1.0 acquired its name through its well-behaved business direction,

1.0       Introduction:

 

Top Glove
Corporation Bhd is currently the world’s largest rubber glove manufacturing
company. While it began its service in the year 1991, Tan Sri Dr Lim Wee Chai
formed the enterprise which currently operates its courses across Malaysia,
China, Thailand, US and Europe. Its steady growth and global recognition has
helped it to acquire 25 percent of world’s market share and to be listed on the
Bursa Malaysia market in 2001 and Singapore Exchange in 2006 including other
components of Bursa Malaysia.

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(Topglove.com,
2017)

 

Top glove started
its business while around 250 glove manufacturers were running their business
in Malaysia alone. The group acquired its name through its well-behaved
business direction, by producing high quality glove and selling it for cheap
and affordable prices. They remained consistent in the same business for 26
years, which helped them rapidly expand and grow their business around the
globe. Top Glove starting its business with 1 factory 3 production lines and
100 staffs grew to 29 glove factories and 550 production lines which has the
capacity to produce 51.9 billion gloves annually.

(Topglove.com,
2017)

 

2.0        Top Glove’s Reward Strategy and Performance Management
System

2.1.      Performance Appraisal System:

It was stated by Coens
and Jenkins (2000), that a performance appraisal is “the process or
evaluating or judging the way in which someone is functioning” and
“the purpose of evaluating an employee must be useful and must have purpose”.

(Ahmed Allam and
Banerjee, 2013)

 

Top glove takes a
meritocratic approach in regard of the employee performance appraisal. Their
Key Performance Indicator works by engaging in supervising the employee’s
qualities in taking responsibilities, ownership and performance. They are also
rewarded on depending on their performance with variable and non-variable
benefits.

(Topglove.com,
2017)

The talent and employment
positions of employees are updated on time in a company to meet the needs and
demands of production and company development. A well-organised professional growth
and operations can be achieved through regular employee meetings.

(Harrison, 2012)

 

The Internal
Auditor’s proposes the recommendation and improvements to the Audit Committee. And
the Audit Committee reviews overall performance of the Internal Audit
department. The Audit Committee has completed various meetings, discussions and
training programs during the year.

(Top glove corporation Bhd, 2014).

 

2.1.1. Board, Committees and Individual
Director Assessment:

 

An Online
Assessment system is setup for board to evaluate themselves. By completing the
assessment form, the board reviews their current performance and their
effectiveness as well as their contribution towards the group as a whole.

The Nomination
committee evaluates the effectiveness of the board and the terms of Auditing
Committee annually. They are given the authorisation of performance evaluation
of the board to ensure it completes its given responsibilities along with
granting and performing appraisal of completed questionnaires and/or evaluation
forms. The evaluated results are then passed on to respective participants for
self-evaluation and improvement. The senior management team uses the following
results for the group’s succession planning and to come up with a well prepared
Big-picture plan.

(Top glove corporation Bhd, 2017).

2.1.2. Employee Assessment:

 

Different
approaches are used to establish performance assessment systems for the
employees. The responsibility of reviewing the group’s efficiency and
effectiveness in regard to their internal control system is assigned to the
Audit Committee. Appointed components are assigned to arrange meetings and discussions
regarding the employee performance and improvements within regular intervals.
An Internal Audit Department is introduced by the group to deliver quality
services regarding control assurance in the financial year ended 31 August
2003.

(Top Glove
corporation, 2017)

 

Indulging in
performance assessment include things as attaining the key performance through
schemes improvised by the organisation that can benefit the group is another
method of the group’s performance assessment reward criteria. And others like,
meeting high performance through gaining a decent profit margin for the group
and focusing achieving in shareholders wealth maximising and/or other similar
areas where the employees compete for the benefit of shareholders. (Top glove corporation Bhd, 2017)

 

 

2.2       Reward strategy:

The Top
compensation structure includes both short and long-term benefits, like wages,
rewards and Share Option Plans as well as non-fixed and fixed components. Top
glove reward strategy is a lot similar to Ouchi’s Theory Z. The theory Z, built
on Japanese idea explains that the dedicated employees will have higher
productivity than the non-committed ones. Therefore, benefits like long-term
rewards, promoting to higher positions given from the same organisation, and
similar rewards makes the employees motivated and highly productive.

