HRM4416 Reward Management Assignment
Added on 2020-04-15
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Student name: Mahmoud Abdelhamid Abusamra AbdelrasoulMISIS number: M00609387Module:HRM4416Academic year: Dubai 2017/18Module name: Reward ManagementAssignment name: Maine Bank Case Study Module leader: Dr. Lien Els1
Table of ContentsExecutive Summary............................................................................................................31-Introduction...............................................................................................................42-Analysis & Discussion.................................................................................................42.1. Flawed pay structure.............................................................................................................42.2. High-turnover & recruitment cost..........................................................................................52.3. Impact of Brexit on Investors.................................................................................................63-Recommendations......................................................................................................73.1. Job family pay structure........................................................................................................73.2. Value-creation based compensation......................................................................................83.2.1. Long-term incentive plans (LTIs)..........................................................................................83.2.2. Short-term incentive plans (STIs).........................................................................................83.2.3. Pay entitlement per job family............................................................................................93.3. Flexible benefits scheme........................................................................................................93.4. Non-Financial recommendations for MB.............................................................................104-Implementation of recommendations.......................................................................104.1. Identification of the career path of all MB units..................................................................114.2. Alignment of job family levels (internal equity)...................................................................114.3. Job family levels value (external competitiveness)..............................................................114.4. Job slotting and communication of the new structure.........................................................114.5. Pilot scheme implementation review..................................................................................115-Best practices of similar banks..................................................................................125.1. Standard Chartered Bank (SCB)...........................................................................................125.2. Bank of New Zealand (BNZ).................................................................................................126-Conclusion................................................................................................................137-References................................................................................................................132
Executive SummaryThis report aims at investigating Maine bank (MB) financial reward strategy in the light of externalpressures from MB shareholders to reduce costs by 10% and increase profitability. Also, the reasons behindpay inequity perception of many staff members are analyzed across different departments.The report draws attention that MB has adopted a multi-graded pay structure without a properperformance measurement that led to the fact that 80 % of the staff have reached the maximum pay rate,which in turn, resulted in a rise in payroll costs (Rose, 2014). Also, it has been revealed that MB incentiveplan is based on annual merit-increases reaching up to 2.2% of the base salary, which has led to costescalation in the long-term, let alone the pension scheme costs. Besides, this type of incentives fail tomotivate the staff because of the mismatch between increase rates and inflation rates (Armstrong, 2015).Further analysis revealed that the employee's turnover rates measure almost 30% (in MB callcenter) which is considered high against the private-sector trend in the UK reaching 23 % in 2017 (XpertHR,2017). The call center employees seem not to contemplate the relationship between their effort and theway they are rewarded leading to loss of motivation. On the other side, investment bankers are alarmed bythe Brexit and losing their jobs through relocating some or all business operations.Thus, this report evaluates the challenges mentioned above and concludes that MB needs to changeits pay structure and develop a new variable compensation plan that enables the bank to driveperformance as well as reducing the payroll costs. Moreover, the new scheme should be based on a robustanalysis negotiated with the banking union that is represented in 30 % of the staff. Therefore, it is mainlyrecommended to:Develop a job family based structure that’s based on analytical job evaluation and robust marketdata to reduce pay inequities.Design a long-term incentive scheme to improve employees’ retention and loyalty.Design a short-term incentive scheme that includes individual and group compensation to motivatestaff & drive performance.Integrate a balanced-scorecard performance measurement scheme to draw clear line-of-sightbetween effort and reward.3
Pilot the new reward strategy in the retail business sector since it's the primary source of MBprofitability.1-IntroductionMonetary reward refers to the financial payments secured to an employee as a way of retaininghim/her. The primary aim of providing financial compensation is to ensure such an employee is paid for his/her immense contribution towards the individual efforts, as well as an input made, work done, and skillsemployed when working (Perego & Hartmann, 2009). The payment system, as well as level of pay play animperative role in trying to determine the relationship that exists between the employee and the employer(Kerr & Rifkin 2008). Thus, it is always necessary that a given organization should come up with anappropriate pay system to cater for the financial needs of all employees (Fleming, Chow & Chen, 2007).Such a system will only be deemed adequate if it can portray the money value while at the same timeacting as a just reward to all employees based on their assigned duties (Perego & Hartmann, 2009). Financial compensation, in the banking sector, can also be referred to the act of providing incentivesto businesses that are active. Maine Bank (MB) is one of the financial institutions that have continued toregister dismal performance because of having poor monetary reward choices based on a multi-graded paystructure which is notorious for creating a rigidly hierarchical organization (Armstrong, 2014). Therefore,this report has delved on determining some of the significant steps the bank has to make to remedy itsinequities in embracing financial reward and highlighting some of the recommendations deemedappropriate for the improvement of the bank’s performance. Also, the report exhibits some of the bestpractices in similar banks that might benefit MB in its venture towards equitable and competitive rewardstrategy.2-Best practices of similar banks 2.1. Standard Chartered Bank (SCB)Standard Chartered Bank (SCB) is one of the major financial institutions (similar to MB) in the UKidentified to have employed a total reward system more efficiently with the aim to retain its top talentemployees and drive performance (Armstrong et al., 2010).As far as financial rewards are concerned, SCB embarked on benchmarking the employees payranges against its competitors in the labor market to create a market anchor point (Worldatwork, 2007).4
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