The changes made by Spotlight management to their old remuneration system may create significant impacts to the whole personnel. With the deliberate implementation of the new remuneration system, the senior management is very concerned about the outcome of their decision and considered the potential effects to employee effectiveness.
The outline of this paper is as follows: the first section provides the conceptual definitions that guide this essay. It also provides a brief history of the new WorkChoices industrial relations legislation and Spotlight case. The next section outlines the main argument. Also, remuneration, its related concepts like rewards and incentives and motivation and pay, and HR function will follow. In the next section, this paper also outlines the argument that remuneration is an effective motivation factor in the performance and productivity of employee and that the potential risk in the execution of the changes in the remuneration is a major issue for the whole management. A concluding section collectively draws the central idea.
Remuneration
Traditionally, this term has something to do with the idea of monetary involvement in exchange to services rendered, like employment. It includes various types such as pay, salary, wage, commission, compensation, employee stock option, fringe benefits and others. In this essay, the term remuneration falls within this context.
The New WorkChoices Industrial Relations Legislation: an Overview
The new WorkChoices industrial relations legislation was released by the Federal Government in response to some initiatives (economic). With this act, it includes the cashing out of overtime, penalty rates, meal allowances, paid rest breaks and other benefits to the value of $90 a week in exchange for a two-cents-per-hour wage increase. WorkChoices has created national headlines and debate yet believers emphasized the advantages of the act. They consider WorkChoices as a simpler, fairer, national workplace relations system. The change was done due to some important reasons: first, Australia continues to change so the government must go along with such changes for the benefit of the majority; second, for stronger economy as this cooperative approach will improve the economy of the country by providing new, permanent, and full time jobs and lowering the rate of unemployment; third, securing the future especially in the workplace setting; fourth, a fairer system that benefits both the employer and employee; fifth, a simpler system that will unify the different pieces of industrial relations legislations and workplace systems that operates across the country; and lastly, to improve living standards (Australian Government 2005).
The Spotlight management indeed complied with the new legislation. Employees’ overtime, penalty rates, meal allowances and paid rest breaks of workers removed in exchange for two cents an hour extra in their wages. Under the Australian Workplace Agreement (AWA), it is compulsory for all new Spotlight workers to move wages from the award rate of $14.28 an hour to $14.30, but all other payments will be lost. However, with the implementation of this new legislation, senior management authorities are concerned with the potential risk of their decision to reduce employees’ wages. In order to understand the probable effects of this new system particularly in employee productivity and organizational performance, Spotlight management must understand the importance of remuneration as a strong motivation factor and HR function.
Human resource management literatures proved that employee performance and productivity – individual or team, is likely interconnected with a agreeable remuneration system. Hence, managing remuneration, reward, or compensation is an important HR function.
Rewards and Incentives: a HR Perspective
According to Burke and Cooper (2004:26), when organizations value and reward people, those people are committed to performing well. As a result, the organization accomplishes more and it can then reward employees more and attracts and retain more talented employees. This leads to even higher organizational performance. It also involves developing a variety of HRM practices that motivate people to peak performance with accompanying rewards. Staffs, in turn, are more committed to the organization and more responsible for their own behaviors (contribution, learning, development, etc.).
HRM practices can also influence levels of motivation through the use of performance appraisals, pay-for-performance incentives, and internal promotions systems based on merit (Brown, Sturman, & Simmering 2003:752-762). HRM practices can also influence the design of work so that highly motivated and skilled employees can use what they know in performing their jobs (Wright & Boswell 2002: 247-276). Giving incentives on a favorable performance appraisal is an example of a positive reinforcement that will impact the attitudes and behavior of employees. This mechanism falls under performance management functions handled by HR managers.
However, there are some positive and negative consequences in giving incentives. Incentives work as a positive reinforcement when used as a motivational factor and reward system (Champion-Hughes 2001:287). It motivates employee to work for a common goal. On the other hand, rewards and incentives insinuate competition among employees, thus, breaking the perspective of teamwork (Burke & Cooper 2004:26). A compensation system that only rewards individual performance is not consistent with sustaining teamwork (Lublin 1995:R4) because the compensation system tells employees which behaviors will be rewarded and which will be punished (Salas et al. 2004: 95-120). If the system strictly reinforces individualistic behavior, without any consideration for collaboration or collective goals, then teamwork behaviors will be inhibited.
In relation to the traditional system of incentives and incentives based on customer satisfaction in a variety of industry, the both possess similar operations. There is no significant difference in performance management except to the fact that they involve two different workforces but still working on one objective – company growth. The potential solution to a balance incentives or rewards management lies in the hand of an effective HR manager and efficient HR function.
Motivation and Compensation: a HR Responsibility
Basic financial rewards and conditions of service are determined by national bargaining or government minimum wage legislation such as the WorkChoices or by collective bargaining with labor unions. Details of conditions of service are often more important than the basics (Sims 2002:4). Hence, financial and other motivations must constantly be evaluated and improved to ensure employee satisfaction.
