You are a consultant that specializes in performance and reward systems.  You have knowledge and insight with regard to insurance broking and have been engaged to design a Performance and Reward Management System for employees of NLA. The design you recommend must display your knowledge and address the following issues:

 

(a)          Should NLA introduce a system of rewarding individual and collective effort?  Should the reward system be the same for all employee groups of NLA? Explain your reasoning.

(b)          Should NLA adopt a competency based or results based system of performance measurement?  Why?     

(c)          In addition to base pay, what reward components should be included in the performance and reward system?  

(d)          What type of performance appraisal method would be most effective at NLA?       

NLA is an insurance brokerage business practice.  The firm employs 81 people, of whom 50 are insurance agents, 31 people are employed in other professional areas and administrative roles, 4 of whom are employed as managers.

 

The firm is well established, financially sound, and to date has enjoyed a good reputation in its field and with its clients. However, the economic impact of extreme weather events and recovery from COVID has created difficulties for the insurance industry at large and for NLA. In response to these challenges, NLA chose to adopt an aggressive approach to increasing its market share. In pursuit of this goal, NLA headhunted several high performing brokers from its competitors. Brokers are paid a base salary and a monthly commissions bonus, consistent with the aggressive approach to increasing market share, the proportion of the bonus was increased.  Managers receive a salary that aligns with that paid by NLA's competitors.  All other employees are paid in accordance with relevant minimum award rates. Until recently, all employees of NLA received a modest annual cash payment calculated on the basis of its profit for the relevant period.

 

Since adopting its aggressive approach to increasing market share, NLA has seen a significant increase in employee turnover. NLA has not collected any formal workforce diversity, diagnostic or prescriptive HR data.       

 

Brokers are required to:

 

Open new accounts

Expand areas of business

Expand NLA's brand recognition

Secure advantageous amendments to existing accounts.

 

Those employees in professional, managerial and administrative roles are required to contribute to achievement of an increased market share.  Their performance is assessed on the following criteria:  

 

Client relationship and capacity to develop business

Team work

Technical skills

Leadership and management skills as relevant

 

NLA does not have a cohesive reward and performance management system in place and wishes to introduce such a system for all of its employees that will assist in ensuring its continued success.

Answer rating: 100% (QA)

Performance and Reward Management System Design for NLA a Individual and Collective Effort Rewards Recommendation Yes NLA should introduce a system re... View the full answer