Introduction to Total Reward Management
The United Kingdom highly acknowledges total reward management because total rewards are aspects that employees regard highly in an organization. Employers use total rewards to attract, maintain, and motivate employees. The problem is that employers cannot afford offering benefits and salaries that motivate employees and create competences for the organizations. Total reward management comprises of bonuses, salary, health care benefits, pension, training and development, employee balance of work life, and the working environment. It can also include control on total value of everything received by employees from the employers who result from working (Bharatwal, Sharma, Sethi, & Rani, 2011).
Pay is in form of base pay, variable salary, long-term incentives, and share schemes or options. The benefits comprise of health care, cars, flexible benefits, holiday, pension, and voluntary benefits. Career development involves the learning experiences, performance management, training, and succession planning. The work environment considers the organization culture, leadership, performance support, and work-life balance. Total reward concept began in the 1970s and 1980s. There are no defined methods of constructing a total reward because of different tastes and preferences of employees. Employees have different reasons for working in an organization that may not be necessarily rewards. Prestige in the company name, freedom or what image the company conveys to the public attracts employees in some workplaces (Mujtaba & Shuaib, 2010).
Aspects of Total Reward Management
This is an important aspect of total reward and looks into adding value to the staff in the future. Career development involves promotion of talent, capabilities, experience, skills, and knowledge of employees through programs sponsored by the organization. The employees have a chance of becoming marketable in the next available jobs. Employees take this opportunity as important in motivating and maintaining employees in an organization.
Some employers have taste for experience and talent of an employee than the qualifications because employers create chances for improvements of the employees through training and development. Career development also involves the ability of the employee to adapt to the working environment and the culture of the organization. Employees with the potential of adapting fast tend to preferred by most employers because the employee creates immediate return on the investment (Spencer & Swiercz, 1992).
Employers provide employees with flexible jobs and free time to balance the work of the employee with personal life. The company offers flexible work schedules, career breaks, such as holidays, and permission breaks to motivate employees by allowing them to rest and have fun with family and friends. Employers must follow-up the changes in the economic conditions to make adjustment on the employee packages to include benefits, bonus, and traditional pay. Adjustments in employee packages are a form of total reward that arises from the need by employers to satisfy employees and consider their needs. Most employers avoid raising the basic salary and changes in competition or demand for employees on wages increases forces the employer to hike the total reward offering (Bharatwal, Sharma, Sethi, & Rani, 2011).
Employee benefits are to increase the economic security to motivate employees improve performance and remain in an organization. In the United Kingdom, employee benefits categorize into voluntary benefits, flexible benefits, core benefits. The government in the United Kingdom subjects Employee benefits to taxation at the normal tax rate with the base pay. This adds expenses to the employee. The employer must provide benefits that after taxation will be of value to the employee. The government introduces programs and organizations that support the benefits of employees. The United Kingdom system supports the national insurance contributions (NIC) to help employees benefit from pensions (Mujtaba & Shuaib, 2010).
Employee benefits can extend from the individual to the family members making the program essential for employees as a form managing total reward. Employers establish retirement plans for employees to prepare their future by securing their financial stability after the work period at the organization. The retirement plans benefit the aged employees discontinuing with the work responsibilities at an organization. Retirement plans are the easiest because it is a form of saving deducted from the employee salary and does not lead to additional costs to an organization. The retirement plans have no subjections to taxation. This plan improves employee loyalty to the organization (Bharatwal, Sharma, Sethi, & Rani, 2011).
Monetary payment creates value of work accomplished by employees. Employers offer basic pay to retain competent, talented, and hardworking employees. Monetary payment provides the employee with assurance and security on finances even when sick and absent with permission. The employers have to be careful when allocating the basic pay because it must be available to the employees at time of pay and is nonnegotiable (Mujtaba & Shuaib, 2010).
Royal Bank of Scotland (RBS) Efforts to Manage Total Reward
RBS is a multinational financial institution that offers a range of financial services and operations across North America, Europe, and Asia Pacific. RBS has centers in eight major cities in Asia pacific and in 13 countries in Europe. The company has more than 140000 employees with more than 36 million customers. The company has diverse business operations that contribute to the provision of more than 40 brands of banking services in the company (Blackman, 1999).
