The Challenges Of Good Talent Management Commerce Essay

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The talent management framework is an important phase of an organisation's people management strategy.  Unless it is well aligned and managed, an organisation may not be able to manage and retain its talent.

Talent management is defined as the approach which an organisation took to attract, develop and retain people with the right skills and abilities to meet the present and future organisational needs (Sundararajan. S, 2009).

In the situation of Standard Chartered Bank, Standard Chartered Bank had revamped its Talent Management Programme in order to achieve its leadership capacity and to overcome manpower shortage.

To overcome manpower shortage, Standard Chartered Bank retained its staff by developing on its staff's talent.

Like Standard Chartered Bank, the bank had adopted its Talent Development Programme which is supported by its 4 principles:

Attracting and retaining staff

Staff engagement


Talent management and development

Attracting and retaining staff

In the merciless environment, attracting and retaining the best talented staff is vital to the bank's success. Due to the on-going war for talent, Standard Chartered Bank had to leverage its staff's local knowledge as an alternative solution to retain its staff and to save recruitment cost. With hundreds of different nationalities, Standard Chartered Bank had to introduce global best practices and tools such as the performance appraisal so as to improve on its organisational performance (Standard Chartered Bank, 2009a).

As mentioned in the case, one of the approaches that Standard Chartered Bank used to retain its staff is the global induction programme, Right Start. The 'Right Start' programme covers every new employee who joins the organisation. The purpose of introducing such programme is to address the issue of losing new employees within 12 months of joining the organisation. For example, Standard Chartered Bank conducted the 'Right Start' programme to let new employees get a feel about working in the bank.

Another approach that Standard Chartered Bank used is employee referral programme, whereby the bank allows internal employees to bring in new recruits to work for the bank.

Alternatively, the other approach that can help the bank to widen its pool of talent is to source for fresh graduates to work for the bank. This is because it is cheaper to hire a fresh graduate and train him or her to the best of their abilities rather than to recruit external specialists which can be costly.

Staff Engagement

With regards to building employee engagement, building employee engagement remains one of the bank's main priorities, in particular, during challenging and uncertain times in the banking industry (Standard Chartered Bank, 2009b).

Based on the Standard Chartered Bank's point of view, staff engagement will only work when there are good people managers. This is because Standard Chartered Bank believed that staff engagement is closely related to having good people managers.

In Standard Chartered Bank, the management focus on their brand promise, 'Leading by example to be the right partner' and their 5 core values namely, creativity, responsive, international, courageous and trustworthy in order to increase staff engagement and to align with their business objective which is to be the best international bank (Standard Chartered Bank 2009c).

At this juncture, the case highlights that Standard Chartered Bank had attempted on a number of methods. For example, one of the methods employed was by identifying senior staff whose leadership skills need improvement. According to the management of Standard Chartered Bank, a small percentage increase of 5% in staff performance will influence the bank's operation significantly.

The benefits of engaging staff have helped Standard Chartered Bank in reducing its staff turnover, improved staff morale, improved in staff retention, improved coordination, better leadership, improved communication and motivation. In addition, highly engaged staff are more productive in their roles, with a clear link to increased business performance (Standard Chartered Bank 2008).


The Standard Chartered Bank's approach towards rewarding its staff is closely related to performance. With reference to the case study, the bank uses a six-monthly performance appraisal such as the 180 degree and the 360 degree feedback. The performance appraisal is part of talent development. In Standard Chartered Bank, the performance appraisal is used to classify staff into different categories ranging from high achievers to under achievers as explained in Appendix 1.

Talent Management and Development

According to the case, the Standard Chartered Bank's strength is based on the belief on one of the basis of its approach towards talent management. At Standard Chartered Bank, the employees are empowered to do what they can do best, by identifying and developing their talent into strengths and creating a conducive working environment. For example, the bank used the online self-assessment system to assess on its individual staff's strengths. In addition, the online self assessment system is supported by the well-trained specialists who implement action plans to enhance their business performance.

