Creating, Organizing, and Managing a Total Rewards Program
This research-based assignment focuses on the latest available information about creating, organizing, and managing a total rewards program. Envision a service-based (insurance, telemarketing, or other) profit organization that employs 20,000 employees in 17 different countries. There are 2,000 management-level individuals who speak a variety of languages. The company employs diverse individuals who are governed by multiple regulatory environments.
Write an eight to ten (8-10) page paper in which you:
- Create a brief overview of the company requirements for a total rewards system.
- Formulate a total rewards strategy to encompass the fundamentals of compensation and the regulatory environments.
- Explain the advantages of the total rewards strategy you are proposing and how it might satisfy the employees’ needs.
- Determine the key communication components of the total rewards system.
- Indicate your strategy for devising a competitive pay structure.
- Use at least five (5) quality academic resources in this assignment. Note: Wikipedia and other Websites do not quality as academic resources.
Total Rewards System Proposal – Sample Answer
Consideration of a reward system criteria is significant for optimizing the contribution of employees to the business as well as business performance. Having a well-overseen and equated rewards system can help a business have a great impact on employee motivation that can result into the desired workmanship so that quality and improved staff performance can be realized. It is worth noting that all company staffs, irrespective of their location or their actual contribution to the business, always remain keen on activities that can enable them gain more rewards. Even though most employees are usually keen on tangible items such as cash rewards, intangible items, also, do well for most organizations that embrace intangible motivational inducement systems.
Read also Geico Total Rewards Program Case Study
For a long time, many organizations considered reward programs as necessary evils that were relevant for attracting and retaining highly-skilled and competent staffs. These rewards; however, were not properly aligned to enable the business realize the greatest returns despite many organizations spending averagely 40% percent of their revenues on running their operations (Ferrell & Fraedrich, 2012). Through leveraging their total rewards system’s value, organizations can attain the opportunity to come up with approaches for resolving the key business challenges such as workplace competitive changes, aging workforce, and value maximization of business acquisitions and mergers. As opposed to the traditional consideration, the contemporary definition of rewards covers the overall value proposition offered by the employer to the employee. The total package, in this regard, entails compensation, which includes long-term incentives, short-term incentives, and base pay; careers, which includes career incentives, stretch assignments, lateral moves, training and development; and benefits, which include work/life, retirement and health benefits (Isakovic & Mansoori, 2012).
A Brief Overview of the Company Requirements, for a Total Rewards System
The paper considers company X; an insurance company that specializes in offering asset management, financial protection and insurance services. The company has its operations in a total of 19 nations Asia Pacific, North America and Europe where is it, also, vital to note that it is an employer of 20,000 employees. The company, also, has 2,000 management level individuals whose nature of activities demands them to speak a number of languages. This is because of the varying nature of languages spoken across the region where the company has its operations. For this reason, the company finds it beneficial to employ individuals from a diverse background and, also, who are governed by many, different regulatory environments.
Human competencies are considered the most significant aspect in company X. This is because these human competencies comprise the fundamental source of strength for the company that that helps to drive its operations. The company is always keen on the power of the talent and the dedication that its employees should have in order to enable it make a difference by delivering the best quality of services in the market (Isakovic & Mansoori, 2012). The company believes that consideration of proper talent mix among its human resource can enable it stay ahead of the competition. The main aim underlying most operations of the company is to win the preferences of its employees, shareholders and customers. However, considering that employees comprise the most significant factor of its success, the company has intentions to establish its overall success on the basis of mutually satisfying its needs and those of its employees.
Company X requires a comprehensive total rewards strategy in order to attain its objectives such as:
- Becoming the most competitive company in the market through recruitment of excellent workforce. For this to happen, employees should have a single expectation of giving high standard performance that can enable the company exceed the expectations of customers (Parry & Tyson, 2013).
- Inspire, motivate, and empower employees to continuously look for better ways and adopt them in their work so that they can give the best results at all times (Parry & Tyson, 2013).
- Always acting in correspondence with attributes that can make it become a company of choice such as integrity, team spirit, pragmatism, innovation, and professionalism (Parry & Tyson, 2013).
