History of Amouage
Discuss about the Effects Of And Preference For Pay For Performance.
Amouage is one of the most money-spinning societies of the world. First, it is essential to mention little concerning the formation of the company or when the business was founded. It was founded in Oman in the middle of 1983 and functioned through the Oman Perfumery LLC, a company that was a subsidiary of the Omani SABCO Group. (Amouage's Jubilant Creations 2011, p. 14). Its headquarters is in Muscat which is the capital city of Oman. In its foundation, it was formed because of the request made by the Sultan Qaboos bin Said in 1983 in Muscat by Prince Hamoud bin Hamoud. The company has had several CEOs since its formation with the latest being David Crickmore while Chong Christopher is the current creative director.
The company has developed to include bath, home, and leather products. The company has nearly 30 standalone shops, where the company’s products are sold and distributed in department stores across the world. In the factory, the Amouage’s visitor’s center and the manufacturing plant, the location in Muscat can produce approximately 25,000 bottles in a week (Costello 2012, p. 8). The company produces high quality and varieties of fragrance and sells them at a competition based price. On marketing and promotion, Amouage uses social media and mainstream media as the major sources of advertisement to rich their consumers.
While assessing the quality if management in any company, the aspect is considered both an art and a science. However, the approach for the assessment varies widely from one scholar to another and from organization to organization. Managers have the ability to design facets of measurements or attributes that the staff can use in determining whether the level of performance of the organization is worthwhile or there is a need for a change. In a systematic study, Costello (2012) denotes that the culture of high performance in an organization impacts on the financial and operational results of the company. High Performance Work Practices (HPWPs) are a set of human resource management practices that are integrated and internally consistent. They are in coherence with human resource practices, externally consistent, and are in tandem with the organizational strategy (Riaz, S 2016 p. 421). However, not every organization enjoys high performance despite the financial stability and resources it might have. By definition, Costello (2012) also suggests that high performance teak are made up of a workforce who unite in working towards the objectives of the organization. Such a group can easily excel towards accomplishing work related tasks, set and reach objectives and performance foals, and be free from arguments and conflicts that commonly characterize less successful teams.
Amouage has been astounding the alchemist heritage, and the powerful background of luxury perfume manufacturing since the Sultan of Oman founded it. Amouage is dedicated to making finely combined perfumes using high quality and rarest ingredients sourced from across the world thus bringing true artistry to the perfumes. The innovative and the long-lasting fragrance show the unique creative integrity, and in recent years, Amouage has expanded its product offer to those that include laundry which reflects attention to luxury. The business adopts an inventive approach based on the creative director’s inspirational belief and the world known perfumers such as Grasse and those that are in Paris and New York.
High performance is an aspect that not only benefits the organization but customers and employees as well as pointed out by Costello (2012, p. 7). Every employees paired with other workers in a high performing organization often proves easier for other employees to learn and share their duties. With the help of more experienced employees in the team, the growing staff work together to ensure they leave none of the staff to shoulder the entire project. The employees are motivated and can easily relate positively with coworkers to strengthen the bonds that already exist and allow them to better enjoy their duties. At the same time, customers often receive their requested products in time since the staff fills their needs more rapidly. The customers as well benefits from good customer service, an aspect that will enable them introduce their friends and family to the organization as pointed out by Godeanu (2012, p. 90). This becomes easy as the customers enjoy a more inviting environment for work.
In a systematic review, Khan, Ullah, and Khattak (2018) denote that managers tend to pay less effort into the effective governance of the employees when it is made up of high-performing team. It is because such teams can often govern themselves in achieving the objectives of the organization. In such circumstance, the management can as well forego making decisions for the employees on the best strategy as the employees are able to work within the team in selecting best strategic ideas that will benefit the organization.
To achieve specific certain goals and objectives, the company uses its leadership to obtain above-average financial returns. The effective leadership of Amouage headed by the CEO, David Crickmore has adopted an inventive and highly creative approach to obtain the best results in all the products. The company also has a fundamental leadership design that assists the administration to evaluate and analyze the strategies and also build on the layers of advantages that result in high returns (Godeanu 2013, p. 35). The Chief Executive Officer who uses the diverse managerial style to deal with various issues and situations that business faces heads it.
Amouage Marketing and Promotion
In a bid to realize better results and high income, the company has been employing various practices to achieve its objectives. Several such strategies can be used. However, the notable one that is being applied in this case is the High Performance Work Practices. High Performance Work practices are management tactics on employees that improve the productivity and profit. Some of these practices include staff reward and award programs, performance-based pay, standardized job classification and reward systems, continuous appraisal and leadership development strategy, innovation programs, regular performance evaluation, employee formal training or skill development and many more. The company may not be able to execute all these in the business but can only implement some that only fit the business’ needs and priorities. Implementing high performance work practices or organization comes with various challenges to the business.