(H. Shanks, n.d.)

2.2.1.   Share
based payments

 

(i) Employee share option scheme(ESOS)

 

The Employee Share Option Scheme was introduced to reward the well
performing and loyal employees and directors allowing them to have a share of
the company at a pre-determined price. Excluding dormant holdings of the
company, anyone including executive directors and employees who meets the
eligibility standards are entitled to participate in the scheme. (Top glove
corporation Bhd, 2017)

 

 

 

The Employee Share Option Scheme(ESOS) was introduced in meeting
conducted by the shareholders, that came into effect on 1 August 2008. The scheme
is active 10 years from the date of start. The “Options Committee” nominated by
the Directors of the company acquires the power to designate eligible
candidates with the by-laws of the proposed scheme. An approximate of 15
percentage of shares only can be issued totally from the paid up and issued
share capital during the tenancy period of the scheme. An evaluated five-day
aggregated market price when the scheme is being processed, is taken as the
pre-determined price of each share. The maximum or minimum number of shares can
be with an increment or reduction of price of 10 percentage or less
respectively, that is allocated by Bursa securities or other similar relevant
authorities (Top glove corporation Bhd, 2017). (Top glove corporation Bhd,
2017).

 

 

(ii) Employee Share Grant Plan:

 

The Employee Share Grant Plan, established on 12 January 2016 with a
duration period of 10 years is another form of plan that also allows the
company employees to acquire the company shares. Eligible employees and
director will be awarded required percentage of issued shares, excluding
treasury shares. The awards are allocated to eligible employees on considering
factors like the number of years of service rendered, superiority, performance
and latent of future development. Also, any other conditions that is
implemented by the Employee Share Grant Plan committee.

The maximum amount of issued share is 10 percentage of the company at one
time. Other than the inactive subsidiaries, the senior management and directors
of all subsidiaries will be given a maximum of 75 percentage of total shares in
the Employee Share Grant Plan. Since the commencement of the Plan in the year
2006, a total of 15.2 percentage of shares has been given to the senior
management and the directors from the total of company share. In the Financial
Year 2017, eligible candidates under has been awarded a total of 422,900 shares
through Employee Share Grant Plan (Top glove corporation Bhd, 2017).

2.2.2 Short term benefits

Short term benefit are the wages,
bonus payments and any other sort of monetary benefits for the employees. These
benefits include paid annual leaves, where the employee is rewarded even when
the individual is on leave. These are listed among expenses in the financial
statement of the company. The short-term benefits are not applicable for employees
who are on un-paid leaves, such as leave due to sickness or similar other
reasons.

3.0       Evaluation:

 

Top Glove being “The World’s Top Manufacturer of Gloves” is expected to
have a top management regarding their appraisal system followed by an even
better reward management. First of all, the purpose of an appraisal system is
to evaluate and understand the potential, performance, the need of training and
need for planning of career development. And the appraisal system helps to
decide the need for a financial reward for their performance. (Derven, 1990)

 

Top Glove’s
appraisal system is applicable to all employees in higher positions to smaller
employees. The group shows the seriousness of appraisal through introducing an Audit
Department and making a lot of use out of it. And other subordinates including
audit  committee, internal and external
auditors, nomination committee and others  for appraisal and regarding  purposes purposes. Also, the department
conducts regular meetings to stay on the right track in managing and
maintaining the best employee performance.

