Developing the Right Reward System That Will Motivate F&N Foods’ Employees to Work towards Meeting Set Corporate Objectives of the Company
https://ilokabenneth.blogspot.com/2014/10/developing-right-reward-system-that.html
Author: Iloka Benneth Chiemelie
Published: 15-October-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.
REFERENCES
F & N (2014a), “Corporate profile.”
Available at: http://www.fnnfoods.com/about/index.php
[Accessed on: 3rd – April – 2014].
F & N (2014b), “Brand values.” Available
at: http://www.fnnfoods.com/about/brandvalues.php
[Accessed on: 3rd – April – 2014].
F & N (2014c), “Corporate structure.”
Available at: http://announcements.bursamalaysia.com/EDMS/subweb.nsf/7f04516f8098680348256c6f0017a6bf/659663e2b865ea4748257ae20023469c/$FILE/F&N-Page%2017%20to%20ProxyForm%20(3.6MB).pdf [Accessed on: 3rd
– April – 2014].
Fraserandneave.com (2014), “Our Business:
Foods and Beverages.” Available at: http://www.fraserandneave.com/FN_ourbusiness.asp
[Accessed on: 3rd – April – 2014].
Huong, H and Ken, C. (2006), “E-Government in
Singapore: A Swot and Pest Analysis.” Available at: http://www.dlsu.edu.ph/research/journals/apssr/pdf/200612/science_4.pdf?origin=publication_detail
[Accessed on: 3rd – April – 2014].
Lawler, E. (1995) ‘The New Pay: A Strategic
Approach, Compensation and Benefits Review’, 27 (4), p.14-22.
Lawler, E. (1996) The Design of Effective
Reward Systems. In Motivation and Leadership at Work, sixth edition, eds. R.
Steers, L. Porter and G.Bigley, p. 527-550. New York: McGraw Hill International
Press.
Lawler,
E. E. (1971), Pay and Organizational Effectiveness: A Psychological View, New
York: MacGraw-Hill.
Lawler,
E. E. (1973), Motivation in Work Organizations, Monterey, CA: Brooks/Cole.
Lawler,
E. E. (1990), Strategic Pay: Aligning Organizational Strategies and Pay
Systems, San Francisco, CA: Jossey-Bass. Schuster, J. R. and Zingheim, P. K.
(1992) The New Pay, New York: Lexington.
Mobley,
W. H. (1982), Employee Turnover: Causes, Consequences, and Control, Reading,
MA: Addison-Wesley. Gerhart, B. and Milkovich, G. T. (1992), "Employee
Compensation: Research and Practice. In M. D. Dunnette and L. M. Hough (Eds.)
Handbook of Industrial and Organizational Psychology, Palo Alto, CA: Consulting
Psychologists Press, 2nd ed., Vol. 3, pp. 475-569.
Schuster, J. and Zingheim P. (1993) ‘New pay
strategies that work,’ Journal of Compensation & Benefits, 8 (6), p. 5-9.
Schuster, J. and Zingheim, P. (1992) The New
Pay, San Francisco: Jossey-Bass.
Sparrow, P. and Hiltrop, J. (1994) European
Human Resource Management in Transition. London: Prentice Hall.
Thorpe
R & Homan G. (2000) Strategic Reward Systems. London: Pearson Education
Limited.