In modern day human resource management, managers view HPWPs as vital components of human resource and as crucial factor in fostering high performance in the organization. Business ventures that engage HPWPs as a human resource management practice have human resource departments that are organized such that division of labor enables every personnel to play a role in the achievement of organizational objectives. Research suggests that firms which make use of HPWPs could realize a boost in their productivity by between 20-40% (Siddique 2016 p. 368). Using the AMO system, the paper groups HPWPs into 3 categories and then proceeds to identify each HPWP and evaluate its associated challenges.
According to Long, Wilder, Betz, and Dutta (2012), achieving high performance in an organization comes with a sacrifice. The employees and the management have to go extra miles in advancing their skills and increasing their professional knowledge towards their duty. For instance, there is a need for the organization to ensure its employees possess good sales skills that can ensure they effectively reach their customers despite the challenges they face in the market. In other words, it comes with extra cost on time and expenses for the organization for the organization to hire experts who can equip the employees with the necessary skills.
Practices aimed at enhancing employees abilities (A)
Formal Employee Training/skill development
This is a practice where the organizations take their employees on training programs in a formal setting. It could be through the use of seminars, workshops, conferences or even part time or classes to further education in the relevant discipline. This practice is aimed at skill development (providing employee with further technical skills) with the intention of improving their abilities and competencies to deliver in their respective jobs.
High Performance Work Practices Defined
As noble as the idea is it often comes with huge budgetary implications. Money has to be set aside for formal trainings such as seminars workshops and conferences. It is even more expensive when the organization decides to pay pert time or full time classes in order to further an employees’ education. Depending on the size of the company and the number of employees involved in the skill development programs, the cost of formal training can be very high (Riaz 2016 p. 432). It is a huge investment in terms of finances often with no guarantee for returns. Additionally it is obviously impossible for employees taking part in formal training to provide their services to the organization at the same time. The fact that they are not able to contribute to productivity at the time has cost implications that often is not quantified (Siddique 2016 p. 382). Moreover, the organization has no guarantee that the employee in question will choose to continue working at the same organization even after training. In the event that the employee(s) decide to leave the organization, the investments will have been in vain because the objective was to provide them with skills to with the expectation that they would continue to offer their services at the same organization.
- Top-Down Information Sharing
Better communication is another feature of HPWPs. It advocates for transparency in the manner that information is shared with the employees especially between managerial staff and junior employees. Communication is essential in an organization because it ensures the ideas and views of the employees are heard (Nordbäck et al. 2017 p. 404). In organizations implementing HPWPs social bridges are built within the organization and informal communication gains widespread use instead of formal communication which is rather slow. The downside of this more open approach towards communication is the risk of a possible breach of ethics; e.g. certain sensitive information in an organization is only supposed to be shared among managerial staff. It would be unprofessional for such to be shared with junior employees.
Practices aimed at Motivating Employees (M)
Compensation aspects of HPWPs involve the use of higher pay levels as well as group base performance pay systems. Higher wages have potential to attract and retain the best employees to the organization. Compensation is seen as a means through which firms ensure the staffs’ desires are aligned to organizational goals (Godeanu 2012 p. 152).
Higher levels of wages and salaries especially for a large number of employees could very easily lead to a high wage bill for the organization. Given that wages and salaries are paid every so often, operational costs of the organization are bound to rise. This is likely to put the organization in an unfavorable financial situation with suppliers and creditors if the pay levels are unsustainable. The organization would then have to do away with the practice and as a corrective measure, introduce pay cuts. This will impact on the employees’ morale and performance.
Benefits of High Performance Work Practices
This includes practices that increase the involvement of the employee and fosters team work. Flexibility in the assigning of jobs is also common in human resource departments using HPWPs. Job rotations are good in the sense that they improve the general understanding of the organization among employees. Also teams have the tendency of exhibiting increased desire to exercise their abilities in job-related endeavors (Weinberg et al. p. 326)
Given that businesses operate within set times lines and deadline in order to ensure profitability, implementing flexibility in a team set up becomes difficult. To achieve flexibility in a team requires a lot of time which may hurt the business especially in instances when decisions need to be made promptly.
Reward policy is one of the significant aspects the organization n used in motivating the employees to engage into higher performance, a system that resulted into a significant amount of money being used as a result of increased production. Frequent performance compensations lead to high operational costs, hence it is imperative for the organization to control the operational cost to realize more profit. This is done through the adoption of agency theory and non-economic practices.
