a means of compensating employees for their contributions. Appropriate reward systems are important to organisations as they can used as an incentive for goals to be achieved and to influence the level of motivation amongst employees. For example, if monetary increases are offered to employees who attain certain production levels then workers may be more highly motivated to reach the target. Monetary rewards have a recognised cash value, for example base pay, pay increases, bonus pay, stock options and benefits which may appeal to cash-motivated employees. However, other employees may have a preference for more money, but find the extra effort for the monetary rewards not worth giving up the time spent in other activities (Bushardt, Toso, Schnake 1991, 25-28). As a result, reward systems must often contain a nonmonetary component for those employees with different values. Workers who are motivated to succeed and gain promotion are offered nonmonetary rewards with less well-known cash value such as promotion, recognition and training (Heneman, Fisher, Dixon, 2001, 18-30) Attracting and recruiting new employees who are ‘right for the job’ is one of the key issues of HR. Recruitment has become especially important since the late nineties as the unemployment rate has reduced and the labour market has become tighter. This means greater competition for fewer skilled employees (Bailey, 1998, 11-12). The Harding case shows Focus Pointe is keen on recruiting new employees with sales skills as well as technical knowledge. This could prove difficult if they do not have an effective recruitment strategy. Implementing a suitable reward system that is congruent with the organisation’s goals and business strategy can be a very valuable recruitment tool. Types of Rewards Rewards can be given in many different forms to attract potential employees. The first and most obvious is monetary bonuses. For example, an organisation that produced Internet security products – International Creative Technologies Ltd, gave new employees $5,000 to $30,000 if they took the job and stayed for six months (“Find and keep”, August 1997). Another way to attract skilled recruits is to provide employee training. If the recruitment scheme offers new employees training and development opportunities, they may be more inclined to join the organisation in order to expand their career prospects. This has been proven by numerous survey findings, where training ranks as the number one attraction and retention tool (Bailey, 1998, 11-12). Other non-financial incentives that organisations can use to attract job candidates include: promises such as flexible work schedules, the setting of career goals so that recruits can see their opportunities for advancement, having assignments that will help employees move in the right direction and explaining that the organisation promotes from within (“Find and keep”, August 1997). For example, an organisation with an innovative business strategy can encourage recruits to try new things and take risks. It is important that once the ‘right’ labour are attracted and employed, they are retained to provide value to the organisation. Focus Pointe must find the right employees to retain as it is unrealistic to turnover the entire workforce. Reward people, and they will stay. However it is not merely that simple, the reward system must also be effective and consistent with the organisation’s goals and business strategy to ensure retention of the valued employees. To do so it is necessary to first find out what employees want from their organisation. Research from the Society for Human Resource Management indicates workers are not only concerned about financial compensation, they also want a work/life balance, to be challenged, respected and appreciated (Moline, 2001, 66). Some companies like Swiss organisation, Egon Zehnder International (EZI), pay employees based upon seniority and qualifications because 'it is seen as synonymous with experience and good business sense' (Egon Zehnder, 2001). The impact of this payment system on the job recruitment market sees highly qualified workers seeking jobs at companies like EZI because they feel they can be better paid for their seniority and wealth of knowledge. An increasing number of employers are offering 'signing bonuses rather than higher wages or they may provide lucrative stock options' in their reward systems (Bartol and Srivastava, 2002, 64-77). The effect of this 'new' recruitment approach is to both grab the applicant's attention and increases the reward attractiveness of the rewards. Ideally the employer then has a larger expression of interest from qualified and applicants and thus more recruitment options. Related Cases Traditionally, incentives given to retain employees were promotions and raises. However, with increasing competition and the changing needs of employees, HR managers were forced to find alternatives for employee retention. They discovered so-called “soft benefits” were actually less costly and more effective (Withers, 2001, 37). Companies have found that productivity and/or revenue can increase whilst turnover can be reduced by as much as 50% by simply offering employees a better work/life balance (Withers, 2001). Employers can offer workers the options such as extended leave, flexible working hours and even on-site child care facilities. For example, BMC Software offers employees on-site car repairs, a full gym complete with personal trainers, a hair salon, a dry-cleaning service and three cafes offering carry-out meals (Moline, 2001, 66). Other important rewards can promote professional growth with goal setting teamed with training and mentoring programs. At T-Mobile, a telecommunications company, employees set individual goals in line with T-Mobile’s corporate goals and obtain bonuses based on their progress (Hirschman, 2003). Additionally, retention can also be achieved through job satisfaction by intrinsically rewarding employees with better communication, job recognition and feedback (Withers, 2001). Employees who feel that their work is valued will contribute more energy and dedication to their jobs. The first thing when designing an employee reward system is