Case Study of GEICO Total Rewards Program Research Paper

Excerpt from Research Paper :

Total Rewards Program Evaluation: Case Study of Geico

Total rewards are all available tools that employers can use to motivate, attract and retain employees. In other words, rewards are the compensations that organizations provide to employees for the services rendered to the company. However, rewards are not simply to offer payments or direct currencies for employees; however, rewards are the other form of non-financial benefits that can be converted to currencies, which include comfortable offices and favorable interpersonal relationships for employees. Typically, rewards are the compensatory benefits to exchange for the services that employees offer an organization. Total rewards are also defined as everything that an employee perceives as a great value. In a contemporary competitive business environment, organizations are increasingly attracting best talents to achieve business success. Implementation of total rewards for employees is one of the critical business strategies that can enhance competitive market advantages.

Objective of this paper is to evaluate total rewards program that Geico is currently offering and provides suggestions on the strategy that the company can employ to improve its total rewards packages.

Overview of Geico

Geico is one of the largest insurance companies in the United States that offers automobile insurance policies across 50 states in the United States. The company is registered on NYSE (New York Stock Exchange) and focuses on different automobile business operations. Berkshire Hathaway is currently managing Geico, and Berkshire is a company that manages activities of different subsidiaries. In the last few years, Geico implements effective rewards program to attract talented employees in order to enhance its competitive market advantages. In the contemporary business environment, employee performances are linked to rewards a company offers. After reviewing the Geico's website, it is revealed that the company has designed total reward programs tailored to the employees' needs. Geico compensates all its workers starting from the entry to executive levels.

According to Jiang, Xiao, Qi et al. (2009) five elements of total rewards are:

Compensation

Benefits

Work-Life

Recognition and Performance, and Career Opportunities and Development.

Glico compensates its workers based on their experiences and skilled levels. For example, the company compensates all the entry and executives staff of the company using salary and wages for the service rendered for the company. Compensations that Geico offers its employee comprise of two core elements:

Fixed pay and incentive pays are the two types of compensations that the company offers its employees. Fixed pay is known as base pay that is in form of monthly salary that employees receive. The company also offers incentive compensation that it offers to its employees, which is in form of rewards employee receives based on performances. Finally, Geico offers variables compensation for employees that is based on a level of performances. However, employees are given a target before this type of compensations is earned.

Benefits

Geico offers different benefits for its employees to supplement the cash awards that its employees receive. Geico designs this program to protect employees and their families from financial risks. The benefits are to insure the life of employees, and the comprehensive benefits designed by the company are as follows:

Education and Training is part of the total rewards programs that Geico offers its employees. The company offers different lifelong learning that includes mentoring programs, industry-leading training, family scholarship and tuition reimbursement. The company also offers the finance and retirements benefits for its employees. For example, the company offers profit sharing plans, 401(k) and life & accident insurance for its employees.

Benefits of Geico Total Rewards Approach

Several advantages that Geico can derive from total rewards program that it offers its employees. First, increase in the company productivity is one of the benefits that the company stands to enjoy from the rewards program. Health is wealth. A company that composes of healthy workers will record higher productivity than a company that composes of non-healthy workers. The composition of healthy workers assists Geico to increase its total revenues over the years, which assists the company to enhance competitive market advantages. San, Theen, & Heng, (2012) argue that there is a correlation between rewards and performances. The financial and non-financial measurements are the strategies that organizations can employ to measure rewards package. Financial measures include level of revenues, sales growth, gross profits, net profits and overall a company's balance sheets. Essentially, a reward practice enhances job engagement, motivation and job commitment.

Geico offers varieties of health and well being benefits for its full time employees. The benefits range from vision care to medical insurance. The benefits are also designed to meet the needs of employees' family. For example, the company assists its employees to choose dental plan to access dentists across the country. The vision plan also assists employees to have access to a comprehensive eyes examination for contact and glasses lenses. The company also offers AAP (Associate Assistant Program) to offer counsel to employees about strategy they can employ to manage depression, anxiety and stress. The LTD (Long-term Disability) and physical fitness benefits are offered to employee to assist them managing their health through enrolling in the physical fitness program.

