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Strategic Compensation Plan Essay

1691 words - 7 pages

There is a clear business case for strategic compensation. Well managed rethinking of performance management, rewards and benefits leads to better business results, stronger capability, higher staff retention levels, heightened motivation and employee satisfaction. The success stories of organizations leading the field in strategic compensation prove that how employees are motivated, rewarded, recognized, fulfilled and challenged to perform better is a key differentiator between excellence and plain mediocrity.One of the best ways to keep employees from walking out the door is to pay a higher salary. Paying employees more in salary, however, won't necessarily align them with the company's priorities. In order to do that, companies need to adopt a compensation program that gives employees incentives to achieve the company's goals. The challenge is designing a plan that will accomplish the desired result (Designing, 2007).From top executives to entry-level employees, compensation plans are integral to attracting, motivating and retaining employees. It's often a factor that sets a company apart from its competitors. While most businesses understand the benefits of a well-designed compensation plan, the development of a successful program can be a daunting and complex task. Several recommendations for an updated compensation and benefits program for Plastec will be discussed.Paul should begin by updating the company's job descriptions and job specifications. After this initial step, his next move should be to value his jobs. This can be completed through a job evaluation, which is a formal, systematic means to identify the relative worth of jobs within an organization. Since he is creating this compensation plan for one type of job, the machine workers in the company, he should focus on the knowledge and experience it takes to perform the job. Other factors that should be considered are the safety and hazards of using the machinery, whether or not specialized equipment requiring special training will be used, and the working environment of the employees using the machinery.Next, Paul will need to conduct a pay survey for this particular position or positions if different machinery is sued and different levels of knowledge or experience are needed. At the same time he can also complete a private survey to determine what types of benefits other employers in the same industry are offering and to find out what types of benefits are attracting and retaining employees. The surveys will give him the information on compensation rates and benefits for workers performing similar jobs for other companies. Using the information from his pay survey, Paul can create his pay structure. During this process, he may find it easy to establish pay grades to those jobs having the same or close to the same job worth. The easiest process would be to use market banding where jobs are grouped into pay grades based on similar market amounts. This would also allow him to be...

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