coca-cola's reward system in relation to performance

7/24/2019 Coca-Cola's Reward System In Relation To Performance

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“ASSIGNMENT OF ORGANIZATIONALPSYCHOLOGY”

Submitted To: Ms. Sana Chatha

Bat!: MBA-E9 (7th Semester)

Submi""io# $ate: 22nd October2015

Submitted B%:Wa!d A"! ###5

$ab!ta %sht!a& ##5#'ana assada& ##1

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⇒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 staeholders.

Reward is special payments for special wor. Reward refers to all forms of financial

returns and tangible services and benefit employees receive as a part of an

employment relationship.

!airness 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

"rganizations are interested in reward management for two important reasons. !irst,

the absolute cost of payments bearing on cost effectiveness depends on organizations

to organizations. #econd affect, on employees wor attitude and behavior, employee

wor effectively, to undertae training and accept additional responsibility ($ratton %

&old, 1''', p. 1'1,1').

ccording to our analysis, this author demonstrating reward, in a scenario to influenceemployees to wor 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 *ob and his behavior is good towards others employees.

+e will be loyal to the organization. If he cannot get the good reward with respect to

his *ob his behavior may be change towards the employees and not loyal to the

organization, so the woring condition of office is change this will effect to other

employees well.



Obecti!es of Reward Management:

here are three main ob*ective 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 ($ratton % &old, 1''', p. 1').

Ty"es of Rewards:

$asically organizational reward is two types include intrinsic rewards and e-trinsic

rewards. Intrinsic rewards are internal to individual and are normally derive from

involvement in certain activities or tas it includes achievements, feelings of

accomplishment, informal recognition, *ob satisfaction, personal growth and status.

-trinsic 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 wor environment.

s far as literature is concerned, organizations mostly used two types of rewards lie

wise Intrinsic (non monitory) and e-trinsic (monitory). Intrinsic reward is depended to

the e-trinsic one. $oth play a vital role to motivate employees optimistically to

increase efficiency and effectiveness. "ne important aspect of rewards is that they are

used to control employees/ behavior to the e-tent to achieve organizations tass as

competently as they can. "n account of rewards employees/ feels *ob security, and *ob

satisfaction with them. ccording to our analysis these are very important

considerations to influence performance of employees as well.

#lternati!e to reward management:

here are different alternatives to reward management lie wise, pay for nowledge

system, group incentive gain sharing plan, profit sharing, cost saving (#canlon plan),

and cafeteria style benefits. hese all are used to help reward management strategies

to mae them more gainful.

0



Criteria of reward management:

criterion is very important to maintain a strong base for any system to run it without

ambiguity and bottlenecs. riteria 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.

• ustomer satisfaction

• 2or quality

• 3roblem solving

• 2or quantity

• #etting and achieving ob*ectives

• Improving wor processes

• ttendances

• cquiring new sills

Relating rewards to "erformance:

he free enterprise system is based on the premise that rewards should depend on

performance. his performance reward relationship is desirable not only at the

organizational level or corporate level but also at the individual level. he underlying

theory is that employees will be motivated when they believe such motivation will

lead to desired rewards. 4nfortunately, 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.

"ther rewards, such as promotion can and should be related to performance.

he primary organizational variable used to reward employees and reinforce

performance is pay. $ut 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. nother reason is that many

union contracts require that certain rewards be based on totally ob*ective variables,

such as seniority. 2hile no successful formula for implementing a pay for

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

have been identified and generally accepted6

•

rust in management• bsence of performance constraints

• rained supervisors and managers

• &ood measurement systems

• bility to pay

• lear distinction among cost of living, seniority, and merit

• 2ell communicated total pay policy

• !le-ible reward schedule

he performances relating to rewards are very important to lin. It is used, to increase

employees/ morale optimistically. It also enhances confidence level and *ob

satisfaction because of feeling of *ob security. "n important implication of it is that

employees performance can be measured continuously which forces employees to

wor harder and harder to perform better and also increase organizations productivity

positively. bove mentioned points also give a fair idea to employees that how

organization system is woring with rewards relating to their performance pattern

which reduces bottlenecs and ambiguity to all levels.

