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This report will critically examine reward system procedures at a Center Parcs complex based within the commercial sector of the leisure and sport industry. Cummings and Worley, (2009, P: 344) suggest that "A reward system is an important part of an organisations design and must be aligned with the strategy, structure, employee involvement and work". Employee rewards systems therefore can easily be misinterpreted or underused (by not expressing gratitude for individuals who have excelled in performance for example) which will in turn cause the company problems with their staff. Armstrong (1999) believes getting these wrong can have negative effects on the motivation, morale and commitment of employees and impact the human resource management (HRM) strategy of the organisation. Center Parcs as a company however are passionate about their employee benefits; this can be expressed by their holiday discounts for staff, pensions and individual recognition (these employee benefits are going to be further analysed later in the paper). Center Parcs believe these incentives are what make the company an effective organisation which individuals will enjoy working for. Personally experiencing a summer work placement in Center Parcs 2010, it was evident that these procedures were present in the every day working environment, which makes an interesting case to evaluate.
Within this paper the reward systems of Center Parcs are going to be critically analysed; firstly by explaining the current reward systems in place at the company, and discussing negative impacts which can occur in the work place because of certain rewards. The paper then goes on to discuss extrinsic rewards, concluding that base pay can not consist as a reward due to its compulsory nature in living in today's society.
2.0 Reward Systems
A reward system, as mentioned previously, is about giving employees different incentives to work, therefore providing appropriate levels of reward in accordance with an employee's contribution or level of seniority within the organisation (Armstrong, 1993; Chelladurai, 1999). Within the Center Parcs strategies of employment, their reward system seems to be very attractive to perspective employees showing great gratitude and benefits for the companies workers through several employee benefits. According to Armstrong (2002, p: 418), Employee benefits are "those parts of the total reward package provided in addition to cash pay"; for employees of center parcs these come in many forms. Examples (See Appendix 1) include;
discounts on holidays and up to 50% off on health and beauty treatments within the facilities for staff
privileges for long term employment such as the 'shared success scheme' which allows an employee to receive extra financial rewards after 18months of employment
privileges for management such as separate management bonus schemes for senior management
money incentives such as 30 days holiday pay, group pension plans, life insurance cover, company sick pay and financial rewards for good ideas. This can be shown in Center Parcs initiative which allows employees to win £1000 for an idea that improves life for the staff or customers ( See Appendix 2)
Feeling valued within a work place has a prominent stance within the reward system; center parcs fulfil this by distributing employee of the year titles and star performances as well as giving recognition for an individual going that extra mile (Center Parcs, 2010). These reward systems are all put in place to increase the commitment to the company employees feel (Armstrong 1999). Without these in place, people would not go to, join or perform in a manner consistent with the strategies or mission of the organisation (Wilson, 2003).
As well as reward systems being beneficial to a company there have been instances however where situations have arose because they have been used incorrectly or inconsistently which has resulted in conflict within the organisation. Companies can often direct their reward systems at non-managerial staff; this can cause conflict and tension within the employee circle, even though Center Parcs doesn't fall within this trap and does acknowledge senior staff (See Appendix 3). Companies can also over play the competiveness between employees through employee of the week and money incentives, this can encourage employees to act less like a team and more selfishly which in turn may ruin the customer's experience. It has been found in research that approximately a third of work colleagues are viewed as being competitive, with most workers viewing this as a negative thing (Berry, 2007), this shows that even though competitiveness (which is pushed for in reward systems) may be a healthy attitude to have in the work place, it can also be seen negatively if used excessively.
2.1 Extrinsic Reward
Money is seen to be one of the prominent rewards in which employees like to receive; Latham and Locke (1979 pp: 68 - 80) state that "Money is obviously the primary incentive, since without it few if any employees would come to work." The obvious extrinsic reward employees receive from the organisation is their base pay. This is the fixed salary that employees earn at the company. However this can be seen as compensation rather than reward as the staff has no choice but to work for a living and need some sort of financial remuneration for giving up their time (Armstrong, 1999). In the company, different levels of pay are rewarded according to the individual and their skills. Thierry's (1998) 'Relative deprivation model of pay satisfaction' states that pay satisfaction falls when there is; a discrepancy between desired and received pay or a low future expectation of more pay. Within Center Parcs, employees could feel aggrieved that others are earning more money for equal effort, as seen in the selection of winner for the unsung heroes awards scheme referred to in appendices. A common way of rewarding higher performance is through performance related pay or PRP (Fisher, 2000). This traditionally covers managerial staff such as management at Center Parcs that can benefit from bonus schemes offered when achieving company financial targets or personal objectives, as shown in appendix 3. Internally, the management could offer performance related pay in the form of salary increases each year, although it can also be seen as loyalty pay. With this in mind, the hope is that it will motivate employees to behave in a manner which will help in achieving company objectives and overall organisational effectiveness (Hume, 1995). These can be determined by appraisal systems based on clear, measurable targets agreed by both employer and employee.
