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Assignment 1: Case Study: Geico

Essay by   •  August 24, 2012  •  Case Study  •  1,719 Words (7 Pages)  •  2,519 Views

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Geico

Advantages to a Total Rewards Approach

There are several advantages to using a total rewards approach to compensating the workforce. The top five are described in the text. The following paragraphs discuss the facets of the Geico total rewards program that align with these advantages:

The first facet is Geico's benefits program which aligns with the advantage improved recruitment and retention. Geico offers a variety of benefits programs to meet the employees' needs. They combine both transactional and relational rewards that allow the employee the flexibility to "mix and remix to meet their different emotional and motivational needs" (WorldatWork, 2007, p. 15). "Transactional rewards are financial in nature and are essential to recruiting and retaining staff but can be easily copied by competitors, and relational rewards are concerned with learning and development and the work experience and are essential to enhancing the value of transactional rewards" (Armstrong & Murlis, 2007, p. 14). Benefits are offered by employers to offset the cash compensation that employees receive. Because Geico values their employees and offer this variety of benefits they are able to keep recruitment and retention high.

The second facet is work-life balance of the total reward program. This aligns with the advantage flexibility. The work-life aspect is made up of time off and leave programs and family and life programs. "Work-life is a specific set of organizational practices, policies, and programs plus a philosophy that actively supports efforts to help employees achieve success at both work and home" (WorldatWork, 2007, p. 7). By providing a variety of time off and leave options they are showing flexibility and support for their employees and their families. "Work-life balance is not about the amount of time you spend working vs. not-working. It's more about how you spend your time working and relaxing, recognizing that what you do in one fuels your energy for the other" (Morgenstern, 2008). By providing this flexibility they are showing that they value their employees and the talent they bring to the company.

The third facet is Geico's financial and retirement benefits that align with reduced labor costs and cost of turnover. "Through competitive salaries, merit-based promotions, company profit-sharing awards, and other savings options, Geico's associates can build wealth and secure a promising financial future" (Geico, 2012). By providing these financial and retirement benefits they are showing a long term commitment to their employees. Employees are looking for stability and growth. With a long term commitment from employer, employees will more likely stay long term. By promoting an environment that promotes long term commitment from employees, labor and turnover costs are reduced.

The forth facet is compensation and competitiveness that aligns with heightened visibility in a tight labor market. Even with slow economic times Geico has not had a decline in their workforce, which shows this is a company that values its employees. Geico's total rewards program is based on a compensation and competitiveness and it relates to other companies that are in the same market. Geico pays its employees based off their experience and skill level. Every position from entry level to executive was compensated well, because of the value they place on their employees and competitor's pay rate. By staying competitive and compensating their employees accordingly, Geico is increasing their visibility in the labor market as a desired place to work.

The fifth facet is education and development that aligns with enhanced profitability. Development is learning that is made to improve the employee's skills and competencies. The development makes the employees able to perform better than before and gives them the opportunity at advancement. Education and the need for development are very valued at Geico. Not only is this education and development benefiting the employee but it is also benefiting Geico. Generally speaking, high performers yield high results. High results yield higher profits. Education and development encourages growth and longevity in the company. With high quality workers they are able to increase and enhance profitability.

Total Rewards Strategy

Geico needs a strategy that addresses all of these advantages. The company should follow the following strategy toward this end: In order for Geico to set up a strategy the company has to know what the end goal is and focus on it. In order for that to be done the company has to know what skills are needed and place trained and experienced employees in the right position to add value and help create a smooth working environment. Geico should also find out what motivates the employees they bring onboard to get the most out of them.

Risk and reward management is another part of strategy that has to be used to balance the rewards. Those in positions of authority have to know the importance of skills and the cost of it and place employees in the right position. In most cases the more you pay the better output comes from employees. Non-monetary rewards are also becoming more and more popular in the workforce and in some cases can hold more value to employees. In order for performance to be managed correctly, a sustainable

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