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ASSIGNMENT OF ORGANIZATIONAL

PSYCHOLOGY

Submitted To:
Batch:
Submission Date:

Ms. Sana Chatha


MBA-E9 (7th Semester)
22nd October

2015

Submitted By:
Wajid Ali
3335
Nabita Ishtiaq 3353
Rana Tassadaq 3316

Reward System In Relation To Performance


(Coca-Cola)

Reward Management:
Reward management is concerned with the formulation and implementation of
strategies and policies the purposes of which are to reward people fairly, equitably and
consistently in accordance with their value to the organization and to help the
organization to achieve its strategic goals. It deals with the design, implementation
and maintenance of reward systems (reward processes, practices and procedures)
which aim to meet the needs of both the organization and its stakeholders.
Reward is special payments for special work. Reward refers to all forms of financial
returns and tangible services and benefit employees receive as a part of an
employment relationship.
Fairness is important in reward allocation process and to retain good employees in the
organization manager must be concerned about fairness

and appropriately reward

those who deserve it


Organizations are interested in reward management for two important reasons. First,
the absolute cost of payments bearing on cost effectiveness depends on organizations
to organizations. Second affect, on employees work attitude and behavior, employee
work effectively, to undertake training and accept additional responsibility (Bratton &
Gold, 1999, p. 191,192).
According to our analysis, this author demonstrating reward, in a scenario to influence
employees to work more with greater productivity as well as to reduce cost with
effectiveness. Reward can change the behavior of employees, if employee get the
reward he will satisfy with his job and his behavior is good towards others employees.
He will be loyal to the organization. If he cannot get the good reward with respect to
his job his behavior may be change towards the employees and not loyal to the
organization, so the working condition of office is change this will effect to other
employees well.

Objectives of Reward Management:


There are three main objective of reward management in an organization to attract and
retain competent employees. It encourages and attracts qualified and competent
employees to retain in the organization. Reward system is design and managed to
improve productivity and control labor costs through motivation. Reward system
should comply with pay legislation (Bratton & Gold, 1999, p. 192).
Types of Rewards:
Basically organizational reward is two types include intrinsic rewards and extrinsic
rewards. Intrinsic rewards are internal to individual and are normally derive from
involvement in certain activities or task it includes achievements, feelings of
accomplishment, informal recognition, job satisfaction, personal growth and status.
Extrinsic rewards are directly controlled and distributed by the organization and are
more tangible than intrinsic

rewards it includes formal recognition, incentives

benefits, pay promotion social relationship and work environment.


As far as literature is concerned, organizations mostly used two types of rewards like
wise Intrinsic (non monitory) and extrinsic (monitory). Intrinsic reward is depended to
the extrinsic one. Both play a vital role to motivate employees optimistically to
increase efficiency and effectiveness. One important aspect of rewards is that they are
used to control employees behavior to the extent to achieve organizations tasks as
competently as they can. On account of rewards employees feels job security, and job
satisfaction with them. According to our analysis these are very important
considerations to influence performance of employees as well.
Alternative to reward management:
There are different alternatives to reward management like wise, pay for knowledge
system, group incentive gain sharing plan, profit sharing, cost saving (Scanlon plan),
and cafeteria style benefits. These all are used to help reward management strategies
to make them more gainful.

Criteria of reward management:


A criterion is very important to maintain a strong base for any system to run it without
ambiguity and bottlenecks. Criteria for reward management give a fair idea about
organization internal culture, philosophy of organization, defines its mission, vision,
values as well as its overall road to success.

Customer satisfaction

Work quality

Problem solving

Work quantity

Setting and achieving objectives

Improving work processes

Attendances

Acquiring new skills

Relating rewards to performance:


The free enterprise system is based on the premise that rewards should depend on
performance. This performance reward relationship is desirable not only at the
organizational level or corporate level but also at the individual level. The underlying
theory is that employees will be motivated when they believe such motivation will
lead to desired rewards. Unfortunately, many formal rewards provided by
organizations can not be connected to performance. Rewards in this category,
including paid vacations, insurance plans, and paid holidays, are almost always
determined by organizational membership and seniority rather than by performance.
Other rewards, such as promotion can and should be related to performance.
The primary organizational variable used to reward employees and reinforce
performance is pay. But relating rewards to performance demands that performance
be accurately measured, and this is often not easily accomplished. It also requires
discipline to actually relate rewards to performance. Another reason is that many
union contracts require that certain rewards be based on totally objective variables,
such as seniority. While no successful formula for implementing a pay for

performance program has yet been developed, a number of desirable preconditions


have been identified and generally accepted:

