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Effect of Reward Management on Employee Motivation

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Published: Wed, 07 Mar 2018

How can Multi National Companies use Reward management to motivate the Employees of Different Countries? : A Case of Marriott Hotels in UK.

Abstract

Employees are always considered as people who play a vital role in each and every organisation. The relationship between employee and employer changes frequently through out the years. Several concepts of employees are also varying time by time.

Now a day’s employees are having the bargaining power and they are more concerned about their individual needs and well being of their working environment. This dissertation analyses various factors which motivates an employee to work within an organisation. Employee will stay in an organisation only when their expectations are satisfied or otherwise there is a chance for him/her to leave the company. High employee turnover is a big issue in companies today.

Organisations will look forward to retain only the potential key employees who will make real difference to their customers and their stake holders. This dissertation proposes a frame work to retain the employees and to reward those employees for their potential by which they are taking the organisation to a different level.

This research has been progressed through literature study on employee concepts, Human Resource Management and Reward management of employees. The data from the primary research has been analysed compared and verified with the findings of secondary research and produced recommendations for the effective management of employee in multi national companies.

Introduction

Reward management is nowadays considered as an important topic in order to achieve the goals of a company. Employees are considered as the main factor which plays an important role in the organisation. The success of each and every organisation is its dedicated employee’s .Current world is filled with changes and competition. In order to survive in the current situation companies should be having employees who are loyal and expert in their own field. New technologies are developed constantly and the companies are eagerly trying to catch up those talented employees with right expertise in their own areas. Human resources as an important factor should get increased attention in managing business (Lindergen & Paulson ,2008)`. Multinational companies are facing increased challenges from all around the world due to globalisation.

1.1 Reward management

Reward system usually means the financial reward on organization gives its employees in return for their labour.The term rewards system, not only includes material rewards, but also non-material rewards. The components of a reward system consist of financial rewards (basic and performance pay) and employee benefits, which together comprise total remuneration. They also include non-financial rewards (holiday trips, moving to large office, recognition, promotion, praise, achievement responsibility and personal growth) and in many case a system of performance management. Pay arrangements are central to the cultural initiative as they are the most tangible expression of the working relationship between employer and employee. Many papers examine the role of organizational culture that is, the demand for monitoring compensation. Such investigations conclude that organizational culture places a significant role in determining the level of economic demands. Recent researches on industrial unrest indicate that reward criteria of the organisations both financial and non-financial rewards have tremendous influence upon the employees and employers performance.

Reward is a broad construct that can include ‘anything an employee may value and desire that an employer is able or willing to offer in exchange for employee contribution’. A conceptual distinction can be made between the three main constituents of reward–type, system, and criterion. (Henderson 1989, p.2) Chiang, Flora F.T. ; Birtch, Thomas A (2006) An empirical examination of reward preferences within and across national settings. Management International Review

Reward type refers to the nature of the reward itself (e.g., financial and non-financial; extrinsic and intrinsic). Financial rewards include direct (e.g., basic salary) and indirect (i.e., benefits and services) as well as incentive (e.g., variable pay) and non-incentive (e.g., fixed pay) categories. Non-financial rewards, on the other hand, do not benefit employees in a monetary sense and consist of both extrinsic and intrinsic rewards. Extrinsic non-financial rewards are tangible rewards attached to the job and are given and controlled by a firm. Examples include employment security, promotion, status, relationships, and work conditions. By contrast, intrinsic rewards accrue from performing the task itself and are self-reinforcing. Job challenge, variety, and sense of achievement are good examples of this category.

Reward system represents the method or mechanism (e.g., seniority-based, performance-based) by which organizations determine employee reward outcomes (e.g., pay increases). Systems can be either performance or non-performance oriented. Where performance-oriented reward systems compensate employees based on how well they perform on the job, non-performance systems compensate employees based on a different set of criteria, such as seniority/years of service, and skills/competencies. Reward criterion then, refers to the basis of allocation (i.e., individual or group) used to determine the reward.

1.2 Marriott International

Marriott International is a leading, worldwide, hospitality company and has more than 2,300 operating units located in the U.S. and 59 other countries and territories. It employs approximately 154,000 workers. Fortune magazine has recognized Marriott as one of the “100 Best Companies to Work for in America” (1997-2001), one of the “Top 80 Companies for Minorities” (2000), and one of “America’s Most Admired Companies” overall (2001). In addition, Sales and Marketing Management magazine has named Marriott Sales as one of the top 25 sales forces in the U.S. (1997-2000).(mariott.com 13th jan 09)

Marriott is and always has been an equal opportunities employer in all aspects of employment. The company is fully committed to providing a good and harmonious working environment that offers equal treatment and equal opportunities for all its associates, and where every associate is treated with appropriate respect and dignity.

