HR Management Assignment

Compensation Plan

Student’s Name

Institution

Course

Date

Compensation Plan

Formulating an ingenious compensation plan can aid to support recruitment and retention efforts at Motors and More. The compensation plan can also help to improve employee’s job satisfaction and commitment, all of which will translate to reduced turnover rates (Truss, Mankin, & Kelliher, 2012). Currently, employee compensation at Motors and More lags behind relative to other organizations in the area. The company provides employees with minimum wage and statutory benefits only, while other organizations offer their employees with comprehensive compensation packages that include various incentives and benefits such as group healthcare coverage, paid vacations and bonuses. The compensation packages at these organizations have helped to boost the motivation and morale of employees, which has translated to increased productivity.

The organization will pursue a “meet the market” compensation strategy. This strategy matches the pay rates of the organization with other competitors in the industry, which will ensure that the compensation structure at Motors and More remains competitive. This strategy will also improve the ability of the organization to retain and attract top talent. According to Arthur (2004), the meet the market compensation strategy also helps in the management of labor costs. Furthermore, through having a base pay strategy that meets the market, the employer can easily subtract or add variable pay and fringe benefits, which can enable employers to balance cost pressures versus the need for attracting and retaining employees (Mathis, Jackson, & Valentine, 2013).

Motors and More will consider various alternative pay methods. One of the alternative pay methods is merit pay or pay for performance. This method reward employees based upon their productivity or success in accomplishing established goals. This method has various advantages and disadvantages. Truss et al. (2012) point out that one advantage is the reduced need for supervision since employees have the drive and motivation to work. This can raise productivity and lower production costs. Other advantages of this pay system include less resistance to procedural changes, improved quality control and greater acceptance of work output measurements (Arthur, 2004). Nevertheless, the pay per performance system also has various disadvantages. For instance, this method can lead to reduced teamwork as all employees strive to maximize their input. In addition, this compensation method can lead to elevated levels of mistrust between management and workers. Employees who perceive their bonuses to be less might also have lower motivation, a factor that can undermine their productivity.

Another alternative pay method that Motors and More can consider is commission pay. Typically, employees receive pay based on product sales. Commission pay plans have various advantages. First, they can lead to increased sales (Arthur, 2004). In addition, this method can help managers to ensure optimized selling efficiency and control labor costs. Nonetheless, commission pay also has some drawbacks. For example, this method can motivate employees to behave in unethical ways in a bid to make the sale. The uncertainty associated with commission pay can also lead to budget challenges (Mathis et al., 2013).

In order to support the recruitment and retention efforts, I will offer various benefits to employees at the organization. These benefits will include both statutory and non-statutory benefits. One of the benefits that I will provide is health care coverage for all the employees. Some of the health care plans that I might consider for Motors and More employees include fee-for-service or indemnity coverage plans and managed care plans (Truss et al., 2012). The other benefit will be holiday leave and paid vacations for employees in the organization. Currently, the company does not provide employees with paid vacations. Apart from the monetary benefits, I will also provide some nonmonetary benefits including flexible scheduling, recognition and free snacks during work time. Cumulatively, all these benefits can help employees to feel valued by the organization, which increases their motivation and job satisfaction (Mathis et al., 2013).

I will also provide statutory benefits to the employees. One of such benefits will be the Workers’ Compensation (WC) coverage for all employees who sustain work-related illness or injuries. The injured employees will also be entitled to physical rehabilitation, prosthetic devices, permanent disability compensation or vocational rehabilitation. Furthermore, Motors and More will continue providing other statutory benefits including unemployment compensation insurance. Eligibility to this insurance will depend on various factors including the circumstances of the employee’s termination. Other statutory benefits that I will maintain in the organization include Social Security and Medicare. Social Security offers disability and retirement income. According to Arthur (2004), the Medicare benefits should include hospitalization, medical insurance and prescription coverage.

In order to guarantee the success of the compensation plan, there will be need for developing a communications plan to inform employees about the new changes. The main avenues for communicating the compensation plan will be through emails and staff meetings. Other tools for communicating the new changes will include internal newsletters, social media platforms as well as leaflets and flyers. These mediums are appropriate because of their cost effectiveness (Truss et al., 2012). The target audiences are senior executives and all the other employees in the organization. The HR Director and the communications manager will have the responsibility of communicating the compensation plan to the target audience at Motors and More. The main objectives of the communications plan include raising awareness about the new compensation structure and soliciting feedback from employees about their views of the changes.

References

Arthur, D. (2004). Fundamentals of human resources management (4 ed.). New York, N.Y.: American Management Association.

Mathis, R. L., Jackson, J., & Valentine, S. (2013). Human Resource Management. New York: Cengage Learning.

Truss, C., Mankin, D., & Kelliher, C. (2012). Strategic human resource management. Oxford ; New York : Oxford University Press.