Organization's approach to reward management

    Background. XYZ Technology Limited (“XYZ”) is a growing niche business provider in the telecoms sector founded in the UK in 2001 by a successful entrepreneur, Joe Richards. Joe worked for two industry leaders in the USA and China. He is the Chief Executive Officer, and is supported by an HR director and Finance director who make up the leadership team. XYZ is progressing with its growth strategy, which includes plans to expand service offerings in Asia Pacific. The company, despite the recent economic downturn, employs little over 1,000 employees worldwide, of whom 72 per cent are based in the UK. XYZ employees are predominantly university graduates, plus a growing number of professional staff who are becoming worldwide experts in their own niche fields. The remaining employees (about 28%) are support staff carrying out a range of administrative functions. The employee age profile is relatively young: with about two-thirds aged 39 or below, and nearly 40 per cent below 30 years of age. The gender profile of the UK base is 80 per cent male and 20 per cent female.   Organisational context. The owner is committed to maintaining an entrepreneurial approach however the growth of staff numbers has made it essential to develop a clear set of HR policies which includes reward. Current issues and practices include: • Inconsistent people management practices (situation of staff being treated inequitably) was identified as an issue in the last employee engagement survey • There is no formalised pay structure – just staff group bandings which include leadership; management; professional and technical specialists, and support staff • The company aims to pay market ‘median’ for competent performers and this assessment is carried out annually by the HR department, comparing job roles to external market pay benchmarking sources • This benchmarking approach is proving problematic with staff distrust of the outcomes and the approach is exacerbated by the fact that nearly 40 per cent staff are paid below the median including 20 professional staff that joined three to five years ago • The company is starting to experience difficulties in attracting and retaining high calibre recruits, especially females who see the environment as biased towards men, even after taking into account the 80/20 per cent male to female ratio. This gender bias is also reflected in the leadership and management of the company, of which 90 per cent are male • Lastly, specific concerns have been raised on fairness and external competitiveness for strong performers. The company is also catching up after pay freezes which ended two years ago and employees have raised concerns about pay levels which they perceive as below that of their competitors. Some key employees are also citing lack of career opportunities and believe that some of their colleagues are better paid because they ‘shout louder’. Attrition levels have risen to 15 per cent in the past 12 months and the company is failing to attract high calibre experienced graduates who are critical to help drive future growth. Professional/senior staff participates in the company’s bonus scheme although support staff (mostly female) are not eligible for bonus, which is causing a problem among this group. The CEO supports the case for performance management and is committed to improving it though the quality of assessment is variable and almost non-existent for support staff. You are the lead HR Business Partner for the company globally. Your performance goals for the year ahead include developing a company pay structure and pay progression plan that reflects individual performance and competence in the role. This exercise needs to address key issues and provide the basis for the company to become a successful global business. The CEO has also specifically asked you to develop a pay system that is capable of recognising individual performance and company results.   prepare 2500 words report for the CEO/Board that provides: • Evidence and Theory based justification examining the case for or against the use of job evaluation to underpin the company’s pay structure • Evaluation of the key factors to be considered when selecting and then developing the most appropriate pay structure for the company • Recommendations on two options of pay progression system with justification