It is the company’s policy that there should be no unlawful discrimination, harassment or victimisation of any associate, job applicant, customers, providers of service or member of public, whether in connection with recruitment, placement, training, benefits or promotion, either directly or indirectly, on grounds of race, nationality, ethnic origin, gender, marital or family status(Marriott handbook for employees 2009)

Marriott is committed to fair treatment of associates and to providing training and advancement opportunities to all. Marriott has an unshakeable conviction that there associates are the most important assets for them. Marriott always look forward to an environment which will always supports associates growth and development. Marriott is a reputation for employing caring, dependable associates who are ethical and trustworthy and is always keen to give a home like atmosphere and friendly workplace relationships. They always try to achieve a performance reward system that recognizes the important contributions of both hourly and management associates. There are two types of associates as explained above. Hourly associates are those employees who are paid on the basis of the hours they worked. In the other hand management associates are those who are paid a fixed salary on the basis of job content assigned to them.

Marriott has been selected for the research as they are having employees from all over the world. They employ people not on the basis of ethnicity, caste and religion but on the basis of experience. As they have employees from different parts of the world their needs will be different. They will be looking forward to different types of reward schemes which will suit to their needs and will satisfy them to stay with the organisation. Research has been conducted by taking Marriott as the company because they are facing a high risk of satisfying the needs of employees who are having different tastes regarding rewards which they are looking forward from the organisation. As stated earlier, Marriott has been recognized as one of the 100 companies to work for in America by Fortune magazine. This states that the employees are satisfied to an extent with the rewards which they are allotted by the organisation. As the reward management plays a role in the organisation it will be worth doing a research on the company who cares and gives equal opportunities to each and every employee in the organisation.

1.3 Current postion

1.3.1Current Policy

At present Marriott do not have an existing policy for reward system to their employees. However, their ‘unofficial’ approach can be viewed below. But they are considering reward management on the basis of “Spirit to serve”. It is based on the service which the associate delivers to the customer to keep the good will of the firm. The manager will nominate the name of the associate to the Human Res department according to their service. Associates name will be displayed in the notice board and sometimes this is valued more than money as an individual and as an employee.

1.3.2 Current Issues

a) There is no documentation for reward management policy.

b) There are currently no KPIs (key performance indicators) for monitoring and rewarding for employee’s performance activities.

c) Human resource policy document is rarely provided to employees or it’s not updated.

d) Literature tends to be piecemeal – Employee guidelines are a separate document to the job without any details on employee recognition/reward.

e) Employee recognition is applied inconsistently.

f) Difficult to assess the employee performance and it’s questionable.

g) Employee satisfaction stands at very low rate.

1.4 Expected Results

Results are expected by looking through the issues regarding the current policies and try to make changes in order to get it done properly to satisfy the employees. Enhancements are required for the policies for the well being of the relationship between the employees and the employer. After this research it should be helpful for the company to implement activities and to sort out the responsibilities to the concerned parties. Reward management should be monitored and evaluated regularly .Employer should go to the next level to satisfy the reward and needs of the employees to get them done with the job allotted.

1.5 Objectives

The objective of this research is to recommend improvements to Marriott’s Human Resource policy. Ultimately, the policy will aim to:

a) Reduce the dissatisfaction of the employees on promotion criterion, on appraisal system and on salary, bonus and other fringe benefits.

b) Improve the work performance and productivity

c) Reduce the level of occupational stress that arises from feeling of inequality on reward.

d) Describe HRM, IHRM and its importance and various HRM strategies and its importance in the current scenario.

e) Identify and analyse various factors that drive employees to dissatisfaction

f) Analyse various factors that motivates the employees to stay with the organisation.

g) Reduce the perception gap on reward management system and develop a culture of high performance.

In order to carry out the above objectives it is necessary to analyse:-

>What are the human needs?

>What are the organisation various approaches towards employee needs and satisfaction

1.6 Scope

The project will cover the following

a) Review of all associated literature – reward management in service and related industries.

b) Review of the front-end activities to understand the extent of the employees’ work related problems and other dissatisfaction if any.

c) Review of current HR policy promises and approach to recognising good work of employees

d) Establish links with enhanced HR strategy

The project applies to

All UK domestic and international employees working in Marriott

Both emergency and normal working conditions in and out of the working hours. Establish synergies with employee Performance and HR Policy.

Out of scope

Developing processes or process mapping.