Trust in management

Absence of performance constraints

Trained supervisors and managers

Good measurement systems

Ability to pay

Clear distinction among cost of living, seniority, and merit

Well communicated total pay policy

Flexible reward schedule

The performances relating to rewards are very important to link. It is used, to increase
employees morale optimistically. It also enhances confidence level and job
satisfaction because of feeling of job security. On important implication of it is that
employees performance can be measured continuously which forces employees to
work harder and harder to perform better and also increase organizations productivity
positively. Above mentioned points also give a fair idea to employees that how
organization system is working with rewards relating to their performance pattern
which reduces bottlenecks and ambiguity to all levels.

Reward Management System in Coca Cola International


INTRODUCTION OF COMPANY:
The Coca-Cola Company is the world's largest beverage company. Along with CocaCola, recognized as the world's most valuable brand, it markets four of the world's top
five soft drink brands. They are facing a lot of problems regarding sales of product in
the market of Pakistan. A improving but still away from final destination, the
company faced a lot of hindrances.
Supply chain is to distribute their products at the right place, right time and with right
quantities to satisfy demands in order to remain highly competitive. Distribution
channel is a root cause of accompany and plays a key role in Sale Management. Coke
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and its competitors are trying to remain highly competitive in every field. Research
methodology, case study design, data analysis, Results, Measurement system
Summary and references are in it.
REWARD MANAGEMENT SYSTEM:
Coca Colas management is willing to use top managerial expertise because of its
superior brand image in the market. Customers are happy to buy its beverage products
as well as competitors are also conscious to bench mark its managerial competencies.
Coca Colas rewarding system to employee is excellent as they are caring with
excellent rewarding parameters just to retain, motivate and influence employees
towards organizational goals with their best potential utilization. They are rewarding
relating with employees performance in a way to increase productivity and
effectiveness.
They are using in directly different motivational aspects like Maslows hierarchy of
needs, ERG theory and two factor theory of Hurtz Berg. But more importantly they
are not specifically using one of them; they just relate their main concepts with their
reward system to define it properly.

FINDINGS
Main parameters used as a base of reward system

Inflation rate factor

Market potential (what of individuals worth according to his/her expertise,


job experience etc.)

Matching with his/her presence career path

Personal development of an individual

Sales rewards

Supporting practices

Safety

Re-creational activities

Training and development

Individual goal setting

So all above parameters are used by Coca Cola to make their reward system practices
well in the market, object is to make their employees feel comfort, satisfied,
motivated towards achievement of organizational tasks, competent to perform to the
extent to attain organizational mission and vision terminologies and compete with
outside rivals successfully. Because the management believes that if employees are
loyal to the organization then they perform better to the way to overcome any
competitive goal with accordance to desired results with remarkable customer
satisfaction.
Because quality is the whole mark for Coca Cola as customers demands high quality
with greater innovation in tastes. Customers tastes and preferences are no doubt
change dynamically; competition is increasing day by day, so all such things demands
greater performance of employees and Coca Colas human resource management is
very conscious to overcome this challenge by effective rewarding of both monitory
and non-monitory.
According to our study, which we conducted in our previous semesters form internal
employees of Coca Cola, the higher management more love to have non monitory
rewards like wise. Achievement, Feelings of accomplishment, Informal recognition,
Personal growth, Status, while lower management are more thirsty to have rewards
like incentives, bonuses i.e. have more curiosity to take cash rewards. Maslows
theory can be best define social, self esteem and self actualization stage employees
have inquisitiveness to take intrinsic rewards while other ones physiological, safety
needs employees are more attracted by cash rewards of any kind.

More importantly, Coca Colas management design superbly their reward system, just
for the sake to overcome employees thirst, mean to say sometimes employees only
work hard when they are being rewarded but Coca Colas reward system is distributed
by a mixture of both rewards monitory and non monitory that is one employee some
times get intrinsic rewards in terms of appreciation, status and some times extrinsic
one. So, outstanding managerial expertises are involved to equalize system to perform
better.

Criteria of rewarding employees:


They are using different techniques to define their reward criteria to work according
to define standards of organization. System is developed by doing great market search
so as to compete rivals to the way to satisfy their internal employees more than that to
get more profitability and customer loyalty.

