Case Study on Henderson Printing

Case Study on Henderson Printing

Executive summary:

The Henderson Printing is a small size firm in Halifex, Canada. It produces and sells record books, ledgers and various other record books. The company objective is customer oriented and the CEO George wants to serve the customer best.

However, there is lots of managerial problems within the organization. One of such problem if lack of proper organizational structure. There are no proper supervisors, mangers or accountants in the organization. The CEO himself has to look into the supervising issues.

The reward strategy of Henderson Printing is very vague and they give different rewards to different employees. Although every employee is given bonus on the Christmas Eve, the amount varies huge.

Furthermore, some employees whose cheerful attitude is remembered by George, gets high amount while the any employees who complain about other employees or some other reasons gets smaller amount. This would not be welcomed by every employee.

Introduction:

The organization Henderson Printing ahs lots of managerial flaws though it has sales value of $12 million. The owner and CEO George have the business objective of selling high quality long lasting record books.

Their business strategy is customer oriented and they value customer preferences. However, the management in Henderson Printing has lots of problem. The biggest problem is that there is no proper organization structure. No proper supervisors, mangers or accountants are there in the organization.

The CEO himself has to look into the supervising issues that are not efficient. The CEO holds the top position of company he must not be involved with the small issues within the organization, this reduces the efficiency level.

Reward strategy:

According to Zhu & Zhang, (2016)reward strategy of any organization describes how reward policy of the organization is used to enhance performance of each employee. Reward strategy uses reward as a policies, practices and process to support business strategy and improving performance of employee.

The main purpose of reward strategy is to rewarding the employees those who have contributed large for the organization. The purpose of reward strategy is also related with the fact that the organizations areinterested to attract high quality skills to the organization.

The reward strategy should include some basic guidelines, which is crucial to reflect the business strategy of the organization. Proper reward strategy should explicitly include HR strategy of the organization.

In the case study of Henderson Printing case, the organization is small to medium size organization with quite good number of employees. However, the CEO of Henderson printing, George Henderson does not follow any particular HR strategy and uses reward strategy to support their business idea.

He have business vision to provide high quality customer service by selling them high quality account books, ledgers and various type of record book. The CEO does not follow any concrete business strategy and uses rewards and other managerial strategy vaguely.

The reward strategy used by George is veryvague and he gives different rewards to different employees. He used to give reward to every employee on the Christmas Eve. Furthermore, some employees whose cheerful attitude is remembered by George, gets highamount while the any employees who complain about other employees or some other reasons gets smaller amount. This would not be welcomed by every employee.

Reward StrategyProsConsImpact on staffs
Christmas Bonus·         Increases the interest of employees to put more hard work

·         Gives immense job satisfaction to the employees

·         The bonus are given only when company makes huge profit

·         The level of bonus is not same for everyone.

·         The employees get high bonus will obviously be happy, however, the employees will receive low bonus will be disappointed.

·         There are no particular criteria for giving bonus. The process is purely arbitrary and therefore discriminatory in nature.

·         Staffs may feel unjustified when receiving low bonus despite providing hard work.

·         The discriminatory attitude may reduce the morale of the employees, which will be detrimental to organization growth.

 

 

However, reward strategy should be created such that overall business objective is served and it should have some connection with HR strategy (McLarney& Hansen, 2016). Reward strategy is not liked by every employee equally and the strategy itself has some discriminatory factors. Without proper planning of reward strategy, it will lead to adverse effects in the environment of the organization.

Thus, there should be some minimum level of integration of reward strategy with HR strategy as two are mutually supportive of other factors like talent management, performance management and organizational development.

Therefore, the reward strategy of Henderson Printing is very incompetent and CEO George should first develop proper HR strategy then should create appropriate reward strategy. As opined by Wu et al., (2016) the reward strategy must be made on genuine criteria with proper guidelines to choose reward for each employee. It must aims to reward the talent and original hard working employees rather than arbitrarily choosing reward for everyone.

Compensation analysis- new reward strategy:

The reward strategy is intended to reward employees for supporting the objectives of organization. Therefore, the strategy should be made in order to attract, motivate and retain employees (Zhu & Zhang, 2016). It is pivotal for the organization to follow proper guidelines while rewarding employees and the arbitrary rewarding system of Henderson Printing is not conducive for competitive organizational environment.