More importantly, the company implements programs to preserve employees' class of life. The reward programs that the company offers are accessible to employees first month after their employment have been confirmed. Despite the total rewards programs that Geico offers to its employees, there are some reward programs that the company has not yet integrated in the total rewards program, the next section provides a strategy to ensure that Geico's rewards' plan addresses all the benefits for employees, which will enhance their productivity. Table 1 provides a summary of Geico's total rewards.

Table 1: Summary of Geico Total Rewards Strategy

Definition

Compensation

Base Pay

Wages & salaries

Merit Pay

Base-pay increases according to employee performance

Incentives

Cash bonuses which is based on employee performance

Promotion

Base-pay increases and this is based on performances.

Pay increases

Base-pay increases and this is based on length of service within the organization

Benefits

Health and welfare

Payment for illness and injuries inured on the job

Paid time off

Payment for employee vacation

Retirement

Payment for work that is no longer performed

Personal Growth

Training

Skill development using on-the-job instructions

Career development

On-the-job development to develop skills

Performance management

Ongoing feedback and setting to develop skills

Strategy to ensure that Geico's Plan addresses required Benefits

Geico should use industrial benchmark to compare present total rewards that the company offers its employees. The company should carry out a comprehensive analysis of total rewards offered within the industry and compare them to the rewards being offered within the company. The company can use industry handbooks to identify the rewards that are not currently being offered, which are very critical for employees' well-being.

Employees' survey attitudes are another best strategy that Geico can employ to address all the benefits of rewards programs.

"Surveying employees' attitudes toward total rewards can generate additional valuable information for the project team during the assessment phase. Employees need to know that their input was carefully considered, otherwise you may lose valuable support for the project." (Heneman, 2007.p 7-8).

It is very critical for the company to incorporate employees' suggestions and feedback in overall compensation plan to enhance success of implementation of the compensation plan. (Heneman, 2007).

Evaluation of Effectiveness of Geico's Communication for Rewards Program

Communication is very critical in the overall rewards program. Overview of the Geico's website reveals that the company communicates all the total rewards it offers to its employees. The total rewards that the company offers are listed on the company website, and it is critical to realize that communication is very important because it boosts employees' morale and motivates existing talent within the organization. Typically, Geico provides a comprehensive description of the Health and Well-Being benefits that it offer its employees. The website identifies the health benefits Geico offer, which include:

Medical, Vision & Dental Coverage

APP (Associate Assistance Program)

LTD (Long-term Disability), and Physical Fitness.

Geico also communicates education and training benefits that it offers to its employees through its website. For example, the training benefits include:

Industry-leading Training

Tuition Reimbursement

Insurance Studies, and Family Scholarships.

The company also communicates other rewards programs that employees enjoy within the company. Despite the communication strategy that company employs to communicate its total rewards program to its employees, Geico does not provide communication platform that employees can use to provide feedback about the total rewards program. It is essential to realize that employee's feedback is very critical for the effectiveness of a program. Employees' feedback towards the rewards can assist organizations to improve on the rewards packages tailored to the needs of all employees. (San, Theen, & Heng, 2012).

Based on the shortcomings identified in the current communication strategy towards the rewards plan, the paper suggests that Geico should provide communication platform where employees could submit anonymous feedback to the company management. By allowing employees to offer anonymous feedback, employees will be able to offer their opinion without fear of victimizations. The strategy will assist the…

Sources Used in Document:

Resources Management Strategy Going with the Trend of the Times. International Journal of Business and Management.4(11): 177-183.

San, O.T. Theen, Y.M. & Heng, T.B. (2012). The Reward Strategy and Performance Measurement (Evidence from Malaysian Insurance Companies). International Journal of Business, Humanities and Technology. 2(1):211-223.

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