However Martens (1987) suggests that the more rewards a person gets the less need he or she has for the same type of reward. For example, if certain individuals hit their goals every month, they are more likely to stop trying as hard due to boredom (McDonough 2010); Center Parcs over comes this issue however by implementing their 'bright ideas' (See Appendix 4) scheme which allows employees to continuously develop ideas to make a better company for money incentives. As well as this, Center Parcs stated on their website (See Appendix 5) that "we recently launched our NVQ academy and over 150 employees are currently working towards the qualification. We also offer a 'manager in training' programme to encourage individuals to progress within the business" (Center Parcs 2010). In turn for these initiatives; Center Parcs employees have goals they want to achieve so therefore prevent the risk of boredom within the company.
2.2 Intrinsic Reward
Intrinsic rewards describe any reward which gives individuals internal satisfaction. Daft (2007, p: 226) suggests intrinsic reward is the internal satisfaction a person receives in the process of performing a particular action. Non-financial rewards apparent in organisations include recognition, praise, achievement, responsibility, personal growth (Armstrong, 1996). Examples from management in the company come from giving one casual employee favourable mentions and praise in regards to the 'community unsung heroes awards scheme' (See Appendix 6). The award is given to those who are seen to be committed to helping others in their spare time in charity or community work. Winners are selected by Center Parcs' employee council and are announced at an awards lunch. On top of this the employee receives an extrinsic benefit by receiving two weeks paid leave to spend how they please (Center Parcs, 2010).
There have been criticisms to this view however; Forsyth (2010) proposes that when an employee is recognised more than another by management then it can be divisive within the organisation. Staw (2006) describes this as negative inequity whereby the member of staff, as well as others, may feel they are receiving too little for what they are giving which may reduce work effort and job satisfaction. Management have to be careful here and would need to put into action other rewards for the additional staff so they feel just as important and motivated.
Motivation is seen to be "internal and external factors that stimulate desire and energy in people to be continually interested in and committed to a job" (Business Dictionary 2010). Because of this, decrease in motivation within a company can cause damaging effects. One example of a damaging effect could be the issue of pay discrepancies. A way to over come this would be to have pay incentive rewards; this way effort would be noted in the amount of sales, this will later be discussed in the recommendation section. Equity theory reiterates this by proposing that if an employee feels underpaid then it will result in the employee feeling hostile towards the organization and perhaps their co-workers, which may result in the employee not performing well at work anymore (Spector, 2008).
2.4 Risks with reward
Reward is often thought of and can be a positive means of incentive for an employee. However there are several more risks of reward if they are not implemented in the right way by management. Poor communication of reward can lead to poor organisational performance when strategies are ineffectively implemented. Center Parcs value high quality staff and develop talented and motivated employees through implementing training, development and succession activity (Center Parcs, 2010). A key performance indicator in the Center Parcs (2009) annual review was employee retention See Appendix 7which is achieved by the earlier mentioned star performer programmes; loyalty benefits packages and discounts, resulting in a committed workforce with a low industry staff turnover (Center Parcs, 2010). This helps in achieving the company's mission of 'Every day, the perfect break naturally' by creating the perfect break for guests through skilled, dedicated staff (Center Parcs, 2010). Another risk is Poor employee understanding of reward results in confusion as to why the reward is being offered, resulting in staff not knowing how they have achieved a certain reward and what to do in future practice (Workspan, 2010). Center Parcs communicate to all, at all times by listening to their staff and do this by being open and honest with each other. The company also needs to ensure they adapt reward policies and practices to the changing business environment. The recession calls for managers to really think about how to use the resources available to best reward staff and benefit the organisation as well as guests experiences. This could be implemented by using intrinsic rewards more often as Virgin Active do by recruiting and employing within the organisation and offering staff great motivations to better personal growth in the company (See appendix 8).
This report has shown how reward systems can visibly be of benefit to the organisation and individual, nevertheless they can also be detrimental at times if applied incorrectly.
Ways in which the company can implement new strategies and processes make reward systems more effective