MOTIVATING EMPLOYEES THROUGH TOTAL REWARD SYSTEM
The Royal Bank of Scotland Group (RBS) is one of the largest financial institutions in the world. It is a global business with a range of operations in Europe, North America and Asia Pacific. RBS has centres in thirteen European countries, sixteen North American states and eight major Asia Pacific cities. RBS is one of the world's leading financial services companies providing a range of retail and corporate banking, financial markets, consumer finance, insurance, and wealth management services. It serves more than 36 million customers world-wide and employs more than 140,000 people. In addition to the provision of a full range of banking services under The Royal Bank of Scotland and NatWest brands, RBS also includes Citizens Financial Group, Ulster Bank Group, Coutts, Direct Line, Churchill and around 40 other brands. As a global business its operations are diverse. For example, in 2005, it bought a share in the Bank of China, China’s second largest bank, opening up new opportunities such as a new credit card business.
Roles and performance management at RBS
For RBS to offer world-class financial services, it is vital that it attracts the most talented people. These are the business leaders of the future. At a time when there is fierce competition for talented people, RBS positions itself as a world-class employer, with world-class employment opportunities, not just in the UK, but across the globe. There are various business support roles such as IT, marketing, human resources, finance, and legal. At RBS almost every role can be described in terms of specific job targets. This method of performance management allows managers to measure each individual’s performance in a specific way and reward them accordingly. RBS employees will agree job objectives and targets with their line manager at the beginning of the year. Their performance is then measured and reported on during the year. At the end of the year they will have a performance review. Payments for results are an effective motivator for high performance. Some jobs are paid according to the achievement of targeted results. This means that a bonus is paid if the employee achieves agreed targets for the job. Particularly challenging or difficult to achieve targets are known as 'stretch targets' and the reward for achieving these will be greater.
What is motivation?
Frederick W. Taylor (1911) was the creator of ‘scientific management’. He felt that every job was measurable and each element of a job could be timed. All managers had to do was pay for every item the workers produced and they would work harder to get more money. This led to a long established pay scheme called the ‘piece rate’, where workers received a fixed amount for every unit of output. Another theorist, Frederick Hertzberg (1959) developed a 'two-factor' theory of motivation. Firstly, he established that if an employee's basic needs (such as a suitable working environment and a basic rate of pay) were not met, then this creates a source of dissatisfaction. Hertzberg termed these 'hygiene factors'. On the other hand, the presence of less tangible factors, such as the provision of challenging work and recognition for doing well, can create or increase work motivation. Hertzberg termed these 'motivators'. RBS has put in place several of Hertzberg’s ‘motivators’:
• Employees get recognition for good work
• They have a collective sense of achievement when the whole business does well
• They gain extra responsibility and advancement through regular performance reviews
• When RBS people do well in their work, the company rewards them.
The theory of Abraham H. Maslow (1943) on staff motivation is also evident at RBS. Maslow referred to a ‘Hierarchy of Needs’ which is usually drawn as a pyramid. Basic physical needs , Safety needs, Social needs, Esteem needs and Self Actualization needs are all implemented by RBS for its employees motivation. RBS meets this by offering recognition, promotion opportunities and the chance to develop a lifelong career with the Group.
Motivation at RBS - Total Reward
Employees at RBS enjoy Total Reward – a specific benefits package designed by RBS that goes far beyond salary. It offers benefits for each member of staff that includes not just money, but also personal choice in working hours and security. The RBS Total Reward package also offers flexible pension funding, health and medical benefits, paid holidays, and a confidential advice service. Employees have a generous holiday allowance (between 25 and 30 days for full-time staff), with the option of buying or even selling days. Employees may also choose from a wide range of lifestyle benefits, including discounted shopping vouchers, childcare facilities and RBS financial products, such as mortgages, currency exchange, personal loans and banking at special staff discounted rates.
Results Based Payments
At the core of the package is a competitive salary based on skills and experience regardless of where in the world RBS staff is based. Providing competitive pay means comparing what you are offering against salaries for similar jobs in other financial services companies. All staff receives their salary credited monthly to their staff bank account. The terms and conditions of their employment specify the basic rate of pay and any further payments that they may be eligible to receive. However, within RBS the basic salary is only the starting point from which a number of additional bonus payments can be earned. All employees share in RBS’ success through its profit sharing scheme. If the company meets its overall profit targets, then all employees will receive a bonus worth 10% of their salary. On top of the profit-share bonus, as mentioned before, there is also the chance to earn an individual performance-related bonus when employees achieve or exceed their personal performance targets.
Non Financial Rewards
RBS also offers many non-financial rewards which can improve personal lifestyle. One of the most important motivators for RBS employees is the recognition of good performance by graded progression. At RBS, people are encouraged to ‘make it happen’ through personal development. This means RBS encourages employees to grow and develop their skills and abilities. This in turn helps RBS to grow as a company. Employees identify development needs with their line manager at their annual performance review. These are documented in a personal development plan. Development can involve more training, attending courses or gaining new understanding and skills. This can improve the prospects of promotion and allow employees to move up the organization and increase their Total Reward. RBS also believes in giving its people the chance to help put something back into their own communities.
To attract and retain the highest qualified and motivated employees, RBS enables its employees to develop a work-life balance between work and non-work commitments. RBS gives all employees the ‘right to work flexibly’. This can be through a range of flexible working practices covering job sharing, part-time working, home working, variable working hours, compressed hours and term-time working. These are adapted to suit the local needs of each RBS centre. The policies and procedures for applying are easily available on the RBS website. RBS provides a free advice service called 'Help Direct'. Employees can call for advice on making the most of their time at and away from work. It also offers counseling on a range of life issues. RBS recognizes that in some circumstances, people may need time off from work for reasons other than sickness. Some people have special family commitments or commitments in their local community. In 2004, the RBS “Your time” program won the HR Excellence Award for ‘The Most Effective Use of Flexibility in the Workplace”. The policies of RBS in relation to work-life balance help to create a working atmosphere that relieves stress. They also help to create greater equality of opportunity for everyone. Following these flexible practices allows RBS to attract more talented people. Theoretical work on motivation by Elton Mayo in the 1920s showed that contented people, who are satisfied with their working environment, were likely to be more productive. The distractions of home or community pressures can be handled far more comfortably with the support of an employer such as RBS. In return, RBS gains staff loyalty and commitment, which in turn drives higher performance.
1. Name two motivating factors at RBS.
2. Describe the differences between the theories of Taylor and Maslow.
3. How does RBS' Total Reward package fulfill Maslow's higher levels of motivation?
4. How does Total Reward contribute to RBS' overall strategy?
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