Human Resource Management In Mcdonalds

Published Date: 02 Nov 2017

Part 1

1. The Company

McDonald's is the largest food service company in the world. In 1993, annual sales stood at 23 billion dollars. It is also one of biggest employers in the United States , with over half a million workers .The company has roughly 10,000 locations Which include the standard sit-in restaurants, drive through windows, and satellite sites. McDonald's dominance in the fast-food industry is not likely to disappear anytime soon. Tile Company is expanding continuously, as at December 2000, McDonald's and its franchises operated over 28,700 restaurants worldwide in 120 countries and territories, serving food and drab to over 45 million people daily:

Only fifteen to twenty per cent of the restaurants are actually company-owned. The rest are franchises, run by 2,659 independent owners who pay a fee of between $400,000 and $700,000 for a franchise. McDonald's licensing department handles the fee structure on a case by case basis, and there are a wide variety of license fees determined by property and equipment costs. A skilled franchisee can earn a sex-figure income from a single restaurant; most own 2 or more restaurants.

2. The Job structure

an1ployees of McDollald's fall into three groups restaurant workers, corporate staff, and franchise owners. The fast group is the biggest –a local Mcboald's restaurant usually employs between 50 and 65 people. Company staff members work either at the corporate headquarters or at one of 40 regional offices.

In the restaurants crew members constitute the entry-level position and are by far the most numerous. A large majority are part-time workers, roughly three-quarters. Their wages are low. Swing Managers constitute the first true managerial position in the hierarchy, although their hourly wages are only slightly higher than crew member wages. Assistant Managers and higher are salaried. There is one Restaurant Manager per McDonald's restaurant.

According to company literature, approximately 12% of all teens currently employed in the U.S. work for McDonald's. Turnover at the crew-level employees are teenagers. The remainder includes seniors, working mothers, and "transitional" workers in the 20-25 age range.

The overview above just shows us the history and the structure of McDonald's.

Now come to the second pat:

The McDonald brothers' first restaurant, founded in 1937. From sitting on an outdoor stool or in their cherished new autos to in indoor restaurant and from the hot dog to the Big Mao and Happy Meals, it's tremendous differences. Along the way, it built one of the world's best-known corporate icons and its most ubiquitous store. Why McDonald's becomes increasingly popular and successful? The philosophy was neatly summarized: What ever people ate, McDonald's would be the ones to sell it. Furthermore, its famous even due to its quality food and the ways of management.

Here we just focus on the ways of management at McDonald's, such as training, education and benefit.

Training

Employee training at McDonald's is highly structured. Ends-level workers are first taken through the basic Crew Training System. The program consists of on-the job- training and is largely vocational. Each stage of advancement beyond the crew level then entails a new training program, with the skills becoming more complex and generalized.

Training begins immediately with a one-hour orientation on the company. Each restaurant has its own video player and training room. Step--by --step manuals and video tapes cover every detail of the operation, everything from how to make a Big Mao to a shake. Each restaurant has 25 stations from the grill area to the front counter, Trainers use a series of checklists as new crew members move through the restaurant. A level of competency is demonstrated and the activity is checked off on the SOC--Station Observation Checklist. There is a follow-up SOC to get certified on the station.

One a crew trainers has been promoted to swing manager and performed successfully, he or she is eligible for the Management Development Program. It provides technical and functional management skills for employees at the swing manager level and above. The first step is the Basic Operations Course, which takes several months to complete. It is a course Which covers fundamental restaurant opinions. The nab in the sequence is the Basic Management Course, Which teaches leaderships, time planning, and crew recognition. In the intermediate Operations Course, students are trained on crew recruitment and retention, store leadership and decision-making. The final course in this sequence is the Regional Equipment Course.

Once a front-line crew member has progressed to the position of assistant managed, he or she is eligible to attend Hamburger University , the Company's world wide training center for management personnel. Approximately 2,500 managers and potential franchisees take part in the Advanced Operations Course, or AOC. The Management training curriculum at Hamburger University has been altered in scope: almost 80% of the advanced operations Course is now devoted to enhancing communication, interpersonal, and human relations skills. Teaching methods have shifted from lecture format to include role playing with video feedback and small group exercises. All managers are required to receive training from hamburger University at least once every 5 years. New emphases include goal setting, diversity management, team building, and employee development.

