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Implementing a Compensation and Incentive Plan

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I need some assistance with implementing a compensation and incentive plan for workers in coffee house. How would I structure a reward and recognition plan that supports our mission? Our key objective is being to make the best coffee all while inspiring humanity.

Instructions: Create a comprehensive compensation and incentive plan for workers. Structure a reward and recognition system that supports your objective.

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Solution Summary

Explaining the essential components of organizational compensation and incentive plans.

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The key is to make sure that the compensation plan is in line with the company's vision, mission and objectives. To do, this senior management needs to champion the program and ensure that is fair, recognizes diversity and engages employees.
I have provided more detailed information from the book below for your reference.

The WorldatWork Handbook of Compensation, Benefits & Total Rewards: A Comprehensive Guide for HR Professionals by WorldatWork . John Wiley & Sons 2007

"While many companies agree with the idea of total rewards, they often don't actually put a total rewards strategy into practice. The compensation department may design a sales force compensation program separately from the benefits department that revises the 401 (k) program. This piecemeal approach is common, but it's akin to building a state-of-the-art skyscraper on top of the foundation of a 30-year-old, mid-rise office building. That skyscraper isn't going to be structurally sound using a base that wasn't designed to support it. The same thing can happen when new or revised benefits are built without regard to the overall compensation and benefits structure.
THE TOTAL REWARDS BLUEPRINT
Starting a total rewards program off on the right foot is a matter of taking a complete inventory of the programs already in place, ranking each program's effectiveness and finding the linkages between the rewards and the business strategy.
 Inventory. Find out what's already in the mix—every program, plan, and perk, even those not currently in use.
 Rank. Determine the effectiveness of each program and how close it is to being a best practice in the industry. Effectiveness can be defined several ways. For instance, low participation can mean low interest, or possibly low understanding of a particular program. Ask line managers to list the top five and bottom five programs in the current package.
 Link. This is a difficult step, but an important one. Take a look at the company business strategy and map where rewards complement or help to drive the specifics of the strategy.
For example, consider an organization that developed a business strategy that focused on providing an integrated customer service experience to its clients. If the company tried to blend 10 separate products and three different sales groups into one seamless offering, the structure of the company's sales force and the compensation programs likely would not support this collaborative approach. In fact, the pay structure for the sales force, customer service personnel, and sales support team could be inconsistent and actually motivate people not to work together. Good compensation programs are important, but linking total rewards to business strategy is essential." (WorldatWork , 2007)

"Following are 10 steps that employers can take to better design and implement their total rewards programs and maximize their effectiveness (conclusions drawn from 2005 Strategic Rewards Study, Watson Wyatt and WorldatWork):
1. Focus on Alignment. High-performing companies are more successful at aligning employee behavior with company goals than low-performing companies are.
2. Ask Employees What They Want. Rewards only work if they are meaningful to employees and influence their affiliation with the organization. Study data show more companies need to ask employees about their rewards preferences and use their input to shape program offerings. Too many companies are missing the opportunity to understand whether their investments in different rewards plans are valued by employees and support the company's attraction, motivation, and retention goals.
3. Measure and Manage Costs and Risks. Successful rewards plans strike a balance between effectiveness and cost. However, too small a percentage of employers formally measure ...

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