Reward policy and reward management system (RMS) may be considered to be the critical success factor (CSF) for the business organization (Camilleri, 2017). The instant paper briefly discusses the implications of an effective RMS in an organizational context. While discussing the same, the paper refers to the given case study of Cheesy Pizza Company which is a pizza company and planning to expand its operations by opening 10 outlets in Singapore.
At the beginning of the study, the plan overview is provided followed by the significance of an efficient reward policy. The subsequent part of the paper deals with the discussion on the objective of the objective of the reward system. In addition, the researcher also attempts to evaluate the points of consideration that should be kept in mind while developing a reward system in Singapore of the business. Lastly, the researcher provides recommendation and wraps up the discussion by providing a concluding note.
Cheezy Pizza Company is Pizza Company based in USA. The company has been operating in the given market for the last 10 years with the stable customer base and more than average profitability than the market standard. The company has a good reputation in the domestic market as employer and employees’ satisfaction index is considerably high for the firm in comparison to its competitor. Now as part of its expansion program, the firm wants to go to Singapore and plans t open 10 outlets therein. The reward policy of the plan needs to be developed which forms the essence of the present paper.
Reward management system (RMS) is a crucial success factor for a business organization. An effective RMS helps the management to motivate the employees and staffs of the business organization through financial and non-financial benefits. The core behind RMS is human psychology. The researchers have established the fact that the effective reward policy boosts up the employees and get them engaged in their roles and responsibilities (Swamy, Nanjundeswaraswamy and Rashmi, 2015). Over the past few decades, there have been a number of researches conducted on the reward system and organizational performance and almost all the findings have established the correlation between these two elements. It has been observed that the well-structured reward system and policies around the performance linked bonus and incentives significantly drive the motivation level of the workforce which, in turn, contribute towards the operational excellence (Mustapa and Mahmood, 2016). The section below in the report lists down some of the critical objectives behind a sound reward management system.
Business organization has several risk factors and the employee attrition rate is clearly among them. There are instances where the management suffers from a huge attrition rate (Rees and Smith, 2017). Such attrition may happen either because of the fact that the employees leave the organization because of unsatisfactory pay package; or may be due to the termination by the management on account of substandard performance (Hairon and Tan, 2017). In this context, an interesting point to note is that the employee performance is also linked to the reward system of the firm, as stated earlier also. If the business has faced consistently high attrition rate, the same may dampen the brand value of the firm in the labor market and hence, the prospective employees may not be interested to get associated with such brand (Pek-Greer, Wallace and Al-Ansaari, 2016). Therefore, it becomes critical for the management to attract the new and best talent and retain them with the business on a long-term basis. That is the reason; one of the primary objectives of a strong reward management system is to attract and retain the talent (Hairon and Tan, 2017).
As mentioned previously, the reward policy is directly linked with the employee performance. Well performing employees should be awarded so that the same effect the organization in two ways. First of all, the well-performing employee gets motivated to continue to perform better (Rees and Smith, 2017). Secondly, the same morally boost up other employees also indirectly to contribute more to get awarded. RMS seeks to motivate the workforce through structured policies and strategies and eventually helps the enhancement of quality and performance (Rees and Smith, 2017).
There are companies that have structured their pay packages based on the level of skills of the employees. For example, two employees working at a similar level may get a different salary because of their skills and academic qualification. The companies run various sponsorship ship program also in which employees may excel their knowledge acquire new qualification and learn something new in order to compete in a skill-based pay environment (Nalla, Lim and Demirkol, 2015). This approach indirectly fosters the learning and development initiatives and help holistic growth for the firm as well as o the individual.
Reward system is one of the elements that contribute towards the development of organizational culture. An organization may have different types of cultural environment inculcated within. Some companies prefer an entrepreneurial culture where the employees are encouraged to take independent entrepreneurship activities. There are firms that encourage an innovative culture in which innovation and disruption become a priority and out of the box, thinking wins the race (Nalla, Lim and Demirkol, 2015). Also, the business fostering the competency-based culture promotes skills and performance in order to excel in the operational aspect of the business. However, the reward system may have the ability to shape organizational culture and direct the same towards the management’s objective of sustainability because the RMS has a profound impact on communication motivation, performance, satisfaction and membership, and inclusion also.