The company has plans for a certification program which will govern how employees progress from the crew to the level of restaurant managers. Plans are also in place for a Workplace Skills Certificate. It would be given to crew members who have mastered a set of essential workplace skills, and thus provide a "walkable credential" to enable them to move onto another position within the consumer service industry. McDonald's is a quick service restaurant business committed to 100% satisfaction. Macdonald's independent Franchisees and Company-owned restaurants serve over 22 million customers every day around the world. Each and every one of these customers deserved great services from the moment they approach the counter or drive-thru window until they leave the restaurants. We depend on the employees in the restaurant, whether employed by an independent franchises or by McDonald's Corporation, to provide a fast friendly and courteous experience to all guests so they will visit us again and again. That's why McDonald's Independent Franchisees and McDonald's Corporation look for individuals who like to have fun While delivering fast accurate and friendly service. If you are interested in becoming a part of a McDonald's Team, here are some of the duties that could be required of you.:

1. On Time, Neat and Clean: Our crewmembers are expected to report work on time, neat and clean.

2. Wash Your Hands: the most important thing crewmembers so to help make sure our customers receive safe food is to wash their hands often.

3. Skills and Training: Training will provide you with the skills you will need to perform your job.

4. Standards: Crewmembers follow standard operational procedures so customers always receive exceptional quality & service.

5. Teamwork: Our crewmembers rely on teamwork and high energy to get the job done.

6. Clean' Spotless... Tidy... sparking. Our customers expect every McDonald's will be clean.

7. Welcomed Guest: Our crewmembers make each customer feel like a welcomed guest.

8. Service: We depend on our crewmembers to deliver fast, accurate and friendly service with a smile.

Education

McDonald's is committed to the education of our youth. We all take this leadership role very seriously and work in partnership with parents and educators to ensure that our school-age employees see education and schoolwork as their top priorities. McDonald's Corporation and McDonala's Owner/Operators are similarly committed to ensuring that the McDonald's job experience complements and supports employees' educational goals. Our efforts are defined by the following principles: education always comes first, employment supports education, schoolwork balance and opportunity/careers at McDonald's.

Benefits

• Competitive Wages

• MAC Card

• Haircut Discounts

• Wages increases

• McDonald's Training Programs

• Life insurance

• Education Support

• McDiect Shares

• Uniforms

• Flexible Hours

• Paid Vacation

• Bonus Scheme

• Stock Purchase Plan

GlaxoSmithKline K.K.

I ．Corporate profile

Business Category: Manufacturing (Pharmaceuticals)

Workforce: 3,000

Location: GSK building 4-6-15, Sendagaya, Shibuya-ku, Tokyo, 151-8566

Founding Year: 1953

Capital: 20,270 million yen

Parent company: Glaxo Wellcome plc

Nationality: The United Kingdom

Foreign Capital Percentage: 80%

Business Areas: Development, manufacturing and sales of pharmaceutical products

II ．Main Points in the Personnel Management Scheme

• GlaxoSmithKline Japan (GSK) was formed in April 2001 as a result of the merger between two British companies, Glaxo Wellcome plc and SmithKline Beecham plc. There are plans to further enhance the integrated and reformed personnel management system.

• In principle, the personnel management system follows the concept employed worldwide, though it has been adapted to suit local requirements. The worldwide system is applied to some of the senior management but what this document describes are the practices applicable to the operations in Japan.

• GSK has a policy of avoiding allowances as much as possible and incorporates a "broad band system" to ensure that good performance and contributions to the Company are adequately recognized and rewarded.

III ．Basic Ideas Regarding the Personnel Management System

Compensation is based solely on performance. Therefore, neither seniority nor lifetime employment is an element within the system.

1）Recruitment /Employment / Retirement

Recent school graduates and mid-career workers are both recruited periodically. While the actual number fluctuates each year, the Company recruited 42 (including 23 MRs) new graduates in 2001 and 61 (including 36 MRs) in 2002. For mid-career workers, the number was 114 (including 72 MRs) in 2001 and 100+ (including 100 MRs) in 2002.

