Managing Workforce Engagement & Commitment
Techniques to Manage Workforce
In any organization, workforce commitment and engagement can only be achieved in the firm when its workforce is satisfied with the work and is rewarded with the appropriate benefits that they expect from the management. In present business environment, organizations are using reward management approaches to attract and retain key talent to drive high performance in the business. It is apparent from the fact that employees and their skills and abilities are the only driving force behind competitive advantage and remarkable performance of business. The project report is carried out below attempts to analyse the reward management approaches in context with Inter Continental Hotels Group (IHG) for the purpose of talent management. It will also evaluate the contribution of reward practices in relation to employee motivation, engagement and commitment.
The study by (Burr and Cordery, 2001) reveals that cost allocation in employee reward constitutes a significant part in budget formation of any organization. The dynamics and increasing changes in the modern business world are vulnerable to traditional reward management approaches. The modern business organizations regardless of the size, scale, nature and sector are facing increasing challenges under the economic and business circumstances.
Similar is the case with IHG which is one of the largest organization in hospitality industry. The brand is experiencing problems in reward management which is considerably affecting its performance and causing threats. The current state of the brand shows that it is operating in over 100 countries with more than 4600 properties under various brands. It employs 120,000 employees all over its properties. Taking into account the market position of the brand, it has an estimated 8% share of branded market which is 3% of the total market share. IHG ranks among the top six hospitality brands that controls nearly 41% of the branded rooms. This achievement and position of IHG is contributed by signifiant efforts of employees at all managerial levels (Wright, 2003).
The pay mix of the brand is determined on the basis of external competition. The pay policy is set out through pay structures among the peer group in the industry. The process is carried out with the help of market research that aims to analyse the pay structures at different positions. It undertakes research of employers who compete in same geographic area, same occupational skills and similar products and services (Bassett-Jones and Lloyd, 2005). The reward management in IHG is conducted separately on departmental basis which is accumulated at the HR unit. The departmental heads in continuous manner monitors and supervises the performance of employees to determine the reward criteria and to convey the same to HR unit (Hansen, Smith and Hansen, 2002).
IHG follows a strategic approach to reward management which undertakes all aspects of work that is performed by employees. It also includes learning and development, training and extra efforts that are being contributed by employees to complete the work which are assigned to him. This means that it is following a total reward policy to consider the tangible and intangible benefits that are gained by organization from the effort of its employees (Torrington, Hall and Taylor, 2005.). The reward strategies that are followed by IHG are as follows -
Performance Based Incentives - The brand follows the performance based policy to motivate its employees. An annual appraisal and review of employee is conducted by department and HR head to analyse the performance against the tasks that are assigned to them (HR Resources, 2015). The rewards are based on review scores which are gained by the employees and includes promotion, bonus, commissions and salary increase (Carr and Tang, 2005).
Di Cesare and Sadri (2003) states advantages of this method in the sense that all organizational structures are covered under it equally. Performance is reviewed separately by departments and HR head to avoid any biased view. Additionally, all employees are assigned with equal opportunities of challenging tasks so that their review basis remains the same (Di Cesare and Sadri, 2003).
But Roos and Van Eeden (2008) argued that there are also disadvantages associated with the method. They mention that this method takes a year long time to reward the effort of employees. Considering the present environment where job duration has been declined to 2 or 2.5 years, many employees left before the time of annual appraisal (HR Resources, 2015). Moreover, many employees are refrain from challenging tasks and project work due to any reason which left them out of the race to reward.
Ownership Options - This method is adopted to reward upper level and executive management team to reward their outstanding performance in business results. The brand shares part of the profit and allocates share options to motivate and improve the performance of senior level management (Martín Cruz, Martín Pérez and Trevilla Cantero, 2009).
Hays and Hill (2001) mentions the major advantage of this method as higher amount of reward provided to the employees which improves their performance and achieve higher productivity to show the business results. The method reflects sharing of ownership in company that attains higher satisfaction level.
But demerit of the method is that it is meant for senior level only. The other managerial levels are not entitled to share profits and ownership even if they contribute in that. Another disadvantage is that it creates disparity among the organizational level and leads to decline in motivational levels of employee at the middle and lower level of the organization (HR Resources, 2015).
