Total Rewards System Proposal for a Global Call Center

Introduction

Companies of all sizes and types today face the need to provide their employees with an optimal blend of pay and benefits in order to recruit and retain highly qualified workers. This research-based paper focuses on the latest available information about creating, organizing, and managing a total rewards program for a service-based, for-profit call center organization that employs 20,000 employees across 17 different countries. The company employs 2,000 management-level individuals who speak a variety of languages and who are governed by multiple regulatory environments.

To this end, the paper reviews the literature to provide a brief overview of the company's requirements for a total rewards system and formulates a total rewards strategy that encompasses the fundamentals of compensation and the regulatory environments in which the company competes. An explanation of the advantages of the proposed total rewards strategy and how it might satisfy employees' needs is followed by a determination of the key communication components of the total rewards system. Finally, a proposed strategy for devising a competitive pay structure is presented, followed by a summary of key findings in the conclusion.

Company Requirements for a Total Rewards System

Although the specific requirements for a total rewards system vary from enterprise to enterprise, research confirms that such a system can provide companies with a competitive advantage by adopting a holistic view of rewards — extending the traditional focus on pay and benefits to include other workplace rewards, such as a quality work environment and opportunities for learning and development (Rumpel & Medcof, 2009). The potential return on investment from a thoughtful, well-designed total rewards system is significant. As Rumpel and Medcof note, "Because these rewards are a high priority for workers, total rewards offers an opportunity to tap the unrealized potential of the organization. Effectively managed rewards will ease the critical attraction, retention and motivation challenges faced by firms" (p. 28).

Properly formulated and administered, total rewards systems can provide companies of all sizes and types with a competitive advantage over those that do not employ one. According to Fitz-Enz (2009), "A total rewards system can be designed to give the organization a competitive advantage" (p. 276). In a total rewards system, all human resource products and services are focused on the company's employees to facilitate optimal performance (Fitz-Enz, 2009). To achieve optimal results, it is essential that all human resource functions integrate their operations in order to support other corporate functions (Fitz-Enz, 2009). When this integration is achieved, Fitz-Enz emphasizes, "The net result is that the total output is much more than the sum of the parts" (2009, p. 276).

Perhaps one of the most important requirements of a total rewards system is a provision for ongoing training and development. De Meuse and Marks (2003) report that, "Without the promise of job security, employees frequently conceptualize other inducements they receive from the organization as part of the organization's total rewards system. Employee training and development is a key facet of this reward system" (p. 99). Including training as part of a total rewards system can help overcome the erosion of the social contract that, in many countries, once guaranteed lifetime employment in return for unswerving loyalty and hard work. De Meuse and Marks (2003) note that "employees expect that if they do not have job security with the new psychological contract, their employer should at least guarantee that it will provide them the training needed to maintain their marketability" (p. 99). Depending on the jurisdiction and prevailing social priorities, other rewards — such as paid time off for births and deaths — may also be incorporated into a total rewards system (De Meuse & Marks, 2003).

Formulating a Total Rewards Strategy Across Regulatory Environments

A useful three-stage framework for formulating a total rewards strategy in different jurisdictions is provided by Rumpel and Medcof (2009) and is summarized in Table 1 below.

Table 1: Three-Stage Approach to Formulating a Total Rewards Strategy

Stage 1 — Discover: This stage seeks to build a fact base on which to implement long-term plans to improve reward value for employees and reduce reward costs for the organization. A macro view of organizational elements — such as business strategy, workforce composition, market position, competencies, and technical skills — is taken. This fact base allows the firm to evaluate reward cost-benefits, risks, alternatives, organizational and managerial readiness, and reward gaps as the basis for plan creation.

Stage 2 — Invent: This stage develops more detailed plans for changing current programs and creating new ones to close the reward gaps identified in Stage 1. These plans are oriented toward ensuring the firm's human capital investment yields the greatest return on reward dollars spent. By identifying and closing reward gaps, the firm begins to build a strategic, integrated infrastructure for total rewards. This stage also includes creating change management plans and establishing a system to monitor the effectiveness of the new reward infrastructure.

Stage 3 — Deliver: This stage involves execution of the plans developed in the two previous stages. The duration of the implementation stage depends on the size and scope of the reward changes being executed. This stage is likely to require substantially more time than the previous two, with ongoing effort and focus placed on executing the change management strategy and communicating clearly, consistently, and in alignment with organizational goals to all employees.

Source: Rumpel & Medcof, 2009, p. 29

One approach to formulating a total rewards strategy that encompasses the fundamentals of compensation is provided by Rumpel and Medcof, who describe the financial rewards available through work and the workplace. These are summarized in Table 2 below.

Table 2: Financial Rewards Available Through Work and the Workplace

Direct Financial Rewards: Base salary; bonus; cash profit sharing; stock programs; employee referral program (cash rewards for successful hires); suggestion programs (cash for ideas).

Indirect Financial Rewards: Adoption assistance; commuter reimbursement (pre-tax); company cafeteria; company store; dependent care; dependent scholarships; discount tickets; educational assistance; fitness facility discounts; health and welfare benefits; incremental dependent care (travel); insurance via payroll deduction; long-term care insurance; matching gifts; relocation program; retirement plan(s); savings bonds via payroll deductions; scholarships; stock purchase program; student loans; tuition reimbursement.

Source: Rumpel & Medcof, 2009, p. 29

Because the call center company operates in 17 different countries, the regulatory environments in which the total rewards strategy is implemented must be carefully taken into account to ensure compliance (Rumpel & Medcof, 2009).

Conclusion

The research showed that a total rewards system extends the traditional model — focused primarily on pay and benefits — to include all types of rewards that can be earned through the workplace. For a call center company with 20,000 employees in 17 different countries, this means analyzing the specifics of each jurisdiction using the three-stage model proposed by Rumpel and Medcof (2009) to identify rewards that are of primary interest to both employees and executives, and then fine-tuning the total rewards system to accommodate these variables. The company will need to apply varied total reward strategies across different venues based on cultural and social differences as well as prevailing compensation rates. In the final analysis, companies that employ a total rewards strategy are well-positioned to enjoy a competitive advantage over their counterparts that do not, making this human resource approach a valuable and timely addition to overall corporate strategy.

References

De Meuse, K. & Marks, M.L. (2003). Resizing the organization: Managing layoffs, divestitures, and closings: Maximizing gain while minimizing pain. San Francisco: Jossey-Bass.

Fitz-Enz, J. (2010). The new HR analytics: Predicting the economic value of your company's human capital investments. New York: AMACOM.

Fitz-Enz, J. (2009). The ROI of human capital: Measuring the economic value of employee performance. New York: AMACOM.

Graham, M.D. & Roth, T.A. (2008). Effective executive compensation: Creating a total rewards strategy for executives. New York: AMACOM.

Rumpel, S. & Medcof, J.W. (2009). Total rewards: Good fit for tech workers. Research-Technology Management, 49(5), 27–31.