Developing the right reward system that will motivate F&N foods’ employees to work towards meeting set corporate objectives of the company

Author: Iloka Benneth Chiemelie

Published: 23-September-2014

ABSTRACT

The main objective of this research is to present an analysis of the reward system in F&N Singapore as well as provide recommendations on how the system can be effectively improved. In order to achieve that, this research presents a background analysis of the company, an analysis of its business environment, and an analysis of its present reward system. Recommendations were then made in line with company’ set objectives.

CHAPTER 1

INTRODUCTION

1.1. BACKGROUND OF F&N

Fraser and Neave Limites (F&N) was established in 1883 and the company has since then continued to quench the taste of different customers across the generation of its existence, with such making them the present leader in Singaporean and Malaysian foods and beverage industries (F&N, a, 2014). It is an established household brand in these two countries, but there products are also found across other ASEAN cities.

1.2. ORGANIZATIONAL STRATEGY

The corporate strategy of F&N is built on the philosophy of continues creation of reputable brands that meet customers’ need for quality and healthy enjoyment. On a present note, the company has experienced success with that strategy because it has brought about increased innovation and creativity; which is the source of its numerous brands such as F&N, 100PLUS and F&N SEASONS for Soft Drinks, F&N MAGNOLIA, F&N NUTRISOY and F&N FRUIT TREE FRESH for Dairies, and Myanmar Beer, Myanmar douible Strong and Andaman Gold for Beer (fraserandneave.com, 2014).

1.3. CORPORATE OBJECTIVES

In line with its overall strategy, the main objective guiding F&N’s philosophy is the need to meet health and wellness demands of consumers when it comes to beverages and foods. The brand’s is purely guided by the ideology of “Pure Enjoyment, Pure Goodness” and this is exactly what they seek to achieve with their products (F&N, a 2014)..

1.4. MISSION AND VALUES

F&N’s missions and values are well aligned with its mission of delivering Pure Enjoyment and Pure Goodness, and the five main values guiding their business activities are: Thoughtfulness, Excitement, Progressiveness, Trust and Innovation (F&N, b 2014). These values also define the company’s missions of becoming the more reliable and healthy foods and beverages brand in their markets.

CHAPTER 2

ENVIRONMENTAL ANALYSIS

2.1. PESTLE OF SINGAPORE

2.1.1. Political factors: In the political scene, Singapore is regarded as one of the most political stable country in the world, with well-established principles and philosophies that have positively shaped the way people perceive them as a political system (Huong and Ken 2006). On that note, the political system of Singapore if a positive factor because it creates the right atmosphere for businesses to operate without fear of new policies targeted for their downfall.

2.1.2. Economic factors: The Singaporean economy is also one of the advanced in the world and one of the most advanced in ASEAN region with huge GDP ranked in annual from investments (Huong and Ken 2006). This provides residents with higher disposable income and buying power when compared with other ASEAN countries. However, live in Singapore is expensive and brands must be conscious with pricing as it has huge impact on purchase (Huong and Ken 2006). The economic scene is favorable but F&N needs to ensure that they competitively price their products in order to effectively compete in the market.

2.1.3. Social-cultural: On the eating culture, Singaporeans enjoy eating outside and spending time with families at restaurants. The main reason for that is the busy nature of the country, which means that parent have less time to prepare foods at homes (Huong and Ken 2006). This culture is hugely positive for any foods and beverage company because it creates the right atmosphere for increased consumption.

2.1.4. Technological factors: just like majority of the countries in the ASEAN region, Singapore has advanced production systems with latest technologies that support effective and efficient production (Huong and Ken 2006). This is positive for F&N as they can be assured of meet their consumers’ demands easily with such production network.

2.1.5. Legal factors: just as the political factors discussed above, Singapore has well-established legal system (Huong and Ken 2006) that provides support for both local and international brands in the country. This is positive for F&N as it will aid the protection of the company’s properties and reduce loses that can occur due to lack of such protection.

2.1.6 Environmental factors: Singapore has some of the most sophisticated and advanced networking systems for both roads and shops. This provides the company with needed access and ease to push its products to the market. Thus, it is also positive for business.