The company does not differentiate employees by their length of service once they are employed. Since performance is the key factor in determining compensation, it is not uncommon for newly- employed mid-career workers to be well compensated regardless of their age.

All recruitment is announced through the Company's website.

Wages for newly-employed mid-career workers are determined considering their previous salaries and the Company’s standard for the applicable job category. Age is not a factor. A compensation package is proposed after the recruiting decision is made and the applicant will join the Company if he/she agrees to it.

Language skills are essential for those working in administration or research & development, but sales expertise is valued over language proficiency in the sales area.

2）Wages

（1）Pay Raise and Promotion

A standard wage system based on job grades is applied to all areas. Job grades correspond to job descriptions.

In principle, job grades change only when positions change in this system. This creates complications where an appropriate position is not available for an individual with recognized abilities. The company has introduced, therefore, a personal grade as well as an official grade so as

to flexibly meet the compensation requirements. Since it is difficult to define clear responsibilities

for non-managerial level employees, every effort is taken to reflect performance in compensation.

（2）Bonuses

Bonuses are awarded three times a year with two fixed bonuses in summer and winter and a performance-based bonus in spring. The performance bonus can range from zero to 200% depending on the degree of achievement of corporate targets.

3）Personnel Review and Evaluations

Bonuses are based entirely on performance. GSK plans, however, to add behavior evaluations for bonuses as well, in line with its policy to place importance on behavior and process in achieving targets.

4）Education/ Skill Development

（1）Background of the Current System

GSK believes in the underlying concept that "skill should be earned not taught." This is based on the recognition that each employee’s willingness to learn is essential in enhancing his/her abilities and independence.

The company, therefore, provides only a few compulsory programs for employees to have them learn its corporate culture, such as "New employee training," "Manager training" and "Appraisal skills training." Most of the other programs that the Company provides are optional.

（2）Outline and Structure of the System

i) English Training

GSK subsidizes 80% of the cost for a 6-month program at a contracted external language school. Until 2001, lessons were conducted at the Company with hired instructors but the results were not satisfactory. Therefore, the entire program was outsourced.

A distance learning program is available for MRs.

A new program using e-learning technology is under review.

ii) Performance and Development Plan

The "Performance and Development Plan" is a worldwide program for its employees at the level of general manager and above. In the program, each employee establishes and implements two plans simultaneously with the assistance of his/her supervisor. One is a target management plan which "sets targets and monitors progress" and the other is a personal development plan which "identifies the target area for improvement for the year."

GSK’s basic approach is to encourage employees to develop their own skills and abilities. At the same time,employees in a supervisory position are required to train those working under him/her. The "Performance and Development Plan" is a program which strongly reflects this approach.

iii) Other Training Programs

Training for presentation and communication skills is offered to employees using outside training courses and seminars. Instructors are invited to the Company to conduct the training courses if there are a large number of applicants.

IV ．Issues in Personnel Management and Directions for Solving Them

Having just undergone the merger, GSK now needs to ensure that its core policy of "Recognition of Performance" is understood by all of its employees. This policy should be fully recognized as a necessary structure by each and every employee and the personnel management system must be effective in promoting their motivation. Conducting fair and adequate evaluations is the most important factor to achieve this.

An issue that the Company must face from now on is to how to arrive at evaluation results that are convincing to its employees; this should also be a crucial element for its own growth.

Definition

Personnel Management-Personnel Management is thus basically an administrative record-keeping function, at the operational level. Personnel Management attempts to maintain fair terms and conditions of employment, while at the same time, efficiently managing personnel activities for individual departments etc. It is assumed that the outcomes from providing justice and achieving efficiency in the management of personnel activities will result ultimately in achieving organizational success.

Human Resource Development-Human resource management is concerned with the development and implementation of people strategies, which are integrated with corporate strategies, and ensures that the culture, values and structure of the organization, and the quality, motivation and commitment of its members contribute fully to the achievement of its goals.

Differences in Scope

Human Resource Management is broader in scope than Personnel Management.

The scope of personnel management include functional activities such as manpower planning, recruitment, job analysis, job evaluation, payroll administration, performance appraisals, labor law compliance, training administration, and related tasks. Human resources management includes all these activities plus organizational developmental activities such as leadership, motivation, developing organizational culture, communication of shared values, and the like.