Strategic Human Resource Management

Strategic Human Resource Management (SHRM) is defined as the integration of human resource activities with strategic goals and objectives in order to improve business performance and develop organisational culture that foster innovation, flexibility and competitive advantage (CIPD 2009).

In organisational context, SHRM simply means accepting and involving the human resource functions as a strategic partner in the formulation and implementation of the organisation's strategies through human resource activities such as recruiting, selecting, training and rewarding personnel.

As shown in Table 1.0 below, is the explanation on how the bank's talent management activities display features of SHRM.

Talent Management 4 Principles

Features of SHRM

Attracting and Retaining Staff

Recruitment and Selection

Staff Engagement

Succession Career Planning



Talent Management and Development

Training and Development

Table 1.0: 4 Principles of Talent Management and the Features of SHRM

Source: (Standard Chartered Bank. Annual Report and Accounts 2007. Business Review: People. 2008)

By looking at the table, in my viewpoint, to support the Standard Chartered Bank's business strategies, its human resource personnels need to integrate its staff's talent with its business objectives in order to improve on its business performance.


Talent management is the approach which an organisation took to attract, develop and retain people with the right skills and abilities to meet the present and future organisational needs.

Talent management plays an important role in ensuring the organisation business mission is aligned with its organisational objectives. Talent management can be used as a mechanism in SHRM activities to help Standard Chartered Bank to achieve its goals and objectives. Due to globalisation, technological advancement, and the changing requirements in skills, organisations like the Standard Chartered Bank need to have talented employees to run the organisation. This is because humans are the assets in providing quality services.

Question 1.2

2.0) Recent Banking Crisis

2.1) Standard Chartered Bank

The term 'crisis' simply means problems faced by the organisation. Crisis can be applied to many situations the organisation is facing. For example, based on comparison studies, one of the largest financial services organisations in New York, Citigroup is facing skills redundancy crisis. Due to economic downturn, Citigroup needs to retrench the affected staff (9000 employees) in order to save the organisation from such adverse situation as attached in appendix 2 (Kiflimusa, 2008).

Besides, apart from the skills redundancy crisis that Citigroup is facing, Citigroup is also faced with some other problems such as an increase in interest rates and mortgage crisis (Kiflimusa, 2008). As a result, Citigroup has lost its position in the financial market to its rival, Bank of America due to various reasons. One of the reasons is they provide soft loans to customers without requesting for collaterals from the customers, and secondly, Citigroup had also invested huge amount money on risk projects that were meant to fail, thereby causing the bank being unable to service the debts.

However, in Standard Chartered Bank's situation, Standard Chartered Bank is facing a different problem whereby the bank is facing manpower shortage. As Standard Chartered Bank is fighting in the 'war for talent', to my suggestion, for Standard Chartered Bank to avoid being in the situation like the Citigroup, it is recommended that the bank use its internal staff to help the bank to find talented employees and, secondly, by retaining its talented employees by promoting them to take up a higher responsibility job, and third, by providing internal training to leverage employees' knowledge on their job to resolve skills redundancy concerns.

In addition, based on the information gathered from the comparative studies, Standard Chartered Bank should not follow the footsteps of Citigroup such as providing soft loans to business without requesting for collaterals from the business and investing huge of money on projects without studying the financial condition. This simply means that Standard Chartered Bank should have a good forecast of the future financial situation in the market.

2.2) Talent Management

Talent management is indeed relevant to the common crisis that most banks are facingcurrently such as skills redundancy, otherwise manpower shortages. Today, talent crisis is major problem for most banks because the available pool of talent that the bank has does not match the organisation's requirements. For example, in the case of Citigroup, Citigroup retrenched its staff because their skills did not match the organisation's requirements.