2.2 BUSINESS LIFE CYCLE

Figure 2.1: Business life cycle of F&N

From the above discussions, it can be stated that the company is presently at its maturity stage. However, increased innovation and introduction of new products means that decline is still far from its reach and success is still sustainable.

CHAPTER 3

REWARD AND PAY STRATEGIES IN F&N SINGAPORE

Reward system represent an integral part of any company’s organizational design. This is because the extent to which they fit within the rest of the systems in the company does have an impact on how effective the organization and on the quality of life that people can experience in the company. In the course of the past decade, there have been an emergent of new popular reward systems in order to ensure that reward systems are well aligned with the critical changes that are occurring in terms of how organizations are designed and managed (Lawler, 1990; Schuster and Zingheim, 1992). The implication from such understanding is that companies must draft effective reward systems that are well aligned with other systems in the company in order to ensure sustainability in its business process. Additionally, such systems must be changed and aligned with the changes in the business process are time goes on. On that account, this sections looks into the reward system of F&N Singapore and how effective they are in meeting set corporate objectives.

3.1. Reward system in F&N Singapore

Research conducted on choice of job career and overall turnover of employees does have positive relationship with the level and kind of reward system that the company adopts as it determines who is attracted and who will continue to remain with the company (see e.g. Lawler, 1973; Mobley, 1982). In essence, companies with the most profitable reward systems do attract and retain more employees (Gerhart and Milkovich, 1992)

The first reward system in F&N employees’ sustainable performance reward system through increased motivation, which is based on mutually beneficial philosophy. Sustainable performance systems is of the notion that companies need to take good care of their staffs in order to ensure sustainable production and performance (Gerhart and Milkovich, 1992; Lawler, 1990; Lawler 1971) as the absence of a staffs due to illness or other factors will have negative influence on production but presence of all staffs as well as motivation level will positive influence on overall performance of staffs and company. The company does this by providing employees with high safety in their working environment. For instance, the company recorded a zero LTA (last time accident) in all of its production plant (F&N, c 2014) in 2013 and this ensured sustainability in its production system.

The second strategy adopted by the company is employee attraction and retention system. The ideology is that companies must provide competitive or higher reward systems as obtainable in their industries in order to ensure that attraction of talents is increased while turnover is reduced (Gerhart and Milkovich, 1992). On the side of F&N, the company continuously surveys and studies the reward systems of other beverage companies in Singapore and align their own with what is obtainable in the labour industry (F&N, c 2014). This ensure that new talents can be attracted while established talents have no reason to leave.

From the above discussion, it is clear that the company adopts effective reward system by offering quality of life to employees while also being competitive in the beverage industry. This will ensure sustainability in production due lower turnover intention and high intention from new staffs to work with the company.

CHAPTER 4

RECOMMENDATION AND CONCLUSION

There are two dominant views in the strategic pay literature and the first is based on “best fit” ideology which is that companies should align their reward system in line with set corporate objective as this is the only way they can ensure sustainability; while the second is “best practice” strategy, which is based on the idea that companies should focus on keeping staffs satisfied because such will ensure sustainable competitive advantage (Lawler, 1996; Sparrow and Hiltrop, 1994; Thorpe and Homan, 2000; Schuster and Zingheim, 1992, 1993; Lawler, 1995).

The above analysis shows that the company is adopting best practice. First, F&N takes time to ensure that employees are provided the right working environment (best practices), and secondly, the company always align their reward system with what is generally obtainable in the market in order to ensure that they are satisfied and remain with the company.

On that note, it is recommended that the company should also incorporate best fit strategy into its system in order to ensure that all investments on employees are worthwhile as noted by Schuster and Zingheim (1992, 1993). For instance,  the company can adopt “per performance”, which rewards employees based on what they have produced and this will increase overall productivity as employees will work more in order to earn more, while it will also reduce operation costs as F&N will not bear costs when employees are not working.

In conclusion, the this research has been able to achieve set objectives as it has analyzed the reward system in F&N Singapore as well as provided recommendation on how the company can ensure effective reward management.

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