Introduction. Key Reward Principles

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Sandra Harper
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1 Introduction Press Up Entertainment Group is a large organisation within the hospitality industry, employing over 1,000 staff in more than 26 venues across Ireland. I am currently employed in Sophie s, a restaurant located on the top floor of the Dean hotel on Harcourt Street. I have worked for the Group since 2010 in three of their restaurants: Captain America s Cookhouse and Bar on Grafton Street ( ), Union Café in Mount Merrion (2016), and Sophie s (2016-present). While I have primarily worked as a waitress in these establishments, I have also been employed as a busser, hostess, managing supervisor, and Christmas bookings co-ordinator, giving me a lot of exposure and insight into the way the Group manages their reward system individually and company-wide. Key Reward Principles Total rewards have been described by Voyt (2011) and WorldatWork (2008) as the financial and nonfinancial benefits provided to attract and retain staff in return for their commitment, engagement, effort and results. An organisation s total rewards strategy combines these benefits, such as training, bonuses, and various forms of performance appreciation, with a planned strategy designed to encourage staff to reach and exceed business objectives (Voyt, 2011). The positive effects of having a well-designed total rewards strategy in place are numerous, and organisations are realising that a unique program plays a vital role in its overall success (Gross et al., 2004). These effects include, but are not limited to, improved productivity and retention of staff (Po-Ju et al., 2008), increased job satisfaction (Rothfelder et al., 2012), enhanced organisational performance (Cameron & Quinn, 2006), and achieving business goals (Gross et al., 2004). According to Pregnolato et al. (2017), CEOs cite employee retention and engagement as the top priority for their Human Resource departments due to the potential problems that arise following the departure of a critical member of staff.

2 There can be significant damage to employee morale when a key member of staff leaves an organisation, as well as a loss of productivity, problems with clients, and the loss of expert knowledge that member of staff possessed and provided (Krishnan, 2009). Due to these potential major issues, staff retention has become a major priority in most workplaces. The Corporate Leadership Council (2004) even suggested that the combination of costs associated with a departing staff member, both tangible and intangible, are higher than the annual salary of that departing member. To combat staff turnover employers and organisations need to ensure that they have a reward system in place which tailors to various demographics and multiple needs (Pregnolato et. al, 2017; Snelgar, Renard & Venter, 2013). Smith et al. (2015) stated that most organisations use a published reward model as a starting point when they are designing their own distinctive reward strategy, such as the WorldatWork s 2007 model, Armstrong s 2006 model, Nienaber s 2010 total reward preference model, the Towers Perrin 2011 model, or Aon Hewitt s 2012 reward model. Pregnolato et al. (2017) claims that a total rewards model should integrate five essential elements with the purpose of retaining, attracting, and motivating staff. Typically, these five elements include remuneration, benefits, work-life balance, performance recognition, and development opportunities (WorldatWork, 2007). While remuneration is generally viewed as the top strategy used in employee retention strategies (Bussin, Nicholls & Nienaber, 2016), research has found that it is only the fifth most common reason for staff leaving their organisations (Bussin, 2012). As a result, an organisation s total rewards strategy can no longer only focus on the financial benefits to motivate its staff (Hankin, 2005). It should be designed in terms of performance, commitment and engagement, focusing on both intrinsic and extrinsic rewards (Hoole & Hotz, 2016). Intrinsic rewards include development opportunities, status, autonomy, responsibility, acknowledgement, and a sense of accomplishment, while extrinsic rewards relate to pay, job security, bonuses, and benefits. Early research found that extrinsic rewards enhance productivity, commitment to business goals, and attract talented individuals (Goldsmith et al., 2000), but more recent research shows that

3 extrinsic rewards, i.e. monetary rewards, act as a poor motivator and decrease staff s intrinsic motivation to work (Bussin, 2011). In comparison, Long and Shields (2010) determined that intrinsic rewards are becoming more and more common within organisational practices. In a 2010 global study, WorldatWork reported that recognition, incentives and intangible rewards supported work engagement significantly more than pay and benefits (Hoole & Hotz, 2016). McMullen (2010) supported these findings, stating that intrinsic rewards have a greater impact on work engagement. Evenson (2014) determined that a positive relationship between engagement and organisation performance exists in terms of increased staff performance, employee and client satisfaction, reduced staff turnover, increased productivity in staff, and organisational effectiveness (Hoole & Hotz, 2016). According to Bamberger and Levi (2009), increased employee efforts and positive work outcomes occur by aligning the organisation s reward system with organisational strategies. Organisations are beginning to realise and recognise that there is no one best practice approach, and that reward strategies need to be individual and unique, in other words, that they must focus on best fit rather than best practice (Gross et al, 2004). Role of the Line Manager When focusing on the hospitality industry, employee engagement and satisfaction is hugely important for the success of a restaurant / organisation (King, 2010). Garlick (2010) determined that employee happiness had a direct effect on customer happiness. Due to the influence employees have over their customers perceived service quality and satisfaction (Ottenbacher, 2007), great leadership style in management is absolutely essential. Rothfelder et al. (2012) examined the impact of three different leadership styles (transactional, transformational, and non-leadership) on employee satisfaction within the hospitality industry and found that a transformational leadership style, and contingent rewarding, was the best technique for positively influencing job satisfaction in staff.

