UiTM KAMPUS BANDARAYA MELAKA (UiTM KBM)

BACHELOR OF BUSINESS ADMINISTRATION (HONS.) HUMAN RESOURCE

MANAGEMENT

TITLE : LONG-TERM INCENTIVES PLAN IN ORGANIZATIONAL REWARD

SYSTEM (TELEKOM MALAYSIA)

SUBJECT : COMPENSATION & BENEFITS MANAGEMENT (HRM 648)

LECTURER’S NAME :

STUDENT’S NAME :

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 TABLE OF CONTENT

ITEM PAGE

TABLE OF CONTENT 2

1.0 INTRODUCTION 3

2.0 CONTENT 4-5

3.0 CONCLUSION 6

4.0 REFERENCES 7

5.0 APPENDIX 8

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1.0 INTRODUCTION

Organizational reward system is a structure concerned with the choice of the sorts of
rewards to be utilized by the organization. The rewards consists of intrinsic and extrinsic
rewards. Hence, organizations must study what employees see as meaningful rewards, which is
not essentially what management perceives. This is because, these rewards are always resolute
by the organizational relationship and position such as rewarded vacations and insurance
policies. Other rewards such as promotion, can and should be related to performance. Studies
show that many variables can give effects to the employee partialities for certain rewards such as
age, sex, marital status and others. One of the reward is, Long-term incentives plan (LTIP) is a
company’s policy that rewards employees for achieving certain goals that lead to the increment
of the shareholder value. This plan normally include the major element of executive pay. The
objectives of the long-term incentive is to reward the executives for accomplishment of the
organization’s strategic goals that will capitalize on the shareholder’s value. Usually, long-term
incentives are a combination types of equity and may comprise a cash element. In a distinctive
LTIP, the employee, usually an executive, must achieve several situations or requirements. This
plan other than it will gear towards employees’ performance, it is also a purpose of the
organization itself struggling for long-term development. This is because, when purposes in a
organization’s development plan match to the organization’s LTIP, employees will aware on
which performance elements to focus on refining the business and receiving more particular
reimbursement. This such plan also supports to preserve top talent in a vastly competitive work
environment as the organization remains developing in predetermined and potentially profitable
decisions.

These organizational reward system is very significant in ensuring the employees’

satisfaction. This is because, they will feel accepted and belonged to the group of employees
through common goals and has a desire to development towards the goal. Thus, it can improve
their job performance which leads to rewards that result in a definite level of contentment. There
is an indication that intensely indicates that rewards create a more direct source of contentment
rather than performance. It has been evidently recognized that job contentment does have a
positive influence on turnover, absenteeism, unpunctuality and others.

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2.0 CONTENT

A study indicates that a direct link between employee satisfaction levels and an amount of
business metrics, including output and employee retaining. Keeping employees from leaving is
mainly vital as the number of open jobs far compensates the number of job seekers.
Organizational rewards are recognized to support an organization to increase the employees’
satisfaction. The application of incentives structure also is seen as one of the method done to
satisfy the employee. So, in TM, the Proposed LTIP is a plan that enables eligible employees to
receive new TM shares. The goals is to retain, reward and attract key employees whose services
are vital to the growth and business strategy. Plus, it is also to motivate employees for continuous
performance over multi-period and to align employees’ interests with the long-term
shareholders’ value enhancement and success of the organization. Lastly, it is also to improve
motivation of employees on the achievement of the Group’s multi-year objectives. TM Proposed
LTIP is a share grant that comprises Performance Shares (PS) and Restricted Shares (RS).
Performance Shares is a conditional grant for top management and Executive Directors. The
performance targets for PS would be much more skewed towards equity value creation while
Restricted Shares is a conditional grant for designated eligible employees and Executive
Directors. The performance targets for RS would be company-level operational metrics.

