Employee Rewards Review: External Influences and Potential Consequences (Durham Branch)

1. External Influences on Employee Rewards (50%)

Before responding to HQ’s demands to reduce employee rewards, it’s crucial to consider several external factors impacting our Durham branch:

• Cost of Living in Durham: Research data on the Consumer Price Index (CPI) for Durham to understand the inflation rate and how it affects the purchasing power of our managers’ salaries.
• Salary Trends in Durham: Analyze salary surveys or reports to determine the average and competitive salary range for managerial positions in Durham. This helps assess if our current pay structure (including the 3% raise) remains competitive.
• Labor Market Conditions: Investigate the job market in Durham. Is there a high demand for qualified managers? A tight labor market might necessitate retaining talent through competitive compensation and benefits.
• Industry Standards: Explore employee reward practices within our industry. Do other companies offer private pension plans or similar benefits? Knowing industry norms helps position our company’s offerings.
• Legal Requirements: Ensure any changes to employee benefits comply with local labor laws and regulations.

2. Potential Consequences for Managers (50%)

Implementing changes to employee rewards, particularly the removal of the private pension plan, can have significant consequences for managers’ motivation and behavior, drawing from motivational theories:

• Expectancy Theory: This theory suggests motivation depends on the perceived relationship between effort, performance, and rewards. Removing the private pension plan (a valued reward) might decrease managers’ belief that their effort leads to desired outcomes (financial security in retirement). This can reduce motivation and potentially lead to decreased performance.
• Equity Theory: Managers compare their rewards (salary, benefits) to others in similar positions. If the private pension plan is removed without adjustments to other benefits or salaries, managers might perceive inequity compared to past rewards or industry standards. This can lead to dissatisfaction, decreased morale, and potentially higher employee turnover.
• Herzberg’s Two-Factor Theory: This theory distinguishes between hygiene factors (extrinsic motivators like salary and benefits) and motivators (intrinsic factors like challenging work). While private pension plans are hygiene factors, removing them can create dissatisfaction. If not compensated by addressing motivators (e.g., growth opportunities, recognition), overall employee satisfaction and engagement can decline.

Additional Considerations:

• Communication Strategy: A transparent and clear communication plan is crucial when implementing changes. Explain the rationale behind the changes and address employee concerns to minimize negative impacts.
• Alternative Benefits: Consider offering alternative benefits that might be more valuable to managers in the current context. This could include flexible work arrangements, wellness programs, or additional training opportunities.
• Phased Approach: If feasible, a phased approach to removing the private pension plan could lessen the impact. This could involve providing a grace period or offering a one-time payout contribution.

By carefully considering these external influences and potential consequences, you can develop a more informed response to HQ’s demands. Analyzing employee rewards through the lens of motivational theories can help predict and mitigate potential negative impacts on your managers’ morale and productivity.