Performance And Compensation Management Essay: Issues At Woolworths.

Background of the Company

Analyze The Issues In The Performance And Compensation Management Of Woolworths?

Performance and compensation are two most important variables in the organization for the betterment of the company as well as the employees. Any issue on these grounds would be detrimental for the growth of the company in some way or the other. Performance issue and compensation issues are mostly related to each other in some way or the other. Performance problems are often caused due to problems in management, workplace condition, policies and other issues. There can be various performance issues such as missing targets, unhappy customers and others. On the other hand, compensation issues can be unpaid overtime work, salary problems, incentive problems and others. An organization can face these issues from employees and management (Sangwan 2015). The report discusses about the compensation and performance problems in Woolworths supermarket in Australia. It further analyses the reason and need for improvement of these problems. Lastly, a recommendation is given by which the company can solve the problem in its work environment.

Woolworths is a well-known supermarket in Australia that sells grocery and operates store chain in the country. It operates as a duopoly in the Australian market by joining hands with Coles. This helped the company to take up 80 percent Australian market in the past years. It offers various types of groceries such as vegetables, fruits, packed foods and others. However, the company is also involved in selling other items such as household goods, baby products and others. Thus, the supermarket involves itself in selling all kinds of goods to the customers in order to cover wide range of market. Currently the company is operating 1000 stores all over Australia, which are divided into 968 supermarkets, and 19 stores (NewsComAu 2017). It is considered as the second largest retailer in Australia because of its expansion all over the country. The company also has 202,000 employees working under them in various departments, which has also helped the organization to grow from the day it has launched in the market. To motivate the employees the company also offers rewards and recognition from to encourage the employees to perform their best and provide maximum business to the customers (Pc.gov 2017). These rewards help the organization to measure the performance of the employees according to the set objectives to each one of them. The rewards are given to the employees through various types of elements such as salary, incentives, career growth, promotions, and awards for extra efforts and Annual CEO Awards. The compensation includes the items that are offered to the employees based on their performance. However, the employees had to meet the targets give by the company on a monthly basis to get such rewards. Thus, the compensation pattern and performance of the employee are interdependent on each other in Woolworths. However, the company is facing various challenges and problems in the performance and compensation management system from past few years. This is because of various reasons offered by the customers as well as the organization itself.

Performance Management and Compensation Issue

Companies nowadays face many issues in their performance and compensation structure. The issue in performance comes from the lack in show in the employee in such as unachieved targets, lack of customer dealing and others. However, sometimes the performance of the employees goes down due to issues in compensation management. Some of the organization does not pay the employees according to their performance. They remain underpay or work for extra hours without any incentives (Adeoye and Fields 2014). This reduces the enthusiasm in the employees to give their full potential and perform nicely. Woolworths is recently facing many problems in the performance of their employee in most of its stores. The lack of performance in stores is evitable due to lack of customer satisfaction and reduction in revenue of the company. This is causing a decrease in the revenue of the company. Moreover, the company is also facing issues in its employee compensation management, which was seen in the organization as most of the staffs are unpaid for overtime work and are exploited by the managers. This has demotivated the employees to work and offer their full potential in sales and targets (Gupta and Shaw 2014).

The issue in the performance management department in Woolworths was seen in the year 2012 when approximately 3000 staffs in 200 stores of the company was redundant about the payout that was offered to other employees in the stores. They missed the protective award that was given to the employees. This leads to demotivation in the staffs to perform well for the organization. Such an incident has put a negative effect on the performance of the employees in these stores. This is shown in the expectancy theories of compensation in which it is stated that if the employees are offered by an extra reward or compensation for the work that they have done, it helps them in performing high in the near future (NewsComAu 2017). Similarly, a nonpayment of reward leads to underperformance of the employees in the organization. Thus, according to expectancy theories rewards and performance are related to each other in an organization and in order to achieve success in the market the company needs to overcome the issues coming from both the grounds (Van Dooren et al. 2015). Further, the expectancy theory focuses on other factors that are necessary for getting good compensation from the company such as behavior, motivation and outcomes (Howard et al. 2016). Similar things happened in Woolworths in which employees showed very low performance by not meeting their sales targets. This has lead to lowering customer satisfaction and lowering income of the company.

Analysis of the Issue

The issues that the company is facing in case of performance management can be related to the Goal Setting Theory. According to this theory, setting a monthly or weakly goal for the employees in the company can motivate them to offer superior performance (Locke and Latham 2013). This can be judged on the ground that the employees with some goals continuously try to meet that goal which leads to better performance. Woolworths follow the same strategy in their organization; however, they failed to meet the desired goals. These are the two most important issues that the company faces in its organization recently, which is inter-related, to each other. This means an improvement in one factors might automatically lead to improvement in other issue.

Performance and compensation are two most important attributes of an organization as it helps in its continuous growth. An organization facing issues with these two factors will never be able to grow at the rate that it expects its organization to be in a year. Thus, it is important for the organization to get rid of such issues in their management. This is because performance allows the organization to attain advantage in whatever they are doing and fight away tough completion that it is facing. Similarly, improving the performance of the employees, Woolworths will be able to offer tough competition to other competitors that exist in the supermarket industry of Australia. On the other hand, compensation management is yet another important thing a company needs because it is the only way it can motivate the employees (Budworth et al. 2015). Thus, it is important for Woolworths to take care of the compensation issues that they are facing. This is because lack of compensation will automatically lead to poor performance and a chain of negative affect will lead to the downfall of the company. These factors show that it is necessary for the organization to improve the issues that it is facing in these two departments.

