Reward Programs in the Workplace Fieldwork Timeline

Reward Programs in the Workplace

Fieldwork

Timeline and Budget

Reward and incentive programs are a popular component of employee benefit packages. Many employees value such offerings as flexible scheduling, tuition assistance, and child care in order to satisfy personal needs and professional development. In today's society, it is becoming increasingly common to align these reward systems with the overall business strategy of an organization in order to satisfy business needs and to improve shareholder value. In addition, many organizations are developing or restructuring their rewards programs based on employee performance. This trend is likely to continue as costs continue to increase and competition continues to thrive in a highly volatile economy.

The following will provide an overview of selected research in the area of rewards, benefits, employee performance, and business strategy as they are all related to create unique reward environments in organizations of all shapes and sizes. This research will demonstrate that reward systems are most successful when they are aligned with business strategy and are directly tied to employee performance.

The proposed research study will identify ten distinct organizations in a localized geographic area, and the compensation and benefits manager at each organization will be mailed a short survey that asks a number of questions regarding each organization's existing rewards system. Once the data has been collected, it will be evaluated and presented in report form to identify how employees benefit and relate rewards to morale and performance.

Introduction

The development of reward and incentive programs in the workplace environment typically provides many benefits for employees that utilize these programs to improve both their professional and personal lives. Organizations are well aware that their employees possess specific needs that may be fulfilled through such programs, such as flexibility and professional development programs. Therefore, it is in the best interest of organizations with ambitions to succeed to evaluate their current benefits packages and incentive programs to identify specific employer needs in order to reduce turnover and improve employee morale. One method that is becoming increasingly popular for many organizations that has been demonstrated to be effective is to directly align employee rewards and incentives with work performance. This initiative ensures that employees are gaining professional experience and are rewarded for their hard work accordingly.

Problem Statement

It is a relatively common perception in today's society that organizations that do not provide their employees with adequate benefit packages and incentives for performance may risk losing valuable intellectual assets in their employees that contribute significantly to the workforce environment. It is also known that these types of programs provide employees with enthusiasm and initiative to fully maximize their performance in order to improve the existing organization. This study will evaluate the retention and turnover rates of a variety of organizations of various sizes and industries against the benefit and incentive packages that are offered and the direct influence that these programs have on employee retention and turnover rates. The programs and initiatives to be evaluated include healthcare and prescription benefits, performance-based compensation increases, tuition assistance, onsite childcare, onsite fitness centers, public recognition for superior performance, flex time, and other benefits such as dry cleaning and complimentary dinner vouchers. The study anticipates at its conclusion that employee benefit and incentive programs can make a significant difference in an employee's decision to remain or to terminate employment in a specific organization.

Literature Review

Organizations must develop mechanisms by which they can reward their employees for a job well done. This can be accomplished by assessing employee needs against the proposed costs of program implementation within the constraints that are evident in the organization. A healthy balance between proposed benefits and costs should be established in order to promote enhanced employee performance and to reduce turnover, without excessively risking the potential loss of profits and revenues. In addition, such programs should make employees feel comfortable with their employment decisions and should also promote growth and improved productivity. The following research conducted by experts in the field will demonstrate various aspects of benefits and rewards programs that may strongly influence employee morale and future output, all of which improves overall organizational success.

An article written by Dolmat-Connell entitled Developing a Reward Strategy that Delivers Shareholder and Employee Value provides interesting information regarding the importance of reward programs in organizational success. The author indicates that today's reward program offerings are largely based on pressures from shareholders and the general public to align executive compensation with shareholder value (46). Furthermore, "The concept of total rewards is not new. However, many organizations that we work with view total rewards from too narrow a focus - i.e., they consider only the program's competitiveness from a total cash compensation or total renumeration standpoint, or they focus only on the total monetary value delivered to employees. Both these perspectives are important but insufficient. In order to be truly effective, organizations need to think about total rewards from a higher, more strategic perspective" (50-51). In order for these programs to enjoy success, they must be closely aligned with previously defined business strategies, and must be incorporated into the general human resource strategy of the firm. This situation is critical to achieve a sustainable competitive advantage in the industry of choice.

