1 Table of Contents
1 Table of Contents..................................................................................................1
2 Executive Summary...............................................................................................2
3 Problem Statement...............................................................................................3
4 Alternatives...........................................................................................................4
5 Implementation...................................................................................................10
6 References...........................................................................................................11
Figure 1: Maslow's Hierarchy of Needs.........................................................................8
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2 Executive Summary
This case study is all about the SerendiB bank and its newly changed compensation
management system and culture with the appointment of new CEO. This shows how
company falling down due to non-effective compensation management system and
my purpose is to have vision as a steering committee member headed by director HR
to find the best possible ways to get the organization back on track.
SerendiB is one of the oldest privately owned local bank in the country founded by
Mr. J Kothalawala. SerendiB have huge amount staff members and also operates
branch in each leading town including two overseas branches. This bank recently
changed their CEO with well-educated and skilled person who have educated abroad
about 20 years. New CEO implemented the new technologies, processes, facilities and
services to attract the customers to the bank and as a result of that SerendiB go the
highest pitch rating in the popular bank magazine also this one is the first ever local
bank achieve this status.
But new approach and culture introduced by the new CEO does not appropriate for
the situation and it was sudden and huge change for the employees according to the
existed culture for the decades. Also it’s hard to embrace the new culture due to most
of the employees severed the organization during their entire career. The new CEO
also changed their reward system and that is a huge impact to the employee’s
motivation. Many senior executives were extremely unhappy about those approaches
of the new CEO. Also they paid statutory payments above to the legalized criteria and
the management introduces dozens of financial benefits without caring the company’s
capability. Legal consultants strongly advice about the move that they gained, due to
this move will create a path to the future financial crisis.
When the government relaxed certain regulations, two new foreign banks started their
business in the country and they attract the lot of customers to them due to their talent
and effective management. On those days SerediB shows their weaknesses and they
began to fall down. As a result of that SerendiB lost half of their customer base, senior
staff members resigned from the organization and the employee turnover became
high.
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The board of SerendiB took a decision to replace the CEO with the Deputy CEO who
have worked SerendiB for a long time.
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3 Problem Statement
After analyzing the case in the problem statement as a steering committee member I
have to adjust my scope and I’m supposing to find the key issues that will affect to
company collapse.
01. Not having a proper reward management system and that will not help
employees and organization to achieve their goals and objectives.
02. Not having proper culture that matching to banking industry.
03. Not having highly motivated workforce and that will affect to organization’s
productivity and performance.
04. Not having right balance / composition between financial, non-financial
individual based or group based incentives.
05. Not having proper pay structure, pay grades, pay levels this led to internal
conflict among employees due to favourism.
06. Not having attractive, competitive and employee retainable reward system.
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4 Alternatives
In the alternatives I’m supposed to suggest the all the alternatives to the found
problems according to my gained knowledge from the studies, other sources and
practical incidents.
SerendiB is one of the oldest private banks in the country and the bank has 9,800 staff
members who have served the bank during their entire career. The employees who
works for the SerendiB bank and they had a loyalty towards the organization and
existed reward management system maintained the employee satisfaction and
organization productivity. That reward management system and culture survived long
time and people liked to work with the company due to the balance of the reward
system with Financial and Non – Financial incentives.
New CEO’s approach got some short term achievements. But his approach didn’t
work for a long period of time because organization always needs to be balanced with
the company capabilities, productivity, profit and also with their employee needs.
Also CEO and his management failed to assume people needs can be changed with
the time. So that’s why an organization need a proper balanced reward system.
So as alternative for those matters first of all I suggest, HR need to implement
balanced reward management system with the acceptance from the existed staff
members and this system should be
Reward management should be……………………………………………..
When we implementing the new reward management system we need to get the ideas
and involvement of experienced staff members. After collecting the ideas we need to
analyze company capability to pay and what are the existing resources that we can use
provide for existing staff satisfaction. Before thinking about the profit we need to
protect existing staff. So we have to change newly implemented reward management
system.
After consider about external environment we need to protect internal environment
including existing staff following things can be done to retain existing employees in
the organization.
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Identification weakness of new motivational system and changing the method
According to newly implemented reward system CEO emphasized on motivating
internal staff through extrinsic motivation. Extrinsic motivation refers to motivation
that comes from outside an individual. The motivating factors are external, or outside,
rewards such as money or grades. These rewards provide satisfaction and pleasure
that the task itself may not provide. Extrinsic motivation does not mean, however, that
a person will not get any pleasure from working on or completing a task.
Disadvantages of Extrinsic Motivation:
01. Provides distraction from learning
02. Difficulty in determining appropriate rewards and punishment
03. Ineffective after a long period of time
04. Once the reward is removed, motivation is lost
Employee motivation should consist of both extrinsic and intrinsic motivation.
Otherwise employees will not retain in the organization.
Intrinsic motivation refers to motivation that comes from inside an individual rather
than from any external or outside rewards, such as money or grades.
The motivation comes from the pleasure one gets from the task itself or from the
sense of satisfaction in completing or even working on a task.
Advantages of Intrinsic Motivation:
01. Long-lasting
02. Self-sustaining
03. Focuses on the subject rather than the reward or punishment
Developing intrinsic motivation is not costly move. We can redevelop employee
intrinsic motivation like past system do. We can develop employee intrinsic
motivation through.