- Adoption of Agency Theory and Non-Economic Practices
Amouage Company has adopted agency theory in developing the employee’s salary in the move to control the operational costs arising from the high-performance practices (Kuvas et al 2016, p. 669). The economic theory states that money is the primary motivator of performance while the agency theory state that compensation is made to the employees by the outcome, therefore different employee on the same job attract different salary due to different performance levels.
- Base Pay Management
Base pay management structure provides a framework for implanting a big and economic reward policy by defining the pay levels of the employees and ranges for groups of roles about their internal and external market value. The base pay rate adopted by the company focuses on retention, career development and benefit allocation to employees: through these, the organization has received ease salary decisions, have expertly maintained the cost of all programs such as bonuses and have provided a better plan that reward performance through merits salary increases(Sukanya, Gayatri & Jahnavi 2018, p 219). The system ensures that high performance receives a higher salary than low throughput and is always spread over more extended periods of time. The ultimate effect is that the low paid workers strive so hard to catch up with the high paid workers by improving the performance rate, ultimately increasing the organization performance. Generally, the salary increment rewarding system has proven to be more economical than incentives and promotions to the organization.
- Adoption of Broadband
Challenges to Implementing High Performance Work Practices
The organization move to control the cost of reward adopted a broadband structure of pay base. The arrangement allows a small number of bands typically about four with a progression and flexible pay grade that is majorly based on the competence (Long et al 2012, p. 823). The flexibility of the pay base allows the organization to control either way the cost of salary rewards system to remain within the value of the company and maintain the high-performance objective. Additionally, the brand structure adopted tends to enhance the employee development in various skills, an aspect that is important in increasing the individual performance that automatically translates to the performance of the whole organization.
- Adoption of an Annual Bonus Plan
Annual bonus plans is a more disciplined approach to employee motivation and reward as it focuses on specific behavior changed for a more extended period and is directly linked to the performance goals of the organization (Godeanu 2012, p.220). Unlike the day to day incentives and one-time performance bonuses, the annual bonus insists of accruing the performance bonus for a minimum of a year hence determine the group of employees that are eligible for the gift. The system does not only control the reward cost but also helps in retaining the high performing employees within an organization and motivate and reinforces the desired behavior. These employees in their push to accrue the annual benefits end up being loyal to the company as they get attracted by the annual performance bonuses. This system is more economical than the monthly and all employee comprehensive reward system.
The long-term incentive is another variable pay system that focuses and associate with the annual bonus rewards system. However, it is less difference with the annual bonus as focuses on both the short-term and the long-term achievements (Baran 2014, p. 98). The incentives used as employee motivator and retention strategy are reviewed to have a long-term cash award performance-based for a minimum of one year.
- Step up Employees to adopt Straight-Forward Communication
However much the top-down information sharing in organizations enhances performance, the system tends to be costly regarding the type and number of channels used to relay the information. The policies also might not favor all kinds of information circulated as some might leak of the junior staffs and are still costly (Khan, Rao & Wang 2016, p. 9). To address this, the organization adopted straight-forward communication system as a form of information sharing. The system is more effective and economical as it only impacts those that are directly affected by specific programs hence tends to be prudent on the organization’s side of running expenses.
- Public and Private Employee Recognition
Practices Aimed at Enhancing Employees Abilities
Employee performance is directly linked to the motivators such as money, promotion and training. Training employees for quite a longer time tends to be costly to the organization, hence proper strategies of increasing employee’s knowledge and motivation level can be adopted other than training (Wade, Bohac, & Platt 2013, p. 28). The most common cost effective methods adopted by Amouage includes internal on-job training through role rotations, motivation through private and public recognition among others. These practices do not cost the organization any money but improves the performance of the individual and eventually the entire company.
The leadership of the organization can sifreshmply follow a strategic framework that is focused on the gaps available in the market place. In other words, conducting a market research will enable the organization to identify the possible gaps that the organization can venture on while increasing the quality of services in the existing areas of operation. On the other hand, high performance can only be achieved within the organization if the culture of the organization goes in line with the objectives. The organization needs to plan, manage, and monitor its strategy and culture to ensure it remains in line with the objectives of the organization. At the same time, the organization should ensure it takes time to celebrate the achievements with focus given to the employees who are the backbone of the performance. A strategy gives the employees a sense of value and character as they will feel respected by the organization. The result will be more effort towards duty and a united workforce that can ensure they work together to achieve the objectives of the organization despite the market challenges and seasonality. Performance is dependent on the management, the kind of treatment they give to the employees and quality of customer service.