The human resource management approach remains integrated to the company’s core strategy and vision, and seek to optimize the use of human resource for the fulfillment of organizational goals. This strategic and philosophical context of human resource management makes it more purposeful, relevant, and more effective compared to the personnel management approach.

Difference in Approach

The personnel management approach tends to attach much importance to norms, customs and established practices, whereas the human resource approach gives importance to values and mission.

The personnel management approach also concerns itself with establishing rules, policies, procedures, and contracts, and strives to monitor and enforce compliance to such regulations, with careful delineation of written contract. The human resource management approach remains impatient with rules and regulations, and tends to relax them based on business needs and exigencies, and aim to go by the spirit of the contract rather than the letter of the contract.

An illustration of this difference in approach lies in the treatment of employee motivation. The personnel management approach holds employee satisfaction as the key to keeping employees motivated, and institute compensation, bonuses, rewards, and work simplification initiatives as possible motivators. The human resource philosophy hold improved performance as the driver of employee satisfaction, and devise strategies such as work challenges, team work, and creativity to improve motivation.

Difference in Nature

Another dimension of the difference is approach between human resources vs personnel management is the proactive nature of human resource management compared to the reactive nature of personnel management.

Personnel management remains aloof from core organizational activities, functions independently, and takes a reactive approach to changes in corporate goals or strategy. Human resource management remains integrated with corporate strategy and takes a proactive approach to align the workforce toward achievement of corporate goals.

For instance, while the personnel management approach concerns itself with a reactive performance appraisal process, human resource management approach has a more comprehensive and proactive performance management system that aims to correct performance rather than make a report card of past performance.

Difference in Application

Personnel management is an independent staff function of an organization, with little involvement from line managers, and no linkage to the organizations core process. Human resource management on the other hand remains integrated with the organizations core strategy and functions. Although a distinct human resource department carries out much of the human resource management tasks, human resource initiatives involve the line management and operations staff heavily.

Personnel management also strives to reconcile the aspirations and views of the workforce with management interest by institutional means such as collective bargaining, trade union based negotiations and the like. This leads to fixation of work conditions applicable for all, and not necessarily aligned to overall corporate goals.

Human Resource Management gives greater thrust on dealing with each employee independently and gives more importance to customer-focused developmental activities and facilitating individual employees rather than bargaining or negotiating with trade unions.

Finally, in our discussion of personnel management vs human resource management, we find that personnel management lays down rigid job description with many grades and a fixed promotion policy - usually based on seniority and performance appraisal ratings. Human resource management on the other hand has relatively fewer grades and ranks, with broadly defined job responsibilities providing much scope for applying creativity and initiative, and plenty of career paths, with skills, talent and commitment the key drivers of career advancement.

HRM is concerned with carrying out the SAME functional activities traditionally performed by the personnel function, such as HR planning, job analysis, recruitment and selection, employee relations, performance management, employee appraisals, compensation management, training and development etc. But, the HRM approach performs these functions in a qualitatively DISTICNT way, when compared with Personnel Management.

Main Differences between Personnel Management and HRM

· Personnel management is workforce centered, directed mainly at the organization’s employees; such as finding and training them, arranging for them to be paid, explaining management’s expectations, justifying management’s actions etc. While on the other hand, HRM is resource –centered, directed mainly at management, in terms of devolving the responsibility of HRM to line management, management development etc.

· Although indisputably a management function, personnel management has never totally identified with management interests, as it becomes ineffective when not able to understand and articulate the aspirations and views of the workforce, just as sales representatives have to understand and articulate the aspirations of the customers.

· Personnel Management is basically an operational function, concerned primarily with carrying out the day-to day people management activities. While on the other hand, HRM is strategic in nature, that is, being concerned with directly assisting an organization to gain sustained competitive advantage.

HRM is more proactive than Personnel Management. Whereas personnel management is about the maintenance of personnel and administrative systems, HRM is about the forecastingof organizational needs, the continual monitoring and adjustment of personnel systems to meet current and future requirements, and the management of change.