Grade jump

Designation change

Special assignments (inter departmental transfer)

Financial aspects

Grade jump and designation change

Training and development

Personal development of an individual

Career grooming

They make close collaborative or communication system with employees so as to


fetch information on the part of their problems to satisfy them all to increases their
efficiency and effectiveness. Because need and wants of employees are changing day
by day to satisfy meaningful needs and wants are very important in the behalf of
organization so as to use best potential of both physical and mental competencies is
very important. Thats why defining criteria of rewarding them have a significant
importance for the mutual benefits of both employees and organization. Rewards have
greater importance and effectiveness in Pakistani cultures, because people have more
demand of them.

The link of performance objectives with the organization

Mission
Goals
Head of
Department

Organizational goals

Unit office
Locations PGM

Key result areas

Functional heads
Direct reports

Performance objectives

supervisors
Employees

Performance Standards:
According to our practical analysis, we came to know that Coca Cola International is
using better linkage of mission and vision to its organizations functions as well. As
above diagram clearly explain how they managed all in a way to get best appropriate
results. As they have developed a fine system to involve employees in decision
making just to make them company loyal and responsible.

First goals are developed at higher level, then head of departments make their ones,
then unit office, next comes locations PGM, then functional heads then direct reports
are being formulated, supervisors take part and at the end employees also formulate
their goals. All these exceptional policies make Coca Cola International best out of its
competitors. At functional level, human resource, accounts, distribution, and sales &
management all have to develop their own goals according to their departments
philosophy.
All done at four basic steps, like wise:

Goal setting

Monthly review

Mid year review

Final review

First all goal are formulated according to above diagram, from organizational level to
employees, then monthly review has taken place in it only checking of goals
implementations is going on. Monthly review is at inter departmental level, here no
change can be offered as well as no record can be made but at goal setting both
change and record can be happened. Mid year stage comes with re alignment of goals
as well as new policies ways can be designed to achieve organizational goals. At the
end, final review comes in, in this step check and balance takes place, actual

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achievement can be matched with defined are standard one so as to measure out
comes or results.
Here after getting results, if organizations see optimistic results with greater
productivity, then they analyze its true reasons so as to reward those ones who have
done extraordinary yearly base performance. All those will have to be rewarded by
organization with their defined rewards like, salary increment, grade jump and
designation change (promotions).

Pay system of Coca Cola International


Grade range:

M represents management grade


M1 & M2

Assistant Officers

M3 & M4

Officers

M5

Senior Officers

M6

Executives

M7

Senior Executives

M8

Assistant Managers

M9

Managers

M10

Senior Managers

M11 & M12

Location Heads & Unit Levels

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The purpose of giving this whole pay system is that Coca Cola is using pay system as
a base for their reward system. Because of such administration, rewarding may differ
according to their grade, as from management grade 9 to onwards, their percentage of
benefits rises. There are number of indicators which are used to define ones grade as
well as its designation in the company like wise, grid, education (educational
institutes, degree worth & specialization), experience with regard high profile
organizations, and industry experience and individual competencies.

Ranges of Pay System & Performance:

Based upon grades

Survey of top five companies

Inflation rate

Individuals market worth & expertise

Performance Ratings
Exceptional performance EP :
Contributions significantly exceed the stated objective (s) in terms of quality,
quantity and timeliness.
Successful performance SP :
Contributions meet and sometimes exceed the objective (s), which are based on
challenging goals.
Developing performance DP :

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Contributions meet some / most but not all of the objective (s) and performance
improvement is necessary.
No Performance NP :
Contributions frequently do not meet the stated objective (s).
Performance requires monitoring and substantial direction from the manager.
Basically their pay system is highly linked with performance, firstly Coca Colas
management prefers grade for defining pay. They prefer to do research by
conducting survey of top five companies, in this step they conduct minimum three
year pay ranges of those companies and take average of them. Then they decided
their pay system with accordance to their management grades. Inflation rate has to
be considered each year at any cost no matter of an individuals performance
increase or not.

Types of Rewards of Coca Cola International


Yearly Basis:

Employee salary increment

Grade Jump

Designation change

Annual incentive Plan (AIP) (for business performance, but fixed)

Personal Progress report (PPR) (Annual Appraisal)

Monthly Basis:

Making the move (MTM, sales target achieve)

Monthly turn hall (extraordinary performance)

Quarterly Basis:

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Employee of the Quarter (EOQ, non sales)

Sales Dangle context

Gold Context

EMPLOYEE OF THE QUARTER PROGRAM


Employee of the Quarter (EOQ) program is to honor outstanding performance and
dedication of employees to their work. The purpose of this program is to
recognize/reward and motivate employees to perform better and to create a
competitive environment leading to higher productivity levels. This step has been
taken to create HPWS (high performance work system) through innovative HR
policies and best practices.