- Building a company culture that enables employees value diversity both as individuals and as group so that they can develop respect for one another and share views, knowledge and any other information to facilitate growth and success among them (Parry & Tyson, 2013).
- Building a learning culture among employees to assist in nurturing willingness to learn new things, openness to change, professional mobility, and personal development (Parry & Tyson, 2013).
A Total Rewards Strategy to Encompass the Fundamentals of Compensation and the Regulatory Environment
It is significant for an organization to align its pay as well as other rewards with its business strategy or approach so that it can develop a well-enunciated philosophy of compensation to drive its success (Ferrell & Fraedrich, 2012). This is significant for creating the basis for designing administration and connecting the company’s present and future plans with its values and culture. In this regard, the cornerstone in the compensation philosophy of company X revolves around recognizing and rewarding outstanding results. Individual qualifications are highly-regarded in the company where its mission entails attracting, selecting, placement and promotion of all individual employees based on those qualifications. Just like the case is in other competitive companies, company X puts a lot of emphasis on performance-based compensation. This conforms to its belief such a form of compensation helps in attracting, developing and retention of the talent mix that is relevant for the success of the company. The company provides base pay that is based on the local market conditions and whose target is to be above the market.
Besides all that, the company, also, considers rewarding performance through offering a number of potential forms of compensation as follows (Ferrell & Fraedrich, 2012):
- Organizing yearly promotions – all nonexempt and exempt salaried employees are considered eligible
- Annual increases based on merit – all employees are considered eligible whether they are nonexempt or exempt salaried employees
- Short-term Incentive compensation – all employees are considered eligible whether they are nonexempt or exempt salaried employees
- Organization of Annual Spot Bonuses – all employees are considered eligible whether they are nonexempt or exempt salaried employees
- Long-term Incentive Compensation – which only gives consideration to all salaried employees.
In all cases, it is significant that compensation programs abide by specific regulations that are specifically designed to ensure that fairness prevails in the manner in which employees are paid. Therefore, it is crucial that a company’s compensation strategy aligns well with the existing laws. These laws aim at ensuring that there is no employee discrimination on the basis of sex, religion, color, race, disability, and national origin (Isakovic & Mansoori, 2012). Besides, there must be valid reasons for firing or promoting employees. Besides, regulations touching on workplace safety and working conditions require being observed by organizations such as company X. Considering the case in company X, the wages for nonexempt employees conforms to the requirements of the FLSA regulations. Besides the company does not entertain child labor.
There should be a comprehensive program that the company should consider for rewarding its employees besides the traditional compensation program. Such benefits programs should enable employees to accumulate wealth and provide them with an opportunity for improving their general welfare. These benefit programs include (Isakovic & Mansoori, 2012):
- Visual and dental insurance – whose eligibility is for salaried employees
- Health insurance – where eligibility is for nonexempt and exempt salaried employees
- Disability plans – where eligibility is for nonexempt and exempt salaried employees
- Day care services – where eligibility only considers salaried employees
- Life insurance – where eligibility is for nonexempt and exempt salaried employees
- Educational assistance programs – where eligibility only considers salaried employees
- Adaptation programs – where eligibility only considers salaried employees
The following is the proposed step by step process that company X can follow to develop a successful total rewards strategy:
- Defining the issues that prevail in the business context – these entail consideration of both internal and external factors that influence human capital and business decision. These entail labor, political, regulatory, geographic, and economic issues as well as the needed workforce attitudes, behaviors and capabilities, and business objectives and performance metrics (Yemm, 2012).
- Setting or creating a total rewards strategy through developing directorial principles, which represent the state that most fits the total rewards program (Yemm, 2012).
- Setting the rewards change agenda, which entails the company considering its present position against where it requires being in order to meet its business and performance objectives in the future (Yemm, 2012).
- Reviewing implementation plan where budget estimates and time frame comprise two significant factors for consideration (Yemm, 2012).
- Designing individual plans and making sure that they align with the overall rewards program approach (Yemm, 2012).
- Effective implementation through integration of proper administrative and communication activities in order to meet the objectives of the rewards strategy (Yemm, 2012).