Performance is an aspect that every organization focuses to achieve in all facets with the departments it operates. Performance depends on the quality of service offered to customers, an aspect that primarily relay on how the organization treats its employers and in the long run, its customers. Delivering quality is easier said than done and requires strategic sacrifices from the management to ensure the employees work productively towards the objectives of the organization. Therefore, it is recommended that the organization sets a framework for effective leadership and adopt strategic decisions that will ensure it meets all the desires of the customers in the cosmetic industry. It needs to develop a simple, actionable and clear expectation to see effective functionality of the organization. In other words, the management needs to ensure they make their staff aware of the goals of the organization and what is expected from them. Without awareness, the employees will be working through a guess work system to work towards what they need to achieve, an aspect that will make them miss on vital aspects of the organization. The management also needs to ensure it provides feedback to employees on their performance as well as to customers regarding the issues they are raising towards the products and services it offers to the market.
Better Communication in High Performance Work Practices
List of References
'Amouage's Jubilant Creations.' (2011). Soap, Perfumery & Cosmetics, vol. 81, no. 2, p. 14.
Baran, M 2014, 'The Beyond-Pay Elements Of Remuneration Of It Specialists In The Context Of The Key Phenomena In Economic Environment', Contemporary Management Quarterly / Wspólczesne Zarzadzanie, 13, 1, pp. 97-113, Academic Search Premier, EBSCOhost, viewed 16 May 2018.
Costello, B. (2012). 'Amouage To Grow Distribution, Store Count', WWD: Women's Wear Daily, vol. 195, no. 105, pp. 8-1NULL.
'From The Omani Fragrance House Of Amouage.' (2013). Middle East, no. 394, p. 35.
Godeanu, A 2012, 'The antecedents of satisfaction with pay in teams: do performance-based compensation and autonomy keep team-members satisfied?', Eastern Journal Of European Studies, 3, 1, pp. 145-168, Academic Search Premier, EBSCOhost, viewed 16 May 2018.
Godeanu, A 2012, 'The antecedents of satisfaction with pay in teams: do performance-based compensation and autonomy keep team-members satisfied?', Eastern Journal of European Studies, vol. 3, no. 1, pp. 145-168.
Khan, A, Ullah, I, & Khattak, S 2017, 'Link to system interfacing for multiple input and multiple output wireless system using maximum likelihood receiver', IET Communications, 11, 9, pp. 1346-1351, Academic Search Premier, EBSCOhost, viewed 16 May 2018.
Khan, M, Rao, R, & Wang, X 2016, 'Two-way decode-and-forward cooperative systems with signal space diversity', EURASIP Journal On Wireless Communications & Networking, 2016, 1, pp. 1-14, Academic Search Premier, EBSCOhost, viewed 16 May 2018.
Kuvaas, B, Buch, R, Gagné, M, Dysvik, A, & Forest, J 2016, 'Do you get what you pay for? Sales incentives and implications for motivation and changes in turnover intention and work effort', Motivation & Emotion, 40, 5, pp. 667-680, Academic Search Premier, EBSCOhost, viewed 16 May 2018.
Long Iii, R, Wilder, D, Betz, A, & Dutta, A 2012, 'Effects of And Preference for Pay for Performance: AN Analogue Analysis', Journal Of Applied Behavior Analysis, 45, 4, pp. 821-826.
Nordbäck, ES, Myers, KK, & McPhee, RD 2017, 'Workplace flexibility and communication flows: a structurational view', Journal of Applied Communication Research, vol. 45, no. 4, pp. 397-412.
Riaz, S 2016, 'High Performance Work Systems and Organizational Performance: An Empirical Study on Manufacturing and Service Organizations in Pakistan', Public Organization Review, vol. 16, no. 4, pp. 421-442. Available from: 10.1007/s11115-015-0315-1. [17 May 2018].
Siddique, M 2016, 'Effects of High Performance Work Systems on Organizational Performance: A case of Banking Sector of Pakistan', Abasyn University Journal of Social Sciences, vol. 9, pp. 364-386.
Sukanya, D, Gayatri, V, & Jahnavi, Y 2018, 'Payroll Management System', International Journal Of Recent Research Aspects, 5, 1, pp. 218-222, Academic Search Premier, EBSCOhost, viewed 16 May 2018.
Wade, W, Bohac, P, & Platt, J 2013, 'Technology-Based Induction: Professional Development Strategies for Correctional Education', Journal Of Correctional Education, 64, 3, pp. 22-36, Academic Search Premier, EBSCOhost, viewed 16 May 2018.
Weinberg, DB, Avgar, AC, Sugrue, NM, & Cooney-Miner, D 2013, 'The Importance of a High-Performance Work Environment in Hospitals', Health Services Research, vol. 48, no. 1, pp. 319-332. Available from: 10.1111/j.1475-6773.2012.01438.x. [17 May 2018]