Therefore, to retain staff and to cope with skills redundancy, organisations like the Citigroup needs to revise on its talent management programme. Although training is important, talent management is also important. The bank should continue to engage its staff actively to identify gaps for training so that the bank doesn't lose its talented staff to its competitors. Therefore in such situation, motivation and regular interactive communication with staff plays an important role in the organisation.


Motivation is important to a large extent that employees are the organisation's most valuable asset. Without them, the organisation may not be able to sustain its competitive edge over their competitors because the organisation did not have the right people to perform the job. However, managing employees can be very challenging at times.

Therefore, to motivate employees, the manager should make the employees feel that they are valued by the organisation and create a learning environment in the organisation (Association of Business Executive, n.d) by engaging their staff actively.

For example, as mentioned in the case, Standard Chartered Bank believed that to motivate employees, employees should be made to feel that their contributions are valued by the organisation.


Next, effective communication is also another important part in the organisation, one who listens, gives advice and provides the necessary guidance to help employees in performing their job.

In Standard Chartered Bank, effective coaching and mentoring helps to build a good rapport between the employer and the employee. For example, as a mentee, mentoring provides a safe environment to explore personal, work and career issues, while the mentor provides his or her employees the confidence in managing a difficult decision. Furthermore, effective coaching and mentoring provides managers a great opportunity to improve on their leadership skills by developing others to become future leaders.

In the case of Standard Chartered Bank, effective coaching and mentoring has a huge impact on the organisation's performance whereby it contributes significantly to the attraction and retention of talents. In addition, effective coaching and mentoring can also contribute to enhancing the organisation's reputation as a caring, people-oriented employer (Muhammad 2008).

However, it is unfortunate that the crisis has every opportunity to dampen the employees' morale, de-motivate employees and reduce the employee's productivity (Business Center 2010). For example, evidence in the case has showed that financial institutions like the Standard Chartered Bank are facing an ongoing war for talent. This implies that the talents needed by the bank, or employees who possess such skills are scarce. Like many financial institutions, Standard Chartered Bank needs talented staff who can think strategically, in addition, being able to have a good forecast of the future financial situations, have a good grasp on change management, good interpersonal and excellent communication skills. To achieve these objectives, organisations should work as a team to weather these crisis and to retain its employee through rewards and recognition.

Finally, unless the supply of talent is able to meet the demand for talent, the ongoing war for talent is here to stay. Therefore, organisations need to devote more attention on Talent Management as a driver for longer term change. Evidence is shown in the bank's effort to stay ahead of its competitors when the economy recovers.

Question 1.3

3.0) Importance in Measuring the Impact of SHRM

SHRM has a great impact on organisational objectives and the ability to realise the objectives. The primary key to review the function of the human resource is to ensure that the investment in employees and training are reasonable in business context. It is based on the approach best practice is adhered (CBS Interactive 2010).

In the new paradigm, HR responsibilities are not carried out solely by the human resource personnels but are also shared by the line managers within the organisation. Therefore, collaboration between the human resource department and the organisation is needed to fulfil the human resource responsibilities.

3.1) Evaluation of Talent Management Programme

In Standard Chartered Bank, their talent management programme is evaluated by using scientific figures to examine the data and by evaluating on the softer phases to human resource management to measure the impact of SHRM as follows:

By using scientific figures

Some of these hard information gathered by the bank:

Staff strength

Employee engagement


Performance management

Learning and development

These hard information gathered by the bank showed evidence which clearly indicated that their human resource activities are strategically aligned to the organisational goals with the SHRM goals.

By evaluating on the softer phases to human resource management.

From the Standard Chartered bank's approach towards talent management, the bank develop its staff according to their requirements and ambitions.

At Standard Chartered bank, there are opportunities for staff to be recognised through their performance appraisal and staff who perform well are rewarded. Staff are given the empowerment to make the decision as the bank develop its staff through staff engagement and continuous learning.