The lower motivational levels of employees at the middle and lower level thus forms basis to reconsider reward management approaches at IHG. Management finds out that financial incentives and promotions are not enough to satisfy the psychological needs and desires of employees (Leete, 2000). Here, the theories of motivation are given by experts like Maslow and Herzberg needs to take into consideration while rewarding the employee performance by using the correct approach to satisfy his/her desires. According to experts : human needs are layered in structured form and it begins with the basic requirement that lies at the bottom (Armstrong, 2010). As individual or employees achieves lower level need, it moves to higher level to achieve higher satisfaction (HR Resources, 2015). It is also important that these needs and desires must be met in a proper form to keep them motivated and they are being inspired to improve their performance and productivity (Mak and Sockel, 2001).
These aspects conclude that management must adopt a robust reward system that consists of both intrinsic and extrinsic motivators. The IHG redefined its reward system and adopted a policy that includes consideration of intrinsic and extrinsic factors which helps to determine the motivating factor of employee to reward them with an appropriate method (Rynes, Gerhart and Minette, 2004).
Intrinsic Factors - It includes factors such as competency, responsibility and achievement that arrives from challenging and complex tasks along with the opportunities that are provided to the employees.
These factors are internal to the employees and derives from the satisfaction that is gained through work opportunities (HR Resources, 2015).
Extrinsic Factors - These factors consists of pay, promotion, feedbacks and work environment that came from outside environment of employees (Kruse, 2012).
IHG follows this strategy at few selected locations that has the highest number of employees. It also makes changes in the duration of employee appraisal period and reduces it from one year to three months. The employees of same departments were assigned with same challenges and level of work to base their appraisals. In three months time duration, the management analyzed that employee productivity increases significantly with the inclusion of more intrinsic factors. Burr and Cordery (2001) also reveals in their study that above strategy helped the company to achieve low rate of absenteeism as employees feel more satisfied and concerned regarding their work. Moreover, the frequent appraisals in three months time period increases more activities at the workplace as employees feel more pressure to complete the task (HR Resources, 2015). But even in this situation, they feel more satisfied with their work because of the continuous recognition from managerial level. The managers who usually took year long time to appreciate the work of employees now recognise and started appreciating employees at frequent level to boost their morale. Thus, the new reward system achieves higher level of productivity and business performance at the locations as compared with those which are still following the old system (HR Resources, 2015). Hence, looking at the performance of employees and business that generate higher satisfaction with the rewards provided and results obtained, it can be concluded that this approach must be followed at all other locations (Ramus and Killmer, 2007).
The hospitality brand follows a motivational process to identify the change that is required in its existing reward management approach.
Unsatisfied Needs - The brand was following performance based incentives and ownership options as motivating factors to improve the employee efficiency and productivity. But the methods were not effective because organization was experiencing high absenteeism and turnover rate. The employee exiting interview thus helps to analyse that they were not satisfied with the current reward practices (HR Resources, 2015). The rewards were not enough to satisfy their psychological needs. Also, there was disparity among the different levels of organization (Process of motivation, 2015).
Tension - Manolopoulos (2007) states that high absenteeism and turnover rates were affecting the business performance as a result of decreased efficiency and productivity of employees. As IHG is a multinational brand and operates in more than 1200 countries, it needs to maintain and grow its market share and delivers consistent performance to stay competitive.
Action to Satisfy Needs and Motives - The brand then realised the needs to redefine its reward management approach and to consider intrinsic and extrinsic factors as the basis of appreciation and rewarding employee performance (HR Resources, 2015). It demands immediate call for action on part of management to reduce the impact of tension arising an overall business performance.
Goal Accomplishment - IHG follows the new reward system at selected location to measure the effectiveness in terms of satisfaction and motivational levels of employees (Webb, 2007).
Feedback - The feedbacks revealed remarkable result in short term duration and states that new reward practices were far more efficient than existing ones (HR Resources, 2015).
