Reference no: EM133010955
Case Study- Compensation & Reward Management
The John Lewis partnership has a reward strategy of paying the full local market rate and as much above as is justified by individual performance, its staff expected to be responsive to customer needs and deliver excellence in customer service and performance, with employees subject to scoring by mystery shoppers. In John Lewis performance payment are consolidated into pay, rather than paid as one of bonuses. In addition as the company is owned by its staff, employees share the full distribution of profits after the payment of operational costs and the costs of future expansion. This results in an annual bonus being paid to staff as a percentage of their pay. In March 2008, the 69,000 staff shared a pay-out of over $180 million, approximately 20% of their salaries, as profits were up 19% at $380 million but what happens when the high-street retail sector suffers a downturn?
An illustration as to what might occur can be seen with its competitor, Marks & Spencer which axed bonus payments for staff in 2008 despite breaking the $1billion profit barrier for the first time in eleven years. Although their results for 2007 were the best since 1997, the trading climate was the toughest for a decade with this downturn expected to last for several years. This will involve a dramatic cutback of bonuses(or no bonus at all) for their 70,000 staff and directors. Whilst organizations might experience altercations in their opening environment differently, it would be highly unlikely for the John Lewis partnership and its staff to be unaffected by an economic slowdown.
What might the implications be for staff rewards and motivation?
Q1 Mystery shoppers are
a. Shoppers who shop on regular basis
b. Shoppers who reach unannounced to check the standards and systems
c. Shoppers who shop in bulk
d. Shoppers who are shoplifters
Q2 The staff is considered most appropriate when they
a. Take care of customers
b. Take care of employees
c. Not only take care of customers but employees also
d. Take care of profits
Q3 The employees look towards total compensation which means
a. Salary
b. Cost to company
c. Total reward strategy including cost to company
d. The awards and rewards they will get during the year
Q4 In case of economic slowdown, it is advisable to
a. Give bonuses so that employee can feel motivated to increase the sales.
b. Stop bonuses, so that this money can be utilised to take care of variable expenses.
c. Defer bonuses, so that this money can be utilised for variable expenses at the moment but later bonuses should be released when the slowdown is over.
d. Forfeit the bonus to take care of fixed and variable cost.
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