4 Managers who exhibit a transactional leadership style set goals and expectations and clearly communicate with staff how they will be rewarded if they meet these expectations, or disciplined if they don t (Rothfelder et al., 2012). It is composed of three dimensions: contingent rewarding, active management-by-exception, and passive management-by-exception (Bass, 1997). Contingent rewarding is an exchange process, where the leader and the follower together agree on a task and the reward for completing that task. Rewards can be financial (bonus, pay increase etc.) or non-financial (praise, commendation etc.) in nature. Active management-by-exception is where the leader closely monitors the followers performance for any potential mistakes or rule-breakings, always ready to immediately step in and take any necessary measures to correct the situation (Bass, 1997). In comparison, passive management-by-exception is where the leader waits for a problem to arise before stepping in, and typically results in negative feedback being given to the follower (Harms and Crede, 2010). Erkutlu (2008) found that staff under transactional leaders experience lower levels of job satisfaction compared to those under transformational leaders in the hospitality industry. Bass (1997) found that compared to transactional leaders, transformational style leaders increase followers self-confidence and enthusiasm, act as positive role models, are attentive to individual followers needs and concerns, and sacrifice their own personal interests for the benefit of the followers. Naturally this results in the followers experiencing respect, trust and admiration for their leader (Rothfelder et al., 2012). In total contrast, non-leadership, also referred to as laissez-faire leadership, is where managers take very little action when needed. These leaders typically hesitate to take action and make decisions, avoid responsibility, and give little to no feedback to their followers (Rothfelder et al., 2012). Unsurprisingly, employees under this leadership look to other managers or fellow staff members for assistance and support, and experience negative job satisfaction (Erkutlu, 2008). Overall, Rothfelder et al. (2012) found that employees were more satisfied with their work when they had leaders who clearly expressed their expectations, provided feedback, and used rewards, or praise, to demonstrate their appreciation for excellent work.

5 In Press Up, I am unaware of the impact my managers have on the decision process of reward, and I currently work with managers who would have an overall transactional style of leadership, with a focus on active management-by-exception, but there is definitely a hint of the laissez-faire attitude from some too. At this stage of my experience, a laissez-faire attitude is only frustrating for me when I have customers who are unhappy with an element of their experience and I do not have the power to help them, e.g., when a steak is cooked rare and the customer asked for it well done. Conclusion & Recommendations In relation to the Press Up Entertainment Group and the current reward strategy they have in place, there are clear improvements which can be made. First, awareness should be made of the generational differences and how these may affect staff members expectations of reward in the workplace. Smit et al. (2015) said that is it important to create reward policies that are not based on one generation s preferences, as these policies may not cater to another generation s. Because there is such a high turnover within the hospitality industry, most current staff members are part of Generation X and Generation Y (born between 1981 and 2000). Staff members from these generations are more likely to leave an organisation if they feel their needs are not being met than previous generations, and are more concerned with a work-life balance (Pregnolato et al., 2017). There is a natural flexibility of working in hospitality, therefore Generation X and Y workers should feel like they have the autonomy they desire in order to achieve their personal ideal work-life balance. In terms of reward strategy, Press Up could offer sabbaticals for summer months when many students may be looking to travel abroad but return to their jobs in the autumn time when college begins again. Second, Pregnolato et al. (2017) points out that to retain staff, a non-discriminatory customised reward package should be offered that includes both financial and non-financial rewards. It cannot be expected for a large organisation like Press Up to have completely individualised reward packages for all establishments but an effort can be made to either slightly tailor them, by asking management

6 and staff what benefits they would like to see, or by broadening the reward package and allowing staff members to select a certain number of benefits each. Research has found age and gender differences do exist in reward structure (Murao, 2000), therefore a choice of benefits may be easier for employers to ensure no discrimination is taking place across reward packages. Third, transparency of the reward system should be enhanced. I have worked with Press Up for over five years and I struggled to discuss and describe their reward system. I don t even know if one actually exists, is in place, or is enforced. Sweins, Kalmi and Hulkko-Nyman (2009) support this idea and believe that organisations should be obligated to detail and explain their reward system to employees so that they clearly understand what is expected of them. Furthermore, Kurji (2014) suggests more emphasis needs to be put on tracking and calculations when it comes to maximising reward systems. If Press Up is not keeping records of reward data, then the company cannot use this information to make budget plans for future reward spending or to justify ROI. Finally, managers and their leadership styles should be evaluated to ensure optimal working conditions are present for staff at all times. Based on current research (Rothfelder et al., 2012) the most effective leadership style is transformational with contingent rewarding. At the recruitment stage, Press Up should attach great importance to the selection of managers displaying these qualities and style. Additionally, training and development in the optimal leadership style should be regularly organised to ensure all management is on the same page. Staff and colleagues could also be asked to evaluate the behaviour of management to determine areas needing improvement.