⇒Reward Management System in Coca Cola International…

I$TRO%&CTIO$ O' COMP#$:

he oca7ola ompany is the world8s largest beverage company. long with oca7

ola, recognized as the world8s most valuable brand, it marets four of the world8s top

five soft drin brands. hey are facing a lot of problems regarding sales of product in

the maret of 3aistan. improving but still away from final destination, the

company faced a lot of hindrances.

#upply 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. 9istribution

channel is a root cause of accompany and plays a ey role in #ale :anagement. oe

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and its competitors are trying to remain highly competitive in every field. Research

methodology, case study design, data analysis, Results, :easurement system

#ummary and references are in it.

R*#R% M#$#+M$T SSTM:

oca ola/s management is willing to use top managerial e-pertise because of its

superior brand image in the maret. ustomers are happy to buy its beverage products

as well as competitors are also conscious to bench mar its managerial competencies.

oca ola/s rewarding system to employee is e-cellent as they are caring with

e-cellent rewarding parameters *ust to retain, motivate and influence employees

towards organizational goals with their best potential utilization. hey are rewarding

relating with employees performance in a way to increase productivity and

effectiveness.

hey are using in directly different motivational aspects lie :aslow/s hierarchy of

needs, R& theory and two factor theory of +urtz $erg. $ut more importantly they

are not specifically using one of them< they *ust relate their main concepts with their

reward system to define it properly.

⇒'I$%I$+S…

Main "arameters ,sed as a base of reward system

• Inflation rate factor

• :aret potential (what of individuals worth according to his=her e-pertise,

*ob e-perience etc.)

• :atching with his=her presence career path

• 3ersonal development of an individual

• #ales rewards

S,""orting "ractices

>



• #afety

• Re7creational activities

• raining and development

• Individual goal setting

#o all above parameters are used by oca ola to mae their reward system practices

well in the maret, ob*ect is to mae their employees feel comfort, satisfied,

motivated towards achievement of organizational tass, competent to perform to thee-tent to attain organizational mission and vision terminologies and compete with

outside rivals successfully. $ecause 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 remarable customer

satisfaction.

$ecause quality is the whole mar for oca ola as customers demands high quality

with greater innovation in tastes. ustomers/ tastes and preferences are no doubt

change dynamically< competition is increasing day by day, so all such things demands

greater "erformance of employees and oca ola/s human resource management is

very conscious to overcome this challenge by effective rewarding of both monitory

and non7monitory.

ccording to our study, which we conducted in our previous semesters form internal

employees/ of oca ola, the higher management more love to have non monitory

rewards lie wise. chievement, !eelings of accomplishment, Informal recognition,

3ersonal growth, #tatus, while lower management are more thirsty to have rewards

lie incentives, bonuses i.e. have more curiosity to tae cash rewards. :aslow/s

theory can be best define social, self esteem and self actualization stage employees

have inquisitiveness to tae intrinsic rewards while other ones physiological, safety

needs employees are more attracted by cash rewards of any ind.

?



:ore importantly, oca ola/s management design superbly their reward system, *ust

for the sae to overcome employees thirst, mean to say sometimes employees only

wor hard when they are being rewarded but oca ola/s reward system is distributed

by a mi-ture of both rewards monitory and non monitory that is one employee some

times get intrinsic rewards in terms of appreciation, status and some times e-trinsic

one. #o, outstanding managerial e-pertises are involved to equalize system to perform

better.

Criteria of rewarding em"loyees:hey are using different techniques to define their reward criteria to wor according

to define standards of organization. #ystem is developed by doing great maret search

so as to compete rivals to the way to satisfy their internal employees more than that to

get more profitability and customer loyalty.

