Introduction
An ideal organization reaps the best productivity out of it human capital by rewarding the right people at right time with right amounts and right reasons. Most of the organizations in the world have some sort of Reward philosophy although some do not articulate it as a guiding principle while others have them linked to their goals (Armstrong, 2012). There are different approaches to the development of the total rewards programs and the prevalent variable pay systems which help in devising adequate employee motivation strategies that boost the organizational productivity(Armstrong, 2012). However, in case of organizations facing a strategic change in their external environment the importance of linking the organizational goals and employee performance with those of the total rewards can be very fruitful in managing the strategic changes.
This essay aims at applying the concepts of total rewards to the Makey case for understanding their reward philosophy and then develops adequate theoretical rationale to recommend the HR for better alignment of their policies with the organizational goals.
Total Rewards
The total rewards are the schemes that combine the three important factors of financial remuneration, non-financial rewards (benefits), and career growth prospects offered by the management as a part of their performance review process (Lawler, 2011). The various components of the financial remunerations comprise of the base-pay hike, short-term monetary incentives, long-term monetary incentives, and variable pay component. The variable pay factors in the total rewards are directly dependent on some predetermined performance parameters and include bonuses, employee stock options, profit sharing grant (for top executives), and unit based commission plans.
The benefits in the rewards comprise of those non-monetary offers that are based on the employee’s relationship with the society and his social status. These include social security features (Superannuation, insurance and retirement benefits), contingency features (unemployment and injury benefits), medical facilities (medical facilities), and other conditional perks (accommodation, commutation, etc.). The career growth prospects include organizational recognition and acknowledgment policies that result in sustainable job satisfaction and job profile autonomy for the employees. Hence, all the above-stated factors together comprise of the Total Rewards for an organization.
Makey’s reward strategy (linking organization goals with compensation)
The rationale behind Makey’s strategy of linking organization goals with the total remuneration for the employees is based on the critical factor that the employees should not feel a disconnection between what the organizations offers to its customers and that to the employees. The rewards like health benefits, eco-friendly operations are integrated with the core business strategy of Social responsibility and charity. Further, development of specific rewards based on employee participation in the growing multi-channel demand based environment seemed to be an extension of the same philosophy.
So, instead of limiting the individual actions for personal growth and incentives, Makey linked the performance parameters to the organizational goals so that the employee performance could be directly linked to the prevalent organizational strategy.
Coca Cola’s rewards strategy: The strategy of the aligning the total rewards with the organizational goals has been established as the most acceptable form of competitive strategy for gaining higher employee productivity. Coca Cola Inc. is determined on developing the most formidable brands, financial caliber, global market share, and strong market distribution network by associating the performance targets of its management and employees with them (The Coca Cola Company, 2016).
In my opinion, this strategy is extremely beneficial because it provides an opportunity for linking the external (competition, customer demand and quality assurance) factors of a business with those of the internal (employee and management) factors so that all the efforts to maximize the attainment of total rewards are in sync with the organizational goals. The only mandatory factor for sustainability of such employee motivation idea is that the design of the total rewards should be strategically designed to boost the employee performance for attaining maximum profitability.
Makey’s strengths and weaknesses (analyzing response with total rewards perspective)
The internal strengths of Makey’s business are those of product quality assurance, and strong foothold over employee motivation initiatives. M. K. Makey always maintained the surprise element in the overall compensation structure by offering bonuses and profit sharing based incentives along with other non-monetary incentives to his employees. Hence, the organization was adamant on associating the employee performance and concerned rewards with the core competencies of the business to develop a sustainable competitive advantage in the highly competitive apparel markets.
The internal weakness was exposed by the strategic review when the multi-channel marketing demand was not found to me compatible with the functional expertise of the sales force which was already accustomed to the conventional catalogue business. The organization aligned the reward program with specific channel development related performance parameters and thus gained the required productivity. This saved them specific staffing costs for the new channel development which otherwise would have been a time consuming process as well.
Recommendations
On the basis of various observations regarding the prevalent total rewards program adopted by the organizations, the following recommendations are made:
Development and compliance to certain competencies required for the business development viz. internet based retail sales, should be established as a measure of performance (Hale & Bailey, 1998).
The rewards program should be designed in a way that it ensures maximum employee retention for all the generations of employees (Smit, Stanz, & Bussin, 2015).
The variable pay systems should be periodically audited to ensure that they are in accordance with the organizational motives of developing a competitive advantage via employee performance linked to them (Cox, 2005).
Conclusion
The essay aimed at applying the philosophy of total rewards designed in sync with the organizational goals to maintain the desired goals of competitive advantage in the markets by using the Makey case. The different components of total rewards and their respective association with the organizational goals is explained by analyzing the internal strengths and weakness. Finally, the recommendations are made to devise the total rewards and involved variable pay programs to match the desired organizational goals. It can be concluded that the most successful organizations design their rewards and review processes in alignment with their goals so as to develop a directly linked model of holistic growth.
References
Armstrong, M. (2012). Armstrong’s Handbook of Reward Management Practice: Improving Performance Through Reward. Chapters 8, 19, 20, 21, 23, 24, 25, and 26. Retrieved from the ebrary in the TUI Library.
Cox, A.(2005). The outcomes of variable pay systems: tales of multiple costs and unforeseen consequences. International Journal of Human Resource Management 16(8) , 1475-1497.Retrieved from the TUI Library.
Hale, J., & Bailey, G. (1998). Seven dimensions of successful reward plans. Compensation and Benefits Review, 30(4), 71-77. Retrieved from the TUI Library.
Lawler, E.E.(2011).Creating a new employment deal: Total rewards and the new workforce. Science Direct. Organizational Dynamics, 40(1),302-309.Retrieved from the TUI Library.
Smit, W., Stanz, K., & Bussin, M. (2015). Retention preferences and the relationship between total rewards, perceived organizational support and perceived supervisor support. SA Journal of Human Resource Management, 13(1), 1-13 pages. Retrieved from the TUI Library.
The Coca Cola Company (2016). Why Work at The Coca-Cola Company?. Retrieved online from http://www.coca-colacompany.com/careers/why-work-at-the-coca-cola-company