7 References Bamberger, P.A., & Levi, R. (2009). Team-based reward allocation structures and the helping behaviours of outcome-interdependent team members. Journal of Managerial Psychology, 24(4), Bussin, M. (2011). The remuneration handbook for Africa. Randburg: Knowles Publishing. Bussin, M. (2012). The Remuneration handbook for Africa: A practical and informative handbook for managing and recognition in Africa (2nd edn.). Randburg: Knowres Publishing. Bussin, M., Nicholls, M., & Nienaber, R. (2016). The relationship between occupational culture dimensions and reward preferences: A structural equation modelling approach. SA Journal of Human Resource Management, 14(1), a737. Cameron, K. S., & Quinn, R. E. (2006). Diagnosing and changing organizational culture: Based on the competing values framework (Rev. Ed.). San Francisco, CA: Jossey-Bass. Corporate Leadership Council. (2004). Retention drivers and strategies at employers of choice. Retrieved 15 July 2014, from Erkutlu, H. (2008). The impact of transformational leadership on organisational and leadership effectiveness: the Turkish case. The Journal of Management Development, 27(7), Evenson, L. (2014). New frontiers in employee engagement. Retrieved from Garlick, R. (2010). Do happy employees really mean happy customers? Or is there more to the equation? Cornell Hospitality Quarterly, 51(3), p Goldsmith, A.H., Veum, J.R., & Darity, W. (2000). Working hard for the money? Efficiency wages and worker effort. Journal of Economic Psychology, 21, Gross, S.E. & Friedman, H.M. (2004). Creating an Effective Total Reward Strategy: Holistic Approach Better Supports Business Success. Benefits quarterly, 20(3), Hankin, H. (2005). The new workforce: Five sweeping trends that will shape your company's future. New York: American Management Association. Harms, P.D. & Credé, M. (2010). Emotional Intelligence and Transformational and Transactional Leadership: A Meta-Analysis. Journal of Leadership & Organizational Studies, 17(1), pp. 5.

8 Hoole, C., & Hotz, G. (2016). The impact of a total reward system of work engagement. SA Journal of Industrial Psychology, 42(1), King, C. (2010). One size doesn t fit all: Tourism and hospitality employees response to internal brand management. International Journal of Contemporary Hospitality Management, 22(4), Krishnan, H.A. (2009). What causes turnover among women on top management teams? Journal of Business Research, 62, Kurji, K. (2014). Maximising total reward statements. Canadian HR Reporter, 27(22), pp. 20. Long, R., & Shields, J. (2010). From pay to praise? Non-cash employee recognition in Canadian and Australian firms. The International Journal of Human Resource Management, 21(8), McMullen, T. (2010). The impact of rewards programs on employee engagement. World at Work: The Total Rewards Association. Retrieved from Murao, Y. (2000). Effects of workplace composition on annual wage of the standard employees in Japan. Retrieved from Panel2.2Murao.pdf Ottenbacher, M. C. (2007). Innovation management in the hospitality industry: Different strategies for achieving success. Journal of Hospitality & Tourism Research, 31(4), Po-Ju, C. & Choi, Y. (2008). Generational differences in work values: a study of hospitality management. International Journal of Contemporary Hospitality Management, 20(6), Pregnolato, M., Mark H.R. Bussin & Schlechter, A.F. (2017). Total rewards that retain: A study of demographic preferences. SA Journal of Human Resource Management, vol. 15. Rothfelder, K., Ottenbacher, M.C. & Harrington, R.J. (2012). The impact of transformational, transactional and non-leadership styles on employee job satisfaction in the German hospitality industry. Tourism and Hospitality Research, 12(4), Smit, W., Stanz, K. & Bussin, M. (2015). Retention preferences and the relationship between total rewards, perceived organisational support and perceived supervisor support. SA Journal of Human Resource Management, 13(1), Snelgar, R.J., Renard, M., & Venter, D. (2013). An empirical study of the reward preferences of South African employees. South African Journal of Human Resource Management, 11(1), 2-14.

9 Sweins, C., Kalmi, P., & Hulkko-Nyman, K. (2009) Personnel knowledge of the pay system, pay satisfaction and organizational outcomes: Evidence from Finnish personnel funds. The International Journal of Human Resource Management, 20(2), Voyt, D. (2011). Identifying total rewards systems and organisational culture type using the competing values framework, Capella University. WorldatWork. (2007). The WorldatWork handbook of compensation, benefits and total rewards. New Jersey: Wiley. WorldatWork. (2008). What is total rewards? Retrieved from

Exploring the Importance of Rewards as a Talent Management Tool for Generation Y Employees

Doi:10.5901/mjss.2014.v5n27p1100 Abstract Exploring the Importance of Rewards as a Talent Management Tool for Generation Y Employees Nicolene Barkhuizen (PhD) Department of Industrial Psychology, North-West