According to an
employee from Top Glove, who was said to be working as a Marketing Executive in
the company says that managers are given multi-level tasks while they are
restricted from adding their opinion in decision making. Negative judgements
made by managers can de-motivate employees and that may further lead to
allegations on manager’s contribution to an employee’s bad performance (McGregor,1957).

Furthermore, other
workers and interns have showed their displeasure regarding the attitude of
managers and/or higher management in not appreciating, allowing or accepting
employee’s opinions, concerns or suggestions for betterment. (Glassdoor.co.in,
2017)

 According to the reviews, it is understood that
the group has proposed an initiative when it came to appraisal but has not
perfected it. What they are lacking is a good performance management along with
the appraisal. Researchers propose that the appraisal systems that has made to
improve and motivate employees did not become successful. (Fletcher, 2001).

Top Glove’s
management lack the ability to minimise the gaps between the employee and
manager. The gaps between them leads to employee dissatisfaction, which can
affect their performance and can further lead to failure of the
organisation. 

 Top Glove has a great long-term
reward strategies that highly values loyal employees and intrinsic rewards in
case of high positioned authorities. They reward employees with company shares
to keep them committed to the organisation. While they also provide
compensations and wages as short-term benefits. Ali and Ahmad (2009) found out
that there existed an optimistic relation among “performance” and “recognition
and reward”. They said that an individual’s performance can be really affected
by both reward and recognition offered to him. In other
words, an individual requires both extrinsic and intrinsic rewards for a better
performance result.

 In the case of Top Glove, the
group has largely focused in providing extrinsic rewards while they showed less
concerns on intrinsic rewards. According to their interns and workers, they said
the company has got a high turnover rate over employees. (Forum.lowyat.net,
2017).

 

This happens due to low intrinsic rewards given to employees in the form
of appreciations and recognitions. The motivation in the form of appreciation
recongnition by managers is what is missing in their reward strategy.

4.0       Recommendation:

 

First of all, Top
Glove has to take initiatives on improving their responsibilities towards
employees from the management. Unlike IKEA, where the managers and employees
are said to have no gaps between them(Ikea.com,2017), helping the employees to
have close and healthy relation with managers, Top glove also must encourage
their top and bottom level managers in keeping a good and open relation with
employee. This can help the employees in improving the motivated. At the same
time, such practices may lead to greater employee satisfaction and performance.

Secondly, the
company must take the employees recommendations into account. Taking employees
opinions and suggestions may help the organisation improve the systems in ways
they did not expect. Also, taking one’s, opinion gives them a thought that they
are valuable to the organisation which may increase their commitment.

Finally, the group
has to put more effort in bringing intrinsic reward systems and application so
as to value, encourage and motivate employees. Employees gain satisfactions and
value in doing their work through intrinsic rewards (Deci et al, 1989). Intrinsic
rewards are easy to implement but is not implemented in the organisations. Even
providing employees with a periodic feedback can lead to intrinsic motivation
in individuals (Wang &Guthrie,
2004). 

Conclusion:

For an organisation to stay on right track being at the top position,
they should strive to improve their management style in every aspects.
Employees are the most essential assets to an organisation. The effort used to
manage them can be considered as the effort used to manage the organisation.
Since, unsatisfied employees will generate low productivity and which may lead
to their irresponsible attitude of working style in the organisation. An
unsatisfied employee can affect badly. The assignment also shows the attitude
of the company in considering the employees opinions or suggestions. The
financial expense on the individual is of no profit when they lack appreciation
in the work they do.

The assignment examines the effort taken by Top Glove in appraisal
reviews and reward management systems. The group has shown very much interest
in rewarding the committed employees. But, they lacked rewarding the smaller
employees or interns, at the same time asking the employees to use more effort.
They lacked in appreciating employees with intrinsic rewards. They considered
the monetary benefits can make the employees content and thus productive. The
company has to review their manager opinions on taking suggestions from
employees at the same time concentrate more on implementing intrinsic rewards to
them.

 

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