• &rade *ump

• 9esignation change

• #pecial assignments (inter departmental transfer)

• !inancial aspects

• &rade *ump and designation change

• raining and development

• 3ersonal development of an individual

• areer grooming

hey mae 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. $ecause 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. hat/s 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 3aistani cultures, because people have more

demand of them.

@



⇒Te lin. of "erformance obecti!es wit te organi/ation…

:ission

+oals

"rganizational goals 4nit office

Aocations 3&:

Bey result areas !unctional heads

9irect reports

3erformance ob*ectives supervisors

mployees

'

+ead of 9epartment



Performance Standards:

ccording to our practical analysis, we came to now that oca ola International is

using better linage of mission and vision to its organizations functions as well. s

above diagram clearly e-plain how they managed all in a way to get best appropriate

results. s they have developed a fine system to involve employees in decision

maing *ust to mae them company loyal and responsible.

!irst goals are developed at higher level, then head of departments mae their ones,

then unit office, ne-t comes locations 3&:, then functional heads then direct reports

are being formulated, supervisors tae part and at the end employees also formulate

their goals. ll these e-ceptional policies mae oca ola International best out of its

competitors. t functional level, human resource, accounts, distribution, and sales %

management all have to develop their own goals according to their departments/

philosophy.

ll done at four basic steps, lie wise6

• &oal setting

• :onthly review

• :id year review

• !inal review

!irst all goal are formulated according to above diagram, from organizational level to

employees, then monthly review has taen place in it only checing of goals

implementations is going on. :onthly 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. :id year stage comes with re alignment of goals

as well as new policies ways can be designed to achieve organizational goals. t the

end, final review comes in, in this step chec and balance taes place, actual

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achievement can be matched with defined are standard one so as to measure out

comes or results.

+ere 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 e-traordinary yearly base performance. ll those will have to be rewarded by

organization with their defined rewards lie, salary increment, grade *ump and

designation change (promotions).

⇒Pay system of Coca Cola International…

+rade range:

M represents management gradeD

:1 % : ssistant "fficers

:0 % :5 "fficers

:; #enior "fficers

:> -ecutives

:? #enior -ecutives

:@ ssistant :anagers

:' :anagers

:1C #enior :anagers

:11 % :1 Aocation +eads % 4nit Aevels

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he purpose of giving this whole pay system is that oca ola is using pay system as

a base for their reward system. $ecause of such administration, rewarding may differ

according to their grade, as from management grade ' to onwards, their percentage of

benefits rises. here are number of indicators which are used to define ones grade as

well as its designation in the company lie wise, grid, education (educational

institutes, degree worth % specialization), e-perience with regard high profile

organizations, and industry e-perience and individual competencies.

Ranges of Pay System 0 Performance:

• $ased upon grades

• #urvey of top five companies

• Inflation rate

• Individual/s maret worth % e-pertise

⇒ Performance Ratings…

1ce"tional "erformance 2P :

ontributions significantly e-ceed the stated ob*ective (s) in terms of quality,

quantity and timeliness.

S,ccessf,l "erformance 2 SP :

ontributions meet and sometimes e-ceed the ob*ective (s), which are based on

challenging goals.

%e!elo"ing "erformance 2 %P :

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ontributions meet some = most but not all of the ob*ective (s) and performance

improvement is necessary.

$o Performance 2 $P :

ontributions frequently do not meet the stated ob*ective (s).

3erformance requires monitoring and substantial direction from the manager.

$asically their pay system is highly lined with performance, firstly oca ola/s

management prefers grade for defining pay. hey 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 tae average of them. hen 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 individual/s performance

increase or not.