Total reward must include every valuable thing that are perceived to be vital for employee relationship. Through the reward strategy, the company must demonstrate their objectives and performance demand from the employees clearly.

However, as stated by Singh et al. (2017), there is no concept of best practices in field of reward strategy and some basic principles should be remembered while formulating reward strategy. The basic principles regarding this are uniqueness, clarity, consciousness, realistic.

Every business is different and objectives of every business are necessarily different, therefore the reward strategy cannot follow one size fit for all strategy. The reward strategy of any organization must reflect the uniqueness and objective of that particular organization.

For Henderson printing the arbitrary reward strategy should be replaced with proper guidelines for rewarding. The objective of Henderson is to supply high quality long lasting record book that should be included in the reward strategy. The following steps can followed in developing reward strategy.

 Case Study on Henderson Printing

Figure 1: developing reward strategy

(Source: Reward Strategy – Assignment Point. 2018)

The HR strategy is important and there is no HR strategy in Henderson. After developing HR strategy the actual reward strategy must be developed. The company must create different position for supervisors, mangers, and all them should be consulted while creating reward strategy. Then comes the original steps of making reward strategy and it should be made with proper guidelines.

After making reward strategy, it should be substantiated to every employee with all relevant information like total reward, job evaluation, grade or pay structure, contribution pay and flexibility. All employees should be given clear and concise goals to follow for getting reward. The reward criteria must be transparent and accountable. Any kind of corruption in the process de motivated and demoralized employees. The criteria to achieve reward must be realistic.

The performance elements are the main basis on which reward should be given. The performance elements like skills, competencies, management, behavior, attachment, commitment and loyalty are important.

All these elements are important in assessing overall performance. Every employee must be encouraged to put their hard work and helps the organization to achieve overall goal. The following table shows most important performance criteria and there significance in assessing rewards criteria.

Performance elementsImportant of the elements
1. Competencies in doing the jobSkills and competencies of employees are most crucial for giving good performance. Therefore, judging and providing reward to employees on basis of skills and competencies will be justified for every employee.
2. Commitment for work and organizationApart from just working for the organization, there must be responsibility and sense of commitment for the job. This makes the workers to provide their best performance under every situations and more contribution for the organization to achieve their goal. Therefore, employees with higher level of commitment for the organization should be rewarded than any other employees who only work for money.

The above two performance elements should be kept along with other factors such as innovation, loyalty and many more. The arbitrary giving reward should be abolished for sake of Henderson printing.

Particularly giving low bonus to the employees who complained previously about other employees should be stopped; this will give wrong message to the employees. This also indicates that company is biased and insensitive to employee’s issues.

Compensation mix and related measures of success:

The tools of compensation and reward are used to attract, retain and motivate employees. The compensation strategy of any organization reflects the work culture of the organization with their objective in focus. The compensation philosophy helps to design compensation strategy and complexity of the compensation strategy. The creating compensation strategy signifies the direct and indirect financial compensation criteria that are the basis for total compensation approach. The compensation strategy oriented with total compensation package that employees are provided and this create a relationship with the company.

According to Demerouti et al. (2014), for keeping the competition of with recent environment, every company must build the compensation strategy, as a mixture of salary, benefits, incentives and non-cash compensation. The compensation mix is more effective in attracting, motivating and retaining employees than any other policy of compensation.

The salary is most popular method of compensating employees and salary is directly linked with the designation and skills of the employees. Therefore, salary is most common and is mostly same in market structure. The benefits are mainly the key differentiator between employees.

It is related with stability, health, wellness, and lifestyle. Incentives are generally linked with business goals and performance of the employees. Incentive can be of two types such as short term and long-term incentive. The short-term incentives are related with annual bonus, profit sharing, commission plan while the long-term incentives include mainly the stock options.

As opined by O’Connell & O’Sullivan, (2014) the broad elements of compensation mix are base pay, indirect pay and incentive pay. To set a compensation mix policy it is crucial to set a formula based on which the total strategy will be built. The formula considers the each elements of compensation with a particular percentage that adds up to get total amount of compensation.

The formula for Henderson printing can be base pay 70%+ indirect pay 20%+ performance pay 10%. The compensation mix formula is built keeping in mind the conditions of the organization, condition of the market and objective of the organization.

The market condition for the product of Henderson has high potentiality and this is indicated by the high profit level of the company. However, the company is small to medium in size and do not afford to give formal compensation to the employees.