Shareholder value is obtained and secured when organizations maximize their internal processes to promote employee longevity and contentment with the firm's practices and treatment. In addition, as human capital is increasingly valued in organizations as a means of competitive advantage, and in some instances, this is viewed as the sole reliable source that an organization possesses in a competitive market. Therefore, in order to retain the services of value employees that provide intellectual capital, they must be committed to the organization wholeheartedly, and this is not necessarily a simple task to achieve. On the contrary, employees must feel that they are considered valuable intellectual assets, and in order to satisfy this objective, employers must provide adequate rewards for exemplary performance. These employees must be considered more than a means to fulfill a set of defined responsibilities; rather, they must be viewed as a valuable investment in order to improve their enthusiasm and to reduce the likelihood that they will leave the organization (47).

Human resource managers can play a significant role in satisfying these objectives through strategic alignment with business expectations.

According to Dolmat-Connell, "Reward systems are a critical component of an integrated and aligned total HR system...when fully effective the reward system focuses on behaviors that lead to success, enables the organization to achieve a competitive advantage, uses a portfolio of integrated systems and practices, develops and adjusts to changing conditions, and creates a win/win for the organization and the individual" (48-49). Rewards systems must include the following primary components (49):

Behaviors: Define the differences in organizational performance and must include focus, competencies, and feedback

Alignment: Organizational strategy and the chosen set of rewards must be aligned to sustain a competitive advantage

Synergy: The degree to which rewards programs work in combination to produce value for employees

Creators of rewards programs must be careful to maintain the appropriate focus in the development of such programs. Maintaining a focus merely beyond the financial aspects of rewards will ensure commitment to the endeavor. Furthermore, the chosen rewards should be designed to motivate the entire workforce in the long-term. Finally, rewards must be directly linked to sustaining shareholder value in order for them to be deemed effective (50).

The development of a comprehensive rewards strategy must be carefully considered. It must be aligned with the business strategy in order to maximize effectiveness. The following steps must be measured in creating a rewards program (51-52): 1) Identifying the organization's key success factors, 2) Identifying the behaviors and actions necessary to implement the chosen strategy, 3) Determine how the rewards program can reinforce behaviors geared toward success, 4) Determine what is required to make each reward a success, and 5) Determine how current programs match the newly defined requirements.

This article discusses the primary means by which organizations must view the rewards process in terms of shareholder value and human capital. The next component of the discussion will identify the most important components of established reward plans.

An article by Hale and Bailey entitled Seven Dimensions of Successful Reward Plans provides an analysis of the important components of reward systems. It is anticipated that as employees invest their time and commitment to an organization, they will be increasingly valued and recognized accordingly through various opportunities for rewards. Such rewards do not just include salary, but also consider tuition assistance, flexible work schedules, stock options, merchandise, and travel opportunities (71). Rewards that are closely connected to business strategy will increase shareholder value, as employee performance is maximized and financial returns are greater. Superior business results are attainable if the following seven principles are utilized in daily business practices:

Superior performance should be rewarded accordingly: Although this concept seems a bit primitive, many employees do not believe that their employers take this into consideration, although employees clearly recognize the connection between the two. Therefore, their performance often goes unnoticed in a financial sense. Both organizations and employees will benefit if these issues are discussed openly without hesitation. As pay and performance are ultimately connected, it is in the best interest of those involved to consider these issues as soon as they arise to maintain stable employee morale (72-73).

Rewards should be linked to other areas of organizational change: Rewards should not be based strictly on salary, particularly if employers wish to further enhance employee interest. Successful organizations also openly communicate changes in organizational objectives, provide recognition when it is well deserved, offer opportunities for career development, and provide challenging prospects for professional growth. These opportunities will undoubtedly improve employee loyalty and commitment to the organization, as well as strengthen the organizational framework (73).

Provide rewards for measurable competencies: According to published research, 44% of all human resource management systems utilize competency-based performance measures in their evaluation process. Unfortunately, these competency-based objectives are not aligned with reward programs in most organizations (74).

Match rewards and incentives to the corporate culture: It has been demonstrated that reward systems that reinforce the corporate culture are the most effective. Incentives should be matched to the corporate vision, mission and principle objectives. In addition, management must fully support these objectives in order for them to become successful across all organizational levels (74).

