This paper will discuss the total rewards program for Apple Inc. This company is a technology company that produces cutting edge computers, smart phones, tablets and portable music players. Apple Retail has been in existence since 2001 and now has 365 stores world wide with over ninety thousand employees in thirty nine countries. Apple Retail enables customers to touch and feel the products and work with knowledgeable sales associates to ensure they have all their questions answered and purchase a product that will change their life. In order to attract and retain the best talent, Apple has a total rewards package that meets a variety of needs depending on what you are looking for. In addition to the standard medical, 401K, education assistance benefits, Apple also offers travel benefits since it is so global, adoption assistance, kin care, stock options, employee purchase discount plans, matching gifts, fitness and wellness benefits as well as convenience services to include commuting alternatives to work and a concierge service for booking personal appointments.
Total Rewards Strategy
In order to meet the HR needs of this company, HR must accomplish the elements discussed in the succeeding paragraphs that address the fundamentals of this type of total rewards system while complying with the regulatory environments. The first element is offering strategic perspective. A well-articulated compensation philosophy drives organizational success by aligning pay and other rewards with business strategy. It provides the foundation for plan design and administration and anchors current and future plans to the company’s culture and values (Kaplan, 2006, p.32). Apple’s total rewards are available to view on the company’s intranet site. With it having locations around the world, once you sign in, you choose which country you work in and the benefits are adjusted based on that region. The second element is the statement of overall objectives. This strategy should identify the balance of how the reward system will support both the business needs and the needs of the employees, customers and shareholders. The third element is prominence.
Prominence is describing the key of the rewards in comparison to other tools that can focus and affect actions and decisions. (Worldatwork, 2007) This is important as it indicates what parts will be mentioned when employees are talking about the benefits of working for their employer. Which rewards will be mentioned as the best or with what frequency and impact during a conversation from one employee to a prospective hire or current peer. The fourth element would include performance measures. This is where performance criteria needs to be clearly articulated. Recognizing and rewarding achievement is the cornerstone of Apple’s compensation philosophy. The mission of the company is to attract, select, place and promote all individuals based on their qualifications.
Apple believes that performance-based compensation helps attract, develop and retain talented professionals. In addition to base pay which based upon local market conditions and targeted to be above market, the company provides the following types of potential compensation to reward performance: * Annual Merit Increases (all exempt and nonexempt salaried employees are eligible) * Annual Promotions (all exempt and nonexempt salaried employees are eligible) * Short-Term Incentive Compensation (all exempt and nonexempt salaried employees are eligible)
* Long-Term Incentive Compensation (all exempt salaried employees are eligible) Due to the fact the compensation programs must adhere to specific laws designed to provide fairness in how employees are paid, the compensation system of the company adheres to laws and guidelines of where the corporate office is based in Cupertino California. In addition any other region specific regulations are also observed and followed if more strict than corporate’s rules and regulations. (Worldatwork, 2007). The final element is ensuring the organization has competitive market reference points. The total rewards strategy should be benchmarked against other companies, industries that contain comparative reference points to determine competitiveness. With Apple, they are constantly benchmarking themselves against not just other technology companies, but companies that are the most desired to work for and they could be in retail, hospitality, technology and so on.
There are several advantages to this total rewards system as described above, and they are discussed in the succeeding paragraphs. The first advantage is to enhance recruitment, retention, and performance levels within the company. The company wants to be the first choice of potential employees to work which also affects its reputation positively. The company makes an emphasis on its wide benefits packages to show the value that it gives its employees as well as its compensation strategy. It drives organizational success through greater talent attraction, engagement and retention.
The second advantage is increased flexibility. Apple takes the “rewards your way” approach by creating niche products and services to cater to many different audiences. According to the Human Capital Review, this is particularly true in a global labour market where workforce diversity is the rule, not the exception, and when specific skills are in short supply. As the importance of flexibility has become more understood, more companies are allowing employees to determine when they work, where they work, and how they work. Total rewards recognizes that employees want, and in many instances demand, the ability to integrate their lifestyle and their work.
The third advantage is it will build employee loyalty to the organization. Employee loyalty comes from employees who believe their future is tied to that of the organization and their willingness to make personal sacrifices for the organization. The more the company is dedicated to taking care of its employees, the more likely it is that the employees will take care of the organization (O. Ferrell, Fraedrich, and L. Farrell, 2011, p.18). With the strategy, employees will feel they are valued by the company.
Thus, they will have intellectual and emotional attachment to the company. It will reduce employee turnover within the organization. They will take more ownership as a member of the company. Employees will feel that their work contributes to the success of the organization and have a clear line of sight between their roles and company objectives. They will want to do their best, which will lead to increased profitability, and recommend their company as a good place to work which will affect the reputation of the company and ability to attract top talent.