On the other hand, company must employ some basic posts like accountant, cashier to handle the financial situation, which at the current stage is missing. The bookkeeper will help to keep track of employees work and other things.

The base is salary level and most of the employees do not work in any institutions if they do not get their desired salary. The salary level of each employees should be as per with the market rate and this can have 70% weight age in compensation mix.

The pay scale is set by marketing pricing, job evaluation and pay for knowledge. The weight age of indirect pay is 20% and this is related with other benefits and prerequisites that are given to motivate and retain employees. However, Henderson is not able to give extra benefit but to motivate employees they must start giving benefits.

According to O’Connell & O’Sullivan, (2014) the performance pay must include extra ordinary performance by any employee, innovative thinking and commitment and dedication with the job. This can be given 10% weight age. The overall situations of compensation mix can be summarized as follows.

Elements of Compensation mixWeightsTypes Importance
Base pay70%Basic salarySalary is main factors of job and this is directly related with the skill and designations of employees. Therefore, base pay should be given highest weights.
Indirect pay20%Pensions, mobile and internet facilities, company car, pay for overtime, health and life insurance, annual leave.All these factors add extra benefits with the job. These attract more workers with quality skills.
Performance pay10%Incentives, profit sharing, other pays for excellent performanceThe payments are important to motivate employees for hard work and thinks for innovations. These kinds of pay raise the morale of employees and they become willing to work hard.

The performance pay as particularly related with individual employee thus should be more oriented with individual pay rather than group pay. The organizational pay should be kept in mind however, this is should not be the sole basis for giving compensation. As for example, Henderson Printing gives bonus only when they are able to make high profit, there must be performance pay for extra ordinary performance for that employee.

 

Therefore, compensation is tangible and there are some intangible rewards such as recognition, work life and development. The employee compensation strategy is good components of competitive human resources strategy. For creating effective compensation strategy, there should be a balance between business affordability and employee value.

The affordability level of Henderson Printing is not capable of providing formal business incentives but it should try to give for further growth and development. Ultimately, the compensation should be fair and equitable without any kind of systematic prejudices.

Measures of effectiveness of compensation system:

The compensation mix itself is not satisfactory until it is measured against standard measures. As opined by Jarvenpaa&Tanriverdi, (2018) the effectiveness of compensation can be measured with help of turnover rates, satisfaction surveys, productivity goals, absenteeism rates and health and safety incidents.

The turnover rate implies growth of the organization and this is achieved with contribution from employees. With growth, the company can provide high compensation and attract more talented employee. The compensation system can further be improved after knowing the limitations and dissatisfaction through satisfaction survey.

The other factors will also help to evaluate effectiveness of compensation system.  The following graph depicts the framework for measuring compensation and reward strategy.

 

 Case Study on Henderson Printing

Figure 2: Measures of success

(source:Demerouti et al., 2014 )

The above graphs depict deferent methods of measuring success of compensation strategy. The below tables elaborates two process of measures.

Measures of successImplication
1. setting strategic reward goals and success criteriaSetting strategic reward goal will clearly set the level beforehand and the success criteria will evaluate how far reward is successful for the organization.
2. review of employeesReview by the employees is importance to get insights of their thinking about the reward policy.

Legislative acts to consider:

The Government of Canada and their labor division administers gave some labor code that should be maintained by every organization in Nova Scotia. According to question, (2018) the labor codes are set to ensure that there should be fair and equitable pay with all employees within every organization of Nova Scotia.

This labor codes also helps to maintain uniformity in law in Nova Scotia. The employees must not be discriminated against any factors like gender, sex, age, and race, religious. Ti is also made with intention that every employee should be treated alike and fair. The labor codes are rules that are specific with recruiting workers, working hours, rules and regulations and hiring foreign workers.

The labor code includes many rules for fair and equitable payment system for the organization. One of such code is equal pay for equal work. This code includes one provision regarding merit pay system. It mentioned that merit pay system that pays workers other pay then salary should be based on employees’ performance (question, 2018).

This code is totally broke of Henderson as they gives bonus arbitrarily. However, the Henderson printing gives bonus to their every employee, the rate differentiates lots among them. This is totally violation of labor codes set by the Canadian Government.

Giving bonus arbitrarily is discriminatory and theygive low bonus to the employees complained about their grievances against another employee. This practice is de motivating and demoralizing to the employees, therefore should be abolished. Fair and equitable bonus payment to all employees as per with the labor code must be given.

