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Running Head: CASE STUDY 3: TOTAL REWARDS
Case Study 3: Total Rewards
Laura Coplai
BUSI 642 – Contemporary Issues in Human Resource Management
Liberty University
April 18, 2022
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Case Study 3: Total Rewards
Background
L.L. Bean is a company who has created outdoor products for over 100 years.
The company has a firm belief in satisfying customers. L.L. Bean also is committed to
environmental stewardship. This means that they minimize adverse impacts on the
environment by going green, using alternative fuels, recycling, reducing packaging,
innovating new products, and managing responsible paper and forest management. This
commitment also seeks to enhance their customer relationships with the outdoors. L.L.
Bean is also committed to ensuring their employees and stakeholders receive rewards for
customer satisfaction, as this is what drives profits. The Christian viewpoint that L.L.
Bean exemplifies is of Ephesians 6:8, “Knowing that whatever good anyone does, this he
will receive back from the Lord” (ESV).
Enhance Total Compensation Using Own Products
The L.L. Bean brand has been built using employees to accomplish their strategic
directives. Employees are the critical channel to customers that reflects the passion for
the outdoors. These employees are not only given a regular base pay, but they are offered
health and financial benefits. L.L. Bean also will enhance their careers with internships,
tuition reimbursements, and management programs. However, L.L. Bean understands
there must be some balance between work and life. These include paid time off, leave
programs, and relocation assistance programs. As Gomez-Mejia, Balkin, and Cardy
(2012) indicate, these nonfinancial incentives can motivate employees.
Additionally, L.L. Bean uses some of their own products to enhance total
compensation for employees. These include the Employee Outdoor Club, which allows
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employees and their families to enjoy the outdoors; the Use Room, where employees can
borrow outdoor gear for adventures; Rangeley Camps, where employees have access to
cabins and tent sites; and Outdoor Experience Days, which encourages employees to
participate in outdoor activities (L.L. Bean). These extra fringe benefits not only allow
employees to experience the outdoors, but they test L.L. Bean’s products and provide
feedback to the company. This is not only a benefit to employees, but to the company as
well. Harer (2008) states that job satisfaction, organizational climate, and quality are
important to employees’ perceptions on the effectiveness of an organization. By testing
L.L. Bean’s products, employees are able to enhance the quality and description of what
they sell and produce.
Internal and External Strengths and Weaknesses
L.L. Bean had the strength of their employees and a strong, reputable brand name.
“I can do all things through him who strengthens me” (Philippians 4:13, ESV). These
strengths combined with a values-driven business accounted for much of the profits the
company was experiencing. Externally, L.L. Bean was facing an environmental
responsibility. They focused on green building, giving to charity, and helping preserve
the environment. Having a responsible paper procurement and global labor rights
mindset also helped strengthen the company. This strong social responsibility
atmosphere improved the quality of life for employees and communities.
Internally, L.L. Bean focused on the Internet and changing technology. This
Internet expansion was not the only expansion where the company was weak. The
strategic review initiated found the company was not up to tackle the growth into the
retail market. There was also an increase of the cost-conscious customer. Externally, the
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threat of global expansion and the opportunity global employees provided were apparent.
These struggles were clear to Gorman and he set out to reorganize the company.
Response Using Total Rewards Perspective
The total rewards perspective is a viewpoint that an employer offers to employees
of all the rewards to attract, motivate, and retain employees. A study completed by
Tornikoski (2011) indicated that there is a strong, positive link between a total rewards
perspective and an employee’s commitment to the organization. L.L. Bean responded to
their internal and external weaknesses using this perspective. As Reed (2009) states, this
perspective was used as a solution to many issues.
Internally, in a strategic review by Gorman, a strategic business unit created was
the human resource department. This allowed them to “develop operational tasks such as
compensation and benefits into a strategic process with measureable outcomes” (Reed,
2009, p. 9). The HR department linked pay with performance and increased employee
job outcomes. Not only did the HR department turn a weakness into a strength, but the
company also strengthened their existing strength – their employees. This was done by
diversification, which infused the values of the company with a job analysis process. The
HR department exhibits that employees are valued and demonstrates the ability to give a
future and hope to those employed with L.L. Bean (Jeremiah 29:11, ESV).
Externally, L.L. Bean focused on continuing the growth of the company. The
company initiated multi-channel marketing to strengthen the weakness of the lack of
technology, Internet, and retail growth. “Multi-channel marketing is the ability to offer
customers more than one way to purchase a product” (Reed, 2009, p. 10). L.L. Bean
expanded from catalog into brick-and-mortar stores as well as an e-commerce website.
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The company also expanded globally by outsourcing. However, Gorman was then
challenged to ensure fair wages and benefits for those vendors. Global benefits were also
different from those in the United States, as the company had to ensure the culture of the
country was intact.