to figure out what everyone would like to see as a reward. I believe the best way to accomplish this is to use a polling and voting system. This seems to be the best way because all the employees get to have a say along with the employers. Seeing a reward system that had something the employees voted for would make them feel important and valued. The main thing for a reward system is to make sure rewards are given in a timely manner. When an employees accomplishments merits rewards the employers should not wait a week or two to reward them because then there is nothing to look forward too. The employee should expect to see his reward, when the time is right. The right timing will make the rewards go quickly and the other employees will work harder to get their own. Monetary acknowledgments will be provided based on the employees work habit and ethics. “Designing a fair and equitable compensation system requires an analysis of the worth and value of each position to the organization” (Kettner 2002, 102-107). For example, when an employee shows up to work on time and is efficient, the employee will receive a raise. Another type of recognition would be a gift card or gift certificate for completing the most work or being the employee of the week. Monetary recognition will get employees working hard because everyone can use a little extra money here and there. Reward Systems and Organisational Culture at Focus Pointe A corporation’s culture determines and reflects the values, beliefs and attitudes of its members. These values and beliefs promote norms that influence employees’ behaviours (Heery & Noon, 2001). Reward systems can influence an organisation’s culture by helping to alter the behaviours and attitudes of its members (Kerr & Slocum, 1997, 99-108). By analysing the reward system – who gets rewarded and why, it can provide key insights to the organisation’s values and beliefs and why employees behave the way they do. Focus Pointe can change their current culture with the aid of congruent reward systems to encourage their employees to work together rather than be adversaries. Recruits should be selected to fit the company’s culture, which has long been a problem with Focus Pointe as depicted in the case, trained to share the company’s values and rewarded when their efforts reflect and reinforce the company’s culture (Chatman & Cha, 2003, 20). Focus Pointe should implement consistent practices so that their business strategy, organisational culture and reward systems align with each other. Reward systems often send a clear message to employees about ‘what's important around here’ or what the organisation values (Hawk, 1995) and can therefore encourage employees to work towards a particular business strategy. For example, an organisation with an innovative business strategy and a risk taking culture may give their employees rewards such as bonuses and stock options as incentives for risk taking (Heneman, Fisher & Dixon, 2001, 18-30). Additionally, by providing employees with a better work/life balance (as mentioned above) Fcous Pointe can improve productivity and promote a fun and happy organisational culture. The reward systems used within an organisation can ultimately dictate the culture of the company's entire workplace. Therefore, it is extremely important to adopt a successful employee incentive scheme. Organisational culture is a distinct way of life shared by members of a society with common attitudes and behaviours (Heneman, Fisher, Dixon, 2001, 18-30). Employees who feel under-rewarded for the work they have completed or fail to have their achievements recognised are likely to have lower job satisfaction. Lower satisfaction may lead to a lack of motivation to perform with maximum efficiency or effort throughout the organisation. This highlights the importance of understanding employees work requirements then designing an appropriate reward scheme. The organisational culture a company portrays may be a direct result of the reward scheme it employs and such is the case with Focus Pointe. If the company puts too much emphasis on selling commission as its rewards, evidence from Jao-Grey (1996, 8) suggests communication concerning product information between employees we be limited. Commission reward schemes foster a 'survival' culture within the organisation because workers who keep to themselves and refuse to co-operate will be receive greater reward. In the majority of businesses such practices mean inefficient production and thus profit is not maximised. Similarly an organisation with a culture that overuses promotion as a reward will notice an increase in promotion seeking behaviour amongst individuals. This discourages a team based approach which can again be detrimental to company efficiency. Designing Reward Systems at Focus Pointe Effective reward systems can be a very valuable tool for organisations to drive their performance above the industry average. The most successful reward systems are aligned with the organisation's business strategy, goals and culture. It can help to attract and retain the best employees for the company as well as helping to reinforce and promote the company’s culture. Managers should see the importance of congruent reward systems and take their time and effort to customise the most effective systems for their organisation. They should also remember that merely paying people more financially is not the best way to attract, retain and motivate talented employees (Hale, 1998, 39). Recognition in the customs of non-financial benefits would reward the employees and workers without it being too costly for the organization. An employee receiving rewards daily for simple accomplishments like completing work early or helping others with their work, for example. There are other rewards than self gratitude that can be awarded for doing good deeds in the work place. For example when an employee stays late to help out a coworker he would receive an award or a gift of some sort. The employees should have a chance to give awards to their coworkers to make them feel more involved and important. There is nothing better than receiving a reward from a coworker saying what a good job was done on a