Reward is something that is given or received to someone who has provided a service or who has earned it by working. There are different types of reward that can be given. One of them is financial rewards. Martin et al (2010) has stated that ‘A reward system consists of financial rewards and employee benefits, which together comprise total remuneration’. Financial rewards are received by business. These include:
- Basic pay rates
- Incentives
- Performance related pay
- Bonuses
- Overtime payments
However, they do also provide non-financial rewards such as:
- Recognition
- Opportunity to develop skills
- Career opportunities
- Work life balance
- Flexible working time
Rewards motivate employees in an organisation to work hard. This helps them grow as an individual and learn while they earn. Tesco gives their staffs great opportunities for working at Tesco’s. Tesco believe the employees deserve rewards for working hard and building a good reputation for the organisation therefore they provide their employees with pay and benefits. Tesco try to ensure that their employees are being cared financially therefore they provide three different schemes for their employees to help them maintain themselves financially.
The first scheme is called “Shares in Success”. This scheme gives free shares to everyone who's worked in Tesco for one year at the end of the financial year, which is February. They share a proportion of their profit amongst their employees, based on the salaries they are given. The staffs Tesco shares are held in trust for 5 years and after the 5 years, the employees can take them, tax-free.
The second scheme that they provide for their staff is called “Save As You Earn”. This scheme gives their employees who have been working with them for over a year the option to save up to £50 every 4 weeks for 3 to 5 years and receive a tax free bonus at the end of it. This will allow them to use their savings and bonus to buy Tesco shares at up to 20% less than the market price or take the cash.
The final scheme, “Buy As You Earn”, gives the employees a chance to join the BAYE scheme after every three months. Employees can buy shares at the market price every 4 weeks, saving tax and can use National Insurance on the salary to do this. They can start, stop or change the amount you invest at any time, the choice has been given to them and if they decide to keep the shares in trust for 5 years, they will get even more tax advantages.
These schemes only apply to employees who have worked with Tesco for a certain amount of time, such as for over 3 months or over a year. This can be a disadvantage for employees who have only join the company however, if they carry on working with Tesco, they will also be able to join these schemes. I believe these benefits give their employees a boost as they can rely on their job to help them and support them financially. This also becomes their motivation. However, the rewards do not end just there as Tesco have more rewards that they provide for their employees.
Tesco also reward their employees who have been working there for over a year by giving them the “Privilegecard”. This is a staff loyalty card that gives them 10% discount and Clubcard points on most Tesco products. This is really beneficial for the staff as they can save money on many products. Also, eligible staffs have access to exclusive staff discounts with Tesco Personal Finance and Tesco Telecoms. Even though this is a good idea for the qualified staff, it can be a downfall for other employees that do not have access to the exclusive discount. They might feel discriminated as they are not qualified enough to receive this reward.
As well as giving rewards for the present, Tesco also provides benefits for their employee’s future. This is done by providing their staff with a pension scheme called “Tesco Pension Scheme”. With this scheme, members of staff are able to understand how financially secure they will be when they have decide to retire. As well as pension provision, employees have access to a life assurance scheme which will provide them with financial protection for their family.
As well as future planning, Tesco also have health scheme that are provided for their staff in case of any injuries so they do not have to worry if they get hurt. Tesco have great discounts with top healthcare companies to help their employees. They offer discounts such as, health cash plans, dental cover and private medical insurance.
Not only do they provide financial scheme to help them for the future, they also provide their employees with leisure time scheme. This is where staffs get exclusive discounts and special offers such as discounts on theme parks, holidays and gym membership, to reward them for working hard for the organisation.
To conclude the rewards that the organisation provides for their employees, I believe Tesco does try to ensure that they can provide their staff with all sort of financial scheme and that they are able to look after their staff when they are in need.
Many people have raised arguments whether or not Chief Executives should receive large amount of bonuses even if the organisation that they have led has underperformed. The arguments for Chief Executives to receive bonuses shows:
- Even though the organisation has underperformed, Chief Executives receiving bonuses will encourage them to stay will the organisation instead of leaving their position in the company for another position in a different company where they will receive bonuses not matter what the situation is of the organisation
- If the Chief Executive continues receiving bonuses, it will make them feel even more valued even though their company has underperformed. This will become a motivation for the Chief Executives to work more effectively which will improve the company’s performance.
Arguments against Chief Executives to receive bonuses even if the organisation that they have led has unperformed show that:
- Company who are short of income usually perform badly therefore bonuses for the Chief Executives is not necessary as they may be the reason for the lack of income
- When a company pays bonus to the Chief Executives, they encourage them to give poor performance as it’s their responsibility to for the company to perform well. They will think no matter how the company does, they will receive bonus and this allows them to work less effectively for the company
- Companies that pay Chief Executives bonuses when their company is underperforming will cause problems in the company and this will create a division in the company which may worsen the overall performance.
In conclusion, everyone deserves to be rewarded and I believe that it should be equal. Some organisation that rewards qualified people with higher rewards can be unfair to others who work in the same organisation that are less qualified. They might feel discriminated as they are not educated enough as other that receive higher rewards and this can cause de-motivation and this may affect the employee’s performance. I also believe that all types of rewards should be open for different people however, only be given when they deserve it as this is a great way to motivate them. However, I also believe that reward may not always be a motivation for staffs to perform well as when employees receive rewards, they may think that as they have received a reward, they will not have to work hard as before as they may carry getting rewarded.
Reference:
- Mullins, L J. ( 2002) Management And Organisational Behaviour. 6th Ed. Pearsons Education Limited: Essex
- Mullins, L J. ( 2007) Management And Organisational Behaviour. 8th Ed. Pearsons Education Limited: Essex