Reward strategy is a long term approach in developing and managing reward policies. The human resource management develops reward strategies which are based on employee performance and market trends. The line manager gives inputs from employees and trade unions to the HRM in developing the reward strategy. The reward strategy cab be either specific or an outline of the direction to follow to achieve a proper balance between financial and non financial rewards.
A replacement of the existing system or the introduction of a new reward system can be initiated through reward strategies. The reward system should take employee suggestions to determine reward guiding principles.
The main stages in developing reward strategy are
- The diagnosis phase
- The design phase
- The testing and preparation phase
- The implementation phase
Some of the various pay systems that organisations use to reward employees are
- Bonus
- Measured Day Work
- Commission
- Profit linked
- Length of Service
- Piecework
- Shares in the Company
In piecework the employees will be paid a basic minimum wage and a piecework bonus. The following graph by Dennis Haffner7 explains piecework system.
In performance related reward system11 the main objectives are
- Reinforcing organisational and cultural changes
- Giving more control to managers
- Encouraging managers to have one-to-one relationships with subordinates
- Supporting performance oriented culture
- Importance on individual performance
- Rewarding and motivating
- Recruitment and retention of employees
Line managers have more responsibility in managing rewards which without the proper training they will be incapable of carrying out tasks to the requirements. So to compensate on line management inefficiency the HR has to develop different strategies to manage reward system or offer adequate training to line managers to execute the system effectively.
The reward strategy can vary hugely between sectors such as in IT training and development plays an important role for employee rewards where as in sales bonus and commission is the main rewarding strategy.
Accenture is dedicated in bringing the best from employees and the reward system is mainly tailored to the personal performance rather than one global system that apply to a diverse workforce. Organisations such as Google and Microsoft have a competitive payment and reward systems which are significantly higher than Accenture’s which is something that Accenture has to look into in order to retain its skilled staff for longer term.
Activity 2 – Learning and Development
Organisation’s competitiveness in the industry is determined by their employee productivity and efficiency. The SWOT analysis of Accenture shows the necessity of continued training and development support for its employees to be competent in today’s fast paced technology sector for continued growth. HRM develops effective learning methods and developmental plans to improve the employee performance.
An effective learning and development strategy should incorporate the learning and development philosophy of the organisation and the aims, priorities, evaluation, responsibilities and required resources for the learning and development strategy.
The organisation’s learning culture promotes learning because the management recognises it as an essential management process.
The main concepts in learning and development are training, competence, skill and continuing professional development.
Armstrong’s learning and development model in Appendix C shows different ways of learning. Learning can be either formal or informal both having its own advantages and disadvantages.
The learning curve below from Dennis Haffner8 shows the different level of competencies achieved during training and development.
A learning program contains many learning event which is a learning activity that is designed to meet the needs of individual learning needs. The learning evaluation determines the effectiveness of learning in employees.
The five evaluation levels identified by Hamblin are
- Reaction
- Learning
- Job Behaviour
- Organisation
- Ultimate Value
Hamblin points out that the five levels are links in a chain one leading to another.
The comparative productivity chart in Appendix C shows that the productivity of UK staff is relatively low compared to other countries except for output per person compared against Germany. Low productivity has implications on international competitiveness. So it is important to create a constant learning culture in the organisations to train their staff to compete in the global economy.
According to Birchalls and Lyons, effective learning of individuals take place in an environment where risk and experiments are encouraged and mistakes are tolerated for individuals to learn from their experiences.
Social learning theory states that for effective learning social interaction is required and it is the primary form of learning.
Kolb’s learning style inventory describes individual learning styles through a learning cycle consisting of four stages.
HRM design, plan, deliver and monitor learning programs and offer advice and training in employment laws whereas line manager support and assist HRM in developing and delivering training by making sure the employees are benefiting from the organisation’s HRM development strategy.
In Accenture, the employees are offered thousands of courses in various disciplines as well as career counselling each year by Accenture’s dedicated training facility and by its partner organisations. Accenture invested nearly US$800 million dollar in training and development. Accenture offers leadership development programs and management training for its high calibre employees to manage a globally diverse organisation. Some of the other mainstream trainings offered are Internship, work experience, Graduate training and professional certifications.