Nomination Criteria for EOQ:

Employees being nominated by the supervisor should meet the following


criteria

Nominees for the quarter must have a permanent status.

Employee should be disciplined; has no disciplinary action taken against


him/her in the past year or so.

Employee should have a good attendance record.

Employee should have no marked absent and should be punctual.

Employee takes responsibility for his/her actions.

Employee owns the results achieved by him/her.


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Employee completes most of the tasks assigned to him/her (as per their
objective and goals).

All the rewards are combined to form Coca Cola Internationals reward management
system to the extent to work well. Human resources department have developed a
great system by distributing rewards among yearly, quarterly, and monthly basis. All
above mentioned rewards really influence employees to satisfy their needs and wants
to larger scale. Coca Cola have developed systematic system with number of steps to
be followed; these limitations make their employees so disciplined and competent
which help them to produce more with contrast to their rivals.

RECOMMENDATIONS
Now we are able to give proposal or a fair advice to Coca Cola according to our
comparison between theory and what is going on currently in Coca Cola. In this step,
we have to shed a light over those areas which are valuable, creative and useful for
Coca Cola but they are not considering to them.
In start of our recommendation, we would like to add that nomination of EOQ criteria
more benefits to sales employees, so it should be highly recommended to have it for
all so as to make system fair. Reward system is an effective technique to support and
change culture of the organization optimistically; it would only be possible if the
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system is equal for all employees of organization. We recommended to Coca Cola


management to utilize this system to all employees so as to increase effectiveness and
productivity. On more important recommendation should be to design both financial
and non financial rewards in a way to give a fair importance of both for top and lower
levels.
Reward management of Coca Cola should be highly functional to make employees
committed to organizational goals, values and standards, also it should push
employees in a way to boost their competencies and work understanding. Reward
management of Coca Cola should be addressed to group tasks, as all rewards are
mostly designed for individual levels like EOQ, make the move and sales dangle,
definitely it reduces productivity. Because now a days, organizations have more
curiosity towards group tasks which needs great interaction and communication
between departments and it only work if all department employees rewarded equally.
For us, it should manageable in a way to remove ambiguity at all levels, so as to
increase organizational efficiency. There should be criteria for employee to consider
their opinions at management level respectfully. It should need to reduce gap between
management and employees so as to increase overall results. For us goals should be
specific, measurable, achievable, and realistic and time bound (SMART), it would
definitely increase overall effectiveness.

We have to recommend Coke to design their system in specific way to define


employees career path, recognition and future goals; it would definitely positively
boost organizations performance. Training and development should be more used to
Coke to groom career of their employees at all level, they are doing on the job but we
recommended that a fair amount of budget should be declared for this purpose, then
off the job training sessions of fifteen days or a monthly package may use to boost
performance.
According to our research, they have declared 3% for rewards with respect to whole
revenue, but it is less because system is not working for all departments equally. We
are on the view to increase this budget to minimum 5% so as to treat all employees

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equally. Employees should be involved in decision making to increase quality and


productivity.
We are keen to make system significant for the sake to reduce the dissatisfaction of
the employees on promotion criterion, reduce the dissatisfaction of the employees on
appraisal system, reduce the dissatisfaction of the employees on salary, bonus and
other fringe benefits, and improve the work performance, improve the productivity,
reduce the level of occupational stress that arises from feeling of inequality on reward,
and reduce the perceptional gap on reward management system and develop a culture
of high performance. These all points beautifully explain the reward management
system consequences and its more value.
There should be proper check and balance system between goals and performance
have to be introduced, currently yearly bases performance evaluation has been going
on, for high motivational level, high quality it demands quarterly bases. There should
be a system of consultation between employees and management about employees
career path, it is easier for management to understand and analyze what employees
actually want and allocate them reward properly. We would like to recommend Coke
to introduce alternative of reward management like wise profit sharing, pay for
knowledge program and goal sharing so as to increase their productivity.

CONCLUSION
In our this assignment, we came to analyze how to relate literature implications to
expediency, this comparison helps us to understand trends of both sides and make us
able to think over them in a way to generate those strategic points which would best
overcome our corresponding companys reward management limitations. Our analysis
gives a fair picture which guided us towards acknowledged recommendations. We
have experienced to immense analytical skills, to give recommendations to the whole
scenario.

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