In addition, the bank has also adopted a Diversity & Inclusion programme to create an environment to make its staff to feel proud to work for the bank and introduced flexible working hours to help the bank save recruitment cost. This was evidenced by the bank being able to retain their employees and attract a wide pool of talents (Standard Chartered Bank, 2009d).

Most organisations are more particular on the return of investment and the return on asset to determine the success of the organisation. Today, the new key approach to improve on the return of investment of an organisation is to increase the return on talent. This new approach helps managers to determine if the payback gained from an investment in its employees is maximised. High return on talent refers productive workforce, smooth operations, continuous product improvements, and improved interactions among staff.

Therefore, organisations must constantly improve on their return on talent so as to gain an edge over their competitors. When there is an increase in the size of the talent pool, all other factors such as production and sales will increase gradually.

In conclusion, SHRM is an excellent key performance indicator. SHRM is one key performance indicator that is set to be evaluated and managed in a similar way as the financial issues.

(2435 words)

Section B

Question 3

4.0) Human Resource Development

As organisations streamline their business processes, employees became aware of the importance that they have to work in teams. This results in employees having to acquire new skills such as decision making, problem solving, and interpersonal skills. Due to this reason, HRD becomes vital if the organisation wants to sustain its competitive edge over their competitors.

Heathfield (2010) defined human resource development as the learning and development opportunities that facilitates in the accomplishment of business strategies and enhancement of organisational, team and individual effectiveness.

Heathfield (2010) stated that "the focus of all phases of Human Resource Development is on leveraging the most superior workforce so that the organisation and individual employees can achieve their business objectives by providing quality services to their customers."

In general, based on Heathfield (2010) analysis, the objective of the human resource function is mainly to achieve the objectives of the prospective organisation that follows to human resource planning, recruitment, selection, induction, training and development, performance appraisal, compensation, and collective bargaining. By looking at the human resource development context, the human resource function is viewed to be effective if only it is integrated with other organisational functions.

4.1) Benefits of Human Resource Development

Human resource development acts as a facilitator in strategies based on product innovation, quality and cost leadership, customized service, and skills. Besides, human resource development can provide effective SHRM approaches as the main determinant of business strategy (Phillips 1999). For example, organisations like the Singapore Airlines strongly believed that it is important to develop on their human resources so as to boost the confidence level in their employees in providing better service quality to the customers (Vlerick Leuven Gent Management School, 2007).

4.2) Role of Human Resource Development

Human resource development supports a wide range of business initiatives that are required in a competent labour force (Richard. T & Richard. S 1995). Examples of business initiatives include critical business issues, ranging from new marketing strategies to modernisation in production technology were based on among other factors, the ability of those employees in adapting to the new work systems.

Today, the success of an organisation greatly depends on the organisation's ability to utilise its employee's expertise to shape its business strategy. Therefore, to sustain an organisation's competitive edge, the development of its human resources becomes vital in meeting the organisation's present performance criteria.

In Singapore Airlines, the many roles of human resource development include helping the organisation to realise their business strategy, reviewing and addressing skills gaps, helping the organisation to sustain a competitive edge over their competitors in terms of service quality and creating a learning atmosphere.

According to Vlerick Leuven Gent Management School (2007), they stated that Singapore Airlines perceived human resource development not only as a supporting role but also a core function.

In support of Vlerick Leuven Gent Management School (2007) viewpoint, studies have indicated that for organisations like the Singapore Airlines, skills, attitude and knowledge of the staff play a vital role in determining the competitiveness and the attractiveness of the airline industry. Therefore, human capitals should be viewed as assets and resources in helping the organisation to achieve a competitive advantage. This is because it is only with quality human resources, issues could be resolved and organisational objectives can be achieved.

4.3) Importance of Human Resource Development

Due to rapid economic growth, technological advancement and social trends, development of humans became important in managing problems in the organisation. In my perspective, humans have the capability to synergise to become more productive. This is indeed a positive concept in the human resource management. Organisations are aware that in today's competitive environment, an investment in leveraging human's talent is necessary in order to bring in significant benefits in the long run.

