Create A Presentation With Three Compensation Approaches

Create a presentation with three compensation approaches and a final recommendation

Your team is consulting with a local manufacturing company that has 1,200 employees and is the third largest employer in the area. When averaging all of the manufacturing employees' salary divided by the market midpoint, the organization has a 0.90 compa ratio, meaning that on average employees earn 90% of the market rate. Your firm has been asked to propose three approaches for management to consider: increasing base pay, adding a team incentive plan such as profit sharing or individual incentive plan based on individual performance, or a combination of base and incentive pay. Using the current sales and profit trend, the company has the ability to increase compensation spending by 4% annually for the next three years. Create a 10- to 15-slide Microsoft® PowerPoint®, Prezi, or Microsoft® Sway® presentation in which you use at least one cited source, consistent with APA guidelines, to address the situation and: propose a plan for each of the three approaches make a final recommendation The presentation should include graphics and speaker notes on each slide that script what would be said if this information were to be presented in person.

Paper For Above instruction

The current state of compensation at a manufacturing company reflects a significant gap between employee earnings and market standards, with a compa ratio of 0.90 indicating that employees earn approximately 90% of the market midpoint. Addressing this disparity through strategic compensation adjustments can enhance employee motivation, retention, and overall organizational performance. This paper explores three compensation approaches—raising base pay, introducing incentive plans, and combining both strategies—and provides a comprehensive recommendation based on the company's financial capacity and strategic goals.

Approach 1: Increasing Base Pay

Increasing base salary is a straightforward method to improve employee satisfaction and retention. Given that the company's compa ratio is below parity, a targeted increase in base pay can bridge the gap between current wages and market standards. Assuming an annual budget increase of 4%, over three years, the company could allocate a portion of this to raises. For example, implementing a 2% annual base pay increase would gradually align employees' salaries with market rates without significantly impacting the company's financial stability. The benefits include predictable income, increased employee morale, and reduced turnover; however, it may not directly incentivize higher performance or productivity.

Graphics suggestion: A line graph showing current salary levels versus market rates over time, with projections after base pay increases.

Approach 2: Implementing a Team Incentive Plan

Offering profit sharing or other team-based incentives can foster collaboration and align employee goals with organizational performance. Profit-sharing plans distribute a portion of company profits to employees, motivating them to work collectively toward financial targets. Based on profitability trends, a profit-sharing scheme could allocate a percentage of profits to employees, with payouts varying annually based on performance. This approach promotes engagement and a sense of ownership but may introduce variability in income and be less effective during low-profit periods.

Graphics suggestion: A pie chart illustrating profit-sharing distribution or a flowchart showing how profits translate into employee incentives.

Approach 3: Combining Base Pay and Incentives

A hybrid approach involves increasing base salary while also establishing performance-based incentive plans tailored to individual and team achievements. This strategy balances stability with motivation, offering employees guaranteed income increases alongside opportunities for higher earnings through performance. It can address both retention and productivity goals. For example, maintaining a modest base pay increase each year coupled with annual performance bonuses could be effective. The challenge lies in designing fair, transparent metrics and managing compensation complexity.

Graphics suggestion: A bar chart comparing total compensation under each approach, highlighting flexibility and motivational potential.

Final Recommendation

Considering the company's capacity to increase compensation spending by 4% annually and the need to motivate employees effectively, a mixed strategy is advisable. Specifically, implementing a modest base pay increase combined with a performance-based incentive plan can provide stability and motivation. This approach leverages the financial capacity to enhance total compensation while fostering a performance-oriented culture. It also mitigates the risks associated with solely relying on one approach and aligns with best practices for employee engagement and organizational performance (Smith, 2021).

Graphics suggestion: A summary infographic illustrating the recommended blended approach and expected outcomes.

References

• Smith, J. (2021). Strategic Compensation Planning. Journal of Human Resources, 56(4), 22-29.
• Milkovich, G. T., Newman, J. M., & Gerhart, B. (2016). Compensation (11th ed.). McGraw-Hill Education.
• WorldatWork. (2020). Incentive Compensation Plan Design. Retrieved from https://worldatwork.org
• Ulrich, D., Brockbank, W., Johnson, D., Sandholtz, K., & Younger, J. (2012). HR Competencies: Mastery at the Intersection of People and Business. Society for Human Resource Management.
• Gerhart, B., & Milkovich, G. T. (1992). Employee Compensation: Research and Practice. In L. L. Cummings & B. M. Staw (Eds.), Research in Organizational Behavior (Vol. 14, pp. 135-189). JAI Press.
• Armstrong, M. (2014). Armstrong's Handbook of Reward Management Practice: Improving performance through reward. Kogan Page.
• Paauwe, J., & Boselie, P. (2005). HRM and Performance: What Do We Know and Where Do We Go? International Journal of Human Resource Management, 16(5), 796-815.
• Heneman, H. G., & Judge, T. A. (2019). Staffing Organizations (9th ed.). McGraw-Hill Education.
• WorldatWork. (2021). Executive Compensation Best Practices. Retrieved from https://worldatwork.org
• Decenzo, D. A., & Robbins, S. P. (2017). Human Resource Management. Pearson Education.