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Total Rewards Strategy to Meet Employee Needs — A Focus on Beautific Case

TotalRewards Strategy to Meet Employee Needs — A Focus on Beautific Case

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Theenvironments in which contemporary organizations are operating havebeen characterized by various issues that must be considered for themto realize success. One of the notable challenges is globalization,which has created the allowance for firms across the globe to operateseamlessly across borders to tap opportunities in the internationalmarket. The worldwide market trade has resulted in heightenedcompetitions, which is a risk to firm survival. The second challengeis increasing regulations. In contrast with the past, thecontemporary environment has ushered in a myriad of protocols. Whilemany of these regulations are outright in ensuring harmony within themarket, they are additional, costly obligations that firms need tofulfill. Some of the important rules include those that demand firmsto support the efforts of economic sustainability throughenvironmental conservation and protections. Another example of achallenge is resource disintegration. Since most of the resourcesthat companies rely upon are limited, companies have been called todevise ways of rising above the related challenges. Institutions havebeen looking to innovativeness and technologies to increase theproblem, which is also quite demanding (Schneider, 2013). Fororganizations concerned about reaching great heights of success,finding solutions to such challenges is critical. Indeed, the issueof how companies can rise above the contemporary problems has beenone of the areas of interest for many discussions. While variousrecommendations about the survival strategies exist, the call tostrategize human resource management has been perhaps the mostnotable. In particular, administrations have advised that amidst allthe challenges, competitive human resource management strategy is thesurest way of leveraging competitive advantage. This view happens tohave coincided with the shift of paradigm from the mechanistic modelsto humanistic models, from perspectives that treated human resourceas machines to perspectives that view them as an exceptional resourcethat have additional psychological needs that must be considered(Senge,2015).Therefore, it is intriguing whether firms have heeded the advice.This paper examines the case of Beautific on whether it is outrightin enabling it to achieve its goals, focusing on total rewardsstrategy as competitive human resource strategy. In the end, it hopesto recommend measures for the company to increase productivity.

Backgroundof Organization and Nature of Reward Strategy

Beautificis among the largest private employer corporations in the UnitedStates and the world beyond. The company employs over 5 millionpeople to serve its domestic global market business. Apart from beingone of the largest private employers, the company prides itself onbeing one of the United States’ largest retailers, commanding anaverage annual market sales share of over 390 billion dollars.Despite these series of successes that it prides itself, theorganization is still committed to expanding its capacity to realizefurther growth and become the largest firm in the world regardingsales and profitability, as well as the number of employees.

Indeed,this commitment has been exemplified by various initiatives it hasundertaken to safeguard competitive advantage. For instance, in 2009,it unveiled a plan to guide it to become one of the most competitivefirms in the US and the entire globe. The core focus of the schemewas to increase the benefits to the customers through the pursuanceof the operation slogan — saving money and living better winning,playing and showing and being corporate social responsibility. Theapproach aimed at giving products and services that meet theexpectations of the consumers, offering value for money and upholdingethics and corporate social responsibility. Part of the focus for thestrategy of improving the customer experience was to renovate itsstores by increasing the width of store aisles, reducing fixtures,improving the signage, and increasing natural light to the stores.Other strategies include engaging its customers through competitiveproduct promotion schemes. Because the major focus was to attractcustomers, many of the discussions of improving the company’sposition have always been oriented towards various components such asmoderating price leadership, reforming brand communication, andreducing operation expenditures. Despite this commitment, the companyhas been experiencing various setbacks. In particular, for the lastfive years, the company has suffered a considerable loss of itscustomers to its competitors such as the Target. This direperformance has been attributed to poor human resource managementsystems, particularly characterized by flawed reward schemes. Indeed,a look at the organization reward systems reveals various areas ofweaknesses.

Theaverage income for the general employees is low, yet there is a hugegap in the incomes between the general staff and the top managers.Typically, the top management team earns over 1000 times the revenueof the general employees. The company has also experienced variouslegal suits associated with poor employee compensations and theinability to accede to the affirmative actions of the labor unions.Workers have complained that the company offers a low pay compared towhat other employees in other businesses earn, yet they work forlong. Indeed, a comparison of the company with its key competitorsreveals a sharp difference in employee reward.