The Labor code of Nova Scotia also gives advice to keep proper accountant for every organization for proper maintaining of records. The instruction is given to all organization in Nova Scotia to keep records by using either manual system using a payroll book or computerized bookkeeping.

However, Henderson Printing do not maintain proper authorized accountant for maintaining their records. Only a unskilled unsuitable persons are assigned the work to keep records and bookkeeping. This is serious violation of the Government rule, as Henderson Printing will not be able to show any records when asked by Government.

Thus, a specialized accountant who holds appropriate degree should be posted for the job. This will helps in keeping all the records properly. The records can be produced when asked by Government.

Profit sharing- organizational performance pay:

The profit sharing is a part of variable pay plan and it is given to employees when company meets a certain target of profit. According to Poole, M. (2017) through profit sharing, the company gives the employees a share of annual profit as reward for contributing their high effort for the company.

Profit sharing works are suitable for every kind of performance pay. In case of individual pay or team pay, it is not suitable to give share of profit to any individual employees when every employeehas some contribution for the organization in making such profit. In case of group pay, it is again injustice to give only single term share of profit while the entire organization includes contributions from many teams.

Furthermore, profit sharing is perfectly suitable for performance pay based organizational performance. In this case, when any organization makes high profit it is shared by all as every employee have some contribution. The main limitation of profit sharing is that the individual employee cannot clearly understand his or her contribution as every employees get same share of profit. The individual performance is not highlighted.

Compensation challenges in the time of change:

However, with the above discussion it is clear that compensation ahs huge impact on employees for motivation, retain and morale for the organization. The Henderson Printing is able to provide formal corporate compensation as it is still a small size firm and still not expand so much to provide such.

Therefore, it is imperative that Henderson should look for another alternative strategy to meet the challenges of compensation and reap the benefits of compensation. As opined by Jarvenpaa&Tanriverdi, (2018) the alternative strategy can be looking for different source for funds such as banks, vendors and government.

They can help Henderson Printing with fund to give compensation and increase the performance level of employees. The new CEO Georgette should try to expand their business for further increasing the business size and compensation level.

Conclusion

The reward strategy of any organization must reflect the uniqueness and objective of that particular organization. For keeping the competition of with recent environment, every company must build the compensation strategy, as a mixture of salary, benefits, incentives and non-cash compensation.

The formula considers the each elements of compensation with a particular percentage that adds up to get total amount of compensation. The formula for Henderson printing can be base pay 70%+ indirect pay 20%+ performance pay 10%. The compensation mix itself is not satisfactory until it is measured against standard measures.

The effectiveness of compensation can be measured with help of turnover rates, satisfaction surveys, productivity goals, absenteeism rates and health and safety incidents. The Henderson Printing is able to provide formal corporate compensation as it is still a small size firm and still not expand so much to provide such.

Therefore, it is imperative that Henderson should look for another alternative strategy to meet the challenges of compensation and reap the benefits of compensation.

References:

Demerouti, E., Bakker, A. B., &Leiter, M. (2014).Burnout and job performance: The moderating role of selection, optimization, and compensation strategies. Journal of occupational health psychology19(1), 96.

Ghose, S. K., & MOHANTY, P. K. (2016).INNOVATIVE RECOGNITION AND REWARD STRATEGY AS A TOOL FOR EMPLOYEE ENGAGEMENT: AN EMPIRICAL STUDY ON PRIVATE RETAIL BANKING IN ODISHA. CLEAR International Journal of Research in Commerce & Management7(3).

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Jarvenpaa, S., &Tanriverdi, H. (2018). How does A Firms Choice of Hierarchy Versus Platform Mode of Governance Affect Knowledge Worker Behaviors around Knowledge Creation, Profit Sharing, and Quitting?. Academy of Management Global Proceedings, (2018), 26.

McLarney, C., & Hansen, J. (2016, March).Influences on Employee Reward Strategies in International Organizations.In Proceedings of International Academic Conferences (No. 3305200).International Institute of Social and Economic Sciences.

novascotia.ca (2018). Retrieved from https://novascotia.ca/lae/employmentrights/docs/labourstandardscodeguide.pdf

O’Connell, V., & O’Sullivan, D. (2014).The influence of lead indicator strength on the use of nonfinancial measures in performance management: Evidence from CEO compensation schemes. Strategic Management Journal35(6), 826-844.

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