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Restructure of Compensation for Production Employees

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Imagine you are a Compensation Analyst at a large manufacturing organization. The CEO recently came to your boss, the Director of Compensation, to determine how to restructure compensation for certain employees. The CEO wants to make sure that compensation aligns with the following organizational strategies:

1) Continue to make a quality product that our consumers will always choose over our competitors in the industry.
2) Keep production and overhead costs down by working smarter, not harder.
3) Expand into new markets across the U.S.
4) Hire the best people and support them as they develop in their careers.

Put together a proposal memo addressed to the Director of Compensation that shows how the total compensation package can support these strategies.

The 3 specific positions you should focus on are: production associates (who assemble the products in the manufacturing plant), line supervisors (who directly supervise the production associates), and floor managers (who supervise the entire production process at the plant).

Be sure to address the following:

What elements of compensation and non-compensation will be important in supporting the 4 organizational strategies above? Why?
Will organizational hierarchy play a role in your proposal? How?
What challenges did you have aligning compensation strategy with organizational strategy? Be specific.
What aspects of your proposal do you think your Director or the CEO will support vs. reject? Why?

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Solution Preview


To: the Director of Compensation
From: Compensation analyst
Subject matter: Compensation Alignment with Organizational Strategy

The current compensation strategy for the company is not in alignment with the strategies of the organization since the organization since the quality of the products does not attract the attention of the customers over their competitors, the overall production and overhead costs are not kept down through working smarter rather by just working harder, the compensation does not allow for the expansion into new markets, and the compensation strategy does not play part in hiring the best people and supporting them through the whole activity of career development.

The issues addressed above are the organizations strategies which have to be considered in the development of a new compensation plan whereby the production associates within the company will be motivated to ensure that the products within the manufacturing plant is produced at a high quality since their morale of producing high quality products will be boosted. This can be ensured ...

Solution Summary

The solution discusses organizational strategies in restructure of compensation for production employees.