Case Study 2
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case study 2 8
Case Study 2: Nutriment’s New Hires
Liberty University
Abstract
This paper will discuss the case study, Nutriment’s New Hires, in chapter 7 of Strategic Compensation by Joseph Martocchio; the dilemma as well as a solution of the case study will be addressed; this case study will answer the question of how Nutriment Biotech, which is in need of new scientists and administrative staff members, will establish a pay structure to attract the much needed employees; this case study will discuss the strategic considerations in establishing pay structure at Nutriment; and will address if Jack, an experienced recruiter, should suggest a pay policy to lead, lag, or match the market; the explanation behind the recommendation will also be discussed.
Case Study 2: Nutriment’s New Hires
Nutriment Biotech is a potential leader in agricultural biotechnology; they are currently in the stages of developing a breakthrough in genetically engineered food crops that will include enhanced nutrition as well as easier production for farmers.
The individuals who established the company, Emily Hart and Harold James, have hired an HR management consultant, Jack Stewart to help in hiring 15 new employees to conduct the research. Nutriment Biotech is in need of 10 scientists and 5 administrative professionals; the challenge in this recruitment will be the scientists as they are difficult to find in this expertise. The geographic location of Nutriment Biotech aids in the recruitment for scientists because they are near many biotech firms and research universities.
Jack Stewart’s first task to begin the recruiting process will be to establish a pay structure to attract the desired candidates; in addition, before establishing the appropriate pay structure, Jack must discuss pay level policies and strategic aspects for determining compensation structure for new employees. Due to the scarcity of agricultural scientists, a pay package needs to be established to attract and retain the scientists as well as the administrative professionals (Martocchio, 2017).
Strategic Considerations in Establishing a Pay Structure at Nutriment
Since Nutriment Biotech is a newly established company that specializes in agricultural biotechnology, they will need to carefully consider the strategic aspects before establishing a pay structure. It’s crucial that HR management consultant Jack Stewart consider the most effective options that will attract the appropriate talent; this is especially vital when recruiting the scientists, which are scarce in this profession.
When evaluating strategic considerations in establishing a competitive pay structure, Jack Stewart, with Emily Hart and Harold James, need to consider options that would attract the best talent.
Per Martocchio, although Jack Stewart is a highly recommended HR management consultant, it would be in the company’s best interest if Jack brought in a compensation specialist to work with (2017). The compensation specialist would help in accessing compensation and benefits data that are used by other firms; in addition, comparing compensation side-by-side for these specific jobs, will allow a visual of how compensation matches. Furthermore, another method that would prove to be effective, is allowing a compensation specialist to analyze data by using statistics to identify regularities with competitors and areas of significant inconsistency (Martocchio, 2017) (Kahn, 2012).
If Jack should suggest a Pay Policy to Lead, Lag, or Match the Market
Pay policies to lead, lag, or match the market differ greatly from one another so Jack needs to carefully consider each one.
Firstly, the market lead policy separates a company from the competition by compensating employees higher than their competitors; secondly, by slightly differing from the market lead policy, the market lag policy compensates employees less than most competitors; finally, the market match policy closely follows the typical market pay rates because companies pay according to the market pay line (Martocchio, 2017). Not only should the starting pay for a firm be exceptional, but the incentive pay throughout years of employment should be as well (Priks & Stockholms, 2011).
Of the three policies, it would be in the company’s best interest if Jack recommends they go with the market lead policy; since Nutriment Biotech is in dire need of special expertise pertaining to the scientists, they need to exceed their competitors’ pay structure to attract the particular talent for their cause. A pay structure that exceeds competitors would not only attract the talent that Nutriment Biotech needs but would most definitely retain the new employees as well; new recruits will always choose a higher pay rate over companies that offer a lower pay rate.
The Reason for this Recommendation
The reason for this recommendation is simple; the company that offers a higher pay rate is most likely to attract the most candidates. This heightens the chances of finding the best talent for the vacancies that are needed. In addition, scientists who are currently seeking employment elsewhere would most likely inquire about working for Nutriment Biotech and an increase in compensation would attract skilled professionals; therefore, the market lead policy is the best form of market competition provided the company is well-established enough to afford it (Cuñat & Guadalupe, 2005). Currently employed scientists may have career concerns switching to a new company so the pay structure needs to be exceptional before they decide to take that extra step toward something new (Feriozzi, 2016) and the market lead policy would be that push for new talent. Furthermore, high compensation for competition for talent has been proven to make an association stronger, which would be good for Nutriment Biotech since it’s a newer facility (Giannetti & Metzger, 2015).
Conclusion
With Nutriment Biotech’s search for 15 new employees, and 10 vacancies being scientists in a related expertise, they have quite a challenge ahead of them; however, if Jack Stewart can persuade Emily Hart and Harold James to proceed with the market lead policy, I have no doubt that they would attract the talent they need to continue the work of the company.
References
Martocchio, J. J. (2017). Strategic compensation a human resource management approach. Boston: Pearson.
Kahn, L. M. (2012). Labor market policy: A comparative view on the costs and benefits of labor market flexibility. Journal of Policy Analysis and Management, 31(1), 94-110. doi:10.1002/pam.20602
Cuñat, V., & Guadalupe, M. (2005). How does product market competition shape incentive contracts? Journal of the European Economic Association, 3(5), 1058-1082.
Priks & Stockholms. (2011). Firm competition and incentive pay: Rent seeking at work. Economics Letters, 113(2), 154-156. doi:10.1016/j.econlet.2011.06.006
Feriozzi, F. (2016). Career concerns and product market competition. Journal of Economics & Management Strategy, 25(2), 370-399. doi:10.1111/jems.12133
Giannetti, M., & Metzger, D. (2015). Compensation and competition for talent: Evidence from the financial industry. Finance Research Letters, 12, 11-16. doi:10.1016/j.frl.2014.12.007