. Based on the article that I’ve read, entitled Organizational Rewards and Employees’
Satisfaction at Telekom Malaysia by Rudzi Munap, Muhammad Izwan Mohd Badrillah,and
Baharom Abdul Rahman, the study was carried out to recognize the magnitudes of
organizational rewards system that may contribute to employees’ contentment at Telekom
Malaysia Berhad in Selangor. This is because, employees’ satisfaction is particularly required for
the organization to look into the well-being and welfare of their employees such as considering
into the monetary and non-monetary rewards. In this context, the sample frame for this study was
developed from the administrative department of Telekom Malaysia Berhad, and a total
population of 2256 employees was recognized. The sampling method practiced was stratified
sample which includes a method of stratification or segregation, monitored by random choice of
issues from each level. In a write-up from an authorized website associated to a study carried out

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By TM in a professional comment box, it was stated that employees commonly walk out of the
company due to their frustration with the compensation agreed, and claimed for their inequality
per others. However, the application of decent rewards structure in telecommunication firms is
still yet to be explained. As supported by Milne (2007), which specified that incentives basis is
centered on the supposition that long-term and short-term incentives drive to reassure
employees’ faithfulness, nurture teamwork and eventually helps the development of the
anticipated beliefs that reassures and supports information distribution. However, when inter-
team support is essential, incentives may form encounter and offence, diminishing a group’s
motivation to come out with a better achievement (Hoffman & Rogelberg, 1998).

Normally, work-life balance, healthcare, bonus, promotion, long-term incentives, short-

term incentives and wages are important to employees’ contentment. Wages and salary is the
forecaster that meaningfully contribute to employees’ fulfillment. It showed that most of the
employees at Telekom Malaysia Berhad are content with the salary method delivered. This is
because, employees feel the wage given is competent to please their necessities particularly when
it is associated to their standard of living and their cost of living. Money is seen as an essential
element to live a life. Therefore, Telekom Malaysia Berhad has practiced a good application by
providing worthy wage to employees. Besides, elevation also has become the second utmost
section that contribute to employees’ contentment in the business with significant value. The
employees want to be assumed chance to nurture and develop their own career path. However,
in comparison, the slightest major forecaster to employees’ satisfaction is a long term incentives.
This is because, the findings found that incentives formed typical employees’ contentment in the
organization. Furthermore, the information collected indicated that certain employees are
contented with the long term and short term incentives agreed, temporarily the others conveyed
frustration.

Based on Executive Remuneration, the consultants has been trying to create LTIPs work
well ever since these plans were initially developed and they are damaged by the fact that they
expensed a lot in this plans. Making LTIPs work better often means making it more complex,
further diminishing its value as an incentive. The best way to align the interests of executives
with shareholders is to necessitate them to own shares in the company. They should buy these
from taxed income with their own money, so there is a downside as well as an upside.

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3.0 CONCLUSION

In conclusion, the relationship between organizational rewards and employees’ satisfaction

are positive with substantial significance and results to strong linear relationship although the
long incentives plan are the slightest major forecaster to the employees’ satisfaction. There are
various other forecaster that may result the utmost such as wage, promotion and reimbursements
and others. According to Mowday et al. (1979), employees’ consider that their attachment to the
organization will offer admission to significant rewards that fulfill their requirements. So,
employees need to achieve better in order to be remunerated and thus, the determination given
will be strived for an enhanced rewards. Based on the article I’ve studied, the author itself has
enacted some limitations in the part of its research. The sample collected are commencing all of
the department such as managers, executives and support staff in Telekom Malaysia Berhad
only. Plus, it also only concentrated on four organization rewards system only such as fringe
benefits, promotion, salaries, short and long-term incentives. Supposedly, in order to come out
with more solid outcomes, future researchers must use related method but with a bigger range,
covering other telecommunication industries, allow evaluations to be made and therefore
produce other significant outcomes. As a recommendation, other rewards that also can be used to
be perceive for future investigation including wages protection, employment security and
recognition and status. This is to collect better understanding regarding the organizational
rewards system in the future.

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4.0 APPENDIX