A reward system may reinforce the organizational structure. An efficient reward system should have the objective of uniting the employees, inculcate the bonding, and enforce the culture of sharing and collaborating. Additionally, the efficient reward system helps to define the status hierarchy of the business organization (Nalla, Lim and Demirkol, 2015).
Employee benefit occupies major areas of entire administrative cost bracket of the organization. The effective reward policy does not mean an excessive payment to employees; neither it would denote stringent pay structure and pay cut for the employees. There should be a balance between the organizational performance which may be reflected through the financial health of the business and the employee benefits. The objective of the reward system is to make such balance and implement the same in an organizational context (Kiruja and Mukuru, 2018).
The reward system should have the objective of the company with all the relevant la sans regulations relevant in the country for the purpose of pay structure design. There are several guidelines and pronouncement by the Government regarding the tax implications, and incentives and waiver of benefits (Nalla, Lim and Demirkol, 2015). These factors should be taken into consideration while designing a reward policy for the business.
In order to build a strong and effective reward system, the management may need to consider several factors. In the given case study, such considerations may be of two types. One is specific considerations. It has been mentioned that the business intends to expand its operations in Singapore. Therefore, it becomes utmost crucial and important for the HR managers to know the country’s laws and regulations related to labor and workers if any (Shields, Brown, Kaine, Dolle-Samuel, North-Samardzic, McLean, Johns, O’Leary, Robinson and Plimmer, 2015). Accordingly, the reward policy should be developed. Specific considerations will be the relevant implications of the country’s laws around the employees. On the other hand, there will be general considerations which will be observed for all types of efficient RMS.
In Singapore, all the employee benefits are governed by the Singapore Employment Act. The Act governs the employment contracts, salary, compensation and benefits and all other related matters in Singapore. Some of the salient features of the Act that may be relevant in designing the reward system therein are briefly mentioned below:
Minimum Salary: In Singapore, there is no minimum salary to be paid to the employees. However, the same should be paid once in a month and preferably within 7th of the following month. Hence, the management may devise the policy accordingly.
Working Hours and Overtime: The maximum working hour in a week is 44 hours. The employees should not work for more than 6 hours without break. Also, employees should not work for more than 12 hours per day, including overtime work. However, there are exceptional cases which will be judged on case to case basis.
Leaves and Holidays: Though the law prescribes minimum 7 days, the common practice is that the employer generally allows 14 days of annual leave.
Health Insurance: Singapore citizens or permanents residents employees are automatically provided a low-cost medical insurance called Medishield.
Probation: The Act does not provide any guidelines for the probation period. The common practice is that the employer may ask to serve for 2/3 months probation in which the notice period is also shorter than the standard one month.
Termination: There is no notice period and separation may happen from any of the sides either by way of paying salary or writing notice.
Training: There is no statutory requirement of imparting training to the employees, Nether there are any practices of providing training to the staffs and workers for up gradation of their knowledge (Guidemesingapore.com, 2018).
The other details are specified in the table below:
|
Max. Hours of Work per Week |
As per contract |
As per contract |
44 hours |
|
Max. Days of Work per Week |
As per contract |
As per contract |
6 days |
|
Overtime |
As per contract |
As per contract |
Maximum 72 hours per month |
|
CPF Contribution |
Required |
Required |
Required |
|
Annual Bonus |
As per contract |
As per contract |
As per contract |
|
Paid Annual Leave |
As per contract |
As per contract |
1st year – 7 days |
|
Paid Sick Leave |
As per contract |
As per contract |
Outpatient: 5-14 days |
|
Paid Maternity Leave |
16 weeks |
16 weeks |
16 weeks |
|
Paid Annual Childcare Leave |
6 days |
6 days |
6 days |
|
Paid Public Holidays |
11 days |
11 days |
11 days |
|
Probation Period |
As per contract |
As per contract |
As per contract |
|
Termination Notice Period |
As per contract |
As per contract |
As per contract |
|
Medical Insurance |
As per contract |
As per contract |
As per contract |
(Guidemesingapore.com, 2018)
While designing the reward policy, the HR manager should consider the following points as these are the elements of an ideal reward system.