Communicating the Plan
For a total rewards system to be successful, it must be clearly and widely communicated. The succeeding paragraphs describe the richness of the communications plan that must reach such diverse people and geography. The first component of the plan is to ensure the communication plan clearly articulates the contents of the total rewards system. Without proper communication, the total rewards system will not be effective if employees and prospective employees don’t know what is in it. This makes communication of the system just as important as the system itself (Nelson, 2010, p. 4). Before the company starts to communicate the strategy with employees, it needs to figure out some issues, like: * How to communicate with different level of employees? (exempt- nonexempt)
* When to communicate?
* Which media should be preferred?
* Who will communicate with employees?
The second component of the plan is ensure it can reach all employees world wide. The best way Apple has found to do this, is through the internet. Having an internal website, it allows the employees to select their country of origin for their specific HR benefits and rewards. There is also an internal communication site that is required to be checked daily for any pertinent information. Management is also encouraged to share with staff at all daily meetings. The third component includes breaking the communication up into different levels based on the job responsibility, for example different communication for exempt and non exempt. Because of a need of different communication styles and media, there will be two communications released. The first will communicate to all exempt employees, while the second will take care of nonexempt employees. The non exempt employees will be given detailed information about the strategy during the recruitment process. They will make the emphasis on implementing of the strategy and the policies.
The exempt employees will receive detailed information during the recruitment process but they will have emphasis on tailored rewards to motive them. Written explanation of the strategy will be given to both exempt and nonexempt employees. Additionally, there will be audio about the strategy for nonexempt employees. There will be a toll free lines are available to guide both exempt and nonexempt employees about the using of benefits as well as several webex conference calls offered in different time zones to accommodate all employees schedules. On call advisors will be available for existing employees who want to tailor their benefits.
In addition, the advisors are to create a career path for the employees and guide those who want to have reimbursement opportunities as well as training within the company. When changes happen on one of the component of the program, the company gathers employees on several conference calls, sends out communication via email as well as sends snail mail to reinforce the message. Often times, the retail store leadership is held accountable to ensure that all employees have gone through any required information updates or training, as they are tracked online. Communication at every stage of the program is critical to the success of the company.
Ensuring the Plan is Competitive
Additionally, for a total rewards plan to be successful, external equity must be ensured. The succeeding paragraphs describe the steps that Apple will take to ensure the competitiveness of the plan for the multinational company. The first step is to build a competitive pay structure the company has to develop an accurate description of the jobs to be evaluated. The job description is used to ensure accurate comparison with published market surveys and for internal comparisons with other jobs within the company. The job description should state the reason the job exists and list the key duties and responsibilities. It should spell out the qualifications needed for competent performance of the job duties, including educational and experience requirements, skills and abilities needed to do the job, as well as any physical demands and environmental exposures encountered (EarthLink Inc., 2012).
The second step is being aware that external equity is more important for the company than internal equity. Therefore, the process of collecting data via surveys is a really important process for the company. During the hiring process the rate is higher than market but over time, when loyalty is gained from employees over years with helping of benefits of the company, the rate is kept in line with market price during the seniority years of employees. The minimum salary of the jobs is higher than market but midpoint and maximum are in unison with the market. Also, the company considers internal equity somehow.
There are different salary minimum, midpoint and maximum ranges for some nonexempt jobs according to the importance of the department that the job performed within the organization. In addition, Apple will conduct salary surveys in order to ensure they are staying competitive not only in the United States, but internationally as well. Several salary surveys will have to be considered based on the country’s cost of living as well as any specific salary guidelines that may exist. Apple will have to survey a variety of companies depending on which country they are reviewing. Not all countries will have the same comparisons, so Apple has to be flexible in who they compare themselves to.
Ferrell, O. C., Fraedrich, J., & Ferrell, L. (2011). Business ethics: ethical decision making & cases. Mason, OH: Cengage Learning
Kaplan, S. L. (November 1, 2006). Answer these questions for a sound compensation philosophy. Business source complete. (Accession No. 23652229) Retrieved February 7, 2012, from, https://web-ebscohost-com.libdatab.strayer.edu/ehost/pdfviewer/pdfviewer?sid=57b31a86-3d7d-43e1-a86f-705a41503b34%40sessionmgr15&vid=11& hid=123
Nelson. A. H. (2010). Total rewards: it’s more than just a paycheck! Total Rewards Instructor’s Manual. Retrieved February 7, 2012, from, http://www.shrm.org/Education/hr education/Documents/Nelson_Total%20Rewards%20Its%20More%20Than%20Just%20a%20Paycheck!_IM_FINAL.pdf
EarthLink Inc. (2012). Sample compensation study. Retrieved February 8, 2012, from http://home.earthlink.net/~hrpartners1/id12.html
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Worldatwork (2007). The worldatwork handbook of compensation, benefits &