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Compensation Program - HRM II

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Fatemah Hemraj

on 19 April 2013

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Transcript of Compensation Program - HRM II

Human Resource Management II COMBINATION COMPENSATION PLAN PROPOSAL EFFECTIVE COMPENSATION PROGRAM BENEFITS: Reinforce unique vision+goals of organization

Support+motivate employees

Employees stay, contribute & thrive CHALLENGES: Employees threatening to leave organization- demonstrating disengagement

Base salary of $10.00 – will cause legal consequences (below min wage)

Unmotivated to work toward achieving organization goals

Base pay – consider seniority, qualifications & market value

Different job positions cannot be compensated the same way

No benefits or drivers in place S A L A R Y P L A N STRAIGHT SALARY PLAN: A method of compensating employees for their work in which they are paid a specific dollar amount at regular intervals. BENEFITS OF A SALARY PLAN: Predictability
Departmental logistics DRAWBACKS OF SALARY PLAN: Potential losses
Not tied to results
Seniority vs. performance COMMISSION PLAN: A way of compensating employees for their work in which they are paid entirely on the basis of what they sell. C O M M I S S I O N P L A N BENEFITS OF COMMISSION PLAN: Provides salespeople with a chance to earn more than an hourly wage
Attracts high performers
Easy to understand and compute
Sales costs are proportional to sales
Company’s selling investment is reduced
Drives higher sales DRAWBACKS OF A COMMISSION PLAN: Fear in employees of insecure income

Salespeople might neglect certain clients/duties

Variances in employees’ income may occur - inequity

Higher turnover due to instability

Strongly depending on personalities C O M B I N A T I O N P L A N COMBINATION PLAN: A type of compensation plan in which a proportion of the pay is guaranteed and the rest is incentive to pay. TYPES OF COMBINATION PLANS: Salary+Commission



Commission+Bonus BENEFITS OF COMBINATION PLAN: Motivates/attracts/retains/satisfies employees
Reduced turnover rate
Minimizes bad selling habits
Less management supervision DRAWBACKS OF A COMBINATION PLAN: Complicated

Extra time+effort


Equal potential P O P R O S L A TEAM RECOMMENDATION FOR MARILYN: We suggest that she uses the combination plan
Paying her workforce a set base pay
Plus a percentage of gross profits/sales each salesperson makes. THINGS EMPLOYERS MUST FOCUS ON: How smoothly does your organization function?

How satisfied are your employees?

Are workers recognized for their contributions? RECOMMENDATIONS FOR MARILYN: Engage employees by linking incentives to individual performance

Motivate employees to achieve key behaviours

Create employee loyalty through employer commitment

Link compensation to the organizations ability to pay BENEFITS TO MARILYN & EMPLOYEES: Stability of base pay

Motivation to earn higher percentage of commission

Fair rewards and higher profits Vital Elements of a Business Structure Performance
Management Performance
Appraisals EFFECTIVE APPRAISALS SHOULD INCLUDE: Organizations standards

Work quality expectations

Customer service skills Performance
Principles DRIVERS: Attraction



(Opinions in decision making) ACTION: Establishment of goals

Workshops/training on selling techniques

Customer service appreciation

Meetings before start of workday SAFETY & BENEFITS Reinforcement of Health & Safety regulations Legal requirements - paid time off/overtime etc.

Flexible benefits - employees able to choose

Employee opinion survey - Lets take a look!
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