01. Opportunity for Advancement
Employees who see a clear path to career advancement have a vested interest in the
company and are motivated to contribute to its success, and therefore, to their own
success.
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02. Mentoring and Education
Employees who are mentored and given the opportunity to expand their knowledge
through participation in professional development seminars and training sessions feel
an increased sense of worth.
03. Regular Feedback
Employees who know where they stand with regard to performance measurements
feel more control over the stability of their jobs and the quality of their work.
04. Participation in Decision Making
Employees who are engaged in the corporate decision-making process are
intrinsically motivated because they have a sense of camaraderie as well as a stake in
the success of the company. Employees view themselves as being valued members of
the collective team and that their intellect and input is noticed and appreciated.
Identification inappropriate organizational culture and changing the culture
New CEO emphasized on promoting team work & achieving goals through team
dynamism and he changed the individualistic culture that is existed for five decades.
Team dynamism is not appropriate for the banking industry. Because usually banking
sector employees working individually and those employees should be rewarded
individually. Management need to reward employees according to individual
Performance, Skills, Knowledge and Attitudes.
This provides more pay to higher-achieving employees and less pay to lower-
achieving ones. It allows for competition among employees for prestige and pay
which provides a strong incentive to perform. It also avoids punishing employees
based on the poor performance of fellow team members, resulting in better morale for
the individuals. This compensation may also seem more personal, especially to
higher-performing employees.
According to those reasons individualistic culture more appropriate for the banking
sector and SerendiB also knows individualistic culture is appropriate for them because
individualistic culture is their existed culture successfully for five decades.
So steering committee need to re-implement individualistic culture as the second step.
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Classifying jobs into pay grades
We need to do classify the jobs in the organization. Because if we do not have proper
pay structure there will be conflict among people due to there is no clear levels of pay
and there should be clear visibility about how the pay package made up and
employee’s needs to know where is the job placed in the pay structure. First of all we
need to conduct job evaluation for important jobs in an organization.
Job evaluation process………………………………………..
After doing the job evaluation we need to classify jobs into pay grades. We can easily
done this by gathering old pay structure data.
Rewarding people with Financial and Non – Financial incentives
Maintaining balance between financial and non – financial incentives is bring benefits
to both employer and employee.
The factors helpful in motivating the employees with non-financial rewards are as
follows:
01. Build up position or rank of a person in an organization.
02. Career Advancement Opportunity
03. Job Enrichment
04. Employee Recognition Programmes
05. Job Security
06. Participation in managerial works
07. Giving the employees more freedom to take decisions
08. Work and Life Balance
Following are the benefits to employer when providing non – financial incentives for
employees.
01. Cost effective
02. Attract and retain Employees
03. Gain employees loyalty towards the organization
04. Development of employer brand
05. Being a competitive employer in the labor market
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According to new CEO’s approach he said rewarding people only with financial
incentives. This is not suitable method for any organization because as legal
consultants said organization will have to face financial crisis in the future. In the
other hand this method will not survive for a long time and this method will not gain
acceptance from all employees.
According to the Abraham Maslow’s needs theory people will not satisfied with
satisfaction of one need. When one need is fulfilled a person seeks to fulfill the next
one, and so on.
Figure 1: Maslow's Hierarchy of Needs
I think following are the most common reasons SerendiB employees leave the
organization linked to nonfinancial issues.
01. Lack of career development opportunities.
02. Poor work climate.
03. Lack of challenging work.
04. Direction of the organization.
05. Lack of recognition.
So re-implementation of balanced non – financial and financial rewarding system is
not costly thing for the organization. As a steering committee member I suggest to re-
implement this rewarding system as an important part for get back organization into
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track. However non-financial rewarding system is need to be done according to the
pay grades or structure.
Attract qualified employees from the competitive external market
Finally we need attract qualified and suitable employees from the external labour
market. When we have good internal environment with the proper culture and reward
system attracting people from external market is an easy thing. Because when have
good internal environment we already developed employer brand and attractiveness.
Finally we need to attract and select suitable employees from the external market
through proper recruitment and selection process.
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5 Implementation
First of we need to repair organizational internal environment. According to this as I
suggested above in the alternatives we need to identify and correct the employee
motivation method (Intrinsic and Extrinsic). Then we need to change the company
culture back to the individualistic culture that is existed before.
Then we need to classify important jobs into pay grades and reward employees with
financial and non-financial incentives according to the pay structure. Those things
will develop the existing employee’s satisfaction, loyalty and also employees will
retain in the organization. After developing the internal environment we need to
recruit people from the external market for the vacant positions through proper
recruitment and selection procedure. I think these suggestions will provide a vision or
path to get SerendiB back on track.
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6 References
01. [Link] Parenting, (2015). Gifted Children Glossary. [online] Available at:
[Link] [Accessed 10 Nov. 2015].
02. Anon, (2015). [online] Available at: [Link] [Accessed
10 Nov. 2015].
03. [Link]: The Next Generation Library, (2015). Business
Communication | [Link]: The Next Generation Library.
[online] Available at: [Link]
communication [Accessed 12 Nov. 2015].
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