In a competitive corporate environment, every employer strives to increase the quality of the services they provide while simultaneously reducing their operating expenses. In the meantime, the expansion of the global economy has increased employment market rivalry. While business owners expect employees to perform well within their organizations, employees have higher expectations of their employers (Articlesbase 2009, para. 1). Creating a rewarding system that is effective is one of the key responsibilities of managers. Employers utilize employee reward systems as one technique to motivate their personnel. In order to reap the benefits of rewarding systems, those responsible for designing a reward system within a company must be knowledgeable of the organization's goals and objectives as well as the behaviors that will aid in achieving them. The development of such a system requires expertise in human resource management. Despite the fact that most businesses think this to be true, corporations frequently establish reward systems that do not assist them achieve their goals. A company that seeks to foster collaboration among its employees, for instance, should not promote people who increase their productivity without including other employees. If a company's goal is to improve the quality of its products or services, it is not advisable to create a system that pays employees for increasing the quantity of work completed (Articlesbase 2009, para. 4). This discussion will attempt to determine whether or not all managers are human resource managers. It will assess this by analyzing real-world instances using pertinent human resource management concepts. It will also offer an acceptable approach that may be used by organization managers to ensure that they fulfill their human resource management responsibilities effectively.
Performance analysis ensures that a company produces a compensation plan that pays personnel in accordance with its objectives (Britton, Samantha & Terry 1999, p. 25). Employers must guarantee that their organization's performance has improved prior to paying employees, given that reward systems are costly in terms of time and money. When designing a rewards system for an organization, it is essential to ensure that the awards granted to employees correspond to their productivity. This results in increased staff motivation. Employers must also ensure that they have rewarded both group and individual achievement to encourage individual excellence and teamwork inside the firm. For a compensation system to be effective, a corporation must explain precisely what is expected of each employee (Britton, Samantha & Terry 1999, pp. 27-39). It has been observed that employees perform well in organizations if they are aware of what is expected of them in their various areas of expertise. For the purpose of motivating and recognizing employee performance, businesses implement a variety of reward schemes. These rewarding methods include bonuses, profit sharing, and stock options, among others.
Business organizations have utilized incentives as a reward scheme for decades (Clemmer n.d, para. 1-3). Individual employees who contribute to the attainment of an organization's objectives are rewarded with bonuses. In corporate organizations, the strategy is utilized to ensure that staff increase their productivity, hence improving business profit. The system is often utilized to recognize group accomplishments. Undoubtedly, the majority of corporate organizations are transitioning from paying individual employees to rewarding contributions made by diverse groups inside the corporation. There are a number of advantages to using bonuses as a technique of rewarding individual and collective achievement within a business. Motivated employees result from the distribution of bonuses to those who perform admirably inside an organization. When employees see that their contributions to the organization are valued by management, they perform well. Individuals inside the organization try to enhance their performance as a result of receiving bonuses. This technique assists the company in achieving employee royalties. Consequently, employees become committed to their obligations inside the organization (Glasscock & Kimberly 1996, pp. 75-80). The strategy assists in enhancing the performance of employees who lack organizational commitment. As these employees observe the efforts of their coworkers being rewarded, they too endeavor to work diligently for the firm in the hopes of receiving future rewards.
The majority of businesses have implemented group-rewarding bonus systems to boost employee engagement and encourage teamwork. Employees fail to perform effectively in organizations where teamwork is prioritized over individual effort because they believe their contribution to the group is not being appreciated. In these circumstances, each employee in the group relies on the others to carry out any obligation assigned to the group. This is the primary reason why group awarding bonus schemes can operate badly. In certain contexts, praising collaborative accomplishments enhances employee performance. This is due to the fact that all employees are encouraged to contribute equally to the group (Glasscock & Kimberly 1996, pp. 81-89). The bonus structure enables the corporation to concentrate on performance- and profit-enhancing areas. Businesses pay bonuses to employees who contribute to the organization's profitability. This ensures that personnel in these professions perform diligently, thereby improving the profit of the firm.