2 Roles of HR practitioners

(a) Guidance role

(b)Advisory role

(c) Service role

(d) Control/auditing role

(e) Planning/organising role

Also taking the role as:

(a) Strategists

(b) Business partners

(c) Internal management consultants

The role of HR is changing as a result of many influences. These include: globalisation resulting in increased competition; a change from a large manufacturing base in the UK to service-related industries such as finance; demographic trends evidenced by falling birth rates and extended life expectancy. These trends affect the labour market and have resulted in skill shortages in specific areas. The HR practitioner needs to understand the impact of these factors on their organisation.

In considering key skills, much will depend on the functionality of HR in the particular organisation. The function may deliver a mainly transactional service or may have moved towards the strategic business partner role, but certain factors will remain the same regardless of model of delivery. In many organisations the administrative function of HR has already been outsourced, for example payroll and pension administration.

There can be confusion about the role of HR as it moves from one model to another, and HR practitioners can find that they are still heavily involved in the operational role, handling grievances and discipline while new demands are made of them. The expectations of the service and individuals need to be clearly articulated and managers need to be clear about their role in managing people.

Performance management: objective and competence requirement setting, performance monitoring and appraisal, discipline handling, grievance handling, identifying learning and development needs

Human resource development: learning organisation, education and training, personal development, career management, managerial development

HR services: managing the employment relationship, HR policies and procedures, HR information systems compliance

3.The Line Managers in organisations play an important role in the development of its employees’ professional careers and encouraging their positive attitude. The organisations have recognised the advantages of the Line Managers’ involvement in learning and development process of its employees. Yet, most organisations have not worked towards educating human resource (HR) practices to them. It is becoming increasingly important to acknowledge that the Line Managers possess the potential to help change organisational environments for the better.

Educating HR practices to Line Managers

The Line Managers should be educated on HR policies and HR functions such as performance appraisals, training identification etc. They should have the authority to track HR activities and report the same to the Human Resource Department (HRD). Correspondingly, the role of the HRD should be to make the Line Managers competent by providing communication training so as to help them communicate better with their subordinates. So, close interaction between the HRD and the Line Manager and giving them the authority is vital.

Further, the Line Managers should be briefed on conducting appraisals effectively. Performance appraisals must be conducted to help employees maximise their respective potential for mutual benefit. For this purpose, it’s imperative that the Line Managers receive behavioural and communication training.

Management Review Meetings

The organisations must give due importance to management review meetings for the Line Managers. They are an important part of educating the Line Managers as they get to hold discussions with the management boards. This process helps taking timely and appropriate actions required for organisational development.

Job Description for the Line Managers

Developing guidance is another important aspect which helps the Line Managers perform better. The HRD must make them realise the importance of the organisational team. The relations between the HRD, Line Managers and other employees must complement each other. The inclusion of HR responsibilities in the Line Managers’ job description and coordination with the HRD for the employees’ performance enhancement would help formulate effective HR related activities. A complaint mechanism also needs to be developed as it can work as the reflection for change requirement.

Counselling and Training

The Line Managers have to work closely with the employee so they must understand their human needs. For instance, an employee may be experiencing grief, tension or a personal problem. It may influence his end performance and weaken his retention prospect. In this scenario, the Line Manager’s counselling can influence the employee positively. A Line Manager’s positivity can rub on to the team and enhance its overall capability.

The ability to inspire is not the easiest of qualities to develop. The Line Managers must be provided trainings, periodically, on people management and enhancing competencies of their team members. Such trainings can help them learn to be more competent to achieve common objectives.

The Line Managers’ Leadership Role

Leadership plays an important role for a team to accomplish a common task. The Line Managers should lead the group of people and work towards enhancing their capabilities without getting insecure. The HR personnel cannot reach each employee most of the times. So, the Line Managers should be given adequate authority to make decisions, to a certain extent. When the Line Managers are given authority and responsibility, there is a tremendous possibility of increased productive output.

The HRD should have a system which identifies the employees’ expectations from the organisations. It can then design the desired format and address it to the Line Manager. As a result, the Line Manager takes pride in the positive changes happening to his team members. The Line Managers play a vital role in ensuring that employees are mentored, motivated and feeling competent. The HRD can consider itself successful if employees are productive and contribute towards overall organisational growth. The employees’ successful careers within the organisation are a healthy sign of things to come.