Group incentives must be clear-cut and simple to understand: Rewards must be aligned with corporate objectives, leadership style, team structure, and core competencies. Reward systems that have experienced measurable success in the past have combined direction and power. In other words, business strategy and cultural values provide the direction, and the performance-driven workforce provides the power (75).

Communicate rewards and incentives excessively to achieve the best possible results: This is perhaps most critical to improve organizational performance. Statistically speaking, companies with employees that clearly understand their reward and incentive programs have a much higher shareholder return than those that do not have a clear understanding or expectations of their programs. Furthermore, if employee opinions are openly sought and valued by management, then the organization is more likely to experience improved shareholder returns (75-76).

The work that is performed is the greatest incentive: Employees wish to be publicly recognized for their hard work and improved performance, and it is not always the monetary compensation that matters the most to employees. Organizations must recognize these needs and concerns in order to structure their rewards programs according to employee needs and interests (77).

This article demonstrates the basic principles that should always be considered when organizations wish to design or restructure their rewards programs in order to maximize employee and organizational effectiveness. An alignment with primary business strategy and objectives is the key ingredient to the development of a successful rewards program that will result in improved shareholder return as well as employee satisfaction and improved performance for future years to come.

An article by Bolen and Kleiner entitled New Developments Concerning Work/Family Programmes provides a variety of statistics and other information concerning work/life programs in real organizations. Some of the most important statistics provided in the study include the following:

For every dollar spent on work/life benefits, there is a two to six dollar return in the form of reduced absenteeism, increased motivation, and higher retention rates (76)

The cost of hiring and training a new employee is 93% of the first year's salary (76)

1993 evaluation of Johnson & Johnson indicated that 71% of all employees utilizing work/life benefits valued them as important (76)

26% of parents with children under the age of thirteen had experienced a breakdown of typical child care arrangements in the past three months, and these can result in costs of $3 billion for American businesses annually (77)

Some American businesses also offer some benefits that are considered controversial in some circles: "Xerox takes care of employees' dry cleaning and photo processing. Birthday cakes can be ordered at Marriott's cafeteria. Aetna Life & Casualty offers an in-house personal shopper to buy employees' gifts. Wilton Connor Packaging employees can have their laundry washed, dried, and folded by two in-house workers, and an in-house handyman is available for employees' household repairs. Rhone-Poulenc employees are offered take-home meals prepared by the cafeteria, on-site shoe and jewelry repair, and car repair. Other companies offer massages, pet insurance, in-house financial planning, fitness centers, concierge services, pets to work, time off for volunteer work or parent-teacher meetings, and employees of Starbucks take home a pound of coffee a week" (79).

It has been demonstrated that these types of benefits attract employees to the organization and express a greater commitment to the firm with a lower rate of intent to leave the business (79). Additionally, "First Tennessee National Corp. initiated family-friendly programs three years ago, and have realized clear gains in productivity and customer service. Supervisors supportive of work/family balance retained employees twice as long as the bank average and kept 7% more retail customers. These higher retention rates contributed to a 55% profit gain over two years. The corporation's strategic view is that work and family are not discrete phenomena but touch each other, often profoundly. To create balance and solve the problem, consideration of family issues is built into job design, work processes and organizational structure" (80). Finally, this article notes that "In order for a work/family program to be successful, it must be integrated within the business strategy. The company must encourage balance between work and family. Starting with commitment from the top executives, all management must be educated and held accountable to institute the program. Input from workers should be included in designing the policies, which should be formal, written with guidelines, and available to all employees equitably. Flexibility should be encouraged. Information and education should be readily available to support the employees" (80).

These real-life examples as well as general recommendations demonstrate that reward systems are extremely significant in the workplace, as they possess the ability to offer employees a sense of unity and will ultimately enhance productivity since they allow employees to manage their personal concerns when they see fit, not after the work day has been completed.