⇒ Ty"es of Rewards of Coca Cola International…

early 3asis:

• mployee salary increment

• &rade Eump

• 9esignation change

• nnual incentive 3lan (I3) (for business performance, but fi-ed)

• 3ersonal 3rogress report (33R) (nnual ppraisal)

Montly 3asis:

• :aing the move (::, sales target achieve)

• :onthly turn hall (e-traordinary performance)

4,arterly 3asis:

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• mployee of the Fuarter ("F, non sales)

• #ales 9angle conte-t

• &old onte-t

⇒ MP5O O' T6 4&#RTR PRO+R#M…

mployee of the Fuarter ("F) program is to honor outstanding performance and

dedication of employees to their wor. he purpose of this program is to

recognize=reward and motivate employees to perform better and to create acompetitive environment leading to higher productivity levels. his step has been

taen to create 6P*S (ig "erformance wor. system) tro,g inno!ati!e 6R

"olicies and best "ractices7

$omination Criteria for O4:

⇒ m"loyees being nominated by te s,"er!isor so,ld meet te following

criteria…

• Gominees for the quarter must have a permanent status.

• mployee should be disciplined< has no disciplinary action taen against

him=her in the past year or so.

• mployee should have a good attendance record.

• mployee should have no mared absent and should be punctual.

• mployee taes responsibility for his=her actions.

• mployee owns the results achieved by him=her.

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• mployee completes most of the tass assigned to him=her (as per their

ob*ective and goals).

ll the rewards are combined to form oca ola International/s reward management

system to the e-tent to wor well. +uman resources department have developed a

great system by distributing rewards among yearly, quarterly, and monthly basis. ll

above mentioned rewards really influence employees to satisfy their needs and wants

to larger scale. oca ola have developed systematic system with number of steps to

be followed< these limitations mae their employees so disciplined and competent

which help them to produce more with contrast to their rivals.

⇒ RCOMM$%#TIO$S…

Gow we are able to give proposal or a fair advice to oca ola according to our

comparison between theory and what is going on currently in oca ola. In this step,

we have to shed a light over those areas which are valuable, creative and useful for

oca ola but they are not considering to them.

In start of our recommendation, we would lie to add that nomination of "F criteria

more benefits to sales employees, so it should be highly recommended to have it for

all so as to mae 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. 2e recommended to oca ola

management to utilize this system to all employees so as to increase effectiveness and

productivity. "n 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 oca ola should be highly functional to mae employees

committed to organizational goals, values and standards, also it should push

employees in a way to boost their competencies and wor understanding. Reward

management of oca ola should be addressed to group tass, as all rewards are

mostly designed for individual levels lie "F, mae the move and sales dangle,

definitely it reduces productivity. $ecause now a days, organizations have more

curiosity towards group tass which needs great interaction and communication

between departments and it only wor if all department employees rewarded equally.

!or us, it should manageable in a way to remove ambiguity at all levels, so as to

increase organizational efficiency. here 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. !or us goals should be

specific, measurable, achievable, and realistic and time bound (#:R), it would

definitely increase overall effectiveness.

2e have to recommend oe to design their system in specific way to define

employees/ career path, recognition and future goals< it would definitely positively

boost organization/s performance. raining and development should be more used tooe to groom career of their employees at all level, they are doing on the *ob but we

recommended that a fair amount of budget should be declared for this purpose, then

off the *ob training sessions of fifteen days or a monthly pacage may use to boost

performance.

ccording to our research, they have declared 0H for rewards with respect to whole

revenue, but it is less because system is not woring for all departments equally. 2e

are on the view to increase this budget to minimum ;H so as to treat all employees

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equally. mployees should be involved in decision maing to increase quality and

productivity.

2e are een to mae system significant for the sae 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 wor 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. hese all points beautifully e-plain the reward management

system consequences and its more value.

here should be proper chec 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. here 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. 2e would lie to recommend oe

to introduce alternative of reward management lie wise profit sharing, pay for

nowledge program and goal sharing so as to increase their productivity.

⇒ CO$C5&SIO$…

In our this assignment, we came to analyze how to relate literature implications to

e-pediency, this comparison helps us to understand trends of both sides and mae us

able to thin over them in a way to generate those strategic points which would best

overcome our corresponding company/s reward management limitations. "ur analysis

gives a fair picture which guided us towards acnowledged recommendations. 2e

have e-perienced to immense analytical sills, to give recommendations to the whole

scenario.

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coca-cola's reward system in relation to performance

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