Traditional and Non-traditional Rewards
L.L. Bean traditionally offers performance-based bonuses, cafeteria-style
healthcare, and employee training (Reed, 2009, p. 10). Non-traditional benefits include
employee store discounts, use of company products, ability to enjoy the outdoors on and
fitness programs. The company’s core value of connecting people with the outdoors is
experienced with all stakeholders. A profit sharing program such as the one L.L. Bean
employs, is a corporate-wide pay-for-performance plan as defined by Gomez-Mejia, et.
al. (2012). In profit sharing, there is a formula used from the declared profits that are
distributed to employees. There were also funds set aside to fund employees’ pension
plans. The founder of the company, L. L. Bean himself, believed that employee
satisfaction was the beginning of obligations the company had to its stakeholders.
“Companies who strategically want to build positive employment relationships with their
workers should signal to them that their welfare matters to the organization by offering
benefits beyond that typically offered by most firms” (Muse & Wadsworth, 2012, p. 124).
Benefit and Value Alignment
L.L. Bean values a strong customer focus. The benefits given to ensure that
customers will continue to receive such service include that of the profit sharing program.
Employees and other stakeholders are ensuring their benefit by continuing to keep
customers happy and loyal. When the company reviewed their strengths and weaknesses,
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Gorman found many struggles within the company. Therefore, he was adamant on
changing the global marketplace as well as expanding their markets. Gorman was also
assertive on providing fair wages globally, not just in the United States. This ensured the
fairness for all employees of the company. L.L. Bean also ensures their commitment to
the environment will not waver. Employee activities involving outdoors products ensures
their commitment and innovation on providing the best products to their customers.
Testing the products gives employees a strong brand image and loyalty to the company.
The benefits that L.L. Bean offers to their employees also ensure that employees know
the company values who they are. As Gorman had stated, stakeholders have invested and
entrusted in the company to produce the best and guarantee satisfaction as well as
enhance benefits (Reed, 2009, p. 10). The “fruit of the Spirit is love, joy, peace, patience,
kindness, goodness, faithfulness, gentleness, self-control,” of which, the company
demonstrates within the organizational culture of social responsibility. (Galatians 5:22-
23, ESV).
Recommendations to Expanding Benefits Program
To expand the benefits program further, L.L. Bean could initiate a program that
allows employees to save money to coincide with their environmental stewardship value
of going green. L.L. Bean can also assist in health coverage by paying some portion of
the premiums. This program will let employees save a bit more money in their retirement
fund. L.L. Bean offers employees the ability to buy and sell additional vacation days, but
if they implemented a program where employees can swap with other employees, it
would reduce the need for employees to buy more time. This would also help out in case
an employee had a crisis in the family. However, expanding the plans that employees
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have access to, to make a consumer-driven health plan, allows the employees to choose
what plans they want to pay for. In conjunction with that plan, L.L. Bean could allocate
“a specific amount of pretax dollars that employees can use to buy health coverage,
deposit in an HRA or HAS, and then use remaining funds to purchase ancillary benefits
such as dental, vision or disability coverage” (Wojcik, 2013, p. 8). L.L. Bean, however,
does have an exceptional benefits program. “Do not neglect to do good and to share what
you have, for such sacrifices are pleasing to God” (Hebrews 13:16, ESV). As L.L. Bean
incorporates this verse into all products, values, and benefits they provide, they reap great
profits.
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References
Gomez-Mejia, L.R., Balkin, D.B., & Cardy, R.L. (2012). Managing human resources (7th
ed.). Upper Saddle River, NJ: Pearson Education.
Harer, J.B. (2008). Employees as customers judging quality: Enhancing employee
assessment. New Library World, 109(7/8), 307-320. Retrieved from
http://dx.doi.org.ezproxy.liberty.edu:2048/10.1108/03074800810888140
L.L. Bean. Benefits. Retrieved from https://llbeancareers.com/benefits.htm
Muse, L.A. & Wadsworth, L.L. (2012) An examination of traditional versus non-
traditional benefits. Journal of Managerial Psychology, 27(2), 112-131. Retrieved
from http://dx.doi.org.ezproxy.liberty.edu:2048/10.1108/02683941211199527
Reed, S.M. (2009). Benefits and business at Aflac and L.L. Bean. Society for Human
Resource Management.
Tornikoski, C. (2011). Fostering expatriate affective commitment: A total reward
perspective. Cross Cultural Management, 18(2), 214-235.
doi:http://dx.doi.org/10.1108/13527601111126030
Wojcik, J. (2013). Following the leaders to employee benefit savings. Business
Insurance, 47(26), 8-9. Retrieved from
http://search.proquest.com/docview/1473651405?accountid=12085
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