The final article by Federico and Goldsmith entitled Linking Work/Life Benefits to Performance discusses the advantages of work/life programs to encourage strong performance from employees. Since employees are consistently expected to perform to their maximum potential, they, in turn, expect to be recognized and rewarded accordingly. As a result, career growth and success is ultimately the responsibility of the employee. In order for these types of rewards programs to enjoy success, they must be directly tied to performance. In this scenario, both the employer and the employee reap the benefits. Federico and Goldsmith state that "The key is to install work/life programs as performance-based benefits, with eligibility and/or subsidy levels tied to employee performance. With some guarantee that the cost of these programs will be returned to the employer in tangible productivity improvements, any employer can put these programs into place and use them to attract and retain the right employees. The critical point is to integrate these benefits into the rewards system" (67). In order for such an endeavor to be successful, compensation and benefits professionals must incorporate work/life benefits as a large component of the firm's rewards program. The most intriguing work/life program is employee flex time, whereby employees are permitted to work around personal commitments by adjusting their schedules accordingly. In many instances, such programs are highly beneficial to the employee, but provide little or no return for the employer, making the program a one-way endeavor. In addition, such programs can cause problems for managers since they are left to make the decisions at their own discretion, since relatively few guidelines exist that must be followed (68). Furthermore, managers that are not required to join flex time with performance will ultimately lose rather than gain from the program.

In order to make this type of program successful, employees must actively demonstrate to their managers that they can productively manage their flexibility. Employees are empowered when they are permitted to arrange flexible work schedules, and this should be considered a significant part of performance reviews. In addition, for employees that necessitate flexible work schedules, performance criteria should be set at a higher level: "For example, employers can establish a waiting period for eligibility for flexible work arrangements, based on service requirements or meeting performance goals. Employees might become eligible after one year of service, for example, or they might become eligible based on their performance ratings in their annual review. The work arrangements would end if their performance falls below a certain level" (69). Generally, work/life benefits such as flex time do not result in high costs to the employer, and they can significantly accommodate the employee. If they are managed properly, work/life benefits can provide employees with the opportunity to improve their productivity, particularly if these benefits are directly tied to performance measures. If employees have the opportunity to manage their personal issues that may conflict with their professional lives, then they may improve their work performance.

Another benefit that is of particular interest to employees is the ability to obtain cost-effective and convenient child care. In most instances, these benefits are paid by the employee and do not provide any advantage to employees without children (69). However, if these benefits are also tied to performance, they may resolve some of the issues that are of primary concern. Onsite Child care benefits that are available to all employees on the basis of social need are perhaps the most effective method for some organizations, since these employees can simply bring their children to work, drop them off at their child care facility, and pick them up before they leave. This type of arrangement improves time management for employees, as it takes them less time to get to work and to begin their daily activities. However, subsidies for child care based on performance may be considered as a reward and may be an option for those who meet or exceed defined performance objectives (69). In either case, child care benefits are gaining prominence in organizations, regardless of industry.

Other miscellaneous benefits, often grouped together and termed convenience benefits, can act as significant rewards for some employees, depending upon their specific needs. These include but are not limited to dry-cleaning delivery, take-home meals or meal vouchers, on-site car washes, and complimentary passes to the local cinema (69). Such benefits may be very significant to some employees because they preserve precious time and add value to their professional careers as well as their personal lives.

In addition, it is still commonplace for many organizations to provide awards for distinguished years of service, typically in five-year increments. However, most employees are unconcerned with these types of advantages and do not consider these awards as significant recognition for performance. Rather, employees would rather have access to immediate rewards, such as those mentioned previously. Perhaps a balance can be identified, where employees obtain access to convenience benefits based on short-term project performance or in smaller time increments, such as establishing evaluations for every year of service (70). This type of arrangement also provides employees with much-needed flexibility and a choice in how they choose to manage their personal rewards, based on their specific needs at that point in time. Regardless of the programs that are chosen, they should ultimately be based upon performance in order to maximize productivity and to improve organizational value.

The articles that have been analyzed and discussed in this section provide substantial support to the concept that organizations are increasingly dependent upon rewards and incentives to maximize employee performance. By permitting employees to gain access to rewards, they will feel indebted to the organization and will place a greater emphasis on their performance, which can only benefit the organization rather than harm it and will increase its value to the general public as well as its shareholders. In addition, employees are much more likely to remain with the organization for a longer period of time if they feel that they are valued and are rewarded for a job well done.