Martín Cruz, Martín Pérez and Trevilla Cantero (2009) emphasize on the importance to understand the motivational factors of employees that increases their satisfaction level and ultimately achieves higher productivity. The managers have analysed that there are different motivational levels and factors of employees that stimulates them to work more efficiently and contributes at their full potential in achieving organizational gaols (Martín Cruz, Martín Pérez and Trevilla Cantero, 2009). Considering the new reward system, management ensures that -
Employees feel that their work is valuable and has meaningful impact on overall business performance.
The work is rewarding. Lastly and more importantly, employees must feel that they are treated fairly at the organization (HR Resources, 2015).
According to Victor H. Vroom, employee's expectations revolve between effort and reward. The author has given the Expectancy Theory that states if employees work well and contributes with additional efforts as demanded by the organization, it is likely that they expect to be rewarded in the same manner (Vroom, Porter and Lawler, 2005). At IHG also, there are many projects and tasks that demand more efforts from employees to achieve a better and improved outcome. Chiang and Jang (2008) also agrees that it is the hard work and intelligent skills of employees that has lead the brand to achieve this position in the market. So, when employees are putting their extra work even when not asked by their senior, they must be rewarded accordingly (HR Resources, 2015). But in case, the reward and recognition of organization and managers were short of employee's expectation, it leads to lower satisfaction level and impacts the efficiency of firm as well (Hays and Hill, 2001).
This dissatisfaction level that caused decreasing efficiency and productivity in the next assignment will impact the results that are expected by the organization. Because when organization fails to measure and recognize the employee efforts, it is likely that employees would not go to put extra efforts the next time if they will be asked to do so (Leete, 2000).
There can be confusion between rewards and motivation. Some employees may be driven by rewards which stimulates them to perform better. But there is also not denying the fact that many employees perform better for other reasons (Wright, 2004). Thus, there are many ways of motivation that cannot be considered as reward. It can be understood as when a performance or task of employees is motivated by rewards, it is termed as extrinsic motivation (HR Resources, 2015). But in terms of business organization, the management will not reward an employee until he/she performs better and achieve good results.
So in conclusion, the employees must be motivated to perform better and in return, they must be rewarded accordingly to contribute their higher level of efficiency (Mak and Sockel, 2001).
The study by Armstrong and Taylor (2009) mentions that high performance working impact the performance of an organisation in relation to productivity, quality, customer service, profit and growth. The practices of high working system requires practices that can facilitate employee involvement, motivation and skill enhancement. The employee satisfaction and efficiency is directly connected with their engagement and commitment level towards the organization (Armstrong and Taylor, 2009). A satisfied employee stays longer with the organization because he is being provided with the rewards and recognition which he expects against his work. A satisfied employee also indulged in his work and put extra efforts to achieve even better results than expected. Many authors also argue that employee engagement is not related with employee satisfaction (Managing for sustainable employee engagement: developing a behavioural framework, 2012). An employee when highly involved in his work lead to better business outcome but it does not mean that he is satisfied (HR Resources, 2015). It is considered that employee engagement is the key to activate and for increasing the performance of employees.
But it can also be said that employees until satisfied with their work will not involve much in work related activities. Their engagement and efficiency will be reduced if they would not be satisfied with the rewards they expect (Rynes, Gerhart and Minette, 2004). But in contrast with this, committed employees contributes in achieving competitive advantages for the organization with their higher productivity and lower turnover. Thus, it is must that IHG while considering its current position and future objectives must invest in practices and policies to foster higher level of commitment and engagement in their workforces (Employee engagement, 2014). It is also important that they continually motivate and reward employees in an appropriate manner to generate higher benefits for the organization. It can be said that a combination of all these practices in suitable manner will lead to higher satisfaction for both employees and management (Kruse, 2012).
It is thus concluded from the report that in present time, organization must choose appropriate reward approach that leads to higher satisfaction level of employees. In the case above, although IHG was providing incentive to their employees but still it was experiencing higher unsatisfactory level that were resulting into high turnover and absenteeism. When management started to consider intrinsic and extrinsic factors of motivation, it has achieved high satisfaction levels as a result of high employee engagement and commitment.
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