Total reward systems in HR

Introduction

The total reward system emerged from a single dimensional monetary reward to a multidimensional and integrated approach which includes both the intangible and tangible aspects of the rewards. On the contrary, the motivation is more likely to happen when the intrinsic needs are satisfied with the extrinsic ones. Hence, it can be said that the TRS has an integral role in determination of the employees’ motivation level. In this paper, it will be elucidated how an intricate relationship is shared by the TRS and different theories pertaining to motivation. Apart from this, the paper will also focus on the total reward systems’ effectiveness on two distinct sectors of employment such as the public and private sectors.

Discussion

Explanation of the Total Reward Systems’ concept and analysis of the linkage between various motivation theories and the TRS

There are several definitions of Total Reward Systems. However, the most distinct one is that the model is used to decipher the dynamic relationship shared by the employees and employers. As a result, an ongoing and healthy connection between an organisation’s employees and the employers are depicted in the TRS (Shields et al., 2015).  The system utilised in a company is dependent upon the outcome that the firm wants to achieve. For instance, if a firm is trying to decrease the turnover rate then it is important to provide phenomenal development and training opportunities.

On the other hand, it is crucial to endow various values within the compensation structure if the company is enticing the best of talents from the market. In simple terms, each element pertaining to the compensation as well as benefits is referred to as the reward. Hence, the total rewards comprise of everything that an employee expects or anticipates to receive from the end of employers because of their contractual relationship. The TRS can be broken down into several aspects such as indirect benefits, direct benefits, work environment, and job satisfaction factors. For instance, in the case of direct benefit, mostly monetary rewards are included such as incentives, salaries, and bonuses (Armstrong and Taylor, 2014). On the other hand, the indirect benefits are holiday leaves, insurance, health and medical, child care, employee assistance, and many more. Alternatively, the job satisfaction level is measured by the employees when they receive adequate amount of challenges in work, interesting tasks, recognition, advancement, and responsibilities (Kaur, 2013). Lastly, the environment in a workplace must be pleasant enough to provide mental peace amongst the employees and therefore, they expect healthy and safe workplace, fait treatment, congenial co-workers, competent supervision, and good practices as well as policies.

Interestingly, the employees’ performance is one of the linkage points between both the motivational theories and the TRS (Galtress, Marshall and Kirkpatrick, 2012). On one hand, motivation is important for extracting employee productivity; on the other hand, TRS is crucial for making the employees more dedicated towards the company.

Motivation is referred to as the process where the individual behaviours are largely influenced by the authorities of an organisation to withhold or offer satisfaction related to the work. The two most important motivation-related theories which can be linked with the concept of rewards are the process and content theories (Jerome, 2013). The former one focuses on the real motivational process whereas content theories are intricately linked with the concept of motivation. Alternatively, the rewards are achieved by the workers during the process of a job (Daley, 2012). According to the Maslow’s need hierarchy, there are five levels of needs that the human beings possess. The employees, on the other hand, want their employers to fulfil them for maximum job satisfaction. Alternatively, according to Herzberg, two factors such as the motivation and hygiene factors are most crucial ones for the employees. In fact, money cannot be considered as the most important aspect for motivating the employees (Lester, 2013). McGregor, alternatively, proclaimed that the managers must follow various motivational theories such as the theory Y and theory X for motivating their subordinates (Mowday, Porter and Steers, 2013). The theory X explains how majority of the employees do not prefer working and are likely to avoid the same even if they have complete knowledge about the work, allotted. The Theory Y makes them do the allocated tasks properly rather excellently. The companies, as a result, use both the techniques of negative and positive amplifications so as to motivate all the employees. From the above theories, it is at least clear that a TRS must be designed by incorporating various intangible factors together unlike the conventional reward procedure. Hence, a customised or personalised reward system is more appreciated than the ones where stereotyping is done. In fact, it helps in adapting to the external as well as internal business environments (Cerasoli, Nicklin and Ford, 2014). Arguably, a robust TRS always caters the employees’ every need. On the other hand, the motivational theory of Maslow also deciphers how there are not only one or two levels of needs but almost 5 levels are present. Both the motivation and reward systems focus on the objectives of the organisation (Fernandez and Moldogaziev, 2012). For instance, motivation is the core element of every employee when reduction of turnover rate is concerned. A similar instance can be witnessed for the total reward system as well. As per the Maslow’s needs hierarchy, in the basic level that is the physiological needs, an employee cannot survive without adequate amount of food, shelter, and clothing. In such a scenario, if the employees are provided lodging facility, i.e., HRA and food facility, i.e., canteen provisions then chances are high that they can stick to the organisation for a longer period of time (Gupta and Shaw, 2014). However, once their basic needs are fulfilled they will try and move up the needs’ hierarchy. For example, safety needs of a person include stability in life, protection from mistreatments in the society and many more. The third level of the hierarchy comprises of belongingness needs (Lazaroiu, 2015). In this case, the employees will want a cordial relationship with their colleagues because aspects such as being a group’s part, affiliation, love, receiving, rust, acceptance, intimacy, and friendships are highlighted in this phase (Aguinis, Joo and Gottfredson, 2013). As a result, it is extremely important for a company to provide a safe and hygienic workplace along with few cooperative colleagues. However, if all these things are missing then chances are high that the employees may feel de-motivated and leave the same, out of sheer dissatisfaction. The next hierarchy includes the esteem needs where the employees prefer to possess independence, mastery, and success reports more. Basically, they want themselves to be appreciated for the hard work they do for the organisation. It is likely to be higher in the case of committed employees. Therefore, the rewards are extremely important to satisfy the needs of this level (Manzoor, 2012). After all, both the intrinsic and extrinsic rewards are expected by the employees. In the case of intrinsic rewards, promotions, extra holidays, and awards are provided. On the other hand, the extrinsic rewards such as increments, cash rewards, and others are often given to the employees for extracting maximum amount of productivity from them (Chen, Williamson and Zhou, 2012). The self-actualisation phase is the last stage of the hierarchy where a person seeks self-improvement. In order to do so, the companies can definitely arrange few training sessions in which different new skills are developed by the employees (Ankli and Palliam, 2012). Nowadays, it is quite observable that the employees are ready to contribute more when they are provided opportunity to develop themselves along with the organisation (Cho and Perry, 2012). In fact, without improving self it is not possible to provide services to others.

