Introduction
In an organization’ operations, remunerations remains a critical part of the budget. However, the speedy update of the modern world, the traditional remuneration and its management is increasingly facing challenges in both public and private sectors owing to the business and economic circumstances. In that respect, there are many challenges that could affect an organization’s performance and even possible result to existential threats. Thus, the cash reward that had been the focus of the reward system is losing its importance. In addition, the modern reward management breaks from money and substance as an indication that some nonmonetary compensation and indirect income are increasingly becoming crucial in designing reward systems. In that view, this proposal considers a service-based profit organization that employs 20,000 employees in 17 different countries. Further, the organization has 2,000 management-level individuals who speak a variety of languages and employs diverse people who are governed by multiple regulatory environments. With that, the proposal recommends a total reward system providing with an overview of the total rewards requirements. It also describes the rewards strategies, the advantages of the strategy as well as the key communication components of the reward system. Finally, the proposal describes the strategy for devising a competitive pay structure.
Proposal
- Overview of the organization’s requirements for a total rewards system.
In view of the increasing competition, the organization needs to have an efficient reward system that enhances its employee’s performance. In that view, the organization needs a total reward system that addresses the following requirements.
- A system that reinforces and supports the organization’s vision, mission and values.
- Need for consistency system with a different culture
- Need to attract retains and motivate the appropriate current and targeted employees.
- The need to ensure equity in the organization’s positions
- The need to support the organization philosophy towards the global labor market.
- Requirement for a system that is sustainable, affordable and cost-effective
- Need for a legally defensive system in the event of challenges
- Requirement for flexible system that is easier to adapt to considering the extensive regional coverage. (White, 2005)
- Total rewards strategy that encompasses fundamentals of compensation and the regulatory environments.
In need to address the differences in the workforce and the cultural differences while enhancing organizational performance, the organization should adapt a system that is all inclusive. In that respect, the system will have three approaches including providing access, rewards and contingency rewards as well as embracing differentiators as follows.
- Access rewards. They refer to those that the organization’s involvement will be only providing access. In that respect, the rewards will be paid for by employees or third parties in some cases. Such rewards will include group insurance, discount programs and critical illness insurance. (White, 2005)
- Rewards. They are those rewards that the organization must provide according to regulations. They will depend on the different regulatory environments in different countries mainly including retirement and welfare benefits.
- Contingent rewards. Are those rewards that will be packaged and delivered on the basis of the level of performance or employees’ behavior. They will include packages like wellness incentives.
- Differentiators. They are the rewards that will set the organization apart. (White, 2005)
Further, the total reward system that the organization seeks to establish can be described by a four-quadrant model as follows.
- Financial or experiential elements. The financial element comprises of those that will have a clearly defined cost or value. On the other hand, the experiential elements are those that employees will experience by interacting with customers, management, leadership, the company and colleagues. (Berger & Dorothy, 1999)
- Personal or Company elements. Personal rewards will be those tailored to individuals with an example of bonus, salary, development plan and personal goals. On the other hand, the company related elements will be those that are provided, in the same way, for all employees such as culture, benefits and work environment. (White, 2005)
Thus, all the rewards will be based on the framework. In that view, the recommended rewards system entails the following specific components.
- Direct compensation
Base salary:
That will be applied through basic salary ranges will be consistent with the headquarters scale. Thus, those ranges will be decided depending on the regions of operations guided by the scale. (Berger & Dorothy, 1999)
Supplementary salary:
The reward will be applied where employees and expatriates will be expected to provide extra services. In that respect, the reward will not be required if such services will not be there.
Incentive pay schemes:
The system is mostly applicable of the European and UK regions, and context as expatriates in the region are used to them. Thus, they will be included as their lack could result to de-motivation. (Berger & Dorothy, 1999)
Bonuses:
They will be provided based on performance and will be crucial in achieving the desired performance standards.
Group Incentives:
The reward will be used for the purpose of enhancing coherence of local employees and the expatriates’ performance. (Berger & Dorothy, 1999)
- Benefits
Cost of living adjustments:
The benefit will be offered through cafeteria approach. They will permit the expatriates to tailor their benefits as per own needs. That will include allowances such as transport, accommodation, displacement, education, relocation as well as security and pet management. In that view, employees and expatriates will have to select a permissible number of benefits such as 5, 7 or 8 out of 10. That will be focused on lowering the cost of the reward system as well as employees cost of living. Those will mainly apply to expatriates that will be betters than the cost of maintaining local employees. (Martocchio, 2002)
Traditional benefits:
They will include the commonly provided benefits such as leaves, eldercare facilities, and medical facilities child care and employees wellness programs. For the expatriates, they will also include the charges for the annual home trip that will also cover the family members. (Martocchio, 2002)
Hardship allowances:
They will be provided to employees and expatriates on a regular basis or a one-time honorarium if they are beyond the company’s resources. That can involve payment to expatriates upon completion of assignments.