Service delivery project to amalgamate employee and their locations / roles (Including transfers).

1.7 Overview

This Report analyzed trends of reward management, and its influence in multi national companies in UK. It analyzed various approaches that the industry has taken to reward employees, primarily through literature reviews, and also through the analysis of questionnaire done with the employees from Marriott in UK .This dissertation also produced recommendations for the effective management of reward process for the improved business case.

Chapter 1: This is the introductory chapter that explains the Significance of the chosen field, Aims and Objectives, Rationale, The reason for selection of multi national companies especially Marriott , and end with the Overview of the Project Report.

Chapter 2: This chapter proceeds with a literature review about various HRM strategies and approaches taken for the reward scheme , and to maintain the needs of the employees in the organisation for the improved product quality and services etc.

Chapter 3: This chapter illustrates the characteristics of Marriott, its business nature, global exposure and the various issues that the industry is currently facing in case of reward management

Chapter 4: This chapter explains various research methodologies that are used for

collecting data and information to carry out various analyses that are required to complete the research and documentation.

Chapter 5: This chapter analyses various reasons in order to maintain a good reward management. This is carried out through literature analysis and through data

analysis of the Survey conducted on various employees from the Marriott industry in

UK. This chapter ends with the findings from the analysis with critical evaluations.

Chapter 6: This chapter explains evaluated recommendations for the findings to the

reward management of employees, as a management strategy for improving the brand standards.

Chapter 7: this chapter gives conclusion about the future development in the industry if the reward management schemes have been allocated properly, which may provide a solution for the future possible issues.

Literature Review

The basic mantra for the success of any business organization is the appropriate allocation and usage of resources. The most important resources comprise of four M’s – man, material, money and machine. The dissertation under consideration deals with the first ‘M’ that is the manpower or the employees of an organization. They are the backbone as they put every plan into action which is inevitable for the success of a company. So their importance in business cannot be ruled out and they form the backbone of every organization because they determine the success and failure rates.

Since the most important set of public for an organization is its workforce which forms the key ingredient of its success, it is a necessary fact that the employees must be kept happy and well bonded. In today’s competitive labour market, irrespective of the size of the organization it has become a major concern to attract and retain employees. One of the important reasons underlying the high turnover is low job satisfaction, appreciation and non competitive benefits package. Corporate should keep one point in mind that there is no lack of opportunities for a talented person. So if he/she is not satisfied means they will switch over to some other firm which provides them with more suitable job. So in order to retain the employees and make them happy, there are so many ways like appreciation, recognition, incentives and awards .In addition to that several motivational tools should be implemented from time to time to keep the employee’s morale high.

These promotional items make for a smart tool because they serve as a token of gratitude and also show that you care. It is a great way of thanking the employees for their services .Moreover they are also expecting some sort of recognition from the company and promotional items help to do just that. Making the employees happy as well as a feel that they are cared is very important if the organization wants them to exhibit performance in a desired manner. Promotional items also give a sense of recognition to the employees. Thus it helps in the strong bonding between employees and the employer which ultimately leads to the smooth functioning and a pleasant work environment which is a must for an organization aiming to reach at the top.

In the 1920’s, the view on a person’s role in the industrial working world started to change, the human was beginning to be seen as a subject with potential (Kressler, 2003). As described by Wilson” Technology can be replicated, capital can be acquired, and distribution channels can be created through new alliances, but the actions of people (what they do or fail to do) have become the critical factor in achieving enduring success” (Wilson, 2002, p.15).

Today’s competitive world demands the firm to invest in people and skills rather than spending huge capital on physical assets, then only they can achieve competitive advantage .Thus it’s no surprise that a reward strategy can help the organizations to attract and retain the talented ones and to motivate them to led the company to its desired goal . Companies in the service sectors require skilled and committed workforce to exhibit desired performance and also provide good services in a timely manner to their targeted consumers in various countries across the world .Commitment towards job and in return job satisfaction are unavoidable for the successful growth of the companies across the globe. All these facts interested the researcher to select this topic for research to analyze the reasons for the dissatisfaction of job and various factors which helps in motivating the employees of different sectors especially service sector.

Kressler, H.W. (2003). Motivate and Reward – Performance appraisal and incentive systems for business success. (S. Pearce, Trans). NY: Palgrave Macmillan. (Original work published 1988.)