Part2

Tasks

(1)

The Shanghai GM is a mature company. In the structured process for recruitment.

First, it is filtering and shortlisting. It can short-listing candidates for initial consideration. Second，it is written examination. it used to collect the test data. The next it is interviews. There may be variously structured, and using various criteria of job relevance and scoring methods. As the most popular of methods, interviews will be considered in detail below. Then SGM center

take the material give the assessment centres. Conduct screening interviews provide professional advice to assist line manager to make decision. Next is Physical testing. Medical examinations are often one of the final steps in selection, to ensure fitness for work. Specific tests- for example, testing for HIVAIDS, drug and alcohol abuse or genetic sensitivity to workplace chemicals- may also be used for particular job categories: subject to privacy, data protection and equal opportunity principles. Background and reference checks, in order to verify application claims as to qualifications, previous employment record and reasons for leaving and so on.

Once again Processing application prior to the selection process。

(i)Screening replies at the end the specified period for application

(ii) Short-listing candidates for initial consideration

(iii) Advising applicants of the progress of their application

(iv) Drawing up a programme for the selection process which follows

Finally, if you are all pass，congratulations to you. You have a new job.

(2) The Internal Recruitment is the most favorite source of candidates in the stable and developed companies. The Internal Recruitment needs a strong support from other HR Processes, because the unmanaged internal recruitment process can lead to disappointed managers and employees in the organization. The Succession Planning and strong and consistent Performance Management are needed to ensure the success of the internal recruitment.

The internal recruitment can offer the chance to change the job position to anyone in the organization, but the efficient internal recruitment process needs a strong help from other processes to provide managers with the additional information to work with. In case of the unknown additional information, the internal recruitment process can not offer much of the value added. The internal job candidate should be known to the organization and the HRM Function should provide the hiring manager with the information about the background information.

The internal recruitment process has to be driven by strict and agreed HR Rules and HR Policies as the unclear rules for the process can bring a lot of tension inside the organization as the best employees can be easily stolen among different units and different managers. This issue looks pretty simple to solve, but the reality can bring difficult issues and conflicts among the management team and can affect the performance of the organization hardly.

Internal Recruitment Pros and Cons

The Internal Recruitment can build a strong loyalty with the organization as the employees have a chance to change their position after a period of time. The employees are not pressed to look for opportunities on the external job market.

The Internal Recruitment can be cheaper for the organization and can save the costs dedicated to the training and induction of new employees. Also, as the candidate knows the organization, the possibility of the failure is not a significant issue to the organization.

The Internal Recruitment needs strong management from the HRM Function, which can lead to the conflicts and the HRM Function has to have a position to be able to act as a strong facilitator in the conflict resolution.

The Internal Recruitment can lead to huge issues when the candidates come from one department. The managers have to have the right to protect their own interests in the organization as they are responsible for the smooth operation.

The Internal Recruitment does not bring new skills and competencies to the organization and organization with an intensive usage of the internal recruitment can suffer from the fresh blood.

External Recruitment Pros and Cons

The External Recruitment brings new people to the organization, which can be a huge benefit for the organization. The External Recruitment allows the organization to define the right requirements and the organization can select the candidate, which suits the organization best. The external recruitment can be in many situations quicker solutions, mainly in the situation, when the job market is full of potential job candidates.

The external recruitment and proper campaign increase the popularity of the organization on the job market, which helps to improve the position for further expansion.

On the other hand, the external recruitment is expensive and takes a lot of energy from the HRM Function to handle all the job candidates in the selection process.Selection methods

(a) Interviews

(b) Evaluation of education and expericence

(c) Selection testing

(d) Background and reference checks

(e) Biodata analysis

(f) Handwritten analysis

(g) Group selection methods or assessment centres

(h) Physical/medical testing

Part 3

Tasks

Getronics Japan, Ltd.