A human resource manager should be able to recognize each employee's contribution. Not all managers are capable of human resource management. Recruiting employees is one of the most essential responsibilities of a human resource manager. Organizations suffer significant costs while recruiting new employees. Organizations that do not compensate employees for exceptional performance lose the majority of their staff. Employees quit the organization to work for companies that recognize their contributions. Such firms continue to hire new personnel to fill open positions (Henemen & Courtney 1995, p. 3). The business must give competitive salaries in order to attract talented employees. By recognizing employee achievement with a bonus, businesses are able to retain their competent people and attract new, experienced employees. Therefore, the organization is spared the expense of hiring new staff each time an experienced employee leaves.
On the other hand, as a short-term motivator, the system is viewed as ineffective for improving employee performance. Rewarding employees for their accomplishments in prior years encourages every employee to strive diligently to ensure his or her achievement is recognized the following year. The objective of enhancing employee performance should not be limited to facilitating the achievement of short-term corporate objectives. Instead, the compensation system should ensure that it has contributed to the organization's long-term success (Henemen & Courtney 1995, pp. 4-7). A manager may be capable of managing the system's resources, but inability to connect with the human resources may result in failure. A human resource manager should be sympathetic to employees, unlike other managers. To determine employees' needs, he or she should have the ability to read between the lines. A reward system designed from the standpoint of a human resource manager must fulfill both psychological and higher demands. This method motivates the majority of employees to enhance the quality of their services inside the business in order to be rewarded, as opposed to improving their performance in order to achieve the organization's long-term objectives. The bonus system for rewarding employees focuses on rewarding employees based on their essential individual and collective functions. As a result, the majority of employees saw it as a right. They perform poorly within the organization if they are not rewarded immediately. Instead than receiving the award as a recognition from management for their performance, employees receive it as part of their regular compensation. It is alleged that the system discourages creativity inside an organization. As each individual or group in the organization strives to increase performance, new performance approaches are implemented rapidly (Klubnik 1995, pp. 28-32).
The second method of employee compensation is profit sharing. This is when a company sets aside a portion of its profit to share with its employees. After a company organization has completed its financial audit at the end of its fiscal year, this occurs. Each employee's share of the profit is equivalent to a particular percentage of his or her wage. The primary objective of implementing this technique to compensate employees is to recognize their contribution to increasing firm profit. The method provides numerous advantages to corporate organizations. Due to the fact that employees receive a piece of the profit based on the profit they have accumulated in the business, they seek to grow profit (Klubnik 1995, pp. 33-41). This enables the enhancement of business growth. Profitability is essential to corporate growth. As employees try to raise business profit in order to receive a larger share of the profit, the firm benefits as a portion of the profit is utilized to fund its growth.
For a person to be eligible for the profit, he or she must have worked for the company for a minimum amount of time. This strategy facilitates staff retention for firms with substantial profits. This is because every employee desires to work for companies that recognize and reward their achievements. As long as they are assured that they will be able to share in future corporate profits, employees will be willing to remain with the company. The strategy gives employees a sense of belonging to the organization. By sharing in the business's profits, employees experience co-ownership of the enterprise (Metzger 1978, pp. 144-163). This motivates people to remain with the company. Additionally, their dedication to business activity increases. The strategy promotes a culture of teamwork throughout the organization. Employees collaborate to increase the company's profit margin.
Despite the method's benefits, it is also associated with a number of drawbacks. Due to the fact that each employee receives a portion of the profit equal to a predetermined percentage of his or her compensation, the approach does not acknowledge individual contributions to the firm. Some employees may not have contributed to the achievement of the profit, but as members of the company, they receive a larger portion of the profit than those who did contribute. This leads to disheartened personnel (Parker & Liz 2001, p. 64). When employees earn a smaller share of the profit despite their contribution to its attainment, they lose commitment to the organization. Employees who do not contribute to the enhancement of the company's profit are never driven to do so because they are always guaranteed a portion of the profit. As a result, the strategy inhibits people from being inventive and creative in the workplace because their contributions are not acknowledged.
From a different standpoint, this strategy is seen as impeding business progress. The majority of firms rely on their profits for expansion. Allocating a portion of the profit to employees leaves the company with fewer resources to support its expansion. Profit in the business results from a variety of activities that occur within the business. This strategy does not assist employees in establishing a connection between their actions, decisions, and participation and organizational objectives. As a result, it does not provide an opportunity for businesses to identify organizational adjustments necessary to achieve their objectives (Parker & Liz 2001, pp. 66-75). Similar to the bonus system of employee rewards, this strategy may be perceived as an entitlement by employees if it is not effectively articulated. Employees may demand compensation whenever the company generates a profit, regardless of the amount of profit generated. A failure to compensate employees may appear to be a denial of their rights, causing them to withdraw from active participation in the business. Some may even leave the company, causing the company to incur further recruitment costs.