Compensation has a lot of benefits on the employees and on the organization that shows its importance. Some of the reasons behind solving the issues arising from compensation are that it facilitate the organization to recruit employees in the organization, help to motivate the employee, increase employee retention and abides with the compensation laws. Thus, these benefits are enough for the organization to improve the issues that it is facing in the compensation management (Elnaga and Imran 2013). Employee performance also holds similar importance in the organization because it decides the overall growth of the business. Thus, Woolworths also needs to maintain both that issues that has arisen.

Need for Improvement

Even though Woolworths is facing a lot of problem in its compensation management, yet there were various evidences that shows that the company offered some of the best remuneration policy to its employees. The remuneration includes both short term and long-term incentive plan for its employees (Pc.gov 2017). Short-term incentive plans suggested that the incentives are offered based on performance and is designed to improve the quality of performance that the employees are offering. On the other hand, long-term incentives were offered by the company to motive, retain the existing employees of the business, and help in value creation. The incentive in this case depends on the level of growth the company is achieving over time (Schultz and Schultz 2015). This shows that Woolworths has the potential of offering incentives to its employees and should thus try to improve the issues that they are facing in order to operate as it used to be in the past.

In order to improve the condition of the business it is necessary that the company carry out certain steps to improve the performance and compensation issues that it is facing. The steps that the company can follow in order to improve the performance of the employees are:

1. The company should not be afraid of discussing its motives and goals with its employees. Accordingly, it should give responsibilities to the employees so that they feel connected with the organization and perform its best.
2. Secondly, the organization should distribute the task of the store among the employees according to their skills and behavior so that they can handle the task with the best possible expertise. For example, it should allow staffs that are extrovert to handle the sales department, as they will be able to deal with the customers very well.
3. Thirdly, the goals of the organization should be clear in front of the employees so that they are ready for the consequences that they might faces if they fail to meet the goals (Schultz and Schultz 2015).
4. Fourthly, offering incentive to the employees is the most beneficial way in which the company can motivate the employee to perform well. Incentives can be monetary and on-monetary benefits. This also acts like a reward for the employee that performs very well and motivates other non-performing employees.
5. Lastly, offer regular training to the employees according to their monthly performance will add to the organizational growth. Training can also be provided while incorporating new system in the organization. This will help the employees to keep up to date with the changing systems.

Thus, it can be seen that Woolworths can solve both its issues by following these steps. This is because both the issues are inter-related such as an improvement in the compensation system of the company will motivate the employees to work well. However, there are other steps too that can be used by the company such as training and others to improve performance other than just increasing compensations.

Conclusion

From the above analysis about the performance and compensation issue faced by Woolworth it can be deduced that the issue in these two departments prove to be detrimental for the company’s growth. This makes it necessary for the organization to get rid of these issues and attain maximum growth. Two main issues that is seen in Woolworths are under performance of the employees that has lead to low customer satisfaction and under payment to some of the employees of the organization. these two problems can be resolved if the company focuses on offering employees with good incentive plan so that they feel motivated and perform their best. However, it can also solve the issues that other way round in which it can improve the performance of the employee by offering training and targets and in turn improve their compensation pattern.

References

Adeoye, A.O. and Fields, Z., 2014. Compensation management and employee job satisfaction: A case of Nigeria. Journal of Social Sciences, 41(3), pp.345-352.

Budworth, M.H., Latham, G.P. and Manroop, L., 2015. Looking forward to performance improvement: A field test of the feedforward interview for performance management. Human Resource Management, 54(1), pp.45-54.

Elnaga, A. and Imran, A., 2013. The effect of training on employee performance. European Journal of Business and Management, 5(4), pp.137-147.

Gupta, N. and Shaw, J.D., 2014. Employee compensation: The neglected area of HRM research. Human Resource Management Review, 24(1), pp.1-4.

Howard, L.W., Turban, D.B. and Hurley, S.K., 2016. Cooperating teams and competing reward strategies: Incentives for team performance and firm productivity. Journal of Behavioral and Applied Management, 3(3).

Locke, E.A. and Latham, G.P. eds., 2013. New developments in goal setting and task performance. Routledge.

NewsComAu. 2017. ‘The system of work left our client vulnerable to injury’. [online] Available at: https://www.news.com.au/finance/work/at-work/woolworths-worker-wins-230000-compensation/news-story/ab6faa0f7af86bf9c53585290a0c483b [Accessed 1 Nov. 2017].

Pc.gov.au. 2017. Remuneration report. [online] Available at: https://www.pc.gov.au/inquiries/completed/executive-remuneration/submissions/sub091-part2.pdf [Accessed 1 Nov. 2017].

Sangwan, S., 2015. IMPACT OF COMPENSATION MANAGEMENT PRACTICES ON EMPLOYEE’S PERFORMANCE IN PRIVATE SECTOR BANKS.

Schultz, D. and Schultz, S.E., 2015. Psychology and work today 10E. Routledge.

Van Dooren, W., Bouckaert, G. and Halligan, J., 2015. Performance management in the public sector. Routledge.