MGT3RPM Remuneration and Performance Management
Introduction
Erich’s Roofing is the eleventh largest company in the world. The company is experiencing turnover issues in recent years with the main focus on increasing the pay scale so that people may not leave their department. However, with the passage of time, the company has to take appropriate measures to use the best of the strategies in which neither there is a financial loss of the company nor there is turnover. With this in view, the company is determined to find such a way that allows new candidates and the existing staff an equal opportunity to grow (Alatawi, 2017). This can be done by doing a strategic analysis, learning the internal and external environment of the company, and also ensuring the remuneration package is sufficient enough to attract the employees.
Strategic Analysis
The industry to which Erich’s Roofing belongs is highly competitive. If the external analysis of Enrich’s Roofing is done, one will get to know that multiple factors contribute to the overall progress of the business. However, the influence of the external environment is nothing without having an appropriate internal environment. This is because the company may have a suitable external environment but might have challenges while struggling with the internal environment. The same is the case of Enrich’s Roofing and the company has to maintain some definite strategies to retain employees and save its internal environment from getting worse.
As far as the internal environment is concerned, human resources, financial resources and information resources, technological resources, organization’s goodwill, and corporate culture all together contribute to it. Everything that is included within the boundaries of the organization is known to be its internal environment. Some of the tangible aspects within it are physical facilities and proprietary technology whereas communication capabilities, information processing, reward and task structure, performance expectations, power structure management capabilities, and dynamics of the organization’s culture are all included intangible aspects (Woźniak, 2018). The internal environment of Enrich’s Roofing provides a new dimension to handle the customers.
Contrary to the above, there is an external environment that helps the company to grow in the market. It mainly includes the PESTLE aspects such as political, economic, social, technological, legal, and environmental (natural). Furthermore, there is an industry environment that consists of the external factors that impact the operations of the business. These external and internal environments of the company help to set the direction of the business as per the demand of the market. In the case of Enrich’s Roofing, the company is having real issues with the internal environment and it is not possible for the company to grow unless they work on the turnover issue.
[hbupro_banner id=”6299″]Identifying Issues
There are always some ongoing issues in a company. In the case of Enrich’s Roofing, the company is able to ensure its progress mainly because of the services it provides. However, one of the most important factors related to motivation includes the non-financial and financial incentives that are needed to retain employees at work. The financial incentives include finding physiological and security needs, hygiene, and other initiatives such as monetary rewards. However, in order to retain employees and satisfy them, the company has to provide participative management that recognizes the efforts of the company and appreciates them (Autrey, 2019). These motivations further strengthen the employees at work and develop their interests.
At Enrich’s Roofing, the employees can have not only financial incentives but competition, appreciation of the work is done, and group and team incentives can also strengthen the overall relationships of the employees with employers. However, the main issue is not having the financial or non-financial incentives but maintaining a true relation of the employees with the company. The issue is that employees are getting their pay but they are not determined to maintain longtime relations with their company. This may contribute to the turnover rate but also a decrease in the financial growth of the company if the employees are not determined to contribute to the business of the company.
According to Braendle and Katsos (2017), any organization can provide incentives to its employees intentionally and unintentionally in exchange for the services they do for the company. A reward can be intrinsic or extrinsic based on the nature of the task. Financial rewards such as base pay, direct benefits, and performance-related pay are all included in the extrinsic reward. However, there is something more to the extrinsic reward such as social and developmental rewards. The social and developmental rewards are dependent on additional efforts made by the employees. In the case of Enrich’s Roofing, the base pay is not the only solution left to attract the employees and retain them but something beyond this is needed. Base pay can be both a time-based wage or salary however it alone may not be able to retain employees.
In this way, without adequate measures, it is impossible to retain employees who are increasing the turnover rate. However, employers are supposed to understand the need for an employee in both financial and non-financial terms. If timely measures are not taken, the employees may increase the issues such as showing little to no interest in work, inappropriately completing the work or the company may find an increase in the absenteeism (Geiler and Renneboog, 2016). Therefore, proper measures should be taken along with ensuring that employees do get basic pay.
Range of Options
When it comes to facilitating the employees, a number of options are available. The main problem with the base pay is that an employee gets a certain amount against his services no matter whatever work he has provided to the company. This is why to protect both business and the efforts of all employees at an equal level, a definite perspective is needed. This can be achieved only by making a larger perspective. On a wider note, the company can only work on either developing strong relations with the employees or they can increase the overall progress of the company through making a high financial investment. However, for Enrich’s Roofing, finding some cost-effective strategy is more important.
Enrich’s Roofing can first start working on a performance appraisal system to get a clear direction while managing the issues. The company can benefit from positive and negative reinforcement strategies. For this, the company should analyze in which employee should it invest the most and from whom they need to stop providing incentives. This can be done without the discrimination of the management level as solely on the basis of the services. Also, the company can hire new candidates initially on contractual terms so that they can be first evaluated and then made a permanent part of the company. The company also has an option to make sure that there is a commission-based strategy for the departments that bring business. This may include the marketing and sales department. Job Enrichment can also be done in order to ensure that the financial capital of the company is not wasted. Job enlargement is also another possible option that the company may choose to add new dimensions to work.
