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Learning Objectives
To know Benefit Programmes for Management
To understand problems raised by Benefit Programmes
To learn administration of Benefits and Services
Introduction to the Concept of Benefit
Programmes for Management
Special considerations and policies apply to the benefit
programmes for the management, for which a different benefit
structure is provided because of the fact that many legal
considerations do not operate in their case.
For example, management personnel do not receive overtime
allowance or payment; nor are they governed by trade union
considerations or agreements. Managers generally are not
entitled to, nor do they expect, many of the benefits and
services to which employees in general are entitled.
However, management personnel are generally required to
contribute in part to their insurance, gratuity, pension and
provident fund. Tax exemptions become more important and
meaningful for them as they advance in the management
hierarchy.
The personnel department is generally responsible for the
coordination of the plans for the administration of these
benefits and services. For this purpose, it seeks the advice of the
various departments, calls for their suggestions and anticipates
the emergence bf possible problems.
The final approval of the plans formulated for the management
personnel, however, is the preogative of the top authority of an
organization.
Problems Raised By Benefit Programmes
Many problems arise when these programmes are adopted and
administered. These are:
1.Charge of Paternalism
When too many benefits and services are offered to employees,
a feeling develops that employers are playing the role of parents
and the workers are looked upon as their children. Moreover,
the latter sometimes develop the feeling that these benefits and
services are their right - which is not really so.
ii. Excessive Expenditure
The administration of these benefits and services is a fairly
costly affair, involving large outlays of direct and indirect
financial expenditure, and often involves a great deal of paper
work.
iii.Fads Become Fashionable
With the introduction of these benefits and services in one
company, other concerns vie with one another to introduce
them as well. Credit unions and severance pay are examples of
benefits which were once considered to be novel but are now
commonplace in industry.
iv.Maintenance of the Least Productive Workers:
With an increase in benefits and services, employees, particularly
when they are not very productive, tend to stick to their jobs,
and are not interested fn changing them.
v.Neglect of Other Personnel Functions
When a management becomes more concerned about the
provision and administration of benefits and services, it often
pays very little attention to other aspects of personnel
programmes. Over-emphasis on these benefits and services
may often develop a concern among the employees for their
future security rather than for their present productivity.
The relationship between a companys benefits-and-services
programmes and employee motivation for increased
production is what weak.
Administration of Benefits and Services
Organizations fumble while administering employee benefits
and services. Organizations have seldom established objectives,
systematic plans and standards to determine the viability of the
programmes.
The main problem is the lack of employee participation.
Managers, too, take little interest in the benefits programme and
trade unions are almost hostile to the schemes. Managers are
not even aware of the organizations policy towards benefits
and their contribution to the quality of corporate life.
Trade unions entertain a feeling of alleviation as the benefits are
likely to erode their base. These problems can be avoided if
steps are taken:
(i) to establish benefit objectives;
(ii) to assess environmental factors;
(iii) to assess competitiveness;
(iv) to communicate benefit information;
(v) to control
Future Trends in Reward Management
The considerable developments in reward management that
have taken place recently are associated with changes in the
economic and competitive environments in which businesses
operate and the ways in which they respond to these external
challenges.
Reward management strategy is an extension of the
organizations business strategy. trends in reward practices can
only be forecast in the light of predictions on how business
strategies and the programmes flowing form them are likely to
develop. There is no doubt that changes in reward management
over the last decade have been in response to changes in
business strategies and practices which in turn have responded
to changes in the competitive environment.
LESSON 33:
ADMINISTRATION OF BENEFIT
PROGRAMME AND SERVICES
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These changes have been well summarized by Rosabeth Moss
Kanter when she defines her model of the post entrepreneurial
corporation as a leaner organization with fewer extraneous
staff which focuses on doing only those things in which it has
competence she suggests that the post entrepreneurial
compotation represents a triumph of process over structure
in contexts requiring speed and dexterity, what is important is
not how responsibilities are divided but how people can pull
together to pursue new opportunities.
Increasingly, people have had to learn how to function in
constantly changing roles; indeed, how to carry out
simultaneously a number of different roles. They have to
achieve a balance between concentrating on their own areas of
skill and responsibility and working together with others.