Wilson, T. B. (2002). Innovative Reward Systems for the Changing Workplace (2nd Ed.). Blacklick,OH, USA: McGraw Hill Companies. Retrieved 20071108,from http://site.ebrary.com.bibl.proxy.hj.se/lib/jonhh/Top?layout=document&id=10153055&?nosr=1

2.1 Employee

An employee can be defined as an individual who was hired by an employer to do a specific job(web.01). He has to do a specific job efficiently within a functional area or department to accomplish the goals of the firm. In most of the organizations a performance development planning process is undergone which will define the specific task of the employee as well as their expected performance. Employees trade their knowledge, skill and experience in exchange for compensation from the firm. If they are not satisfied with the compensation means the propensity to switch the company will be high, this will result in high turnover. So it’s high time to give importance to the rewards.

Employees, considered as human resources of the organization are used for the benefit of the organizations, employees and the society. (Aswathappa, 2008). In order to drive the flow of business in the right direction for better results they have to be valued, respected, encouraged and appreciated .These can be done with the help of rewards. In a good working environment with efficient working methods and equipments employees will exhibit a better work performance and in addition to that natural motivation to do a job for an appropriate reward will surely pave the way for improved productivity and high profitability.

For service sector employees are the most important factor, so implementation of new reward strategies and techniques are unavoidable for high quality performance of the employees, also to reduce the high turnover rate.

2.1.1 Impact of Changes on Employees

Change is an inevitable part of life especially in the fast changing world. Today’s commercial climate is compelling companies to implement changes in order to survive and grow in the global market. Changes always uproot a person and alter his lifestyle. The organizations adopt changes in order to meet the current standards; its employees also have to undergo change and should accept the new circumstances. Due to the technological, social and economic changes employees face a lot of insecurity and it’s the human nature to resist those changes without knowing about its real benefits.

It’s the duty of the management to handle this delicate situation in a tactful manner. One of the effective ways is to motivate and encourage the employees to put their best effort under the changing circumstances so that the net result will be high profitability and ultimate success of the business. By creating a good working environment and high morale, employees won’t be negatively affected by the new changes.

In order to cope up with the commercial changes companies need to be competitive and should attract employees to the job as well as should retain the employees. Employee compensation and benefit packages are the backing up factors for many potential employees who may face discomfort in their work environment due to the social, economical and technical changes without financially jeopardizing the success of the business.

Today it’s a necessary fact that irrespective of the changes which companies are undergoing they should keep their employees motivated by providing them with rewards and recognition. So by communicating the change to the employees, by making them clearly understand about its impact on organization and its benefits, the company can encourage them to do the work in an efficient manner and in exchange employees will get the rewards for their expected performance.

2.1.2 Employee Management & Engagement

Employee management is the key to effective performance management and employee engagement. Employee engagement is the psychological commitment of employees towards their job.

As said by Charles Kettering “There is a great difference between knowing and understanding”. It holds true in the case of business and employees. Know your employees and make them understand about the goals to be accomplished. Understanding in business means the proper management of the employees and providing them with what they expect in return for their commitment and efficient work. Compensation can take the form of rewards, recognition, and reasonable benefits package.

The first and foremost need for the employee management is the right employee for the right job.

The keynote tip which helps to exercise a proper employee management are Structure establishment, which means that there should be a well defined structure for bringing out the desires performance from the employees such as setting of deadlines for a specific task etc. Another one is the value for employees. An organization’s greatest asset are its employees so they should be motivated as well as their skills, knowledge and effort should be valued. Company should treat employees with respect by providing a positive work environment to the employees which will definitely boost their performance and to encourage them to meet the goals in an efficient manner. Listen to the employees and appreciate them for the effort they put to meet the goals and provide them ways to improve their potential, thereby creating belief that the company is taking care of them.

If the organization wants to capture great heights, all it need is an engaged workforce. It is connected to three forces in an organization – attrition, productivity and profitability. In order to reduce the attrition rate organizations should take care of the employees by incrementing their salaries, providing necessary incentives and bonus. Engaged workforce are always aware about the degree of expectation of work by the organization which yields high productivity. Thus they will result in an increase in the profitability of a concern which is the relative measure of success of a business.

2.2 Human Resource Management

The overall management process represent five basic functions for the managers to perform: planning, organizing, staffing, leading and controlling. This research focuses on one of those functions – the staffing which is the personnel management or human resource management (HRM) function. Human Resource Management is the process of acquiring, training, appraising and compensating employees and of attending to their labour relations, health and safety, and fairness concerns (Dessler, 2008pg 2).

Heathfield, (2008) defined “Human Resource Management (HRM) as the function within an organization that focuses on recruitment of, management of, and providing direction for the people who work in the organization”. This can be further explained as “Human Resource Management is the organizational function that deals with issues related to people such as compensation, hiring, performance management, organization development, safety, wellness, benefits, employee motivation, communication, administration, and training”(Heathfield, 2008).