Type of Benefit

Beautific

Union Firm

Percentage of workers under the cover of

employer-provided health plan

44 percent

96 percent

The legibility to the Health plan e scheme

181days for workers serving at least 37 hours for every week

60 days for workers serving at least 64 or

72 hours at every month

The Health plans premium paid by employees

Between 338 to 3,081 dollars per year

Health plans premium from employees

Between $338 to $3,081per year

Retirement benefits

401,000$ for employees after one year and at least 1,000 hours. Employees contribute $ 0 .22 per hour towards plan

Defined benefit pension and 401,000 after 375hours employers only contribute$1.35 per hour towards plan

Paid holidays

Six days for each year of service

6 hours for every month of service

Total Average compensation per hour

$11.90

$23.69

Total average compensation per year

$21,552

$42,552

Recently,the company implemented a computerized scheduling system with the aimof increasing efficiency in its operations, a move that was not wellreceived by its employees because it hurts their wellbeing. While thesystem creates the allowance for the management to program tasks ofeach store with relative ease, it has far-reaching consequences forits employees because it reduces the job stability and makes the workhours to be irregular. The programming has translated to inconsistentpaychecks and irregular working schedules that deprive workers theability to balance their lives. Employees at the company have beendisgruntled about the compensation plans, and this is oftendemonstrated by the rampant workers strike and high employeeturnover. In this regard, it can be inferred that while BeautificCompany is dedicated to pursuing great heights of success, but itseffort is heavily hampered by poor employee reward system. Therefore,to achieve its goals, it is critical for the company to address theneeds the areas of weakness.

RecommendedTotal Reward Strategy

Inlight of identified compensation issues at the company, the essenceof the recommended reward strategy is to be able to fulfill threegoals: satisfy the employees, enable them to achieve a work-lifebalance, and align organization compensation scheme with the laborlaws such minimum wage and other employee’s benefit stipulations.To meet the desired goals, the strategy will particularly need to beoriented towards various critical areas: minimum wage requirements,working hour regulations, employee benefits, job security, and salarystreamlining.

Minimumwage: Beautifichas been reported to flout the minimum-wage stipulations provided bylaw. For instance, while the minimum wage inthe USis $7.25per hour, the company has been paying as low as $6.Therefore, the company will need to increase its rate to over $7.25to satisfy legal provisions.

Workinghours: TheCompany subjects its employees to irregular work schedules that costthem fluctuating incomes. Therefore, part of the focus for new totalreward strategy will be to create a regular work schedule toaccommodate the workers or give incentives to employees working atwee hours.

Employeebenefits: Beautifichas been noted to be poor at providing certain advantages such asretirement and health benefits to its employees. In this regard, thecompany will need to improve its employee benefit schemes andallowances to be comparable to its competitors.

Jobsecurity: Beautificemployees have complained about the lack of job security andautonomy. Part of the reward strategy for the company will be toaddress the plight of employees by promising work security such as byminimizing retrenchment and dismissals.

Salarymainstreaming: Typically,the top management team earns over 1000 times the income of theaverage employees. The focus of reward strategy will be to streamlinethe salary of the employees to avoid disgruntlement.

TheJustification of the Reward Strategy

Differentauthors have lauded such a strategy as being elaborate and inclusiveof the employee needs, as well as the prevailing labor regulationenvironment. For instance, Wallgren(2013) discussthat it is now mandatory for companies to work towards fulfilling thepsychological needs of employees because it is not only a way ofengaging employees in promoting productivity but also a way ofavoiding legal suits resulting from labor laws. Sager(2014)has noted that having an elaborate total reward strategy is crucialbecause it fulfills the psychological needs of the workers,motivating them to give their best. The author elaborates that such areward strategy is critical amidst the concerns of growing statisticsof employees who are stressed and dissatisfied with the nature ofwork and poor compensation schemes, which often translate to lowproductivity (Sager,2014).

Thisview is supported by Avolio(2013),who notes that the nature of work environment in the contemporaryenvironment imposes many obligations on its employees, hamperingtheir ability to balance work and their personal and family lives.The lack of work-life balance is linked to adverse work conditionssuch as low pay, limited autonomy at work, job insecurity, andincreasing cost of living (Avolio,2013)).Interestingly, these issues happen to be the key challenges that theemployees at Beautific have cited.

Sager(2014) furthercited that work-related stress, which results from the inability tobalance between work and outside life, is now a critical issue, withwell over 65 percent of the contemporary workforce suffering fromdepression, anxiety, and stress, among other indicators. Whileworkers specializing in different professions have exhibited variedlevels of stress, those with low income have exhibited the highlevels of anxiety. As was typically evidenced by the case ofBeautific, the author notes that many employees are quitting jobs orseeking sick leave because of increasing stress. Incidences of workstress and dissatisfaction are increasingly becoming common and arehaving a profound impact on the employees, for instance, escalatingmental illness, suicide, and family breakups because of the inabilityto balance between work and life. While the statistics on the case ofBeautific in relation to this observation is limited, it neverthelesssignals that there might be such undocumented scenarios. Countrieshave acknowledged the problem of work-life balance and evenestablished regulations to cater for workers’ rights, evidenced byminimum wage laws, working-hour rules and employee allowances (Sager,2014)).