Businesses have had to look very hard at the ways in which they
employ people, using value-added analysis techniques to ensure
that each step carried out in a work process and decision
sequences augment the previous step.
In developing business strategies and the HR and reward
strategies that flow from them, organizations have been driven
by the need to satisfy demands for flexibility, continuous
development and team work. To make the best use of their
distinctive competences they have had to attract, retain motivate
and develop distinctive people. And, importantly, they have to
ensure that they get value for money from their reward practices.
It is these business trends which., have .governed the most
important reward management developments in recent years,
namely: a more strategic focus, a more flexible approach to job
evaluation, greater focus on external relativities, job family
modelling, broad banding, the assessment of inputs
(competences) as well as outputs in performance management
processes, competence-related pay, team pay and flexible
benefits.
So far as business change is concerned, there is no evidence that
there will be any significant future difference in its nature or
direction, at least in the short to, medium term. Of course the
pace of change will vary; governments and recessions will come
and go; and the ED and the possible single currency will make a
difference. And, following the change in Government, there
may be changes in the attitudes to corporate governance and an
increased emphasis on the responsibility of businesses to their
stakeholders.
It is interesting to remember the CBI/Hay 1995 survey
findings2 that almost half the 480 UK organizations surveyed
had changed some aspect of their pay strategy or policy in the
previous two years. The areas most affected were pay structure,
pay progression and the introduction of profit related pay.
For these organizations, the emphasis in the next few years is
more likely to be on consolidating and testing innovations
rather than on seeking new nostrums. This will particularly
apply to such developments as broad banding, competence-
related pay and team pay.
The CBI/Hay survey established that the most significant
factor driving change in pay and benefit policy are the need to
strengthen the link to business performance, cost control,
support for organizational change, and recruitment and
retention pressures...
The need for more flexibility in pay and benefits is likely to
become more urgent. Businesses which are still contemplating
the changes required to improve the effectiveness of their
reward processes will be taking account of these factors.
The CBI/Hay survey found that:
13 per cent of responding organizations planned to introduce
team pay;
30 per cent were making changes in their benefits packages,
mainly to allow more flexibility; 17 per cent planned to
introduce a broad banded pay structure;
13 per cent intended to introduce a formal performance
management process.
The 1996 IRS survey of 270 private sector companies3 found
that 54 per cent intended to revise their reward practices in the
next 12 months. The initiative most often mentioned was PRP,
cited _y 36 per cent of those contemplating a change, followed
by competence-related pay (33 per cent).
So the future does not necessarily include any quantum leaps in
reward management policy and practice. But environmental and
organizational demands are encouraging developments such as
those set out by Murlis.
Well-developed career management programmes that enable
employees to see how they can manage their own progression
in an environment where promotion is rarer and more
significant when it happens, and when building experience in
different roles is the way to progress;
Well-designed and implemented performance management
processes that often embrace the use of competences and so
support development, as well as the achievement of objectives,
and which link credibly to performance-related pay progression
and other variable pay schemes;
Line management skilled in interpreting market data, making
local pay decisions and operating and communicating the
policies needed for this new environment;
Well-validated salary market anchors for the new roles, which
managers can review and use as background for pay budgeting
and pay progression decisions;
Strong, locally based financial control and modelling systems to
support decision making and help ensure the prevention of pay
drift.
Case: The Ineffective Incentive
George Morales had worked at the Adams Company for 8 years
in the extrusion press department. He had progressed from his
break-in job of laborer to sawyer, leadout, and the top job of
heater and press operator. The functions of the press operator
are to operate the press, act as lead man of the crew, and arrange
his work into an orderly sequence. George had spent most of
his time on a press of 2,500-ton capacity, although presses of
larger capacities were available.
An incentive system had been installed in the press area and was
based on the load and extrusion cycles to determine the
standard minutes. The actual time to perform the job was
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divided into the standard minutes to determine the efficiency of
the crew.
George had performed satisfactorily for a long period of time in
all classifications, particularly in that of operator. He was
considered as having a pleasing personality and being an
efficient operator with an average efficiency of 116 percent, an
excellent coordinator of his four-man crew, and highly
concerned with the quality of the work he maid his crew turned
out. He was in good health, and his attendance record was
considered perfect.