I ．Corporate profile

Business Category: Information and communications

Workforce: 550

Location: 2-1-24 Himonya Meguro-ku Tokyo, 152-0003

Founding Year: 1961

Capital: 5,437,500,000 yen

Parent company: Getronics

Nationality: Netherlands

Foreign Capital Percentage: Getronics = 80% , Toshiba = 20%

Business Areas: Manufacturing, sales and service of information systems

Salary System

Getronics Japan’s Remuneration Policy

In order to achieve "Employer of Choice" on a global scale, remuneration shall:

1. Be attractive to necessary personnel and serve as a magnet for the Company;

2. Function to acknowledge and compensate for the employee’s contribution on an individual basis;

3. Be linked to the business strategy; and

4. Enhance the global culture.

Getronics Japan’s Remuneration Strategy

1. Remuneration equivalent to Market Average

－ Achieve a competitive salary level in the market (widely in the IT industry)

－Offer an annual salary equivalent to the market average upon the fulfillment of

business/individual targets.

2. Remuneration proportionate to the Company’s Performance

－Link the individual’s accomplishments and contributions to remuneration→Pay

for Performance

－ Give extra remuneration to employees who have performed outstandingly.

3. Balance within Company

－ Establish in-house criteria based on job significance (job-leveling under the Job

Family System).

i) Broadband Salary Range

As shown in Figure 2, the salary is decided according to the salary range set for each grade

within the job grading system. The salary has a broad range in that it may go up or down by 30%

from the market average (IT industry). An individual’s salary is decided within the salary range

according to his/her job grade. At present, the salary range is broad (up/down by 30%), as the Company has just migrated to the new system. As a result, an individual’s salary may be lower than a person in a lower grade, or may be higher than a person in a higher grade. The Company is committed to reviewing the system so that such inversion will not occur in the future.

ii) Two Salary Systems based on Job Family

The Company applies 2 salary systems based on the job family ratings.

a. Annual Salary System

The Company introduced the annual salary system, together with the discretionary work system, to non-manegerial level so as to implement corporate remuneration strategies in a dynamic manner. For the time being, the Company applies the system to job families under the scope of the Labor Standards Law. The Company intends to expand the scope of application in the future step by step.

b. Pay for Work

It is difficult to apply the discretionary work system to some job families due to the nature of the job. The Company

shifted such job families to a pay-for-work system linked with its corporate remuneration strategy.

（3）Overview of Annual Salary System

i) Characteristics

The characteristics of the Company’s annual salary system are: (1) to treat employees according to his/her accomplishments and contributions in a flexible manner; (2) to launch a performance- linked bonus that reflects the Company’s performance, the division’s performance and the individual’s performance; and (3) to apply a discretionary work system in parallel with the above, clarifying that employees are rewarded for their respective jobs proportionately to their accomplishments and contributions rather than the number of working hours.

ii) Composition of Annual Salary

The composition of an employee’s annual salary is as shown in Figure 3.

iii) Breakdown of Annual Salary

As shown in Figure 4, the performance-based annual salary (performance-based bonus) varies

with the Company’s performance, the division’s performance and the individual’s performance.

Higher job grades are subject to more variables and the annual salary is substantially dependent

on the performance-based bonus. The fixed bonus is paid regardless of performance: a certain

number of month’s pay is given commonly at each job grade (minimum guarantee).

Specifically, the performance-based bonus for the fiscal year is decided based on the

performance in the previous year, and is paid biannually, in summer and winter.

In regard to the method of deciding the bonus payable to an employee subject to pay for work, the Company decides the number of months pay as the annual bonus for those in job grade 4 or

lower, based on springtime negotiations with the labor union. The performance-based portion is

reflected in the year-end bonus.

iv) Composition of Base Monthly Salary

The base monthly salary refers to the portion of the base salary payable on a monthly basis.

Allowances paid under the old system have been integrated with the base monthly salary since

FY2001. Also, personal allowances (housing allowance, family allowance, etc.) were abolished,

Making the composition of the base monthly salary more focused on accomplishments and contributions.

However, the Company sustains allowances other than those specified below (commuting allowance, cold-region allowance, temporary-dispatch-without-family allowance, moving & housing subsidies, external assignment allowance, miscellaneous daily allowance, etc.) without them in the annual salary.

Pay for performance

I once had an interesting conversation with the owner/manager of a clothing manufacturing company. He operated a large and successful business, principally supplying uniforms for the corporate market.

He was surprised by some of his workers. They worked on a piece work rate (paid per item) and some of the very efficient staff did not produce as much as they were capable of. They worked hard at the start of the pay period, but then they tapered off. He expected them to work hard the whole time, as they were paid by what they produced - the harder they worked, the more they were paid. He expected that the extra money reward would motivate them.