According to the interviewee, Kalla (2008), he commented that "The progress of a country depends on its people who run the government. That is why human resource development is very important." Similarly, the progress of how an organisation performs greatly depends on how its people perform on their job. For instance, organisations like the airline industry such as the Singapore Airlines, the good reputation of the organisation greatly depends on how its staff perform to provide quality services so as to gain an edge over its competitors.

However, research had also highlighted that that the adoption of human resource development climate was far more important than the human resource development practice alone (Goliath Business News 2007). This implies that creating a human resource development learning environment is more important than adopting human resource development practices. Crego and Kazemek (1983) agreed with Kalla (2008) that both employee's and employer's job satisfaction surround the concept that human resource and an organisation's human resource management and development practices are the key factors that contribute to better productivity, higher growth and profit.

Therefore, based on the comments given by Kalla (2008), Crego and Kazemek (1983), in my opinion, employers and employees are indeed aware of the significance of human resources development. The management is aware that when employers and employees become more committed towards human resources development, the motivation for human resources development and motivation for working among employees can be heightened. Since there is an increase in the number of unemployed fresh graduates, development of human resource becomes more important in order to reduce manpower shortage and problems of skills redundancy.

4.4) Perception of HRD as a central feature of SHRM

In my opinion, human resource development is certainly an essential feature of strategic human resource management. This is because the main factors of human resource development are learning, development and education that help in achieving business strategies and improvement of organisational, team and individual performance.

Learning is a well designed process of staff development. The learning programmes are organised by the employer, in terms of the skills and knowledge that the employer deemed necessary for the employees should have to perform the job. As for development, development refers to activities that are related to developing of skills and abilities. While education looks at the wider perspectives of employee development in the working environment.

One of the main reasons why organisations need to develop their staff is to address the skills gaps of its staff. For example, Singapore Airlines engaged its staff to identify skills gaps. Secondly, human resource development is perceived as the catalyst to help Singapore Airlines to manage change. For example, at Singapore Airlines, each individual employee is made to feel valued for their contributions to the organisation and respected as a person for what the employee brings to the organisation. Singapore Airlines had invested heavily in developing their employees so as to help the organisation to gain a competitive advantage over other airline carriers and to meet the ever changing demands of the customers (Kaufman, n.d). For example, with continuous training, Singapore Airlines is able to retain its pool of talent and its reputation as the best world class airline. Finally, Singapore Airlines develop their employees for the purpose of career advancement to enhance retention and attraction (Kaufman, n.d).

In Singapore Airlines, besides acquiring and leveraging skills and knowledge of employees in order to spear ahead in service quality, Singapore Airlines felt that by developing on its employee's expertise, its helps the organisation to identify the types of training needed in order to boost its employee's productivity and response to changes because the success of the organisation greatly depends on the availability of a competitive labour force.

As shown in Figure 1.0 below is the diagram on the Shepherd's (1991) strategic approach to human resource development.


Principle 6: senior managers promote learning culture

Principle 7: VET/HRD align with culture


Principle 1: business impact of VET/HRD demonstrated


Principle 2: active involvement in diagnosis, planning and monitoring


Principle 4: Programmes and processes match learning objectives


Principle 3: VET/HRD have continuity with and mutually reinforced by other HRM policies


Principle 5: shared diagnosis of training needs and relevance of programme(s) chosen

Figure 1.0 Shepherd's Strategic Approach to HRD

Source: University of Sunderlands 2004, p.294

From this diagram, there is a clear indication that human resource development practices are related between the SHRM policies and the achievement of organisational objectives.

Like the Singapore Airlines, even during economic downturn, Singapore Airlines still invest on their training programmes (Kaufman, n.d). Singapore Airlines did not reduce its investment on traning because the organisation feels that if they were to cut back on their training programmes, employee's skills may become redundant. In fact, in such situation, by training its employees, Singapore Airlines can gain an edge over its competitors.