The performance measurement may be formed by way of the following six criteria:
The discussion above brings out certain points which the HR manager of the company should consider while formulating an effective reward system for the business.
First of all, the Singapore Employment Act should be consulted with and all the reward policies should be in compliance with the Act. However, there are certain areas where the Act is silent and in such case, the common practice will prevail. For example, the probation period is not specified in the Act. However, the HR manager should consider around 2 week’s time for the probation period as common practice (Festing and Tekieli, 2018). In this context, it may be noted that the reward system does not only count the employee benefits in terms of pay packages during normal contractual agreement of service. It rather also includes the compensation structure for all types of employees, be it temporary, apprentice, permanent, probationary or even labor forces.
Another interesting point is training and development for the staffs. The Act does not specify any requirement. Also, the companies in Singapore do not entertain such training. This may be a dicey area for the business intending to expand its operation in Singapore. If the employees there are not comfortable or habituated with the training and development proposition, they may feel awkward or even puzzled which may affect their performance. However, if the employees are motivated through strategic persuasion, such training provision may add significant value to the firm’s CV in terms of brand creation and sustainability approach (Debroux, 2017).
Besides, the HR manager should also consider the fact that the people working there in Singapore operation of the company get fair scope of transfer to USA and vice-versa under cultural exchange program whereby people of both the countries may get considerable opportunity to explore the differences in the culture and traditions of both the societies and hence may inculcate the same in their work practices (Greene and Kirton, 2015). The researches have established the fact that such kinds of program significantly helps to build the team bonding and enforce cultural diversity and inclusion within the workplace and thereby enhance the organizational culture effectively towards sustainability (Vaiman and Brewster, 2015).
In addition, the HR department of the firm should also need to identify the common psyche of the people in Singapore in relation to the rewards. Different societies across the world have been built up in different socio-economic backdrop and hence, the culture and choice and preferences vary widely with respect to the demographic profile of the people (Banks, 2015). Since Singapore is among the developed countries, the people over there generally prefer to be rewarded with intrinsic rewards like responsibility, development, respect and prestige and not through extrinsic rewards like pay, bonus or overtime (Adams, Nyuur, Ellis and Debrah, 2017). HR manager may need to keep the factor in mind while formulating reward policies.
Therefore, it is recommended to the HR manager to consider these points and chalk out a reward system in such a way that the same adds value to the company’s relationship portfolio. It is needless to mention that while formulating the policies, the HR manager should be in constant consultation with the company’s CEO and their accord in terms of consideration of both the pecuniary and the non-pecuniary factors that may affect the employee performance and affect the organizational operations (Desmet, Ortuño-Ortín and Wacziarg, 2017).
Conclusion
Based on the discussion and analysis performed in the preceding sections of the report, it may be identified that the effective reward management system is a key to organizational success. Implementation of effective RMS and its effective execution requires strategic moves by the HR managers and the management as a whole. However, there are certain challenges in the implementation of a new set of RMS and strategies.
First of all, the employees may be resistant to change. This is a psychological barrier which should be methodically diminished by showing them the financial and non-financial benefits that may accrue for them in near-term (Napathorn and Kuruvilla, 2017). Secondly, it has been identified that the RMS fails to measure all financial and non-financial factors creating value for the business (Park, Min, and Chen, 2016). Also, the system fails to measure the learning, development, change, and growth in non-financial terms. Lastly, it has also been noted that people tend to concentrate too much on the immediate benefit rather than focusing on the achievement of long-term goals. As a result, the implementation of reward policy gets stuck (Houlihan, Contreras and Barnicle, 2016). Hence, it may be concluded that HR managers, in consultation with higher management, must formulate strategies and plans as to how to go about the reward policy developing and accordingly develop the same considering all the externalities and challenges associated with it (Dumont, Shen and Deng, 2017). A well-designed, structured and strategic reward management system will significantly contribute towards the corporate goal of achievement of sustainability in the long-term in a most efficient manner (Armstrong and Taylor, 2014).
References
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