Employee reward systems consist of an organisation’s integrated polices, processes and practices for rewarding its employees in accordance with their contribution, skill, competence and their market worth.
This report analyses current problems with flash (the advertising agency’s) new reward scheme and how it might have occurred. The potential consequences that the organisation may encounter if they continue with the new reward scheme will be outlined, along with recommendations and an action plan on how they can improve their reward scheme.
Problems with current reward scheme:
Unfair rewards scheme
Majority of the workforce disapprove with the current reward scheme, due to it making them feel undervalued. This may have derived from only half of the reward scheme effecting the majority of the workforce (annual bonus for all staff) and the other half of the reward scheme only benefiting one out of 4 departments (business development team). Therefore, this demonstrates unfair judgement from the previous HR Director and board and possibly resulting in a weak employee and employer relationship. Hence, the reason for High labour turnover. According to the institute of personnel and developments (IPD) Building employer and employee trust is the only way that commitment can be generated and tension between the two parties can be contained. They further state, that organisations must translate their values in to specific and practical actions. By the organisation making half of their reward scheme benefiting one department, suggest that the organisation values the business development team the most and this should not be the case as all departments are needed to play their part in producing organisational success
The business development team is the only department that has a team based reward scheme . According to (Thompson 1995) the main advantages of team work are:
· Co- operation
· Encourages groups to improve work systems
· Increases flexibility
· Increases the ability to respond to changing needs
· Encourages information sharing
· Aids communication
· Helps to keep people focused on the whole organisations directions
The other departments are not being awarded for high performance due to teamwork, this could potentially lead to individuals in the same department, reluctant to share knowledge in fear of their colleague using the knowledge to generate a great advertisement ideas for clients and reek all the praise and reward from management.
The new reward Scheme allows individuals to negotiate on their basic pay/ salary. With the decline of trade unions and increase of employment laws this method of pay is outdated (perkins and white 2009), especially for a organisation that comprise of a relatively young workforce. This process of free individual bargaining can lead to inconsistent and unfair decisions regarding pay and is confusing to understand, expensive to maintain and the cause of dissatisfaction and demotivation (Armstrong 1996)