Companies also use stock options as a method of employee compensation. Initially, the strategy was utilized to compensate staff at the highest levels of management within a firm. However, the concept is being gradually adopted as a technique of rewarding junior management teams and other staff in firms (Sarvadi 2009, para. 3-6). A stock option system grants employees the right to purchase a predetermined number of an organization's shares at a discount for a specified time period. The board of directors of the organization authorizes the system. The number of shares issued to employees relies on the outstanding shares of the firm. For an employee to be eligible for the system, he or she must have worked for a specified amount of time at the organization. In the event that an employee wishes to quit the company before being fully vested, he or she forfeits the right to stock options. Once a person has purchased shares, he may keep them or sell them on the open market at a different price (Spitzer 1996, pp. 12-33).
This technique reduces the company's tax liability, which is among its many benefits. Due to the fact that organizations are not taxed on their expenses, this is one of the organization's expenses and is therefore not taxed. As the method is regarded as part of the remuneration, it is not recorded as a business expense in the system's records. The company's perceived value is high, allowing it to attract and hire experienced personnel. The strategy enables businesses to prevent situations in which earnings decline. This is accomplished by lowering the number of outstanding shares in a company (Torrington, Hall &Taylor 2008, pp. 121-153).
This system of employee compensation endangers both the employer and the employee. In the event that employees purchase shares at a price over the market price, they do not gain from the shares because they are unable to sell them on the open market. The majority of an organization's funding comes from the sale of its shares on the open market. By rewarding employees through the system, the corporation is left with fewer publicly tradeable shares.
It is evident from the preceding discussion that not all managers are human resource managers. Human resource management expertise is not innate for all managers. Some managers' inability to respond effectively to employee requirements has resulted in a catastrophic failure in human resource management. To guarantee that every manager is a human resource manager, they should ensure that their organization has incentive programs. A incentive system gives criteria to meet the needs of employees. All of these systems must satisfy employees to be effective. Therefore, they must be designed in a way that rewards employees considerably based on their value to the firm. This is due to the fact that they are essential instruments for staff recruitment and retention. In the majority of cases, employees compare themselves to coworkers at the same level but from different organizations. If they discover that other employees are better compensated, they may decide to leave the firm (Weber 1991, pp. 32-45). Organizations are required to convey the rewards system to their employees. This will prevent people from viewing it as a right, hence eliminating employee protests anytime they are not compensated. Human resources are among an organization's most valuable resources. Therefore, firms should invest in human resource management improvement. Human resource management seminars and workshops are of considerable assistance in transforming all managers into human resource managers.
2009, according to Articlesbase Motivation: reward system and compensation's role Web.
Britton, P.B., J.C. Samantha, and W. Terry, "Rewards of Work," 1999. 25-39 in Ivey Business Journal.
Clemmer, J., "How to Make Effort Rewarding," no date. 2010. Web.
1996. Glasscock, S., and Kimberly, G. Establishing an Effective Recognition System in the Workplace. 75-89 in National Productivity Review.
Henemen, R. L. & Courtney, V.H., 1995. Achieving a Balance Between Group and Individual Rewards: Recognizing Individual Contributions to the Team 3-7 pages of Compensation and Benefits Review.
Rewarding and Recognizing Employees, by J. P. Klubnik, Irwin, 1995, pp. 28-41.
How to Motivate through Profit Sharing was published by B.L. Metzger in 1978. Profit Sharing Research Foundation, Evanston, Illinois.
Parker, O. & Liz, W., 2001. Compensation and Employee Dedication: The Missing Link 64-75 in Ivey Business Journal.
Sarvadi, P. (2009). The Most Effective Methods of Employee Reward. Web.
Power Rewards: Rewards That Really Motivate, by D.R. Spitzer, 1996. (Employee Incentives). Management Review, pp. 12-33.
Torrington, P., L. Hall, and S. Taylor (2008) published Human Resource Management. Pearson Education Limited.
Weber, J. (1991). Offering Employees Unrefusable Stock Options. Business Week, pp. 32-45.