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Developing a Compensation Plan

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Develop a compensation plan. Upper management has asked you to suggest a new compensation plan specifically for your team. Propose your ideas and rationale to the Human Resource Department Manager for approval.

? Write a 700- to 1,050-word proposal

o Describing a new compensation plan for your new employment team
o Explaining why your pay system will work
o Describing three components of a total rewards package that would motivate employees to reach peak performance
o Describing your compensation plan's benefits to the individual as well to the company
o You must include and cite a minimum of two references in APA format.

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Solution Preview

Employers offer rewards to employees in the form of compensation in exchange for job performance and commitment. Compensation refers to the extrinsic or monetary rewards that employees receive in exchange for their work. It is composed of the base wage or salary and if applicable, it also includes the following: incentives or bonuses and benefits. A company's employee compensation plan includes policies, procedures, and rules that provide clear determination and administration of employee compensation otherwise confusion or diminished employee satisfaction can cause litigation.

The proposed compensation plan takes into consideration the following:
1. It shows the company's vision and the company must perform a self-evaluation in order to determine what to accomplish to obtain its goals. It has to determine how to lower costs and gain customers and how it can achieve its goals in order to gain profits.
2. The salary package will not be very high and it depends on the position and skills needed for the job. Raises will not become an entitlement and will not be done regularly but will depend on how the company performs in terms of productivity in a certain period.
3. There will be more frequent or regular bonuses, e., quarterly, depending on the company's profitability and productivity.
4. Provide more incentives, e.g., monetary (or in kind) rewards for best employee, perfect attendance, most productive, ...

Solution Summary

The solution is at least 700 words proposal of a compensation plan for a new employment team. It explains why the pay system proposed will work, describes the three components of a total rewards package to motivate employees, describes the plan's benefits to the individual and to the company. References are cited in APA format.

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See Also This Related BrainMass Solution

Compensation Plan:choose 2 of the 5 factors influencing effective incentive program. Discuss why those factors are important to consider, and the role each plays in developing effective incentive programs.

Scenario:

You are the Director of Compensation and Benefits for Lansing-Smith Corporation, a 6-month old sales and service organization that currently has a workforce of 150 employees. You recently joined the organization when the Vice President of Operations decided to move the Compensation and Benefits function out of the Accounting Department, into a separate function. From your own observations you have identified several areas in need of review, redesign or development, including projects such as an audit of current pay plans to ensure they are aligned with federal regulations, an analysis of various pay plans to assess which plans will provide maximum benefit for Lansing-Smith, extensive job analyses to ensure a solid understanding of each position, job evaluations to determine the worth of the positions, consideration of various incentive plan designs to identify a plan that effectively drives individual and group performance to achieve production goals and research, development, communication and management training for a company-wide performance appraisal process.

You are dedicated to developing compensation and benefit practices that are motivating and empowering for employees. You are confident that with well-developed programs and practices, employees will be motivated to perform at higher levels, thereby driving overall company performance.

Details: You are a member of a national human resource management society which provides web materials for members, as well as on-line chat learning events with field experts. You have just finished reading a live chat presentation with the Martocchio, leading author on strategic compensation. Martocchio says that when designing incentive pay programs, there are 5 factors that should be considered.

Whether the plan should be based on group or individual employee performance.
The level of risk employees will be willing to accept in their overall compensation package.

Whether incentive pay should replace or compliment traditional pay.
The criteria by which performance should be judged
The time horizons for goals, long term, short term, or a combination of both.

You are asked by the chat moderator to contribute to the learning event by choosing 2 of the 5 factors, and posting chat on them. Discuss why those factors are important to consider, and the role each plays in developing effective incentive programs.

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