Motivation is a complex concept. Remuneration is also complex. Individuals react in different ways to pay schemes.

A simple explanation for the clothing worker behaviour is that they did not work just for the money. They enjoyed the working environment and the social interaction it provided. They liked to have work, to be employed, and yes they needed a certain level of income. But once they achieved that, the pressure to work hard was reduced. Given that the actual work task was quite monotonous and repetitious, it was not surprising that they exhibited this behaviour. Drastic work design was required.

People think that money is a motivator. It does have an effect, but motivation involves far more.

Sales people are the classic example. Most are on performance based schemes. But what is one of the main themes sales and marketing consultants write about? You guessed it - how to motivate your sales team! Consultants would not need to write motivation articles if financial reward alone worked.

How to monitor performance

Like writing job descriptions, taking the time out to formally assess the staff and keep written records of it may seem like a fruitless exercise.

A "keeping an eye on them" attitude is all you need, isn't it? After all, you know whether they're doing a good job or not. Well, yes and no. It obviously depends on the size of your team, but when was the last time you simply asked your staff how they were getting on, whether they were enjoying the job, and if they wanted to go for a promotion or take up some new training?

In other words, a good appraisal, or performance review as some call it, is as much for your staff as it is for you. In a busy work environment, it's easy to take them for granted and not really know how they're feeling. It can also be hard for you to let them know if they're doing a good or bad job.

A performance review is a quantifiable way of assessing whether the employee is doing their job as defined by their job description, whether they are enjoying it, what objectives they want or need to achieve before their next review, and what training and development plans they want or need.

How performance reviews are done

The appraisals are usually carried out by the person most likely to know the employee's work and how good or bad they are at it, i.e. their immediate manager or supervisor. In a small team, for example in an individual hotel, then the manager could carry out all the appraisals. This has the added benefit of helping the lower members of staff believe the head boss is taking an interest in them.

Reviews are usually done once a year, although in a high-turnover industry like hospitality the frequency could be increased to encourage motivation and feedback.

The tangible end result of an appraisal is a written document, so it's useful to have a set template that all managers can use. This will help senior management keep track of employees with whom they have no real day-to-day contact and make sure that all staff are given equal reviews. There is always a danger that without a set format a performance review can become an argument if there are areas of disagreement.

This template can consist of a number of set questions. A few examples follow, but note that they are all worded in a positive way. Try to use phrases like "Targets that weren't realised" rather than "Things they did wrong". It may sound a bit over-cautious but an ill-chosen phrase can really damage motivation and respect.

Typical review questions:

Here are a few general questions:

What do you think you've achieved this year?

What targets or achievements haven't been realised?

How do you think you could improve on your performance last year?

How do you think you get on with the other members of staff/the management?

And then more specific ones:

What objectives do you think you should aim for in the next year? List them.

How will you measure whether you have achieved these aims?

What training would you like to attend next year?

It is usual for the employee and the manager to discuss the answers and agree on what is written. This encourages feedback and helps the manager gain a true picture of how the employee is doing and what they need in the coming 12 months.

It sounds obvious, but make sure you let the employee know that this is their opportunity to say whatever they like. Listen to any complaints or grievances and record these on the form, along with what you both need to do to resolve them.

Also, try to be constructive with any criticism you have of them. It doesn't help to lambaste them with all their failings. Tell them that there are aspects of their work that you feel they are unmotivated in and try to agree a plan of action to resolve the situation. Sometimes you may discover that someone you thought was a bad, lazy employee was only that way because they were bored and needed more responsibility to stimulate them.

At the end of the form, set out a written list of what exactly both you and the employee see as the key tasks and requirements for the year ahead.

Performance reviews aren't perfect

While they're necessary, these kind of one-to-one formal appraisals aren't the answer to staff motivation and morale problems. Line managers tend to hate doing them because they are time-consuming and can easily turn into a griping session if not handled properly.

But used in conjunction with regular team meetings, social events, feedback sessions etc., they can help. Holding performance reviews is an acquired skill, however, and anyone expected to do them will ideally have specific training.