Due to high quality financial services offered by the firm, it is vital that it attracts talented and skilled workers. By employing such skilled and competent employees, the organization has the capability of becoming dominant in the industry. This means that the company is under competition from rivals in acquiring the best employees in the job market. The company is at competitive advantage because it hires and maintains the best employees across the globe as the company has access to a wide labor market. The company maximizes the business opportunities presented by total reward management ((Bharatwal, Sharma, Sethi, & Rani, 2011).
The Problem with Total Reward Management
According to Blackman (1999), RBS cannot control the total rewards it offers to employees. Employees complain of high bonus payments to most of the top managers. For instant, the company paid Stephen Hester a share bonus of £963 000 additional to his basic salary of £1.2 million. The employees believe that this reward is high and unnecessary.
The employees complain, especially because the company pays high bonuses when thousands of employees are losing jobs annually. This decision damaged the image of RBS and many employees have reduced their morality and security on the company’s jobs. The total reward has led to popular outrage in RBS. In 2010, £1 billion was spend to pay more than 100 top executives an amount of £1 million on each but the company reported a £1.1 billion loss for 2010. The additional costs have immense effects on the employees as they lose their jobs to cover for the expenses.
How RBS Deals With the Issue
RBS makes strategies that guide the way the company manages total reward. The management of RBS deals with the issues using various strategies. To begin with, the management offers diverse career opportunities to its diversified employees in order to meet the range and scale of the business it operates. The company provides opportunities for graduates to develop careers in the working environment (Spencer & Swiercz, 1992).
RBS managers’ measure individual employee performance in conditions of specific job targets to reward him or her accordingly. The managers present the reports of employee performance annually. Through the application of total rewards to employees with outstanding performance, the firm has been able to motivate its employees thereby improving their performance. Bonuses are for the employees who attain the job targets.
The company also provides stretch targets difficult to achieve and those that attain it acquire greater rewards. The main reason for total rewards management is to create motivation. Employers must pay for every job completed by the employee. Different things motivate individuals. The company offers other benefits besides the salaries earned by its employees. The benefits vary from money to personal choice in security and working hours. Full-time employees acquire holiday allowances for up to 30 days (Blackman, 1999).
From the large range of lifestyle benefits, the company provides opportunities for its employees to choose benefits such as childcare facilities, discounted shopping vouchers, and RBS financial products that fit into their needs. Some of the benefits may also include financial rewards such as currency exchange, mortgages and taking discounted personal loans. RBS provides competitive salary on the experience and skills of its employees globally.
The company provides competitive salary by comparing its salaries with the salaries of related jobs in the labor market of other financial service providers. The salary credits on the employees’ bank account to make easy, safe, and convenient for employees to access their salary the same time. The company provides information to employees on the basic pay rate and other benefits early enough to ensure satisfaction of its employees. When the company achieves its profit targets, the employees acquire 10% of the profits, which are allocated to every member of staff. RBS offers non-financial rewards, such as the graded development that targets encouraging personal development (Spencer & Swiercz, 1992).
Active participation of employees in training and career development workshops offered by the company are important since they help employees of RBS to improve on their skills and capabilities. This total reward improves the performance of employees in achieving the organizational objectives for success of the company in the competitive market. RBS has total rewards for the community. The company has a Group support community program that raises donations to help the society in which it operates.
The company doubles each pound that an employee donates toward a charity. RBS has helped and supported through conducting some fundraising for some projects such as Microsoft UK challenge for the NSPCC and the British Wheelchair Sport among many others. Other projects supported by RBS group include the regeneration programme for building housing estate for local residents in Scotland, development of schools and hospitals, providing access to cash machine free in remote areas, and collaborating with schools to help students in learn practical approach to personal financial stability (Bharatwal, Sharma, Sethi, & Rani, 2011).
RBS balances the personal needs of its employees with work. The company has a free advice program that helps employees manage their time, work, and personal life. RBS offers time off from work anytime for cases of sickness and any other circumstance, such as special family or local community commitments. In 2004, RBS received the award of HR Excellence Award for becoming the most effective workplace in balancing employee work life. This has helped RBS create a good working atmosphere for employees to eliminate workplace stress. The employees can choose working patterns that fit their personal needs. This also allows the company to attract and maintain talented and competent employees who in turn offer commitment and loyalty to the organization (Blackman, 1999).
Kentucky Fried Chicken (KFC)
KFC is a multinational chicken distributor in the United States. The company has expanded its programs on career develop to manage total reward in the company. The company established a subsidiary in the United Kingdom in 2010 hiring more than 9800 employees. KFC achieved more than $3 billion from sales by serving more than 600 million customers. KFC is among the most saturated and competitive companies in the United States. The company is under competitive pressure and must ensure that it improves its performance throughout the operation period to remain relevant in the market.