Special benefits:
In addition to the traditional benefits, the organization will provide unique benefits as recommended. They will be necessary for better adjustments of expatriates and as an incentive to increase commitment to the organization’s operations. They will include familiarity trips as well as awareness seminars and arrangements for traveling and accommodation. (Martocchio, 2002)
Family oriented and work-family balances
The benefits will focus on family-related benefits including children and spouses if useful. They will include facilitating expatriates’ arrangement for children’s education and spouse’s career changes. Thus, the benefit will include arrangements such as facilitating the children’s education, childcare, elder care. It will also include providing compensation for expatriates spouses who lose their jobs and making arrangements for other healthy activities for the family members. Further, it will involve arranging for recreation trips and days as well as providing flexible working schedules. (Martocchio, 2002)
Cross-cultural training
Given the culture diversity and working in different regions, the organization will provide cross-cultural training. This is because lack of awareness about other cultures is a great cause of failure for expatriates and employees in international assignments. The training will seek to familiarize them with different values, norms and practices. That will include training on the different countries languages.
Nonfinancial rewards
Nonfinancial and nonmonetary rewards have been increasing in importance owing to their impact on employees’ welfare and motivation. Thus, their application is crucial in enhancing employees’ commitment and motivation as well as being a reliable source of employee retention. They will include benefits such as training for required and special skills and enhancing participatory environment. The benefits will enhance employees’ motivation as they provide opportunities for career development in a suitable and friendly environment. (Martocchio, 2002)
- Advantages of the proposed rewards’ strategy and how it might satisfy employees’ needs.
The reward system proposed tells the story of the organization brand with ease and clarity on what is expected of employees and what they should expect in return as a means of maximizing their rewards. Thus, it helps employees easily carry out their duties and meet their targets.
The strategy also articulates the value of the programs collection offered in addition to working experience, culture and employees diversity. Thus, employees can easily understand the value they expect to receive from specific rewards hence enhancing their ability to utilize them and meet their needs.
Further, the system will inspire employees’ action by making it clear on what is expected of them in respect of the personal and business needs. That will be crucial in managing and developing talent that is crucial for the organizations success.
Finally, the total rewards system will enhance consistent communication with the use of different languages that suit the different languages used by employees with message repetition, as well as the use of suitable communication style and tone. Thus, the language barrier will be addresses hence enhancing employees’ coordination and performance. (Martocchio, 2002)
Further, the system has the following benefits to the organization.
- Improving recruitment: With the system including more inducements, the system is meant to be a better selling point for the organization to talented employees.
- The system will be a crucial signal that the company is progressive. As employees like associating with well-considered organizations, the system will serve the purpose as employees seek to work for a well-respected brand.
- The system will also increase engagement of employees without increasing costs. With satisfied employees, there will be enhanced brand image as appreciative employees spread the word about their workplace.
- Increase employee's retention rate: With positive and caring message to employees as well as healthy work environment through the system, the system will enhance employees’ retention. (Milkovich & Newman, 2007)
- Essential communication components of the total rewards system.
The reward system will have multiple communication channels. That is because a one size communication does not suit the diverse workforce that the organization manages. A system that delivers communication through multiple channels is more successful in creating value by reaching all employees. (Mulvey, Peter, Robert & Michael, 2002) In that respect, the organization will apply the following channels.
- Emails or letters from supervisors, senior management or Human Resource department.
- Printed materials such as newsletters, leaflets and brochures.
- Meetings headed by Human Resources and/or compensation professionals.
- Line management’s headed meetings.
- Total rewards statements and/or individual compensation statements.
- Bulletin boards and other workplace postings.
- Electronic blogs and bulletins in which employees can react and respond to the system and statement issues. (Mulvey et al., 2002)
- Strategy for devising a competitive pay structure.
The strategy is devised with a view of leading the market. In that respect, the organization seeks to provide a reward system that is better than the competitors’ packages in the labor market. That is because the organization believes that higher compensation will be crucial in attracting higher performers who will in-turn pay for themselves through better performance. Thus, the organization wants the best employees and is willing to pay for it. (Milkovich & Newman, 2007)
Conclusion
The well designed communicated and delivered total rewards system will be targeted to provide an incentive for skilled and talented employees and potential employees to join the organization, perform within expectations and remain with the organization. In that view, the company is expected to achieve higher returns on investments in programs and benefits offered through the total reward system. Thus, the inclusion of all types of rewards ranging from direct compensation to benefits will be crucial in addressing employees’ needs and enhancing their performance in the different environments.
References
Berger, L. A. & Dorothy R. B. (1999). The Compensation Handbook. New York:
McGraw-Hill.
Martocchio, J. J. (2002). Employee Benefits: A Primer for Human Resource Professionals.
New York: McGraw-Hill/Irwin.
Milkovich, G. & Newman, J. (2007). Compensation. New York: McGraw-Hill/Irwin.
Mulvey, W., Peter V., Robert L. & Michael, M. (2002). Study Finds that Knowledge on Pay
Process Can Beat Amount of Pay with Employee Retention and Organizational Effectiveness. Journal of Organizational Excellence. Autumn: 29- 42.
White, R. (2005). A Strategic Approach to Building Consistent Global Rewards
Program. Compensation & Benefits Review, Vol. 37, No. 4, pp. 23-40.