Methodology

Research Design

Since the details surrounding the topic in question are relatively unknown to the writer, the proposed research study will be exploratory in nature. Specifically, the writer is not a human resources expert and does not possess the specific knowledge regarding the intricacies of compensation and benefits programs, since they vary widely in size and scope from one organization to the next. Therefore, as the writer has defined the principle objectives of rewards programs through the literature review, the proposed research study will be based upon this newly acquired knowledge in relation to the unknown realities and perceptions that exist in real-life organizations. Observations will be made regarding existing rewards programs and their relationship to employee loyalty, performance, and the subsequent retention or termination of employment within a specific organization.

This type of research design is best suited for the study because relatively little is known of the topic beyond personal experience and exposure to accounts from the author's inner circle. Therefore, it is advantageous that the writer should actively explore the intricacies of the topic in further detail to draw specific conclusions regarding the ongoing activities related to rewards that are ongoing in daily living.

Data Collection

The data that will be collected in the proposed study will be necessary to identify the effectiveness of rewards programs on the retention rates and performance of employees, as well as their morale in relation to such programs. Once a pattern has been established within the area of interest, some of the collected data will serve as a benchmark to identify the general behavior and flow of how the benefits system as a whole operates in organizations. This benchmarking data will serve as a comparison to the more specific data and situations that will be identified.

The data must be collected in a proper and ethical fashion, since much of the information in this area of interest is confidential to some degree and is highly specific from one organization to the next. In addition, since the data involves human interaction, it must be considered acceptable and justified for the purposes of the study in order to accommodate the participants and their concerns. In the data collection process, participation will be voluntary and will be thoroughly explained before the participants choose whether or not to contribute their input. Finally, confidentiality will be maintained throughout the study, since the participants and their employers are only providing information as a basis for investigation into the general topic of benefits and rewards.

The primary data will be collected through a survey method. It is the intent of the researcher to identify a small number of organizations in the local geographic area to study and evaluate. Upon identification of ten organizations of varying sizes and industries, permission will be obtained by phone with the manager in charge, and an initial survey will be sent to the compensation and benefits manager of each firm. The survey will ask a series of eleven questions regarding the rewards plans that are in place at each organization. Additionally, questions will be asked to identify if any evidence exists regarding employee retention and turnover that is directly related to rewards and incentives. Finally, the manager's perception of the current rewards system will be identified. These questions are general enough to protect the organization in terms of liability and confidentiality, but they are specific enough to obtain the information required. Upon initial agreement with the participant, the researcher will obtain permission to contact the manager for follow-up questions if any additional clarification is required. The entire study will take place over a four-week period in July 2003.

Sample Design

The population to be utilized for the research study is the business environment from the surrounding local community. This geographic area consists of a large variety of business interests that each make a significant contribution to the local economy. Organizations from a wide variety of industries with various sizes will be considered as the primary target population for the study. Specifically, the researcher anticipates the selection of local businesses, with at least one business consisting of each of the following sizes: 1-50 employees, 51-100 employees, 101-250 employees, 251-500 employees, and 501-1,000 employees. This will guarantee that the anticipated data will be diverse and will be strongly dependent upon a varied population. It is the hope of the researcher that the sampling will be conducted in a random fashion. A non-probability sampling will be conducted because the selected participants will be primarily chosen from a small geographic area. This sampling may not represent the total population because of its limiting geographical constraints, but it is hoped that sample will be truthful and accurate for the population in question. In order for the data to be accurate and successful, the participants providing the answers must be truthful in their responses, and this information will be properly presented to each potential participant in the first incidence of phone contact.

Fieldwork

Since the study is relatively small in size and scope, all of the required research, data collection, and evaluation will be performed by the researcher. It is anticipated that the study will be completed within the proposed one-month time frame, barring unforeseen events in the researcher's daily life and activities. The proposed study plan does not include a follow-up measure that would identify future changes (if any) in the participating organizations' reward systems, primarily because such a measure is not required for the purposes of the educational endeavor. Rather, the study is designed to capture one point in time to evaluate how reward systems influence overall employee value.