project. The employees could make an award for their managers, for what good jobs they do or how helpful and friendly they are. Certificates will be the main choice of these operations, these are inexpensive and can be kept for a long time to cherish and remember. Performance management systems are another human resource activity which can be altered by reward systems. Performance management deals with the challenge organisations face in defining, measuring, and stimulating employee performance with the ultimate goal of improving organisational output. One of the goals of integrating performance management throughout an organisation is creating a culture that energises employees and inspires them to work together to achieve the company's strategic goals (Williams, 2002, 19-21). Rewards systems are therefore critical to applying a successful performance management process suggests because workers must feel they have been properly compensated for their output (Omar, 2002, 1-3). In designing an appropriate reward system it is important organisations understand exactly what their employees role involve. This ensures the system put in place should compensate them accordingly. Failure to comply may lead employees to discontinue the extra involvement if they feel their effort is not duly recognised. The difficulty in implementing a success performance management scheme is that organisations, like Focus Pointe, must not decide on which department is responsible for what percentage of each sale which is difficult when it incorporates both knowledge and products. Omar (2002, 1-3) contends that organisations cannot change measures and rewards without affecting culture, and you will not achieve a performance culture without changing performance measures and individual rewards. To make certain the incentive system is efficient and inspires the preferred actions, it is vital to think cautiously about the rewards and approaches used and guarantee the bonuses are associated to or based on how the employee functions. “Well-designed work assignments will ensure meaningful work, achievement, and other such intrinsic rewards” (Kettner 2002, 102-107). To be successful, any type of assessment system should be attached to rewards or some sort of incentive. Gratifying an employees performance ought to be a continuing business endeavor, not merely a once a year bonus. End of the year bonuses are terrific but something needs to be used for the time in between. There is also a need to keep up with other organizations reward plans so the business will not lose employees to better rewarded businesses. The business needs to look at other plans to compare and contrast what they are using for incentives, the better the plan the more likely the employees will stay and continue to work hard. There are businesses that offer things that this business could not even dream of but the key is to work within the means of the company. Do not go over doing the rewards just make them desirable to the employees, see what they would like to have. Conclusion Organisation success requires every employee from top-level management to production-line staff pledging a commitment to the company to maximise personal output. Reward Systems strongly encourage this behaviour by compensating employees for their effort, as well as having a profound effect on organisational culture, recruitment of staff and performance management. Therefore, Focus Pointe must carefully investigate their reward system in order to not only compete but succeed in a competitive market. Recommendations 1. Managing fair compensation in return of employee contribution remains to be one of the most important functions of the strategic human resource management. 2. Focus Pointe, at this level, should maintain a balance between the monetary and the non-monetary benefits in order to keep its employee workforce committed and motivated. 3. Focus Pointe should plan a comprehensive reward system in line with the changing organisational culture and incorporate these rewards systems in its medium to long-term business plans. 4. The major motivating factor behind a sales force remains to be the monetary benefits, however timely non-monetary benefits should be used which would play a greater role in motivating the workforce 5. The long term goals should be properly planned with involvement of the functional managers and the intended strategies should be executed by the top level human resource management to achieve superior goals. References Aguilar, Omar I (2002) The new role of performance management. Organizational Dynamcis. Montvale: Oct 2002., Iss. 132; pg. 1-3 Anonymous. (2001) Rewarding tenure at Egon Zehnder International Human Resource Management International Digest. Bradford: Vol.9, Iss. 6; pg. 11-13 Bartol, M Kathryn, Srivastava, Abhishek (2002) Encouraging knowledge sharing: the role of organizational reward systems. Journal of Leadership & Organizational Studies. Summer 2002 Vol. 9, Iss 1 pg. 64-77 Bailey, G. (1998). Training as a recruitment tool. HR Focus, 75 (7), 11-12. 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Dixon, Katherine E (2001) Reward and organizational systems alignment: An expert system. Compensation and Benefits Review. Saranac Lake: Nov \Dec Vol.33, Iss. 6; pg. 18-30 Hirschman, C. (2003). Incentives for recruiters?. HRMagazine, 48 (11), 86. Jao-Grey, Margaret (1996) AIM Management Winners: no end on search for excellence BusinessWorld. Manila: Mar 8. Periodical pg. 8 Kerr, J., Slocum, J. W. (1997). Managing corporate culture through reward systems. The Academy of Management Executive, 1 (2), 99-108 Kettner, P. (2002). Achieving excellence in the management of human service organizations. Boston: Allyn and Bacon. 102-107 Moline, A. (2001). What do workers want?. Plants Sites & Parks, 28 (2), 66. R. L., Fisher, M. M., & Dixon, K. E. (2001). Reward and organizational systems alignment: An expert system. Compensation and Benefits Review, 33 (8), 18. Withers, P. (2001). Retention strategies that respond to worker values. Workforce, 80 (7), 37. Williams, Kathy (2002) New developments in performance management. Strategic Finance. Montvale: April Vol.83, Iss. 10; pg. 19-21 Read More