Remuneration System For O’meara Company †MyAssignmenthelp.com

Question: Discuss about the Remuneration System For Omeara Company 616684. Answer: Case Background OMeara is an Australian based multinational company that has been operating in the general electronics market for more than 20 years. It was not more than 10 years ago when the company started expanding its operations in certain parts of South-East Asia and also in Germany. The company employs electronic engineers and electronic technicians who design different electronic equipment in the factories, most of which are semi-automated. The company has different operational units, such as research and development, production, storage and dispatch, human resources, marketing, etc. The company has an estimated workforce of 1000 employees while in Melbourne, there are a total of 250 employees. In one of the meetings, that took place in August 2016, the president of the company David OMeara, talked about the declining performance and market position of the company. He also stressed upon the need to bring about changes in the companys existing remuneration and performance management strategies. OMeara suggested that he would like the human resource management department of the company to redesign its remuneration and performance management strategies for the Melbourne office and later on extend it to all the other offices located in different countries. To meet these objectives, the company also decided that they would appoint a new human resource consultant for a contract period of six months. Therefore, in this report, we will conduct a detailed analysis of the existing remuneration system in the OMeara Electronic company and device a new system instead of the older one. Remuneration Systems Remuneration, in simple words, defines the way in which the employees of a company are paid or on what basis are their salaries define. Remuneration is often confused with pay and salaries but in a broader context, it also covers the benefits or bonuses that are paid to the employees of a company under the employment contract. Therefore, a remuneration system is a set of guidelines that help a company in deciding the way and the factors on which the salary and bonus of its employees would depend. Remuneration systems can have a great impact on the long term success and performance of a company and every company can have a different remuneration system. Some companies can even use a mixture of remuneration systems to become more competitive and to keep the workforce motivated. Some of the common remuneration systems observed in the present day are job-based pay and knowledge based pay systems (D.Ittner, F.Larcker, Pizzinic, 2007). Job-Based Pay in a job-based pay system, all jobs in an organisation are slotted into salary schedules. All job positions are assigned a pay scale on the basis of the roles and responsibilities that one will have to fulfil in a particular job role while the variance in pay is based on the qualification of the employee or seniority (Shields Dolle-Samuel, 2015). Person-Based pay It is another common system of remuneration where the employees are paid in accordance with their knowledge, competencies and skills instead of their position in the organisational hierarchy. This type of system is also known as skill based pay structure, competency based pay structure or knowledge based pay structure (Devers, Cannella, Reilly, 2007). OMeara Electronics Companys Remuneration System OMeara Electronics company has identified certain issues with its remuneration system, which was pointed out by the President of the company in a meeting. Sarah Jones, the director of human resource management at OMeara, also pointed out in a meeting that the company has been using a position-based remuneration system whereas the company needs to shift to a person based system in order to meet its performance objectives. In successive meetings, it was also discovered that the companys performance management system is inefficient in achieving the desired objectives, which was a prime reason for employee dissatisfaction and reducing productivity. In order to design a new remuneration system for OMeara Electronics, it is first of all necessary to talk about the issues that are pertaining within its current system. Some of these issues are discussed below: First of all, at OMeara Electronics, organisational performance is just about the customers and the number of contracts while individual performance levels are completely neglected by the management of the company. Further, the individual performance is nowhere linked with the organisational performance, which makes it difficult for the employees to actually realise the roles that they are playing towards the achievement of organisational goals and objectives (Calvin, 2017). The lack of a proper performance management system has made it difficult for the company to actually identify the areas where it lacks competitiveness, which is ultimately having a negative position on the market position of the company (Cadsby, Song, Tapon, 2007). Secondly, the company has not introduced any changes in its human resource management policies, specifically performance management policies and remuneration systems since the very beginning. The staff has developed a comfort zone of its own and will offer resistance to any kind of a change that would interrupt their routine (Bach, 2015). The staff has no clear idea about what a performance management system is and how it can be beneficial for the employer as well as for themselves. Some of the employees in OMeara Electronics reacted in a very negative manner when the leaders talked about bringing about changes in the performance management system of the company. Thirdly, being totally dependent on a position based system of remuneration has not proven to be much beneficial for the company. In the present day scenario, the business world is rapidly changing and a greater priority is being given to the skills and knowledge of an employee rather than the position that he or she holds in an organisation (Colvina Boswellb, 2007). Following a position based approach of remuneration results in increased discrepancies and it becomes difficult to keep the employees motivated and engaged in their jobs because of the lack of decent incentives and career development opportunities. (Boeri, Lucifora, Murphy, 2013). Such issues can have a great deal of impact on the human resources of a company and can bring down the performance and productivity levels of an organisation on the whole. Therefore, David