The firms profits have been decreasing the past 18 months
owing to the effects of
Management competition. Management decided to investigate
the methods of performing the . ark in each department, the
objective being to improve methods wherever possible to areas
costs. Some layouts in the press area were modified to the
extent that crew uses could be reduced. Georges crew was
reduced by one crewmember.
About this time, Georges attitude and performance changed
markedly for the worse. is immediate supervisor found it
necessary to caution him several times, first on the availavity of
his work, then his grouchy attitude which verged on
insubordination, and internally his attendance. His supervisor
could not determine any satisfactory reason for this nation. It
appeared to him that George was just not trying or that he was
not paying mention to what he was doing. The supervisor was
also unable to determine the reason the grouchy attitude, except
George saying he didnt feel good.
The supervisor month have much time to let the situation ride
because the poor quality of Georges work was beginning to
show up in other process centers. This caused his own superior
to get into the act. When the poor quality began reaching the
final inspection department, the roof fell in. The plant
superintendent, the general superintendent, and the department
supervisor were now on the supervisors neck. An immediate
meeting was held with the supervisor by the plants top
management where he unfolded his meager story. Since this was
not an adequate explanation, it was decided to bring George
into the meeting. While waiting for him to appear, the general
superintendent convincingly advanced his theory that George
was offering resistance to the change in methods. The
department supervisor objected to his theory since no trouble
had been experienced in prior similar situations.- When George
arrived, he was asked to state why his production had
worsened, but he declined to offer any more information than
that he had given to his supervisor. He was informed that he
would have to improve immediately or be dismissed. He was
told he would be given 1 week to make the transition in
recognition of his long period of satisfactory service. The
proper union officials were informed of all the facts and the
proposition. The union officers were perplexed about the
change in George but, being aware of his poor performance,
reluctantly went along with the arrangement.
The department supervisor was the sole individual not in
agreement with the rest. He first quizzed the immediate
supervisor again and obtained no new information. He felt
somewhat disappointed in him for not being closer to the man
and having some idea of what had caused the sudden change.
The department supervisor then talked to several union leaders
and other members of the organization. None had any
additional information. George had been part of the gang up
to the time his work performance changed; since then he had
become a lone wolf. The union and informal- group leaders
were aware of the seriousness of his situation if he did not
change, and felt that they had let the department foreman down
in not being able to shed any light on the case.
The first 3 working days of the weeklong waiting period went
by with no change. On the fourth day the department
supervisor ran into George in the restroom. He asked him what
he intended to do. George replied that he guessed they would
just have to fire him. The department supervisor looked at his
worried strained face-the previously happy youth looked as
though he had aged many years in a short time. The
department supervisor asked George what he and his wife were
doing about this problem. This question caused George to
break down completely; he even cried. A private place was
found, and he and George talked. His wife had left him. This
was the mans problem.
He refrained from telling anyone of this because he had
bragged so much of the good relationship he and his wife had,
and now that she had left him, he was ashamed to mention it.
The department head could do little but sympathize with him.
Remarkable: enough, Georges performance improved the next
day.
The department supervisor informed his superiors of what
had happened. The plat superintendent was elated, but the
general superintendent, while saying the department supervisor
had done a good job, was very cool. The recovery for George
was slow be positive. The general supervisor continued to
ride both the department foreman an.:
George about the slow recovery. The general supervisors
attitude was that this complete was in business to make a profit
and was not a psychological correctional institutes. The general
supervisor persisted in taking some disciplinary action. The
department supervisor resisted and won out at the expense of
some lowering of status in the eyes of his superior.
The operator fully recovered his composure in another few
weeks and approached his jovial former self. He again talked
and joked with his fellow workers. His efficiency returned to his
prior average and his quality was again high.
Questions
1. Why did the general superintendent believe that resistance to
changes in methods caused Georges behavior?
2. Should George have received some type of discipline for his
declining quality of work, grouchy attitude, and poor
attendance?
3. What do you think of the behavior of the immediate
supervisor? If you were his superintendent, would you have
permitted defiance of your wishes in this case?