4.5) Factors influencing Human Resource Development

• Environment - In Singapore Airlines, human resource development's activities are shaped by the values placed upon training by the nation, employers and individuals. In this facet, it is necessary to address the deficiencies in each area in terms of the skills needed to outperform their competitors (University of Sunderlands 2004).

• Evaluation of learning and development - As there is a cost to incur in investing the learning and development programmes, unlike Singapore Airlines, many employers in the organisation view learning and development programmes as a reward or worst, a waste of time and money (University of Sunderlands 2004). Such employers will only send their employees for the necessary training when the organisation has excess profits. This should not be the case. Employers should understand that the key objective to implement learning and development programme is to identify key areas to measure so as to gauge if the training programme is feasible.

• Value of Human Resource Development - Employees need to be aware that they need to learn continuously if they want to gain an edge over their counterparts in order to stay competitive (University of Sunderlands 2004). For example, Singapore Airlines placed strong emphasis on training and development (Singapore Airlines 2010) on its staff in order to sustain their competitive edge over other airline carriers.

Based on the above factors that influence human resource development, in my perspective, human resource development has a partnership role with the top management in implementing changes. Human resource personnels must cooperate with the top management by focusing on the organisation's strategic plans and seek alternatives to leverage the development of employees in order to achieve the organisational objectives.

4.6) Conclusion

Both employers and employees knew the importance of developing on its human resources. Human resource development is said to be effective when the organisation is committed to develop on its human resources. However, the management often overlook the impact of their intellectual assets, particularly their people, and the values of human resource development.

To my suggestion, the organisation should also consider on their intellectual assets such as the employees. This is because when organisations develop their intellectual assets, it helps the organisation to raise the level of motivation for human resources development and motivation for working among employees. For example, Singapore Airlines is also awarded for being the top employer because they have the employee's welfare heart.

(1729 words)

Question 5

5.0) Reward Systems

Reward systems are not limited to just pay, bonuses and stock options. Rewards also include awards and other recognition, promotions, reassignment, non-monetary bonuses such as vacations, or a simple "Pat on the Back" for a job well done just like Carrefour. For example, since Carrefour's emphasis is on product differentiation strategy, the management had design their rewards systems in a way that the organisation encourages innovation in order to provide unique products or services.

Robert (2005) defined reward management as: "the process of developing and implementing strategies, policies and systems which help the organization to achieve its objectives by obtaining and keeping the people it needs, and by increasing their motivation and commitment."

5.1) Factors to Determine the Attractiveness of a Reward

To determine the attractiveness of a reward, Lawler (1985) added that: "there are at least two factors that determine the attractiveness of a reward; one is how much of the reward is being offered and the second is how much the individual values the type of reward that is being offered. She argues that the more the individual values the type of reward and the more of it is being offered, the greater the motivational potential."

Further to Lawler's argument, she also claimed that every individual has different preferences in terms of the rewards they desire and how the individual value the reward they received, while Khan (2010) concluded on Lawler's (1985) analysis on the factors in determining the attractiveness of the rewards that these observations need a diverse reward system.

Therefore, in summary, based on Robert's definition (2005) and Lawler's (1985) investigation, implementing an effective reward system is important as it heightens employee's motivation and improves on employee's productivity and ultimately, improved on organisational performance.

The components of a reward system entail monetary rewards or the extrinsic rewards such as basic and performance pay and employee benefits and non-monetary rewards or the intrinsic rewards such as recognition, promotion, praise, achievement responsibility and personal growth.

5.2) Intrinsic and Extrinsic Rewards

In any organisation, intrinsic and extrinsic rewards play an important role in retaining the best employees within the organisation.

Intrinsic rewards refer to intangible awards such as having a variety in job content, career advancement opportunities and recognition in the organisation. On the other hand, extrinsic rewards refer to tangible awards such as pay raise, bonuses and fringe benefits (Thomas 2002).