OMeara has taken a correct decision to revise the remuneration system as well as the performance management system of the company so that the company can regain its market position and can also implement the same policies in its foreign subsidiaries. Designing A Remuneration System for OMeara Electronics The business world is rapidly changing and so are the internal and external environmental factors, which are forcing business organisations throughout the world to introduce changes in their work practices and operations, in order to remain competitive and outperform their competitors. In such a condition, OMeara Electronics, which is a multinational firm, has shaped its remuneration system on a traditional approach since the time when the company was founded. As a result, its productivity has declined and it has become crucial to introduce certain changes in its performance management system and remuneration system. Following are some of the points that would act as guidelines for the human resource management of the company in designing a new remuneration system for the employees: Shifting to a new remuneration system The existing system of remuneration in the company has not proven its worth in the long run because of which, the company is becoming less productive and is also losing its market share. As a result, the management of the company needs to make a gradual shift from position based remuneration system to a person based remuneration system, where the salary and the bonus for a job position will be decided by considering the knowledge and skills of a person rather than his or her position (Paik, Parboteeah, Shim, 2007). A person based remuneration system will be helpful to the company in a number of ways. First of all, when the employees will receive a remuneration that will be dependent on the level of their skills and capabilities, they would feel the need of developing themselves in order to achieve their needs (Kessler, 2005). The work environment would become more competitive and every employee would try to polish his or her own skills and know ledge. In a research carried out by Murray and Gerhart, it was found that even if there is a slight increase in the hourly wages of the employees under a person based remuneration system, the quality of the final product is considerably high and the overall labour costs also decreases in the longer run (Murray Gerhart, 1998). Secondly, an increase in the skills and knowledge of the entire workforce will definitely bring about a great increase in the companys overall competitiveness and efficiency. With better products and reduced labour prices, the company will be able to tap a greater market share and increase its profitability. Thirdly, having a person based remuneration system will help the company in strengthening its human resource policies and market statistics as an employer. Fresh talent in the market will obviously be inclined towards working with a company that provides a greater value to the skills and knowledge of an employee rather than the position that he or she holds in com pany (Chung, Steenburgh, Sudhir, 2013). Furthermore, it will also assist the company in retaining its talented pool of employees as a person based remuneration system will keep them motivated and engaged in their jobs. Ultimately, the company will emerge as an employer of choice in the market while it will also be able to dominate its competitors in terms of profitability, product quality and customer satisfaction (Eldridge Palmer, 2009). A major point to be considered in a person based remuneration system is that sometimes it can have a negative impact on the workplace environment. Some people are of the belief that if an employee is not paid adequately for demonstrating poor performance than a star performer should have a scope of becoming rich because of his abilities. A person based remuneration system can also cause conflicts among colleagues and co-workers as they might feel demotivated if a person performing similar tasks is being paid higher than them (Barnes, Reb, Ang, 2012). To avoid such a scenario, the management at OMeara Electronics can implement a combination of two remuneration systems. The management can fix a basic wage for different job positions and can offer them incentives, bonus and promotion opportunities on the basis of their skills and knowledge (Burnett, Cushing, Bivona, 2012). Such a system can prove to be the best of both worlds as it will help the company in enjoying the benefits of a p erson based remuneration system while also dealing with the issues that come with it. Conclusion OMeara Electronics has been a tough competitor in the market since its foundation. Its ability to expand into international markets and to continue on its path to success solely depends on its ability to introduce changes in its remuneration system and link them with performance management. The company has failed to change with the changing market trends and is still following a position based remuneration approach, which is a traditional approach and is not much effective in motivating and engaging the employees. The human resource management of the company can look into the above recommendations and can design a system that can use the best of a position based remuneration system as well as a person based remuneration system, which will not only help in keeping the employees engaged and motivated, but also in increasing the overall productivity of the organisation and making it more profitable in the longer run. Furthermore, the ability of the remuneration system to strengthen the performance management system of the company can also foster a competitive work environment in the workplace, which would ultimately beneficial for the company as well as for the employees. Thus, this is a necessary change that the company needs to implement as soon as it can. References Murray, B., Gerhart, B. (1998, February). An Empirical Analysis of a Skill-Based Pay Program and Plant Performance Outcomes. The Academy of Management Journal, 41(1), 68-78. Calvin, O. Y. (2017, March). The Impact of Remuneration on Employees' Performance : A Study of Abdul Gusau Polytechnic, Talata-Mafara and State College of Education Maru, Zamfara State . Arabian Journal of Business and Management Review, 4(2). Boeri, T., Lucifora, C., Murphy, K. J. (Eds.). (2013). Executive Remuneration and Employee Performance-Related Pay: A Transatlantic Perspecive. UK: MPG Printgroup. Kessler, I. (2005). Remuneration Systems. In S. 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