As a human resource consultant hired by Cheesy Pizza Company, I am going to assist it with the implementation of a rewards system. As the organization is now focused on the extension to the Singapore and Hong Kong markets in three years, it needs to ensure that its employees are ready to operate in the new locations. In addition to that, the fact that the company will have 10 outlets in each region presupposes a significant extension of its workforce. It means that more people will have an influence on organizational performance and success of its business operations because the way employees cope with their duties determines the overall outcome. Thus, it is important for Cheesy Pizza Company to ensure that its management team and employees are appropriately motivated and rewarded so that their attitudes towards their jobs and the company are positive.
It would be rather advantageous to pay attention to different techniques that are used by the human resource management department and provide it with the opportunity to increase the level of employee engagement, which also deals with employee satisfaction and ensures workers’ willingness to fulfill organizational goals and constantly improve. This target can be achieved when resorting to the appropriate employee reward system. There is no universal approach to it because, being based on the personnel’s desires and wishes, it differs depending on the particular organization and specific characteristics of its workforce. The range of rewards may include but is not limited to monetary remuneration, advanced opportunities for skill development, or career choices. The rewards system presupposes the company’s transparency because the personnel is likely to work harder when they realize what they do and why (Scott 2016). Following Cheesy Pizza senior management’s instruction, this paper will include the overview of the objectives of reward systems and peculiarities of their design as well as the discussion of the factors that Cheesy Pizza should consider when designing and implementing its reward system for Singapore or Hong Kong operations.
Objectives of Reward Systems
Reward systems refer to “all the monetary, non-monetary, and psychological payments that an organization provides to its employees in exchange for the work they perform” (ACCA 2013, p. 1). Employee reward systems are rather useful for all types of organizations. They are implemented in order to fulfill a wide range of objectives. Reward systems improve membership behavior. Pointing out organizational specifics and identifying the things it is ready to offer its employees, Cheesy Pizza receives an opportunity to attract and retain those employees who are well-aware of the company’s operations and are able to cope with their duties with no difficulties due to high qualifications. The worker’s task behavior is also likely to improve greatly. Rewards systems can make them motivated to become as flexible as possible and to reach the maximum of their potential, which appeals to many companies. They are expected to develop employee commitment behavior, as they will be encouraged to act so that the company can achieve the most benefit. In addition to that, it allows managers and employees to improve their relations so that they are not limited to simple supervision and instruction in an organizational framework. The personnel receives an opportunity to find friends at work, which increases their engagement and makes them willing to do their best for the company. As a result, it can be claimed that rewards systems reinforce the business strategy and lead the organization to its success.
Rewards systems also make sure that business operations and the way the workers are treated are compliant with local laws and regulations. Being cost-effective and affordable for companies, they also allow the workers to obtain insurance and related benefits. In order to implement reward systems, organizations are to define their values and expectations so that the person acknowledges what should be done and how. Mainly, rewards satisfy and motivate managers and employees to develop and meet organizational objectives, which ensures competitiveness and enhanced performance. At the strategic level, they need to be aligned with the strategy of the company. For example, if it is focused on differentiation, special rewards can be provided if a worker obtains specific skills. Simpler benefits can be found within a cost leadership strategy because the personnel is not very valued according to it. They require low skills and do not earn much, which discourages them from overtime work.
Reward systems can be used to recruit talent if they are competitive. Potential employees are looking for the best working opportunities, and when having several similar positions offered, they tend to choose the one that is likely to provide them with the hugest amount of benefits. In this way, reward systems can serve as a tool to control and reduce employee turnover. If the workers see that the organization values its human capital and is ready to meet its needs, they tend to become more loyal. Thus, it is significant to adapt rewards to particular populations.
Reasons for Attention to Design of Reward Systems
Nowadays organizations use loyalty programs and reward systems more than ever because they understand their increasing importance. They need to pay attention to workplace reward systems because they provide them with the opportunity to reach higher levels of performance through employee motivation. Such an approach has already been proven to streamline organizational growth and make it more successful. In fact, they are not as expensive as many people think because they are not limited to monetary benefits only. They tend to boost the company’s reputation among the workforce so that more talent wishes to be recruited. Reward systems make the company focused on its workers. They presuppose the necessity to conduct repetitive research studies to find out employee needs so that eventually they affect employee satisfaction positively (Olenski 2014).