Activity 3 – Employee Relations
Some of the key concepts in employee relations are collective bargaining, custom and practice, internal regulations and stakeholder theory.
The SWOT analysis of Accenture shows a score of -32 for threats which are mainly because of the competitive advantage of better organisations.
The main areas of employee relations are pay-work bargain, terms and conditions of employment, managing employment practices, employment issues, communicating effectively and efficiently with employees.
According to Farnham employee relations consists interaction between three groups: employer and employee, parties who act on behalf of them and the third party which can be government agencies. Employee relations offer effective and consistent procedures to solve disputes resulting in improved productivity and commitment and fewer grievances.
Collective bargaining is a systematic way of conducting discussions and negotiations to reach an agreement on matters that are mutual concern for employers and employees. The bargaining power plays an important part in drifting the outcome of bargaining but should not conduct in a way to defeat the purpose of negotiation.
There are basically two kinds of relationships between employers and employees called unitary and pluralist developed by Fox (Armstrong 2008). In unitary view, the management has complete power, whereas in pluralist view, all the concerned parties’ wishes are accounted for.
The HRM model of employee relations consists of
- A drive for commitment
- An emphasis on mutuality
- Complimentary forms of communication alongside collective bargaining
- Importance to individual contracts
- Employee involvement techniques
- Total quality management
- Flexible working
- Emphasis on teamwork
- Harmonisation of contract terms
Negotiations and bargaining takes place in four stages: initial step, opening, bargaining and closing. Dealing with trade union can cause conflicts sometimes but by adopting a positive partnership most of the issues can be resolved without any ill feelings for all parties.
The effective communication between employee and employer means employee plays an active role in management decision making. Employees can express their views through consultation, surveys, suggestion schemes and project team.
For effective communication the information has to be presented in clear, systematic and regular basis to the management. Communication can be face-to-face, team briefing, consultative committee, notice boards, speak-up programmes, intranet, magazines, newsletters and bulletins.
The diagram below shows the employee voice framework by Armstrong where he distinguishes among employee communication levels.
Industrial relations in employee relations are conducted within the external context, the international context and the internal context. The four factors in industrial relations are the political, economical, European and organisational context. The industrial relationship has been developed drastically since 1970.
The major players in employee relations are the government, the trade unions, employee representatives, the trade union congress(TUC), staff associations, management, employer’s organisations, the confederation of British Industry(CBI), various other institutions(ACAS, Employment Tribunals), the European Union and the HR function.
The line manager is the first communication level for employees to express their concerns and disagreements. So it is up to the line manager whether to inform higher level management about staff concerns. In order for employee participation in decision making, it is vital to have good line manager who can act as an effective communication medium between staff and management.
In Tesco6, the company has a strong employee relation encouraging the active involvement of trade unions in improving company culture. Tesco offers share schemes and pension policies for its employees as a form building strong relationship between the staff and management.
Activity 4 – Health, Safety and Employee Well-being
In this activity HRM develop policies to safe guard employees and other beneficiaries of the company from hazards from their relationship with the company. Occupational health programs that operate to prevent ill health from conditions have two elements: occupational medicine and occupational hygiene.
Some of the key concepts in health and safety are frequency rate, health and safety audit and inspection, incidence rate, occupational hygiene, risk, hazard and risk assessment.
It is the legal responsibility of the employer to achieve high standards of health and safety at workplace.
HRM develops the health and safety policies for the organisation. The policy must show the intention, the ways of achieving the intention and the guidelines that must be followed by everyone concerned.
Risk assessments are conducted to identify and analyse hazards. The two types of risk assessments are quantitative which produces an objective probability statement and qualitative which is subjective and backed by data.
Health and safety audit is used to check whether the organisation is meeting its safety objectives covering policies, procedures and safety practices.
The key concepts in employee well being are employee assistance programme (EAP), work environment, quality of working life and work-life balance.
The well-being of employees depends on the quality of working environment provided by the employer. According to Taylor (2008), the working life quality is related to extrinsic job factors such as wages, hours and working conditions and intrinsic job factors. It is employers’ responsibility to provide a healthy working environment.
