Unit 9 Final

Running head: EXTERNAL COMPETITIVENESS 1

EXTERNAL COMPETITIVENESS 1

External Competitiveness

Stephanie A. Gillmer

Purdue Global University

HR 435-01 Compensation

Dr. Ileana Felipe

September 1, 2020

BNSF Externally Competitive

BNSF is a competitive customer service-based organization. BNSF does not only have to be competitive in delivering goods on time, but they need to be competitive in pay. If there is an investment in wages to employees, it can result in a healthy return to the company. Even though BNSF has excellent service to its customers, the strength in the firm lies with the employees starting with managers. This paper will discuss recommendations for forms of pay and percentages. Last will be a recommendation of the use of efficiency wage theory.

For the management positions within BNSF, the recommendation for external competitiveness policy is the lead pay-level policy. Three pay policies include match the market, lead the market, and lag the market. Matching the market has the advantage of managing labor costs better (SHRM, 2019). A disadvantage to matching policy is that it can put BNSF in always having to play catch-up with the competition, requiring more extensive adjustments in the compensation structure during constrained labor markets (SHRM, 2019). Lag pay policy would be an advantage of higher returns in the future, which may increase employee commitment and improve teamwork increasing productivity. However, it could hinder BNSF from attracting potentially skilled managers (Gerhart, 2019). The lead pay-level policy attracts and retains skilled managers and minimizes dissatisfaction concerning wages (Gerhart, 2019). An advantage to lead pay-level policy is it increases morale and productivity in the work environment leading to less turnover (SHRM, 2019). BNSF needs to consider that the lead pay policy is that it increases labor cost, although the lead strategy fits BNSF because it is in a highly competitive market.

BNSF should offer managers work/life balance pay. It has advantages of global competition, not just local. The balance also offers managers to have renewed interest in their personal lives. Lastly, it helps the aging workforce within the company (Lockwood, 2003). The breakdown percentages are as follows: 50% base pay, benefits package 30%, Options 10%, and bonuses 10%.

If BNSF acknowledges a work/life balance for the employees, it gains respect for managers that have families with responsibilities and obligations in their home life. In turn, employees will be encouraged to work hard and together, meeting their personal work needs (Lockwood, 2003).

The theories presented are about creating positives for BNSF getting quality work, and satisfied managers to remain externally competitive. If BNSF loses customers again due to dissatisfaction, the employees will be affected, and the external competition (such as Union Pacific) will gain an advantage in the market, forcing BNSF to make up ground that can take years to accomplish. BNSF’s mission is to satisfy and benefit each customer as well as its employees. It is essential to look from the outside in to keep a perspective of the customers and employee satisfaction to remain competitive.

References:

Gerhart, B. (2019). Compensation. [Purdue University Global Bookshelf]. Retrieved from https://purdueuniversityglobal.vitalsource.com/#/books/9781260486100/

Half, R. (2019, April 07). Why paying a competitive salary is essential: Robert Half? Retrieved September 01, 2020, from https://www.roberthalf.com.au/blog/employers/high-cost-low-salaries-why-paying-competitive-salary-important

Lockwood, N. R. (2003, June 1). Https://eds-a-ebscohost-com.libauth.purdueglobal.edu/eds/pdfviewer/pdfviewer?vid=2&sid=78269266-39a1-4ce1-b59f-f99b8c39f549@sessionmgr4006. Retrieved September 01, 2020, from Work/Life Balance Challenges and Solutions

Shrm. (2019, August 16). Planning & Design: Compensation Philosophy: What are the advantages or disadvantages of a lead, match, or lag compensation strategy? Retrieved September 01, 2020, from https://www.shrm.org/resourcesandtools/tools-and-samples/hr-qa/pages/cms_024253.aspx