5.3) Pre-requisites for developing an effective reward system

Specific. The objective of achieving the reward should be clear and precise.

Measurable. The award should create return on investment to both the employees and the organisation.

Aspirational. The employee's or group's goals should be challenging and realistic.

Realistic. The programme should function based on its guidelines and objective.

Timely. The award should be provided in a way to make the employees feel they are appreciated by the organisation for their performance.

(Wilson B.T 1994)

In addition to the above, when organisations develop the rewards system, the rewards system should be tied to organisational objectives and employee's performance as shown in Figure 2.0 below.

Rewards Organisation Objectives Employee's Performance

Figure 2.0 Organisational Objectives aligned with Rewards and Employee's Performance.

For example, organisations like the Carrefour practised this approach where they linked their rewards systems with employee's performance and organisational objectives. In Carrefour, the management designed their rewards system in a way that their rewards system are clear, realistic, challenging, measurable, not excessively optimistic and timely. For example, Carrefour's mission is to satisfy each and every customer. Therefore, to achieve this, the management of Carrefour had to ensure that their rewards systems are attractive enough to motivate the employees to satisfy the needs of the customers.

To my suggestion, to develop an effective reward system, it is important that the reward programme must identify the company or group goals to be achieved and the behaviours or performance that will contribute to this. For example, if teamwork is the business objective, a bonus system rewarding individuals who works independently by themselves may not be the appropriate methodology. Similarly, if quality is the organisation's objective, the reward system implemented should not focus on rewarding the employees for the quantity of work done.

Rewards should be evaluated properly to ensure that the program is effective in terms of business objectives. Organisations need to ensure that performance has actually shown improvement before administering the reward. This implies that rewards should be aligned to organisation's business objectives.

In addition, organisations should also consider rewarding both individual and group achievements. This is important as it promotes both the individual and group cooperation and performance.

Finally, in order for a rewards programme to be successful, the objectives must be clearly specified for every employees. Rewards programme must be clearly communicated with the employees by conducting regular meetings or distributing memos to promote the program.

5.4) Types of Rewards

The type of rewards offered by an organisation varies. There are various types of rewards for both individual and team performance.

5.4.1) Individual-Based Reward System

Variable Pay

Variable pay or pay-for-performance, can be integrated to the performance of the organisation. Variable pay can be made up of bonus programs, stock options, and one-time awards. Some organisations prefer to compensate their employees less than competitors but rather attempt to motivate and reward employees by using the variable pay programme. For example, Hewlett Packard implemented variable pay system where the management pay their employees less than its competitors but emphasise on motivating employees.

Hurd commented that "if the individual employee performs well, then the individual employee could potentially make up the difference with their bonus. I can't promise you anything, but I tell you…there is a chance…if we get this right." (Hurd 2009)


Bonus programmes refers to rewards that usually reward individual achievement. Bonus programmes are very often used in sales organisations to encourage salespersons to generate additional business or higher profits. However, some organisations used bonus programmes to recognise group achievements. A good example of such organisation that uses this programme is Singapore Carrefour whereby, the Singapore Carrefour recognised group achievements due to the strong emphasis on working as a team (Carrefour Group, 2003)

To most organisations, bonuses are generally short-term motivators. Therefore, to avoid the perception of bonus programmes being seen as an entitlement, bonus programmes must be structured carefully to ensure they are rewarding achievements that exceeds an individual or group's basic functions.

Profit Sharing

Profit-sharing refers to the strategy of generating a pool of monies to be paid to employees by taking a fixed percentage of an organisation's profits (Encylopedia of Small Business 2010). One of the advantages towards profit sharing is that it can help the organisation to reduce its fixed costs.

The rationale behind profit-sharing is to reward employees for their contributions to an organisation's achieved profit objective. For example, to retain employees, organisations like the Singapore Carrefour also uses profit sharing scheme to reward its employees who stay with the organisation. Like bonuses, profit sharing can ultimately be perceived as an entitlement programme if the programme is not structured carefully.