The work environment can be improved by implementing effective strategies to deal with the following factors
- Managerial behaviour
- work-life balance
- managing stress
- sexual harassment
- bullying
Employee services can be offered to deal with individual problems. Employee Assistance Programmes (EAP) offered by external agencies can be a solution if the organisation has no in-house counselling service. The service is beneficial in dealing with sickness, bereavement, domestic issues, retirement and various other personal problems.
Other employee welfare services offered by organisations are gym membership, restaurant vouchers, holiday packages, discounted purchase of company products and child care vouchers.
HRM develops health and safety policies and liaise with safety officer. Accident prevention, health and safety training and occupational health programs are some activities HRM undertake to ensure the well being of employees. Health and safety inspections are carried out systematically by line managers with the guidance of health and safety advisers. Also line managers discipline the staff for violating any health and safety policies.
HRM develops employee well-being services according to employee needs. Most organisations nowadays offer discounted purchase of products and services scheme for its employees. Examples are talktalk, AOL and other telecom companies offer free phone and broadband support for its wide range of staffs. Child care vouchers are also widely popular offered my most employers.
Accenture offers employee well being services for its employees and strictly follows health and safety regulations. Accenture offers flexible working that includes part time, job sharing, and home working. Accenture’s work-life balance is well known for offering fly backs and client-site flexible working for off shore commitments. Accenture also offers video conferencing as a solution to reduce the travelling of its employees.
Conclusion
The roles and activities of line manager and HR manager are analysed in the four activities using Accenture as an example organisation. HR practitioners adopt various techniques to implement human resource activities effectively and efficiently to create motivated and productive employees. The ultimate objective from human resource management is developing and maintaining a safe and happy working environment where the employees feel valued and have a say in management decision making.
The line manager offer advice and employee feedback to the HR system in developing and modifying HR policies in accordance with business strategies. The government rules and regulations have to be integrated into the HR policies.
Appendices
Appendix A
PEST Analysis on IT Industry
Political Impacts
- Government regulations in IT training courses(-6)
- Home office restrictions on migrant workers(-9)
- Government’s view about supporting IT industry(+10)
(- 5)
Economic Impacts
- Increased cost in training and development (-7)
- Recession(-4)
- High salary in IT industry(+10)
(-1)
Social Impacts
- Supply of skilled labour (+8)
- Status of IT industry(+9)
- Steady growth of industry(+9)
(+26)
Technology
- High demand of IT technology (+9)
- Introduction of new IT related technologies in all fields(+9)
(+18)
Over all score (+38) means it is a good industry to work in.
Accenture - SWOT Analysis
Strengths (all +)
- Well established(+7)
- High reputation(+8)
- International operations(+6)
- Highly skilled staff(+8)
- Strong financial assets(+7)
(+36)
Weaknesses (all -)
- High operating cost(-5)
- Need to improve in recruitment area(-4)
- Government restrictions on contractors(-8)
(-16)
Opportunities (+) in the industry
- Expansion of outsourcing activities(+8)
- Diversifications of operations(+7)
- Development of proprietary software(+9)
(+ 24)
Threats (-) from itself and the industry
- Competition from bigger and better organizations(-7)
- Staff demanding salary rise in line with major companies(-8)
- Losing staff to other organizations (-4)
- Politics in one country affects operations in a different country because of international base(-5)
- Economic slow down(-8)
(-32)
Appendix B
Reward Management Model (Armstrong)
Total Reward System
Appendix C
Comparative Productivity Table12, 2002 adapted from www.statistics.gov.uk
Learning and Development Model (Armstrong)
Bibliography
Tyson S Human Resource Strategy Pitman 1995
Beardwell I & Holden L Human Resource Management Latest Edition - Pitman
Bratton J & Gold J Human resource Management: Theory and Practice
Boxall, P. et al The Oxford Handbook of Human Resource Management Oxford U.P. 2007
Gilmore S & Williams S Human Resource Management Oxford University Press 2009
References
- Armstrong M A Handbook of Human Resource Management Practice
11th. Edition (2009) Kogan Page
- Lado A A, Wilson M C, Human resource systems and sustained competitive advantage: A competency-based perspective
- Dennis Haffner, Handout 3
- Dennis Haffner, handout 2
- Dennis Haffner, handout 1
- Foot M & Hook C, Introducing Human Resource Management(2008)
- Kingston Unit
- Worthington I and Britton C – The Business Environment – Pitman Latest Edition