HRM is vital to the organization. It is the function which focuses its direction towards the management of people working in an organization. Dessler and Chiat (2009) states that, ‘Without HRM, organizations may find themselves in different kinds of unwanted situations, such as hiring the wrong people, getting fined by government ministries for unsafe practices, finding out that people are not giving their best, or even over/under- paying their employees.’
The most valued asset of an organization is its employees because improved quality and productivity can be achieved through trained, motivated and committed employees. The function of HRM is nothing but to train, motivate and provide the employees with opportunities to be more productive and effective. Since each and every objective of business is achieved through its effective workforce, the needs of the employees should be satisfied.

2.2.1 HRM Models

HR systems and the organization structure should be managed in a way that is congruent with organizational strategy (hence the name ‘matching model’) (Armstrong, 2006). They further explained that there is a human resource cycle, which consists of four generic processes or functions that are performed in all organizations (Armstrong, 2006 pg 10).

1. Selection – matching available human resources to jobs.

2. Appraisal – performance management

3. Rewards – the reward system is one of the most under-utilized and mishandled managerial tools for driving organizational performance; it must reward short as well as long-term achievements, bearing in mind that ‘business must perform in the present to succeed in the future.

4. Development – developing high quality employees.

2.2.2 Nature and Scope

The role of HRM has grown broader and more strategic over time. In the earliest firms “personnel” first took over hiring and firing from the supervisors, ran the payroll department, and administered benefit plans (Dessler, 2008pg 12). As technology in areas like testing and interviewing began to emerge, the personnel department began to play an expanded role in employee selection, training and promotion. Today globalization, technological and nature of work trends mean that human resource managers have taken on several new responsibilities (Dessler, 2008pg 12). Human resource management involves all management decisions and action that affect the nature of the relationship between the organization and its employees-its human resources (Armstrong, 2006).

Human Resource Management is pervasive in nature as it is present in all enterprises. Its focus is on results rather than on rules. HRM helps employees to develop their potential fully.HRM try to help employees develop their potential fully and to encourages employees to give their best to the organization. It is all about people at work, both as individuals and groups. It tries to put people on assigned jobs in order to produce good results. It helps an organization meet its goals in the future by providing for competent and well-motivated employees. It tries to build and maintain cordial relations between people working at various levels in the organization. It is a multidisciplinary activity, utilizing knowledge and inputs drawn from, for example psychology and economics.

The Human Resource Management activities extend from selection to layoff of an employee in an organization. This includes the fixation of remuneration, training, motivation and induction of employees. Thus it helps to develop other industrial relations for employees to acquire more skills and competencies (Aswathappa, 2008).The functional diagram of HRM is given in 2.2 which clearly defines the interrelation between various functions which enable the organization to achieve its objectives by providing guidance and support on all matters relating to its employees.

The scope of HRM can be limited to three aspects:

1. Personnel which mainly deals with the selection, recruitment, manpower planning, placement, promotion, training, development, remuneration, incentives, productivity, layoff and retrenchment. (web 02)

2. Welfare which is concerned with working conditions and amenities such as crèches, canteens, rest and lunch rooms, housing, transport, medical assistance, education, health and safety, recreation facilities. (web 02)

3. Industrial aspect that covers union-management relations, joint consultation, collective bargaining, grievance and disciplinary procedures, settlement of disputes, etc. (web 02)

Web 02- http://expertscolumn.com/content/human-resource-management-nature-scope-objectives-and-function

2.2.2 Objectives of HRM

The objectives of HRM are to help the organization to reach its goals, to ensure effective utilization and maximum development of human resources, to ensure respect for human being, to identify and satisfy the needs of individual, to ensure reconciliation of individual goals with those of the organization, to achieve and maintain high morale among employees, to provide the organization with well-trained and well-motivated employees, to increase the employee’s job satisfaction and self-actualization to the fullest, to develop and maintain a quality work life, to be ethically and socially responsive to the needs of society, to develop overall personality of each employee in its multidimensional aspect, to enhance employee’s capabilities to perform the present job, to equip the employees with precision and clarity in transaction of business and to inculcate the sense of team spirit, team work and inter-team collaboration.

The above mentioned aims can be summarized as “the overall aim of human resource management is to ensure that the organization is able to achieve success through people” (Armstrong, 2006 pg8)

2.2.3 HRM Functions

In order to achieve the above objectives, Human Resource Management undertakes some functions; some of them are Human resource or manpower planning, recruitment, selection and placement of personnel, training and development of employees, appraisal of performa


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