Therefore,the recommended total reward strategy for Beautific Company isparticularly justified because it considers all the various criticalfactors — employee satisfaction, work-life balance, and legalprovisions.

KeyCommunication Components of a Total Reward System

Itis acknowledged that a communication plan of a reward system plays avital role by enabling employees, both present, and future tofamiliarize with and understand the reward packages of the company.The workers get to know the company’s compensation philosophy, thebase-pay system, the bonus programs, and the role of the firm’sculture in promoting and supporting career growth of its employees.According to Kerrand Schriesheim (2015),when reward communication plan is comprehensive, personnel tend to beloyal and increasingly engaged.

Inline with these insights, the Beautific Company’s management teamwill strive to make employees aware of the different elements in thecompensation program. The employees may be allowed to seek forclarification on various compensation issues that are not otherwiseclear. In addition, the communication plan should use multipleapproaches, for example, a multilingual approach may be included toensure the information is shared in languages convenient to all thestaff, and this is because the firm hires workers with diversecommunication backgrounds. Itwill be necessary for thecommunication to be transparent between the managers and theemployees. For instance, Beautific management team should ensuregreater disclosure, accuracy, and clarity in their communication byusing different channels of communications such as organizationmagazines, circulars, and employee handbooks.

Strategyfor Devising a Competitive Pay Structure

Thepay structure should be based on three elements: what other firms areoffering, the role and position of employees in the organization, andthe commitment of employees to the institute tasks.

Inparticular, the human resource team should be aware of the pay trendsin the industry and seek to adjust their payments to be comparablewith those of the other firms. Secondly, the firm may need to ensurea reasonable compensation plan for different employee role, forexample, managers should be placed under the same compensation groupthan others because of the demanding nature of the position. Lastly,dedication and productivity of employees need to be observed andrewarded through job promotion and salary improvement.

Conclusion

Theaim of this paper has been to examine the case of Beautific withrespect to whether it is outright in enabling it to achieve itsgoals, focusing on total rewards strategy as competitive humanresource management approach. It hopes to recommend measures for thecompany to increase productivity. It is established that whileBeautific Company is dedicated to pursuing great heights of success,its effort is heavily hampered by poor employee reward system.Therefore, to achieve its goals, it is critical for the company toaddress the needs of its workers by adopting an elaborate totalreward strategy. In light of identified compensation issues at thecompany, the recommended strategy will be the kind that is orientedtowards addressing the weaknesses in the following areas: minimumwage requirements, working hour regulations, employee benefits, jobsecurity, and salary streamlining. The recommended total rewardstrategy is justifiable because it strives to fulfill variouscritical areas: employee satisfaction, striking a work-life balance,and aligning organization compensations schemes with the labor lawssuch minimum wage and other employee benefit stipulations. Indeed,literature has indicated that these are the critical elements ofemployee compensation. The competitive pay structure will considerhow other firms are paying, the position and qualification ofemployees and the level of employee’s commitment to theorganization. It is hoped that such a reward system will go a longway in addressing the problems affecting the organization and enableits employees to achieve a satisfactory work-life balance.

References

Avolio,B. (2013). Promoting MoreIntegrative Strategies for LeadershipTheory-building. AmericanPsychologist.62.1 25-33.

Kerr,S. &amp Schriesheim, C. (2015). Toward a Contingency Theory ofLeadership Based upon the Consideration and Initiating StructureLiterature. OrganizationalBehavior and Human Performance.12.1&nbsp: 62-82.&quot..

Sager,K. (2014). &quotAn exploratory study of the relationships betweenTheory X/Y assumptions and superior communication style&quot.ManagementCommunication Quarterly 288–312.

Schneider,B. (2013). “The People Make the Place”Personnel Psychology40: 437454.

Senge,P. (2015). TheFifth Discipline. The art and practice of the learning organization.New York: Doubleday.

Wallgren,L. (2013). &quotTheory Y embedded in Theory X: The limited role ofautonomy in decreasing perceived stress among IT consultants&quot.InternationalJournal of Human Capital and Information Technology Professionals1–17.