Week 23 - Reward

Reward

 Reward refers to all of the monetary, non-monetary and psychological payments that an organisation provides for its employees in exchange for work they perform; ‘a reward system consists of financial rewards and employee benefits, which together comprise total remuneration’ (Martin et al, 2010). Increasingly organisations are looking at non-financial rewards as a key element of a reward strategy.

Consider your own organisation or one with which you are familiar – how does it reward employees? Does it differ for different groups- how and why? How is ‘fairness’ or ‘equity’ ensured?

John Lewis is a large organisation, which does many things to reward its employees. “Join us and we’ll ensure your job is not only fulfilling and rewarding but suited to the way you work best as an individual” (John Lewis, 2010), this motivates employees by ensuring they are empowered by working ‘the way the work best’, and assures that they will be rewarded for the work they put in.

Ways in which John Lewis reward their employees:

1. Their policy is to pay partners according to the market rate for the job they are doing and as much above that as is justified by performance.

2. An annual bonus where profit is distributed to partners as a percentage of their salary.

3. A non-contributory, final salary pension scheme after three years’ service.

4. After three months' service, all Partners are entitled to discount on most purchases from John Lewis and Waitrose.

5. Paid holiday.

6. Subsidised dining facilities.

7. Holiday and leisure facilities exclusively for partners.

8. Partners can get a 50 per cent subsidy on tickets for the theatre, opera and music performances.

9. The partnership offers business, technical and personal development through a range of flexible opportunities.

10. Partners with more than 25 years' service can take paid leave for six months.

Rewards at John Lewis are generally the same for all employees; for example, every employee gets the same percentage of bonus whether they work on the shop floor or they are a manager. This seems very fair; however it does not encourage employees to work their way up. The only way the reward differs for different groups is that the longer one has been working there, the more rewards they get. For example; if they have been working for over 25 years they get an extra reward of 6 months paid leave. I think John Lewis’ reward system is very fair and equal, as employees only get a better reward if they have worked there for a long time; it is not discriminative towards any one.

Do you think that Chief Executives should still receive large bonuses even if the organisation that they have led has underperformed?

List the arguments for and against this.

For

ü  It usually states in their contract that they are to receive a bonus at the end of the year, therefor it would be illegal to break this contract

ü  They have to work very hard and under a lot of pressure; it cannot just be blamed on them if the organisation has underperformed

ü  If they have worked to their best ability for the company then there could be many other factors as to why they are underperforming

Against

• When the chief executive signs their contract they should be signing to achieve the goals that have been set, therefor if goals aren’t met they should not receive their bous
• It is very frowned upon in the media if chief executives are still getting large bonuses when the rest of the company is suffering
• Reduces initiative and motivation to work hard throughout the year, if large bonus is going to be given out either way

In conclusion, a job as chief executive is very hard, and a person has to be very motivated and strong to get the job in the first place. If the organisation as a whole has underperformed then it cannot all be blamed on one person, therefor they should not be punished. As long as the rest of the employees still get the rewards that they are entitled to then I think the chief executive should still get theirs; if this is not the case, then there will be a large upheaval in the media, which will have negative effects on the company.

References

John Lewis. (2010) Employee benefits. [Online] Available from: http://www.jlpjobs.com/your-career/benefits.htm [Accessed on: 07/05/12]

Godson, J. (2011) Reward PowerPoint presentation. [Online] Available from: https://blackboard.bucks.ac.uk/webapps/portal/frameset.jsp?tab_tab_group_id=_32_1&url=%2Fwebapps%2Fblackboard%2Fexecute%2Flauncher%3Ftype%3DCourse%26id%3D_220600_1%26url%3D [Accessed on 07/05/12]