- Measurement and management, which entails monitoring the progress of related business outcomes and particular program design changes (Yemm, 2012).
The Advantages of the Proposed Total Rewards Strategy and How it Might Satisfy the Needs of Employees
There are various advantages associated with this kind of a rewards strategy. Like any other rewards strategy, this strategy aims at enhancing recruitment, retention as well as the levels of performance in the company. The desire of the company is to become an employer of choice and, therefore, understands that it can affect its reputation through a proper rewards strategy. The company puts emphasis on its wide range of benefits to reflect the value it accords its compensation strategy and, also, its employees (Yemm, 2012).
The strategy is advantageous in the sense that it establishes employee commitment, especially for those employees whose belief is that their future has a strong connection to the future of the organization. This; therefore, boosts their willingness to sacrifice for the sake of the company. The willingness by employees to take care of the affairs of the organization depends on how well the company satisfies employee interests (Ferrell & Fraedrich, 2012). Through enhanced employee commitment, there will, also, be increased emotional and intellectual attachment.
This rewards strategy will also lead to reduced costs of labor (Ferrell & Fraedrich, 2012). Following the increased retention, there will be few employees leaving their positions leading to reduced rates of turnover. It should be clear that the cost of turnover comprises indirect costs like losses from sales and customers including reduced efficiencies because, as productive employees depart, the remaining employees become distracted.
The Key Communication Components of the Total Rewards System
The competitiveness and desirability of the total rewards system cannot be achieved if the present and potential employees do not understand what it entails. It is for this reason that communication becomes a vital part of the system. However, there are a number of issues that a company requires considering before communicating its rewards strategy to its employees. These issues include (Ferrell & Fraedrich, 2012):
The manner in which communication to different employee levels should occur – considering exempt and nonexempt employees.
- Appropriate time to communicate
- The kind of communication to be embraced
- The person who requires communicating to other employees
The company can then be free to start communicating its strategy after attaining clarity of these issues. Considering the nature of the organization where there are exempt and nonexempt employees, it would be necessary to have two teams to help communicate to these varying levels of employees. Team A will be essential for communicating to exempt employees while it would be necessary to have team B for meeting the communication needs of team nonexempt employees. During the time of recruitment, it will be the responsibility of team B to ensure that nonexempt employees obtain essential information while laying emphasis on policy and strategy implementation (Connors, 2012). Team A will, also, be required to give detailed information to exempt employees while emphasizing tailored rewards in order to motivate them. Besides, advisors will be stationed at the company to help those employees who may be looking to tailor their benefits. This applies to employees who may have just had accidents and became disabled in a way so that they can begin benefitting from disability programs based on the guidelines of the advisors. The advisors will, also, be preoccupied with providing training at the company. In case changes should occur in any one of the components, it will be responsibility of the company to gather employees in one place and announce such changes.
Strategy for Devising a Competitive Pay Structure
In most organizations, competitive pay structures are developed based on job evaluation that results in accurate job evaluation. The essence of job description is to facilitate internal comparison with various other jobs that the company offers. Within the job description, there should be an explanation of why the job exists and a list of the key responsibilities and duties (Connors, 2012). It is at this level that the job description requires spelling out the needed competence to execute the functions of the job. In addition, there is need to clarify experience and educational requirements, and abilities and skills necessary for the job. External equity has more significance for the company as compared to internal equity. This implies that data collection process is an essential aspect for the company to consider. At the beginning during hiring process, the market price is lower than the rate; but as time goes, following the increased employee commitment and many other company benefits, the rate and the market price come to the same level, especially during later years of employees. In addition, consideration of internal equity is essential for an organization, especially where there are varying salary ranges for nonexempt employees.
The paper considered company X; an insurance company that specializes in offering asset management, financial protection and insurance services. Consideration of a reward system criteria is significant for optimizing the contribution of employees to the business as well as business performance. Having a well-overseen and equated rewards system can help a business have a great impact on employee motivation that can result into the desired workmanship so that quality and improved staff performance can be realized. It is significant for an organization to align its pay as well as other rewards with its business strategy or approach so that it can develop a well-enunciated philosophy of compensation to drive its success (Connors, 2012).