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Therefore, it is evident in this section how the popular motivational theories focus both on the extrinsic as well as intrinsic rewards. On the other hand, the TRS also comprises both of them, collaboratively.

Effectiveness of using TRS in public and private employment sectors

The private sector organisation chosen for this paper is The Rose & Crown. On the other hand, the public institute selected is none other than the oldest state-funded Beverly Grammar School (BGS, 2017). It provides comprehensive secondary education to the boys. BGS is located in England, Yorkshire. Many famous personalities passed out from here itself as it provides the best of education to the students (Renwick, Redman and Maguire, 2013). On the other hand, it was found, in 2013, that the school needs renovation and a plethora of improvements. Soon afterwards, many of the new classrooms were built. Contradictorily, The Rose & Crown of Durham is mostly owned by the private owners. The Robinson family owns the same. They also farmed for last four generations. On the other hand, the day-to-day operations are looked after by none other than the wife of Thomas Robinson, Cheryl.

Multiple goals can be observed in the case of total rewards such as retaining the old performers, attracting employees, spending money wisely, motivating performance, aligning the organisational and the employees’ goals, and rewarding the behaviour of various employees (Hernandez, 2012). In most of the state-funded schools the compensation structure is not adequate. For instance, even in BGS, the teachers hardly get enough amount of salary (Dobre, 2013). It can affect the students’ performance as well. The teachers are likely to stay away from teaching the best academic lessons when the extrinsic motivation, i.e., yearly increment is missing (Jiang, Lepak, Han, Hong, Kim and Winkler, 2012). In fact, the teachers’ own quality of life remains very low and that is why delivering the best performances is not possible from their end. Sometimes, even after getting employment opportunity in BGS, the teachers tend to leave the school thereby contributing to its higher turnover rate (Klingner, Nalbandian and Llorens, 2015). The main reason for such actions is the inadequate proactive steps from the state’s end to raise their salary (Minbaeva, Mäkelä and Rabbiosi, 2012). Even if their salary increases it is bare minimum in nature. Their performances are also not recognised when those teachers give maximum effort in development of the students, academically (Fang and Gerhart, 2012). However, in the last few years the state understood all the loopholes and started taking proactive steps in regards to the same. For example, a survey was done in the year 2013, where various flaws pertaining to the teachers’ satisfaction level and inadequate infrastructure was found. As a result, the state decided to surge the teachers’ remuneration so as to retain them and provide quality education to the students. After all, these steps not only attracted the talented teachers from different corners of U.K. but also the same helped to increase the number of students within the school’s premises (Jacobsen, Hvitved and Andersen, 2014). Interestingly, most of the teachers have great passion for teaching and that is why concentrating on the extrinsic reward system can work holistically towards the staff retention strategy.

Alternatively, The Rose & Crown is also a boutique hotel and that is why various facilities along with lodging are also provided to the fullest (The Rose & Crown, 2017). On the other hand, being in the service industry, the hotel has to entice the talented employees for satisfying the customers’ demands to the fullest (Wang and Hou, 2015). It will also help the organisation to compete with other players present in the market (Tyson, 2014). Moreover, there are several departments of the hotel such as bar, restaurant, and many more (Pinder, 2014). The hotel’s reward programmes for the staffs help them to interact in the best possible way with the customers. Hence, it can be observed how training the required soft skills enhance the process of customer interaction. As a result, the intrinsic rewards can work for The Rose & Crown’s employees as they will be cheerful while interacting with the hotel’s customers.

Conclusion

From the above-paper, it can be inferred that without motivation the employees of any sector cannot be retained for a longer tenure. It is because according to the Theory X, hardly the employees will want to work, no matter what the situation is. However, whether it is intrinsic motivation or extrinsic motivation, at least one of them must be incorporated in the total reward system for yielding maximum output from the employees.