Stock Options

Another alternative to profit sharing is the stock options. Recently, stock options have significantly become a popular technique in rewarding the middle management and other employees. Employee stock-option programmes entitle employees to purchase a specified amount of an organisation's shares at a fixed price for a specified period of time of approximately ten years (Encylopedia of Small Business 2010).

Like profit-sharing plans, stock options usually reward employees for being with the organisation for a long period of time. This means that as long as an employee has been with the organisation for a certain period of time, for instance, approximately four years, the employee is said to have been completely committed to the programme. At this juncture, the employee can purchase an allotted number of shares from the organisation at a fixed price. One benefits of the stock option scheme is that the employee can either retain it or sell it in the open market.

On the other hand, if the employee terminates his or her job from the organisation prior to being fully committed, the organisation can withdraw the stock option scheme at their discretion.

However, offering additional stock carries a risk for both the company and the employees. Therefore, organisations should consider carefully about offering additional stock as an incentive. This is because if the stock option's fixed price is higher than the market price of the stock, the employee's option will become worthless. In addition, when an employee takes up such option, the organisation is required to issue a new share of stock that can be traded openly. The organisation's market capitalization proliferates by the market price of the share, instead of the fixed price that the employee had paid for the stock. Therefore, based on the research from the Encylopedia of Small Business (2010), for organisations to stay ahead of this possibility, earnings must increase at a rate equal to the rate at which outstanding shares increase or the organisation may end up having to repurchase shares from the open market in order to reduce the number of outstanding shares.

5.4.2) Group-based Reward System

Group-based reward systems focus on the evaluation of team performance, with individual rewards obtained on the basis of this performance (Encylopedia of Small Business 2010). One of the setbacks for this system is while this system facilitates individual effort towards the organisation's business objective, employees who do not contribute as much in the organisation were also rewarded. However, one benefit of using the group-based reward system is that it recognises individual effort in addition to team effort. Besides, the group-based reward systems also provide supplementary incentive for employees.

5.5) Conclusion

Employers should place more focus on strengthening its rewards system to encourage desired behaviour. By strengthening its rewards system, it can inspire employees to perform the job. Most importantly, when designing the rewards systems, the organisation should ensure that its rewards systems are aligned to the organisation's strategies.

Finally, in my opinion, a well designed and managed reward programme can steer an organisation's development by optimistically strengthening its desired behaviours.

(1668 words)

Appendix 1

High Achievers

The Critical Resource

The Core Contributors

Under Achievers

Under Performers

Appendix 2


The Malaysia Career Blog

Citigroup Ready to Lay Off More Staff

November 16th, 2008


Citigroup, one of the largest financial services companies in the world, is bracing for another round of staff layoff as the company is struggling to get back to their feet from financial downturn.

The company last week was reported to have made the move in notifying more than 9,000 unfortunate employees who will be laid off as their jobs are being made redundant.

The staff were said to come from a number of different fields including investment banking, sales and trading, and prime brokerage.

This year, up to this month, more than 20,000 people working in various divisions of Citigroup have lost their job. The 9,000 odd numbers represent a cut of 2.6 percent of the overall size of Citigroup's manpower.

Apart from laying off people, rumour has it that the company is ready to renegotiate its agreement with the customers and should this happen, the likelihood is high that customers will see an increase in interest in their new terms of lending and loans.

The New York based Citigroup is comprised of more than 10 major divisions, but the most prominent one is arguably its retail banking operating under the Citibank name. For many years, Citibank was ranked as the largest and most profitable bank in the world until it was hit with the subprime mortgage crisis recently.

Earlier in 2008, Citibank was replaced by ICBC Bank from China as the new world's largest bank. Citibank slumped from first to seventh. It also lost its place as America's largest bank and was disposed off by rival Bank of America.