Since the 1980s, it has been established that there must be a strong association between employee compensation and business strategy (Hufnagel, 1987). However, the development of strategically-oriented compensation scheme is a complex endeavor that requires consideration of numerous factors. Some of these elements are evolving employee needs, changing employee and societal demographics, the changing sexual composition of the labor force as well as transforming qualifications of job applicants (Dawson, 1995). It cannot be emphasized enough that strategic compensation enables an organization to align employee interests with those of the owners of the company (Santone, Kevin, & Britt, 1993). Indeed, numerous studies attest that effective compensation schemes can be tools for employee motivation, high levels of which can lead to excellent organizational performance. However, a sad reality is that not all organizations have strategic compensation programs that seek to align employee interests with that of the enterprise. This paper presents a proposed compensation scheme for Nike, Inc. (Nike), a company that has had issues with employee compensation, particularly for offshore factory workers (Taibi, 2013).
Nike, Inc. (Nike) is among the world’s largest designer, distributor and marketer of sports footwear, apparel, equipment and accessories for different athletic and fitness activities (MarketLine, 2013). Nike is one of the most powerful brands in the world, and the company sells its products sells its products across 190 countries in the Americas, Asia Pacific, Europe, Middle East and Africa (MarketLine, 2013). Headquartered in Beaverton, Oregon, Nike currently has 44,000 employees. Nike has a global market share of the international athletic products market of 16%, which is remarkably large (MarketLine, 2012). This implies a high degree of customer satisfaction as well as loyalty to the company. Notably, Nike’s brand value is estimated to be at $14.528 billion (MarketLine, 2012). There seems to be consensus among industry insiders that two drivers for Nike’s success are excellent Research and Development (R&D) outcomes as well as brilliant marketing strategies (MarketLine, 2012). In FY2012, Nike reported revenues of $24.128 billion an increase of 15.65% from the previous year (Nike, 2012).
Current Compensation Scheme at Nike
Nike contends with a number of employee issues, including deplorable working conditions in its factories abroad, as well as poor compensation programs for its employees, in the United States and elsewhere (Taibi, 2013). Currently, the compensation scheme of Nike features the following components:
1. Compensation Program, wherein aside from daily wages, Nike employees (i) take part in a Performance Sharing Plan comprised of an annual bonus plan to reward both individual and team successes; and (ii) can participate in an Employee Stock Purchase Plan (NUY Job Source, 2013).
2. Benefits such as medical, dental and vision...