KFC must maintain a strong customer base, high quality of services, and a quick and consistent restaurant image and reputation. The company must improve productivity at lower cost to maximize profits. The company can only achieve these marketing objectives through acquiring competent and talented employees, motivating employees, satisfying employees and suppliers, and developing its employees. The company adopted total reward management as an effective measure of achieving success in the company (Jones, 2010).
Problem with Total Reward Management
The employees demand for better bonuses as the company demands team considerations for bonuses lead to workload. Most of the employees do not have enough time for personal life. The company offers flexible working hours but demand high productivity on the hours spends in work. The employees complain of poor working environment, such as slow adoption of the latest technology leading to demoralization of competent employees, as they could not use their knowledge and skills effectively. Employees in KFC have undertaken the career development programs and have acquired the experience and skills that needs promotion from current positions.
The company could not promote most of its competent and talented employees making it easy from the employees to shift to the competitors or underperform in the organization. KFC needs to balance its total reward to ensure outstanding employee satisfaction. This is a challenge for the company as the current motivation and competent strategies by most organization relies on high individual total reward to attract and maintain competent and talented employees. The employees have the potential of boosting the satisfaction of shareholders, customers, and suppliers through increased productivity and quality products and services for the success of the company (Spencer & Swiercz, 1992).
How KFC Deals With the Problem
Jones (2010) identified that KFC uses the working environment to create total reward. The company provides daily breakfast stations, in-site gym, monthly social event, and offer of fresh fruit for its employees. The company engages the staff in activities of the company to make them feel appreciated and part of the company’s success. The company partnership with the World Food Programme enables the employees to enjoy working together toward development of the society in which they live and work.
The company offers opportunities for talented and competent employees to develop their careers. The company has developed training for its staff to help motivate them to remain in the company to develop their careers. The training program focuses on finance, human resources, and operations management through a Building People Capability program. KFC offered 8000 employees in the United Kingdom supply chain with childcare vouchers to motivate employees. The vouchers provided services for healthcare and pension schemes for their children (Spencer & Swiercz, 1992).
KFC analyses its Total reward management to implement strategies that prove efficient in achieving superior employee motivation level in the organization, especially toward customer services that improve the profits of the organization. KFC fails to acknowledge much of reward because it is ineffective. The company pays attention much on the management of the organization and teamwork rather than individual work (Jones, 2010). The company aims at reducing additional costs on reward and dissatisfaction of employees who arise from unequal treatment. KFC concentrates on providing employees and managers high basic salaries and fewer bonuses. The employers satisfy employees with the salary offered as it matches the value of work they complete in the organization (Bharatwal, Sharma, Sethi, & Rani, 2011).
There are many issues enduring to total reward management implementation. This include debate over mixing administrative and developmental purposes, Lack of support and commitment from the top management, absence of quality training programs, consistent rating errors, additional costs, and employee dissatisfaction. This complicates the necessity of total rewards as many organizations adopt the strategy to increase competitive advantage over maintaining and attracting qualified, talented, and competent employees. Total reward requires effective communication in the organization to be effective. KFC and RBS lack good communication with their employees. Total reward management targets the employees, customers, and suppliers in the organization. The two companies fail to take advantage of the importance of total reward management.
RBS uses total reward at the expensive of other employees. The top managers are the major beneficiaries of monetary rewards. The company provides flexible work schedules and high benefits for the staff but has low basic salary and cut many jobs. The employees complain of unequal treatment of the top managers and the staff. RBS needs to take action as soon as possible to motivate, maintain, and attract talented and competent employees required in the organization.
On the other hand, KFC have high salary for employees but low monetary bonuses and benefits. The company needs to improve the working environment, especially on technology, as most of the production requires the latest technology to match the standards of the competitive market. KFC can provide flexible work schedules convenient for the individual workers to ensure high motivation of employees. The total reward management is less effective on individual motivation of the employees as the company relies on teamwork. KFC needs to adjust the management of total reward to remain competitive in hiring and maintaining the best employees in the organization.
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Blackman, T. (1999). Trading in options. People Management, 5(9), 42.
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Spencer, B. & Swiercz, P. (1992). HRM and sustainable competitive advantage: Lessons from Delta Air Lines. Journal of Human Resource Planning, 15, 1-30.