According to the expectancy theory, employees expect and need to be rewarded according to the work they do, and will help them to develop their capability, help them to work up to a higher level so that they can be better rewarded (Sims 2002:7). Employees expect organizations to have compensation systems that they perceive as being fair and commensurate with their skills and expectations. The compensation may, in some cases, act as employee motivators. These compensations that employees receive may be value-added compensation including direct compensation, such as salary, incentives and commissions; and indirect compensation, such as insurance benefits, employee recognition programs, flexible work hours, and vacation benefits. To improve performance, the system theory assumes a synchronized work environment. To synchronize the parts of the organization, it is necessary for the productivity of the company is ensuring the effectiveness of the organization. According to Sims (2002:10-15), an organization needs constantly to take stock of its workforce and to assess its performance in existing jobs for three reasons:
• To improve organizational performance via improving the performance of individual contributors.
• To identify potential, i.e. to recognize existing talent and to use that to fill vacancies higher in the organization or to transfer individuals into jobs where better use can be made of their abilities or developing skills.
• To provide an equitable method of linking payment to performance where there are no numerical criteria.
Remuneration Management: Against All the Odds
Researches by Huselid (1995: 635-672), MacDuffie (1995: 197-221), Delery and Doty (1996: 802-835), and others has demonstrated significant relationships between HR practices and organizational performance. Treating the employees as champions and as a significant aspect of the organization naturally results to other positive outcomes. This could be shown in implementing a fairly and satisfactorily designed remuneration system for the employees. A number of empirical studies have concluded that HRM practices have a significant effect on the organization, which leads to high performance (Delaney & Huselid 1996: 949-69; Haltiwanger, Lane & Spletzer 1999: 94-98; Brewer & Selden 2000:685).
Organizational performance is achieved through HRM functions like appropriate, fair, and balance remuneration system. This will mold the employees as significant contributors to the individual productivity and organizational performance. Having the appropriate HR skills particularly in remuneration aspects that are honed to the maximum level, employees will then lead to the attainment of various goals of the organization. From this relationship, it is then appropriate to wrap up that the function of the HR in the remuneration system a firm is very significant. However, a lot of organizations, like Spotlight, began to significantly switch their people-managing policies and systematize them in new directions (Budhwar & Debrah 2001:9).
In response to the main query, the recent remuneration changes by the Spotlight management will both have positive as well as negative effects on their employees. Positive effects may range to the lawful protection of the following: minimum and award classification wages, annual leave, personal/career’s leave (including sick leave), parental leave (including maternity leave), maximum ordinary hours of work, protection against unlawful termination, specified existing award conditions like penalty rates, overtime and long service leave, the right to join and be represented by a union, the right to have a bargaining agent, and the right to lawful industrial action when negotiating an agreement (Australian Government 2005). It also conforms to the national labor legislation and recognizes the vital role of employees as main contributors to economic growth. As clearly stated in the previous discussions, HR functions specifically in remuneration management indicate that rewards and incentives motivate employees to work best and achieve optimum effectiveness. Although some specified things may change in the initial period of implementation of WorkChoices, the Government assured that the fundamental rights of Australian workers are duly protected. The negative effects, on the other hand, can be manifested within the bounds of internal environment of the organization. Conflicts, misinterpretation of the legislation, and other related aspects may disrupt the effective implementation of the provisions of WorkChoices. But then again, Spotlight senior management has the ability to confer alternative solutions to the emerging risk in the implementation of the remuneration changes particularly in relation to employee productivity and effectiveness.
Recommendations
To address impending difficulties, the Spotlight management may adapt the following recommendations:
Acknowledge the comments, reactions and feedbacks of the employees. Open line of communication between the management and personnel is crucial. Further, collective bargaining and maintaining an open line of communication among concerned parties is imperative.
Study the feasibility of implementing an alternative solution (e.g. incentive and reward programs) that will motivate employees but also considering the financial capability of the company to provide such.
In connection to employee motivation and compensation, Spotlight management must focus on the fairness and equal treatment of employee. Managers must be willing to communicate with their associates. The leadership style must be evaluated in order to know if it is effective or not. Benefits, incentives and rewards are some means to motivate employee performance. However, it is also recommended that it must be used in moderation. Effective implementation of motivational actions will result to increased productivity.
HR personnel must be aware and keen on the possible emergence of new trends or resurgence of old trends that will affect the whole remuneration process. The effective execution of various HR functions particularly in remuneration management must be prioritized.
Management should reiterate the given importance of employees as major determinants of the organizational performance and key participants in corporate success. Recognition not only in terms of monetary basis must be freely extended to deserving employees. Career development and a culture of growth must always be proliferated.
To the Government, continuous research and development (R&D) efforts must be done as to evaluate the effects of WorkChoices provisions.
Conclusion
In conclusion, this paper has argued that employees consider remuneration as a strong motivation factor in relation to their individual and team performance and productivity. Rewards and incentives as well as motivation and compensation are employee-based requirements that every organization should consider. Also, it proves that effective remuneration management is an important area of HRM that every HR manager should prioritized. Indeed, there are significant effects of the recent remuneration changes by the Spotlight management especially to employee effectiveness. With the instantaneous intervention of HR functions coupled with management strategies, both management and human resources will benefit to the humble intentions of WorkChoices.
Reference
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