As all organizations are different and their workforce is rather diverse, it would be more advantageous for them to ensure that the selected system is appropriate and can reach expected targets. Thus, it is significant to consider various types of rewards, as the wrong design can cause enormous additional problems. Extrinsic rewards are “external rewards tied to certain employee behaviors, skills, time, or roles in an organization” (Hurd, Barcelona & Meldrum 2008, p. 270). When focusing on them, organizations should consider how much value workers place on them. Thus, a well-paid employee who often works longer than one is supposed to be likely to become happier to have more days of vacation than monetary benefits. When designing a reward system, the company should define specific motivators that are appropriate for its personnel because providing people who do not like opera with opera tickets will not reach its purposes and will only waste money.
Intrinsic rewards, on the other hand, “derive from employees feeling good about the job they have done, the effort they have put forward, or the role they played in a team project” (Hurd, Barcelona & Meldrum 2008, p. 270). They are more abstract and deal with people’s positive feelings and internal satisfaction. Unlike extrinsic rewards, these ones are usually observed over time so the person may be discouraged from the very beginning. Thus, in order to design an effective reward system, companies should pay attention to both extrinsic and intrinsic rewards. Monetary rewards are connected with some payments, for example, pension or health care premiums. They can be direct, such as hourly payment, and indirect, such as paid leave or gym. According to their basis, rewards can be focused on performance and membership. The first type presupposes that employees alight with the agreed-upon standard of performance, while the second one works when employees represent some particular group, such as a department.
Some non-traditional rewards can also be used. For example, a reduced work week with 3 or 4 working days can be used because an employee used to work long hours or during the weekends. A staggered daily schedule can be offered as well. It provides the workers with the opportunity to schedule their day as they want. Flextime presupposes a similar approach but includes particular limits, for example, considering the hours that should be spent in the office. Finally, some companies may allow their employees to work from home. Of course, it cannot be offered at all working places, so it is critical to ensure that the design of a reward system is appropriate for the organization.
Factors to Consider in a Reward System’s Design
When designing a reward system Cheesy Pizza should start with developing a list of expectations it has regarding its employees. It can include training, interaction with clients, and other things seen as goals that should be achieved. Then, the company should conduct an employee survey. In order to pick up those rewards that are aligned with employee needs and wishes, it should ask them about the things they want to obtain, their relation with other workers, etc. On the basis of this information, Cheesy Pizza should determine particular types of rewards that are likely to appeal to the workers. In addition to that, it is significant to ensure that some benefits presuppose employee enrichment. Such programs are a part of the reward, but they also have a positive influence on people’s lives, making them more knowledgeable and less stressed, which is beneficial for the organization (Jones 2016).
Cheesy Pizza should make sure that the reward system it selects is cost-effective. Many professionals believe that rewards are expensive and that they lead to extreme expenditures. Still, even extrinsic rewards can be rather cheap. For example, some tickets can be provided by sponsors, benefits packages developed with partner companies, etc. If an employee works long hours and then receives a monetary reward or if one’s wage is low and the reward is provided, these people tend to work harder and earn enough money for the company to cover these expenses.
An effective reward system should also be flexible. In the framework of the scalable system, rewards should be provided to some employees on the basis of the amount of those people who have successfully fulfilled their objectives. Focusing on the adaptable system, organizations should take into consideration the fact that “employee rewards need to be assessed in the amount of compensation to be effective” (Salajeghe, Farahbakhsh & Sohi 2015, p. 3654).
As it was already mentioned, a reward system should focus on the company’s targets for it to ensure that the workers do their best to enhance organizational performance. For example, it can be advantageous to put emphasis on the quality of work and provide an opportunity to have a flexible schedule in the competitive market because the employees will work more in this way. Providing additional free days, the company will not be able to streamline its operations. That is why it is significant for the company to have its rewards aligned to the organizational objective and meet employees’ needs. A rewards system should be compatible with other human resource policies. Vertical alignment presupposes the necessity to make rewards coincide with the content peculiarities and indicators of successful performance that allow it to be assessed.