[hbupro_banner id=”6296″]Proposed Solution
One of the most suitable solutions that currently Enrich Roofing should consider includes job enrichment and is largely dependent on the way an employee is targeted. Enrich’s Roofing should appoint new employees in those departments where the senior and junior management has failed to maintain relations. Developing a soft culture along with both intrinsic and extrinsic rewards is a new way to ensure safety.
Furthermore, the company should increase the base pay of those employees who are working absolutely fine and making all efforts to genuinely accomplish the task. Contrary to this, the teams and groups must be attracted to the incentives and there should be bi-annual bonuses for the teams and departments. This will help the company to increase coordination among the staff members and also increase the motivation of employees to work. In addition to this, there is another level of concern that must be addressed by the company (Onnis, 2019). A negative reinforcement must make things clearer for the employees that if they do not work well, the company might take action. Contrary to this, a new healthy atmosphere is needed where a company can have a fresh start.
A new remuneration plan is needed at Enrich Roofing. This plan mainly comprises three main categories under which employees fall. Direct compensation can be made from salaries and bonuses while indirect compensation can be made through equity-based programs. Since there are a number of employees who are working as permanent staff, direct compensation can benefit the company. As the company is a large business operating in the market, the equity-based program will also strengthen the departments to work hard and achieve more incentives. The higher management can avail of this program so that they do not contribute to the turnover ratio. Moreover, permanent employees are allowed to work and receive salaries. However, hourly and commission-based payments are also released for the departments that have this nature of work. For example, the company can hire new interns who can work on an hourly basis and also ensure that they do not waste the potential by only focusing on the monetary rewards. However, when sufficient work and training has been done by a particular employee, the company can provide a non-financial incentive in terms of reward. This can be implemented by appreciating the interns and allowing them an opportunity to work as contractual employees. If an intern has been exceptional throughout the time, he may be offered a permanent job.
When it comes to employees who are already working in the company, the remuneration package should be availed by increasing their duties. This will help the company to grow as a whole and also focus on the key areas where there is enough potential. Enrich’s roofing can have a complete focus on the promotion of those employees who are exceptional at work and eventually increasing their pay. However, job enlargement is another thing that can be done for those employees who do not receive a promotion. By doing both of these things, the company intends to retain employees by increasing their motivation level. For this purpose, the company should include a new remuneration plan that targets only those employees who wish to accept challenges. The incentives must be made flexible yet on the basis of competition. The company can ensure that those employees who are compensated in monetary terms are not stagnant in growth. Rather they are keen to invest in their career by using time and sources.
Lastly, the remuneration plan includes a special coupon that must be presented to the employees who are passionate to achieve a goal in life. The training and development coupon is presented not only as a token of appreciation rather as a membership to some of the good institutes such as SHRM certifications and other such programs that help the employees to get a bigger perspective. These efforts will strengthen the relationship of the employees with their company. Subsequently, there will be more emphasis on working within the organization rather than finding ways to leave the company.
Conclusion
From the above discussion, this can be concluded that the company is in a dire need of making the right choices in the right direction and at time right time. The company must ensure that the remuneration plan is adequately invested and implemented. Enrich’s Roofing should also make efforts to respond to employees about their progress and also add all possible ways to strengthen the company. An affiliation of the employees with the company must be encouraged and this is dependent on both direct and indirect remuneration plans. The internal environment of the company is quite in need of a soft culture yet with definite and hard terms. The employees must be informed that development is guaranteed at Enrich’s Roofing and that whosoever joins the company will get an opportunity to grow. This is how the company can overcome the turnover issue by encouraging the employees and their relationship with the company.
References
Alatawi, M.A., 2017. Can transformational managers control turnover intention?. SA Journal of Human Resource Management, 15(1), pp.1-6.
Braendle, U.C. and Katsos, J.E., 2016. Directors’ Remuneration and Motivation’. The Theory and Practice of Directors’ Remuneration. Emerald Group Publishing Limited, pp.21-34.
Geiler, P. and Renneboog, L., 2016. Executive remuneration and the payout decision. Corporate Governance: An International Review, 24(1), pp.42-63.
Onnis, L.A., 2019. Remuneration: Extrinsic and Intrinsic Rewards, Incentives and Motivation. In HRM and Remote Health Workforce Sustainability (pp. 77-92). Springer, Singapore.
Woźniak, E., 2018. Employee motivation phenomenon. World Scientific News, 111, pp.111-120.
Autrey, R.L., Bauer, T.D., Jackson, K.E. and Klevsky, E., 2019. Deploying “connectors”: A control to manage employee turnover intentions?. Accounting, Organizations and Society, 79, p.101059.
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