Horizontal alignment ensures that the characteristics of the hiring, training, and access systems do not contradict with benefits (Zucker 2008, p. 3). In this framework, it is vital to establish a pay structure that allows to implement consistent reward policies and define levels of pay. Broadbanding can be rather advantageous, as with its help salary bands increase, the organizational hierarchy can be streamlined as well as an internal movement, and relations with management can improve, as greater autonomy is obtained (PayScale 2011). Reward systems also tend to be more cost-effective when they are based on a team incentive system because it presupposes benefits for performance. Thus, workers receive rewards for the results they achieved but not for working hours, which proves that they contributed to the business (Billikopf 2006). Finally, the equity should be considered to avoid conflicts. Employees should receive the same rewards based on internal (job and responsibilities within the company) and external factors (wages, certification, and sizes of several companies) (Teine 2014).
It can be very advantageous for any organization, including Cheesy Pizza, to resort to Maslow’s hierarchy of needs when designing their reward system and ensure both monetary and non-monetary rewards (ACCA 2013). It is widely known for its connection with motivation because it allows identifying those needs that are of the highest priority for the workers so that fulfilling them; the company makes them more loyal and satisfied than ever. According to Maslow’s ideas, an individual wants to follow a hierarchy so that when those found on one level are met, a person will focus on the next one. As a result, the company can predict what to focus on. Thus, from the very beginning, people are willing to fulfill their survival needs, such as those connected with nutrition and housing, safety, including insurance, relations with other people, esteem, and self-actualization. In this way, the junior staff is likely to search for monetary rewards because it has low income and faces problems with meeting physiological needs. With the course of time, as these employees receive higher positions, they tend to become less likely to be satisfied with such rewards and will be more focused on job security, maximization of their potential, the necessity to be valued, etc.
However, some scientists believe that such an approach can be successful only temporarily. Thus, Herzberg emphasizes that it is better to consider intrinsic factors that make the workers motivated and allowed them to recharge themselves, finding what really motivates them in their jobs. He encourages organizations to pay attention to “achievement, recognition for achievement, the work itself, responsibility, and growth or advancement” (ACCA 2013). Thus, it can be enough to provide the workers with greater responsibility, for example, involving them in the decision-making processes.
Factors to Consider in Implementing a Reward System Successfully
Successful implementation of a reward system requires appropriate communication of its peculiarities so that all employees become aware of them and have equal opportunities to obtain desired benefits. It will be advantageous for Cheesy Pizza to involve line-managers in this process because they play a key role “in communicating any new system to their staff and discussing the possible implications” (CIPD 2006, p. 11). Still, it is significant to ensure that the process of implementation consists of four basic phases: design, execution, evaluation, and assessment. This cycle should be repeated so that the changing needs of the employees are taken into consideration (Heneman 2007, p. 4).
Managers should involve employees in the design of the reward system from the very beginning. In this way, the works will feel valued, and it will be easier to develop those offerings that will appeal to them. What is more, they will be able to provide immediate feedback, which is rather beneficial. The system should be based on the company’s goals and be rather specific so that the employees know what they should do, how, and why, which makes them more motivated. In addition to that, it is significant to focus on such influential factors as “leadership style, information availability and accuracy, uncertainty, organizational structure, organizational culture, human resources, and technology” (Rajasekar 2014, p. 170). The role of leadership and organizational culture structure is considered to be the most critical in strategy implementations because they are tightly connected and affect communication. Effective leadership ensures appropriate communication throughout the organization and deals with the prioritization of information that is received by the workers. Thus, it can maintain efficient coordination and employee commitment or lead to poor consequences. Clan organizational structure is considered to be more effective than a hierarchical one because it involves more cooperation between managers and employees, which ensures decent information sharing. The structure of the company defines coordination of activities, which also affects strategy implementation and may make it more difficult and time-consuming if people face problems when contacting one another and cooperating.
Thus, it can be concluded that reward systems provide organizations with the opportunity to improve their performance, become more competitive, attract talent, and strengthen personnel’s loyalty through employee satisfaction and involvement achieved with the help of monetary and non-monetary benefits. It is not enough to base a reward system on monetary benefits alone because it will not provide Cheesy Pizza with the opportunity to make its works reach their potential and be constantly motivated to work harder and perform better. In fact, the organization should focus on employee needs, including those identified by Maslow’s hierarchy and the intrinsic factors in a job mentioned by Herzberg. It will be advantageous for the company to focus on its workers and to find out what exactly they are willing to have as a reward, involving them in the very design of the system. Rewards should focus on personnel specific achievements and behaviors that prove it to do something contributing. In this way, their results will be appreciated but not working hours. Such an approach will allow the company to reduce its expenditures and generate cost-effective strategies.
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